JOHNS HOPKINS UNIVERSITY
CENTER FOR LEADERSHIP EDUCATION
THE WILLIAM P. CAREY PROGRAM IN ENTREPRENEURSHIP AND MANAGEMENT
ADVANCED CORPORATE FINANCE, 660.401.01, SPRING 2010
T, 6:15 – 9:00 PM
DAY/TIME/LOCATION
OF CLASS:
INSTRUCTOR:
Tuesday Evenings, 6:15 – 9:00 PM, Location TBD
Jack Powell
Center For Leadership Education
Rm. 104, Whitehead Hall, x7197
E-mail: WebCT or jpowell1@vt.edu
Office Hours: 4:30-6:00 PM, T in Whitehead Rm. 102
COURSE DESCRIPTION:
The advanced course in corporate finance is designed to provide the upper level business student
with a background in the more complex applications of financial management practice. A primary
objective of the course is to complete the student’s preparation for financial sector employment
and/or graduate business education. A secondary objective of the course is to introduce the
student to selected topics covered on the Chartered Financial Analyst (CFA©) Level I
examination. Students will be exposed to advanced financial management concepts through a
pedagogy combining classroom instruction, problem solution, business case analysis and work on
a group project with coverage of the topics of fixed income analysis, capital markets, portfolio
theory, cost of capital, capital formation, capital structure, corporate dividend policy, real
property valuation, working capital analysis, commercial leasing strategies, international finance
and derivatives analysis. In addition to the topics above, students will receive a refresher in
CFA©Level I quantitative methods, financial reporting and equity analysis.
REQUIRED TEXT:
Ross, Westerfield & Jordan, Fundamentals of Corporate Finance, 8th Edition, 2008, McGraw-Hill
Irwin, New York, NY, ISBN-13: 978-0-07-334188-0
COURSE PREREQUISITES:
It is assumed that all 660.401 students have taken 660.302 (Corporate Finance) or an appropriate
alternative. Students are expected to be proficient in financial accounting and all time value of
money applications. It is also assumed that students have a basic understanding of business
mathematics, statistics, and economics.
USE OF BUSINESS CALCULATORS:
THIS IS A CALCULATOR COURSE! The course involves the use of certain mathematical
formulas and functions which are pre-programmed into such business calculators as the HP 10B,
12C, and 17B and the TI BA 35, BA II Plus, etc. Use of these calculators for solving homework
and test problems is expected in the interest of time and on the basis that such calculators are used
extensively in almost every financial job setting.
COURSE OBJECTIVES:
This course presents opportunities for the student to apply financial management concepts in
developing strategies to address a variety of problem scenarios. Upon completion of this course,
the student should be fully capable of using the tools covered in the course to understand and
evaluate a broad sample of complex financial management problems and strategies. Specifically,
a student who successfully completes this course should be capable of:
1. Analyzing fixed income duration, convexity and embedded options.
2. Calculating financial asset returns and other basic quantitative and statistical
techniques of financial analysis.
3. Performing mean/variance optimization and portfolio risk analysis.
4. Calculating firm cost of capital considering investment risk.
5. Conduct advanced analysis of reported investments, inventories, long-lived assets,
income taxes, leases, EPS and Statement of Cash Flows.
6. Conduct basic company analysis and stock valuation and price an Initial Public
Offering (IPO) of common stock.
7. Evaluating the impact of capital structure on capital cost and firm value.
8. Evaluating the components of a corporate dividend policy.
9. Valuing income producing real estate assets.
10. Accomplishing a complete working capital analysis.
11. Evaluating basic foreign currency exposures.
12. Valuing options, and other derivative instruments.
13. Evaluating a lease versus buy decision.
The course accomplishes the above objectives using a combination of classroom demonstration,
problem analysis and extensive group business case analysis.
CLASS TOPICS AND HOMEWORK ASSIGNMENTS:
1/26
Hour 1: Course Introduction
Hour 2: CFA©Level I Fixed Income Analytics
2/2
Hour 1: Capital Markets, Ch. 12
Hour 2: CFA©Level I Quantitative Techniques Part 1
Hour 3: CFA©Fixed Income Analytics Problem Solution/Discussion and Quiz 1
2/9
Hours 1&2: Portfolio Theory and Risk Analysis, Ch. 13 and CFA©Level I Portfolio
Management
Hour 3: CFA©Quantitative Techniques Problem Solution/Discussion and Quiz 2
2/16
Hours 1&2: Cost of Capital, Ch. 15 and CFA©Level I Cost of Capital
Hour 3: CFA©Portfolio Management Problem Solution/Discussion and Quiz 3
2/23
Hour 1: Raising Capital, Ch. 16. HW: Problems 9-15
Hour 2: CFA©Level I Financial Reporting and Analysis Part 1
Hour 3: CFA©Cost of Capital Problem Solution/Discussion and Quiz 4
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CLASS TOPICS AND HOMEWORK ASSIGNMENTS (Cont’d):
3/2
Hour 1: Capital Structure, Ch. 17. HW: Problems 16-22, Stephenson Case
Hour 2: CFA©Level I Financial Reporting and Analysis Part 2
Hour 3: Ch. 16 HW and CFA©Financial Reporting Part 1Problem Solution/Discussion
and Quiz 5
3/9
MID-TERM EXAM
3/16
SPRING BREAK
3/23
Hour 1: Dividend Policy, Ch. 18. HW: Problems 14-18
Hour 2: CFA©Level I Quantitative Techniques Part 2
Hour 3: Ch. 17 HW and CFA©Financial Reporting Part 2Problem Solution/Discussion
3/30
Hour 1: Real Estate Valuation. HW: Real Estate Valuation Problems and Case (Handout)
Hour 2: CFA©Level I Equity Review Part 1
Hour 3: Ch. 18 HW and CFA©Quantitative Techniques Part 2 Problem
Solution/Discussion and Quiz 6
4/6
Hour 1: Advanced Working Capital Management, Chs. 19-21. HW: Basic Problems and
Cases
Hour 2: CFA©Level I Working Capital Management
Hour 3: Real Estate Problems and Case, CFA©Equity Review Part 1Problem
Solution/Discussion and Quiz 7
4/13
Hour 1: International Corporate Finance, Ch. 22. HW: Basic Problems and S&S Air Case
Hour 2: CFA©Level I Equity Review Part 2
Hour 3: Chs. 19-21 HW and CFA©Working Capital Management Problem
Solution/Discussion and Quiz 8
4/20
Hour 1: Option Valuation, Chs. 14 & 24. HW: Basic Problems Only
Hour 2: CFA©Level I Derivatives and Alternative Investments Part 1
Hour 3: Ch. 22 HW and CFA©Equity Review Part 2Problem Solution/Discussion and
Quiz 9
4/27
Hour 1: Lease Financing, Ch. 26. HW: Basic Problems
Hour 2: CFA©Level I Derivatives and Alternative Investments Part 2
Hour 3: Chs. 14 & 24 HW and CFA©Derivatives and Alternative Investments Problem
Solution/Discussion and Quiz 10
5/11
FINAL EXAM
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CLASS POLICIES:
(1)
(2)
(3)
(4)
(5)
(6)
Class attendance and preparation. Class attendance is vital to the successful
completion of this course. With the exception of the first class meeting, students are
expected to come to class having read the chapter material referenced.
Homework and Quizzes. Homework will not be collected, however, students will be
given quizzes on most of the homework assigned. Homework solutions will be
posted on WebCT after the subject material has been covered in class. The format of
the quizzes will be short answer, multiple choice and problem solution. Make-up
quizzes will be administered at the full discretion of the instructor. Please note that
make-up quizzes will not be administered as the result of travel plans, job interviews,
or lack of preparedness.
Examinations. There will be one mid-term examination and a final examination given
during the course. On-line review sessions will be provided for each exam (WebCT).
Calculators are permissible for use during all exams and quizzes. Make-up exams
will be administered at the full discretion of the instructor. Please note that make-up
exams will not be administered as the result of travel plans, job interviews, or lack of
preparedness.
Group Project. Groups will be formed and a group project will be assigned during the
first few weeks of the course.
Senior option. Senior option will not be offered in this course.
WebCT. This course has a WebCT site. The site will be used as a communication
and course administration tool. All e-mail communication with the instructor should
go through WebCT. Students are encouraged to bring laptops to class, as most lecture
material will be presented electronically using WebCT.
EVALUATION:
Each course participant will be evaluated as follows:
Quizzes – 20%
Mid-Term Exam –25%
Project – 20%
Final Exam – 35%
EVALUATION (Cont’d):
Letter grades awarded shall correspond to the following scale:
Letter Grade
Percentage Points
A+
97-100
A
93-96
A90-92
B+
87-89
B
83-86
B80-82
C+
77-79
C
73-76
C70-72
D
60-69
F
Below 60
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ETHICS:
The strength of the university depends on academic and personal integrity. In this course, you
must be honest and truthful. Ethical violations include cheating on exams, plagiarism, reuse of
assignments, improper use of Internet and electronic devices, unauthorized collaboration,
alteration of graded assignments, forgery and falsification, lying, facilitating academic dishonesty,
and unfair competition.
In addition, the specific ethics guidelines for this course are:
(1) If you are taking a make-up quiz or exam, discussing the quiz or exam material with
anyone who has already taken the quiz or exam prior to taking the make-up is cheating.
(2) Discussing a quiz or exam with anyone who is scheduled to take a make-up is also
cheating.
Report any violations you witness to the instructor. You may consult the associate dean of student
affairs and/or the chairman of the Ethics Board beforehand. See the guide on “Academic Ethics
for Undergraduates” and the Ethics Board website (http://ethics.jhu.edu) for more information.
© 2009 CFA Institute. All Rights Reserved
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