Financial Application
2011
Faculty
Dr. Jerry Song
The University of Texas, Arlington
Tel: 310-699-6409, Fax. 310-550-8213
Email: jerrysong@yahoo.com
Syllabus
Objectives
Effective utilization of capital markets, both domestic and foreign, is essential for a
thriving firm. Leaders must be able to assess relative benefits and costs of both short-term
and long-term sources of expansion capital not only within their home markets but also
within the context of global markets. Evaluation of and access to foreign capital markets
requires an understanding of characteristics of international financial instruments, the
operation and structure of foreign capital markets and fundamentals of measurement and
management of foreign exchange exposure
In this class, we will learn how to make financing decisions within our home markets and
within the context of global financial markets, where we will examine the sources of
financing and whether there is an optimal mix of financing. We will also provide special
introduction to global IPOs and cross border merger and acquisition process. Finally,
there is valuation, where all of the financial decisions made by a firm are traced through
to a final value, in venture capital financing, public listing or merger and acquisition.
The text book will only provide the basic knowledge and information for this class.
More advanced training is going to be provided through the real world case
analysis, analytical tools and models we are going to introduce in the class. After
finishing the class, you will gain hands-on experience in making financial and
investment decisions.
Course Readings
Required Text
Ross, Stephen A., Randolph W. Westerfield and Jeffrey Jaffe, Corporate Finance, 9th
edition, Irwin/McGraw-Hill (RWJ).
Special Topics, PowerPoint Presentation (PPT)
Tentative Class Arrangement
Day 1 Objectives in Global Financial Management
Reading Materials
1. Introduction to Global Financial Management
2. Valuation Methods
Discussion: China Economy 2010-2011
Day 2. Risk, Return and CAPM
Reading Materials
1. How to Measure Risk and Return
2. International CAPM
Case Study: Disney in China
Discussion: Is valuation a Black Art?
Day 3 Global Capital Markets
Reading Materials
1. What have happened in the Wall Street?
2. New Trends in Global Capital Markets
3. Private Equity vs. Venture Capital
4. Understand Hedge Fund
Discussion: Financial Markets in the US and China:
Discussion: Subprime and Bernie Madoff
Discussion: Investment Philosophies
Day 4 How to Access Global Capital Markets
1. Equity Financing
2. Cross-Border Merger and Acquisition
3. Financial Derivatives
Discussion: Technical Issues Related to Public Listing
Case Study: China.Com
Case Study: Compaq
RWJ Ch.1
RWJ Ch.5, 6
PPT
RWJ Ch.9
RWJ Ch.10, 12
PPT
PPT
PPT
PPT
PPT
PPT
PPT
RWJ Ch.19
RWJ Ch. 29
RWJ Ch. 22
PPT
PPT
Grading Policy and Class Project Requirements
You will write a case in this class. This will be 60% of your grade. The other 40% will be
a take home/open book examination. I expect you to use the tools and decision rules
learned in the class to analyze the case.
What you need to do before the class:
The second day of the class, I need the following information from you for the case.
1. A list of the members of your group.
2. A short description, the title and a detailed outline of your case.
3. A summary of what you have done so far, and a schedule for completion of the case
(using the Group Work Plan excel file compiled for the class).
4. Familiar yourselves with the International Database and China Database compiled
for this Class.
5. Familiar yourselves with financial analysis models compiled for this class.
The Case Format should be as follows:
1. An one page executive summary describe the case and its relevance to this class
2. The detail of the case
3. Your analysis of and solution to the case.
4. Data resources (i.e. spreadsheet in Excel, company annual reports, press
clippings, prospectus, and online databases).
5. A copy of the PowerPoint presentation
6. An email from each group member detailing the percentage contributions of each
member. The contribution should not just reflect the time devoted but the quality
of the time. If you fail to send an email, I assume that your vote for the
contributions is for equal.
Case Content
1. The case has to have some finance content related to this class.
2. The case needs to provide a valuation, i.e. how much is a particular company worth.
3. The case needs to use detailed financial statement information. Value using discounted
cash flows as well as market comparables.
4. You need to provide an analysis of risk and the cost of capital.
5. You can use the financial projection and valuation models we introduced in the class.
Suggested Case Titles
1. The company you work for.
2. Public companies listed on NYSE, NASDAQ or AMEX.
3. Other well-established private companies or start-up companies which you have
access to their financial statements.
Note: Most information can be found in our International Database and China
Database