FINC5001_Discipline of Finance_2009 Semester 1_FINC50011 - Study Guide

FINC 5001 Capital Markets & Corporate Finance

Semester 1, 2009 Unit of Study Outline

Stream 1: [Lecturer-in-charge]

Lecturer: Mr. Hamish Malloch

Lecture venue Teachers College Lecture Room 448 (Monday 10am – 1pm) Contact details Phone: 02 9036 6273, email: h.malloch@https://www.360docs.net/doc/032425302.html,.au

Office: Merewether Building, Level 4, Room Number 458

Stream 2: [Lecturer-in-charge]

Lecturer: Associate Professor Graham Partington

Lecture venue Teachers College Lecture Room 448 (Monday 2pm – 5pm)

Contact details Phone: 02 9036 9429, email: g.partington@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 413 Stream 3: [Lecturer-in-charge]

Lecturer: Dr. Jiri Svec

Lecture venue Carslaw Lecture Theatre 175 (Monday 6pm – 9pm)

Contact details Phone: 02 9036 6241, email: j.svec@https://www.360docs.net/doc/032425302.html,.au

Office: Faculty of Economics & Business Bldg, Level 4, Room Number 445 Stream 4: [Lecturer-in-charge]

Lecturer: Dr. Joel Fabre

Lecture venue Teachers College Lecture Room 448 (Tuesday 10am – 1pm) Contact details Phone: 02 9036 7869, email: j.fabre@https://www.360docs.net/doc/032425302.html,.au

Office: Faculty of Economics & Business Bldg, Level 4, Room Number 414 Stream 5: [Lecturer-in-charge]

Lecturer: Mr. Angelo Aspiris

Lecture venue Carslaw Lecture Room 250 (Tuesday 2pm – 5pm)

Contact details Phone: 02 9114 0553, email: a.aspris@https://www.360docs.net/doc/032425302.html,.au

Office: Faculty of Economics & Business Bldg, Level 4, Room Number 440

Stream 6: [Lecturer-in-charge]

Lecturer: Dr. Juan Yao / Professor Alex Frino

Lecture venue Peter Nicol Russell Lecture Theatre (Tuesday 6pm – 9pm) Contact details Phone: 02 9036 9057, email: j.yao@https://www.360docs.net/doc/032425302.html,.au

Phone: 02 9351 6451, email: afri1432@https://www.360docs.net/doc/032425302.html,.au

Office: Faculty of Economics & Business Bldg, Level 4, Room Number 439

(Juan Yao); Room Number 406 (Alex Frino)

Stream 7: [Lecturer-in-charge]

Lecturer: Dr. Hui Zheng

Lecture venue Carslaw Lecture Room 250 (Wednesday 2pm – 5pm)

Contact details Phone: 02 9351 6448, email: h.zheng@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 443 Stream 8: [Lecturer-in-charge]

Lecturer: Professor Michael McKenzie

Lecture venue Merewether Lecture Theatre 2 (Wednesday 6pm – 9pm)

Contact details Phone: 02 9114 0578, email: m.mckenzie@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 404 Stream 9: [Co-ordinator and Lecturer-in-charge]

Lecturer: Dr. Reuben Segara

Lecture venue Chemistry Lecture Lecture 4 (Thursday 2pm – 5pm)

Contact details Phone: 02 9351 8790, email: r.segara@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 447 Stream 10: [Co-ordinator and Lecturer-in-charge]

Lecturer: Dr. Reuben Segara

Lecture venue Bosch Lecture Theatre 1 (Thursday 6pm – 9pm)

Contact details Phone: 02 9351 8790, email: r.segara@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 447 Stream 11: [Lecturer-in-charge]

Lecturer: Dr. Kathleen Walsh

Lecture venue Institute Lecture Theatre 1 (Friday 9am – 12pm)

Contact details Phone: 02 9351 6452, email: k.walsh@https://www.360docs.net/doc/032425302.html,.au

Office: Faculty of Economics & Business Bldg, Level 4, Room Number 446 Stream 12: [Lecturer-in-charge]

Lecturer: Mr. Craig Mellare

Lecture venue Peter Nico Russell Lecture Theatre (Friday 2pm – 5pm)

Contact details Phone: 02 9036 6572, email: c.mellare@https://www.360docs.net/doc/032425302.html,.au Office: Faculty of Economics & Business Bldg, Level 4, Room Number 440 Note:Consultation hours for each lecturer-in-charge can be found on the FINC5001 Blackboard site.

1.Unit of study information

1.1.Faculty Handbook description

This unit of study introduces students to the Finance Discipline, where completion of a major can lead to exciting career opportunities such as investment banking, funds management, securities broking, treasury and financial planning. It is an introduction to basic concepts in corporate finance. During the semester you will learn how to process information into a format that you will be able to analyse and interpret to make financial decisions. You will get an opportunity to work in a small team, noting that communication and interpersonal skills are essential for a professional appointment. You will also have the opportunity to discover methods of data-sourcing and research and to apply generalised findings to your own unique situation. This unit places an emphasis on the application of ideas and current practices in the finance industry and it lays the foundation for later units of study within the Discipline.

2.Learning outcomes, learning and teaching activities & assessment

2.1.Intended learning outcomes

Each unit of study has the potential for developing students’ “graduate attributes” in a number of areas. The learning goals for this unit are as follows:

2.1.1 Personal and Intellectual Autonomy:

1.Demonstrate a commitment to lifelong learning by reflecting on the application of unit of study

material to current events.

2.1.2 Research and Inquiry:

2.Demonstrate understanding of financial mathematics and accurately value stocks and bonds and

other instruments.

3.Critically evaluate and effectively implement alternative capital budgeting techniques.

4.Accurately estimate the weighted average cost of capital.

5.Analyse the relationship between risk and return and accurately estimate the Capital Asset Pricing

Model.

6.Succinctly describe the process of trading equity in Australia and assess the efficiency of this

process.

7.Develop coherent arguments on and numerically demonstrate the impact of Dividend Policy and

Capital Structure Policy on company valuations.

2.1.3 Information Literacy:

8.Manage, analyse, evaluate and use information to make corporate finance decisions.

2.1.4 Communication:

9.Confidently, coherently and concisely communicate orally and in writing, to a professional

standard.

2.1.4 Communication:

10.Demonstrate an appreciation of the importance of being able to collaborate with and learn from

others.

0.0.Learning and teaching activities

2.2.1 Prescribed text

An Introduction to Corporate Finance, 3rd Edition, by Frino, A, Z. Chen, A. Hill, C. Comerton-Forde and S. Kelly, Pearson Education, 2006.

2.2.2 Additional Readings

Provided on Blackboard in the Resources folder

2.2.3 Additional recommended texts

Corporate Finance, 5th Edition, by Bishop, S.R, R.W. Faff, B. Oliver and G.J. Twite, Pearson Education, 2004.

Principles of Corporate Finance, by Brealey, R.A., S.C. Myers, G Partington and D Robinson, McGraw Hill, Inc., 2001.

2.2.4 Blackboard and other electronic sites

This unit will make extensive use of Blackboard. All major announcements will be made using Blackboard. Lecture notes and tutorial solutions will be posted on Blackboard.

Three Discussion Boards will be established on Blackboard:

?Administrative Questions;

?Major Assignment Questions; and

?Student Forum (not moderated by staff).

Students are expected to check Blackboard at least twice a week. Staff will respond to questions on the Administrative and Major Assignment forums at the end of each week.

2.2.5 Contact policy

All staff are available during their designated consultation time or by appointment only.

Questions about course content should be directed to your lecturer in class or during their consultation times.

All communication with staff, other than that of a private nature, should be made using the appropriate Blackboard Discussion Board. Any communication of a private nature relating to grades or other issues should be directed to your lecturer via email.

2.3.Assessment

Assessment

Task Weight Due

Date

Description Related

Learning

Goals

Additional

Comments

Mid semester-

test 20% Saturday

28

March 2009

at 10am

Multi-choice

questions

2 Non-

programmable

financial calculators

allowed

Major assignment 25% 4pm,

Friday

15 May 2009

Risk and return

analysis to be

completed in

groups

3,4,8,9,10 Questions about the

assignment will only

be answered on the

“Major Assignment

Forum” on

Blackboard

Final examination 55% TBA – Exam

Period

15/06/09 to

27/06/09

3 hour written

paper comprising

short answer,

problem solving

and discussion

questions

2-7,8,9 Non-programmable

financial calculators

allowed

Total 100%

0.0.Explanation of assessment

Face-to-face teaching in FINC5001 is comprised of one two-hour lecture and one one-hour tutorial per week for one semester. In order to complete this unit successfully, students are expected to meet the following minimum criteria:

Satisfactorily complete all assessment tasks;

Attend at least 10 out of the 12 tutorials;

Complete weekly required readings before class;

Complete assigned tutorial questions before class;

Participate in tutorial discussions; and

Attend Lectures

2.4.1 Mid-semester test

The mid-semester exam will be held at 10am on Saturday 28 March 2009. Each student will be allocated to an exam venue. All lecture / readings / tutorial material from weeks 1 to 3 is examinable. The exam will be of a multiple choice variety. During this exam you must display your student ID card on your desk. The only other material you are allowed on your desk is a pencil, an eraser and a calculator. The purpose of this assessment is to give you an early indication of your understanding of the unit of study material. The material covered in the first three weeks of semester forms the foundation for the remainder of the semester. You must sit the test at your assigned time. Details will be posted on Blackboard the week prior to the test.

2.4.2 Major assignment

Details of the major assignment will be made available on Blackboard in the week commencing 23 March (i.e., Week 4)

To ensure that everyone in the unit of study has equal access to information, questions about the assignment will only be answered on the Blackboard “Major Assignment” Discussion Board. Questions will be answered at the lecturer’s discretion. Questions will not be answered in any other forums. Students must not answer questions in this forum.

The major assignment must be completed in groups of 3 to 5 people. Each of the team members must be in the same lecture stream. This task is designed to promote teamwork. Students must lodge a Group Formation and Agreement Form with their lecturer in class in Week 5 (i.e. week commencing 30 March). The Group Formation and Agreement Form are available on Blackboard.

This group assignment requires each student to complete an individual draft response to the assignment question. While we would expect students to meet and discuss issues related to the assigned question, ultimately the draft report should be each students own individual work.

Students will then meet as a group and combine their individual responses to produce a final group report. Only the final group report is graded, however all individual drafts must be submitted. Students must also submit a reflective journal that details their experiences.

While the assignment is a group task which allows students to allocate different parts to different group members, students are encouraged to familiarise themselves with all components of the assignment as there could be a question in the final exam which draws on what you have learnt from the assignment. The submission timetable for the assignment is as follows:

Description Date Location

Group Formation and

Agreement Form

Week 5 (i.e. commencing 30 March) In lectures

Draft report By 4pm Friday 1 May Digital Drop-off Box

Final Report By 4 pm Friday 15 May Assignment box Level 1,

Economics & Business Building

(H69) & Digital Drop-off Box

Group assignment self-reflective journal By 4 pm Friday 15 May Assignment box Level 1,

Economics & Business Building

(H69)

You must attach a Group Coversheet to the front of your assignment. This coversheet must be signed by all group members. The coversheet is available from Blackboard. Late penalties detailed in section 2.4.4 will be applied to this assessment task.

2.4.3 Final Exam

The final exam will be a combination of short answer, problem solving and discussion questions. It will cover all material included in the unit of study. Further details about the Final Exam will be provided in lectures in week 13.

Students are required to sit the final exam at the scheduled exam time. No early exams will be given under any circumstances.

2.4.4 Penalties for late assessments

Students will be penalised at a rate of 10 percent of the possible marks per day for assignments received after the due time and date. Note that the awarded grade will be reduced to zero if the assessment is handed in 9 days after the due date.

2.4.5 PASS Program: Peer Assisted Study Sessions

The Faculty funds an additional program for students called PASS in this unit. PASS stands for Peer Assisted Study Sessions. Research from the UK, USA and Australia has consistently demonstrated that students who regularly attend PASS are likely to improve their academic performance and are less likely to fail or drop out. In 2008, 97% of respondents to end of semester, anonymous surveys reported they learnt during PASS and 97% reported that they enjoyed the program. One student commented “I loved everything about PASS – it was GREAT for clarifying ideas from class [and] helped my studies. I also had the opportunity to make many friends though PASS”.

What’s in it for you?

Weekly, hour-long sessions lead by senior, high achieving students.

A focus on mastery of course content through discussion and peer learning.

Extra learning opportunities, including problem solving practice where relevant, in areas directly related to understanding the concepts more thoroughly.

Great opportunities to meet other students and study effectively together in relaxed, interactive, small groups.

Registering for the PASS program

Attendance in PASS is voluntary but highly recommended. Registrations open the first week of semester. PASS starts in week 2 of semester. Spaces in the PASS program are limited. Students register for PASS online at: https://www.360docs.net/doc/032425302.html,.au/pass/

Email all enquiries about the PASS program to: pass@https://www.360docs.net/doc/032425302.html,.au

What’s students said last year

PASS gave me more opportunities to revise the materials covered in class.

I liked doing practice questions that were more complex and ‘real world’ than the textbook ones.

This made the tutorial work easier.

I liked the relaxed atmosphere, the support, and never being judged for not understanding the topic.

PASS gave me a lot of confidence!

In PASS I could collaborate with other students over things I struggled with and learn other approaches to learning.

0.0.Workload and minimum requirements

Weightings for each assessment task are outlined in the table in section 2.3. Careful consideration should be given to allocating sufficient time to prepare all work for submission, especially the major assignment. Students can expect to spend a minimum of 20 hours preparing the assignment. Additional practice questions are highly recommended. Please note that the Academic Board student workload for six credit point units equates to an average of 9-12 hours of student effort per week per 13-week semester.

0.0.Feedback

The mid-semester is a multiple choice exam. Grades will be distributed as soon as they are processed. The major assignments will be returned as soon as possible. Each assignment will include comments and a comprehensive marking guide to enable students to see how their grade was derived. Workshop tasks will not be graded however attendance is compulsory. Students failing to attend 80% of workshops may be deemed to have failed to meet the minimum requirements of the course.

1.1.Academic honest and plagiarism

Commencing students should complete the academic honesty module available via Blackboard before their first assessment submission. Students should refer to the University’s policies on academic honesty and plagiarism (https://www.360docs.net/doc/032425302.html,.au/policy), the Faculty’s procedures for dealing with allegations (https://www.360docs.net/doc/032425302.html,.au/sio) and use the assessment cover sheet.

Academic honesty is important to protect students' right to receive due credit for work submitted for assessment. It is clearly unfair for students to submit work for assessment that dishonestly represents the work of others as their own and gain marks and degrees, which are not based on their own efforts and abilities. Deliberate breaches of academic honesty constitute academic misconduct. These breaches include: plagiarism, fabrication of data, recycling previously submitted material, engaging someone else to complete an assessment on one’s behalf and misconduct during supervised assessments.

The penalties for academic misconduct may include: a mark of zero on the assessment; a fail grade in the unit of study, additional assessment (including an unseen exam), and reference of the matter to the University Registrar.

2.Student evaluation and feedback

A number of changes have been made to this unit in response to feedback from students that completed the unit last semester.

Previously, a number of students indicated that whilst they appreciated a review of the mid-term exam, they were unable to identify specific multiple choice questions that they had incorrectly answered. This semester, students will be able to identify all their answers before attending the review lecture for the mid-term exam. This is aimed to help students identify their mistakes and improve upon them.

A few students indicated that they found it difficult to form groups for the Major Assignment For this reason we will dedicate some time to help you with this during the first few weeks of semester. In addition, students will be given the opportunity to work through tutorial problems in groups.

Last year we established a Student Discussion Board for students to help one another with problems related to the unit. Questions on this Discussion Board were not addressed by staff. Many students indicated that this was a useful resource, so we will establish this at the start of semester. However, a small number of students misused this resource and used it to seek answers to assignment questions. This is not appropriate Blackboard usage. Guidelines have been established and are provided on

Blackboard. Students that fail to comply with these guidelines will have access to Blackboard denied and may face further disciplinary action for Academic Misconduct.

Students are welcome to provide feedback to staff at anytime during the semester. This feedback may be provided via the Blackboard Discussion Board, email or during staff consultation times.

3.University policies and services

All students must comply with all Faculty and University policies and follow appropriate procedures.

Faculty policies are contained in the Administration Manual for Students at

https://https://www.360docs.net/doc/032425302.html,.au/StudentManual/ (e.g. special consideration, appeals, late submission, feedback mechanisms, academic honesty and plagiarism). Assistance is available from the Faculty’s Student Information Office at https://https://www.360docs.net/doc/032425302.html,.au/sio/

University policies at https://www.360docs.net/doc/032425302.html,.au/policy/ include: academic honesty

https://www.360docs.net/doc/032425302.html,.au/ab/policies/Academic_Honesty_Cwk.pdf, plagiarism

https://www.360docs.net/doc/032425302.html,.au/senate/policies/Plagiarism.pdf. Assistance is available from the University’s Student Centre https://www.360docs.net/doc/032425302.html,.au/studentcentre/

The code of conduct is an important policy which outlines the University’s expectations about treating all staff employees and students with respect, dignity, impartiality, courtesy and sensitivity and refrain from acts of discrimination, harassment or bullying.

https://www.360docs.net/doc/032425302.html,.au/ab/policies/Student_code_conduct.pdf

Links to other student services and resources are included on Blackboard and on the Faculty’s Learning and Teaching website https://www.360docs.net/doc/032425302.html,.au/students/learningsupport/ (e.g. counselling services)

4.Topic and assessment schedule

Topic Readings Tutorial Questions Week Week

Begins

1 2 March Introduction FCHCK Chapter 1 No Tutorial

2 9 March Review of Financial Mathematics FCHCK Chapter 2 FCHCK Chapter 1: DQ 1, 9, 10;

PQ 3, 5, 6, 9, 11

3 16 March Valuation of Stocks and Bonds FCHCK Chapter 3 FCHCK Chapter 2: PQ 25, 26, 27, 28, 29

4 23 March Capital Budgeting FCHCK Chapters 4 and

5 FCHCK Chapter 3: PQ 3, 9, 10, 12

Saturday 28 March / EXAM on WEEKS 1-3

Lecture, reading & tutorial material are

examinable

5 30 March Risk and Return FCHCK Chapter

6 FCHCK Chapter 4: DQ 2; PQ 5

FCHCK Chapter 5: DQ 1; PQ 2, 7

6 6 April Mid-Semester Exam Review

AVCC Common Week

7 20 April Capital Asset Pricing Model (CAPM) FCHCK Chapter 7 FCHCK Chapter 6: DQ 6, 8 13;

PQ 7, 9

8 27 April Company Cost of Capital FCHCK Chapter 8 FCHCK Chapter 7: DQ 5, 13, 15;

PQ 2, 6

9 4 May Australian Equities Markets FCHCK Chapter 9 FCHCK Chapter 8: DQ 4, 8;

PQ 2, 3, 4

10 11 May The Pricing Efficiency of Capital Markets FCHCK Chapter 10

FCHCK Chapter 9: DQ 6, 9, 10, 14; PQ 1

Aitken, M., P. Brown, A. Frino and T. Walter,

(1995)*

11 18 May Dividend Policy FCHCK Chapter 11 FCHCK Chapter 10: DQ 1, 7, 8, 9, 10; PQ 1

12 25 May Capital Structure Policy FCHCK Chapter 12 FCHCK Chapter 11: DQ 3, 5;

PQ 1, 8, 9

13 1 June Review FCHCK Chapter 12: DQ 1, 10; PQ 11, 12

14 8 June Stu Vac No Tutorial

FCHCK denotes Frino, Chen, Hill, Comerton-Forde, and Kelly, An Introduction to Corporate Finance, Pearson Education, (2006)

* denotes Additional Readings which are provided on Blackboard in the Resources Folder.

DQ denotes Discussion Questions from FCHCK.

PQ denotes Practical Questions from FCHCK.

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