The Chinese University of Hong Kong
CUHK Business School
FINA2010 Financial Management
Second Term 2015 – 2016
A. Staff Information
Instructor:
Office:
Phone:
Email:
Office Hours:
Dr. Anson C. K. AU YEUNG
Room 1245, Department of Finance, CYT
3943 3780
ansonauyeung@baf.cuhk.edu.hk
By Appointment
TA:
Office:
Phone:
Email:
Office Hours:
Miss. Karen H. L. LEE
Room 1155, Department of Finance, CYT
3943 7840
karenlee@baf.cuhk.edu.hk
By Appointment
B. Class Schedule
Session
FINA2010L
FINA2010M
Day
Thursday
Monday
Time
09:30 – 12:15
09:30 – 12:15
Venue
YIA 405
WMY 505
C. Course Overview
Financial Management studies corporate finance and capital markets, emphasizing the
financial aspects of managerial decisions. This course aims to provide you with a
background in some fundamental concepts of modern financial management. It exposes you
to some of the major financial decision techniques used in the business world, including the
valuation of real and financial assets, the trade-off between risk and expected return, and
corporate investment and financing policy. As financial markets are now globally integrated,
we will draw on some cases and examples involving international companies, giving you a
global perspective on financial management.
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D. Learning Outcomes
After completing this course, students should be able to:
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Describe and evaluate the basic features of financial markets.
Apply time value of money concepts to complex cash flow scenarios.
Price bonds and other fixed-income financial assets.
Determine the fundamental price for common stock using dividend discount model.
Use the Capital Asset Pricing Model to quantify he risk-return tradeoff.
Determine a firm’s weighted average cost of capital.
Estimate project cash flows to distinguish between value-creating and value-destroying
investments.
Evaluate alternative techniques for analyzing project opportunities and budgeting capital.
Apply the net present value criterion to complex capital budgeting problems.
Use a financial calculator and Excel in a variety of financial problems.
E. References
1. Ross, Westerfield, Jordan, Lim and Tan, Fundamentals of Corporate Finance, Asia
Global Edition, McGraw-Hill Irwin, 2012.
F. Academic Integrity
Attention is drawn to University policy and regulations on honesty in academic work, and to
the disciplinary guidelines and procedures applicable to breaches of such policy and
regulations. Details may be found at http://www.cuhk.edu.hk/policy/academichonesty.
With each assignment, students may be required to submit a statement that they are aware of
these policies, regulations, guidelines and procedures.
G. Course Requirements and Assessment
Individual Assignments
Class Participation
Midterm Exam, 4 March 2016
Final Exam, 26 April 2016
Midterm Exam
Final Exam
Date
4 March 2016 (Fri)
26 April 2016 (Tue)
10 points
15 points
25 points
50 points
100 points
Time
6:30 pm – 8:00 pm
6:30 pm – 8:30 pm
Venue
LSK LT5
LSK LT5
2
The final grade will be assigned based on a relative frequency distribution (percentile ranking)
of the total points accumulated over the entire semester. This means that your final grade
will be determined by the relative performance of other students in the class as well as the
overall performance of the entire class.
1. Individual Assignments
The individual homework assignments will consist of some problem solving questions.
There will be 2 online assignments. No late submission is accepted.
2. Class Participation
We are going to have some case discussion in the class. The purpose is to offer you a
unique case setting to understand how concepts and theories of financial management are
applied in real world.
To prepare for the case discussion, you need to work in a group. You are expected to
form a group of 4 members from the same class. You should choose to set up your own
groups. You must email the list of your group members with each member’s name,
student ID and email address to my TA before 22 January 2016.
Each case contains several questions. I will randomly choose some groups to present
their analysis. The analysis is expected to cover all relevant aspects of the case. An
important part of this exercise is to distinguish the relevant from the irrelevant, and it is
for the group to decide what issues are relevant.
Groups are encouraged to be seated together. Everyone is expected to have his/her name
card on the desk at all times.
3. Exams
There will be midterm and final exam in this course. Both exams are closed-book and
closed-notes. You are allowed to bring a financial or scientific calculator during the
exam. The midterm is 90 minutes in length and only includes multiple choice questions.
Final exam includes both multiple choice and essay questions. It is 120 minutes in length.
Makeup exams will only be given under extreme circumstances with appropriate thirdparty documentation.
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H. Course Outline
Topic
1
2
3
4
5
6
7
8
9
10
11
12
Introduction to Financial Management
Financial Statements Analysis
The Time Value of Money
Discounted Cash Flow Valuation
Investment Decisions
Bond and Stock Valuation
Capital Budgeting
Market Efficiency
Risk and Return
Cost of Capital
Capital Structure
Advanced Capital Budgeting
Reference
Chapter 1
Chapter 2, 3, 4
Chapter 5
Chapter 6
Chapter 9
Chapter 7, 8
Chapter 10, 11
Chapter 12
Chapter 13
Chapter 14
Chapter 16
Additional Materials
I reserve the rights to make appropriate changes concerning the addition and deletion of
topics, assigned readings and the order of presentation.
I. Case List
Case #1: Ocean Carriers (9-202-207)
Case #2: Teuer Furniture: Discounted Cash Flow Valuation (KEL779)
Case #3: Valuing Wal-Mart Stock (806N09)
Case #4: Nike, Inc.: Cost of Capital (UV0010)
Case #5: Danforth & Donnalley Laundry Products Company
Case #6: Corporate Bonds - They are More Complex than You Think
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J. Course Calendar
Week
2016
January
1
2
3
4
Su
M
Tu
W
Th
F
Sa
3
4
5
6
7
1
8
2
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
22.01.2016
Submit Group List to TA
04.03.2016
Midterm Exam 18:30 - 20:00 @ LSK LT5
31.03.2016
Makeup 18:30 - 21:15 @ CYT LT5
07.04.2016
Makeup 18:30 - 21:15 @ CYT LT5
26.04.2016
Final Exam 18:30 - 20:30 @ LSK LT5
31
February
Su
4
5
6
7
M
Tu
W
Th
F
Sa
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
Su
M
F
Sa
6
7
13
20
27
March
7
8
9
10
11
Tu
W
Th
1
2
3
4
5
8
9
10
11
12
14
15
16
17
18
19
21
22
23
24
25
26
28
29
30
31
April
Su
11
12
13
14
M
Tu
W
Th
F
Sa
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Su
M
Tu
Th
F
Sa
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
May
W
5