6N:225 MANAGERIAL FINANCE
University of Iowa
Prof. Art Durnev
Office S386
www.artdurnev.com
Email: artem-durnev@uiowa.edu
Phone: (319) 335-2626
Office hours: Mondays and Wednesdays, 2.00-3.00
COURSE OBJECTIVES
The objective of the course is to provide an overview of the basic concepts and principles of
financial management. The goal is to give insight into the decision making process of financial
managers. Topics to be covered include the time value of money, the tradeoff between risk and
return, valuation techniques, capital budgeting, capital structure, the role of financial markets,
corporate governance, and risk management.
TEXTBOOK AND CASES
Textbook: Jonathan Berk and Peter De Marzo, Corporate Finance, 2nd edition
Case 1: Globalizing the cost of capital and capital budgeting at AES: HBS case 9-204-109
Case 2: Hedging currency risks at AIFS: HBS case 9-205-026
Handout: Models of corporate governance: who is fairest of them all?
GRADING
Midterm Exam:
Final Exam:
2 Group Cases:
Participation:
30%
35%
30%
5%
EXAMS
The exam dates will be fixed. You must take the exam on these dates, even if you have other
exams on the same day or during the same week. Extracurricular activities and family visits are
not valid reasons to request an alternative exam date. If you miss an exam due to medical
reasons, a doctor’s note should be presented.
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CASES
Cases are an integral part of this course and constitute 30% of your grade. The cases are to be
done in groups of up to 5 people. All group members are expected to contribute to the case
analysis. You will be required to evaluate your teammates’ contribution. A case write-up has to
contain an executive summary, the key questions addressed, and a conclusion. The case write-up
must be no more than 4 pages long (excluding references and appendixes) plus appendices with
the font size of 11 and line spacing of 1.5. All tables and figures must be properly referenced in
the text. Note that case studies rarely have one correct answer.
IN-CLASS PRACTICE PROBLEMS
Practice problem sets and their solutions will be posted. They will be discussed during class, and
they are NOT to be handed in for grading. However, it is very important that each of you tries to
solve all the questions and understands the solutions provided. These questions will be very
valuable in helping you prepare for exams.
CLASS PARTICIPATION
You have to actively participate in class discussions to earn class participation grade which
constitutes 5% of your final grade. If you are frequently absent from class, your class participation
grade will be reduced.
ARTICLES
I will be assigning articles that cover the current affairs in the financial industry. The articles will be
discussed in class and your active participation will be reflected in participation grade.
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SUBJECTS
1. FINANCIAL STATEMENT ANALYSIS
Chapter 2
2. TIME VALUE OF MONEY
Chapter 4
3. CAPITAL BUDGETING
Chapters 6 and 7
4. VALUATION OF BONDS
Chapter 8
5. VALUATION OF STOCKS
Chapter 9
Midterm Exam
6. CAPITAL STRUCTURE
Chapters 14 and 15
7. CAPITAL MARKETS AND PRICING OF RISK
Chapter 10
8. PORTFOLIO OPTIMIZATION
Chapter 11
9. COST OF CAPITAL ESTIMATION
Chapter 12
Case 1: Globalizing the cost of capital and capital budgeting at AES.
10. CORPORATE GOVERNANCE ISSUES
Chapter 29
Handout: Models of corporate governance: who is fairest of them all?
Article to read: Explaining Differences in the Quality of Governance Among Companies: Evidence
from Emerging Markets (A. Durnev and E. H. Kim), Journal of Applied Corporate Finance, Vol.19,
Issue 1, 16-24.
11. FINANCIAL OPTIONS AND RISK MANAGEMENT
Chapter 20
Case 2: Hedging currency risks at AIFS
Final Exam
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Student Profile
6N:225 Managerial Finance
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