syllabus fundamentals of finance summer 2014(1)

INSTITUTO TECNOLOGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY

EGADE BUSINESS SCHOOL-Monterrey.

MASTER IN INTERNATIONAL BUSINESS

Fundamentals of Finance

GA4081

July-August 2014

Professor:

Dr. Rocío Gómez-Tagle Rangel

e-mail: [email protected]

Phone: +52- 81- 8625 6172

Secretary: Mrs. Carmen Lara

e-mail: [email protected]

Phone: +52-81- 8625 6029

COURSE HOURS

Tuesdays & Thursdays 18h00 to 21h30

Room EG217-18

mailto:[email protected]

Course description

The Fundamentals of Finance course is an introductory course to the organizational financial functions. This course is the basis for more advanced courses in the financial area but will help the students to develop a clear vision around the financial functions and to develop the needed abilities to interact efficiently in the financial topics of a firm.

Course objectives:

This course will: Provide students with the fundamental knowledge and tools in finance. Enable students to understand financial instruments and to make investment decisions.

After finishing the course, the student should: Know and understand the models, tools and concepts that are used in finance to analyze

and understand the financial problems that a firm faces so he (she) will take reasonable decisions when solving them.

Pedagogical System:

Text and paper Readings. Cases.

Problems solving.

Discussions about readings and notices.

Educational intentions

To develop people o With courage to face changing environments with optimism and energy.o Who act with honesty and integrity in any area of their lives, personal of

professionally. To promote in the student team-work activities with the mentality that the team success

depend on the individual commitment.

Learning Methodology

Individual activities

1. Readings .The student must read the assigned bibliography before the class session. This will help and promote the discussions in class and help him (her) to solve the cases or problems that are assigned to be solved by team.

2. Mid Term & Final Exams .These exams must be answered individually in the date assigned.

3. Team work evaluation .The student must evaluate his (her) team. Every team member must assign a grade to the others, assigning a 10 to the team member with the best degree of commitment, participation and proposals to the problems or case solving; the second student will get a 9 and the third student an 8. There is no auto-evaluation. This information will be sent CONFIDENTIALLY to the professors by e-mail. These notes will be part of the participation grade.

Team activities

Teams will be organized with 3 to 4 members selected by the students on the first day of class. This team will be maintained along the course to work in problems, cases and final exam

4. Problems / Case solving. Problems to be solved are those with a SOLUTION AT THE END OF THE BOOK

5. Term Paper.

A. Topic: Financial Analysis of a company currently quoted in the Mexican Stock Exchange.

B. This activity is team-work developed (the same team working together in this class along this quarter).

C. Each week, starting on the third session, every team must show advances in the development of this article. A GOOGLE DOC file is open for this activity so every team will be able to develop its article using an up-to-date technology. Every team member must provide input to the development of every week´s topic.

D. Topics to be included in the article are exactly the same analyzed along the course:

o Financial Analysis.o Analysis and Valuation of Stocks and Debt issuances.o Analysis of Risk and Return of the company.o Analysis of the Weighted average cost of capitalo Analysis of capital structure

E. The article must be written following the structure of

Introduction. Company Analysis. Team proposals to the company. Conclusions. Bibliography.

Code of Ethics

Please refer to the Legislación Académica para Alumnos de Maestría y Doctorado 2009 and the recently signed Tecnologico de Monterrey Code of Ethics, We will not tolerate any form of academic misconduct and will not hesitate to apply the full power of the academic legislation. We will see that you fail the class and suffer any other academic sanctions that may apply hence forth.

Evaluation:

Activity Weight

Mid Term & Final examinations50%

Homework

(Problem solving, cases analysis)20%

Term Paper25%

The term paper will be graded 80/100 and only with the evidence of uploading it to Conacyt CVU it will be graded 100/100.

Attendance and participation5%

2 points assigned by team members and 1points assigned by professor. 2 points will be added with the evidence of having an updated Conacyt CVU.

Bibliography:

Basic Bibliography

Ross, Westerfeld, Jaffe, Jordan. “CORPORATE FINANCE”. McGraw Hill. 9th edition. 2009.

Recommended Bibliography:o Brealey, R. A./Myers, S. C. Principles of Corporate Finance. 10th edition. Mc

Graw-Hill. 2010

o Brigham; Erhardt. Financial Management: Theory and Practice. 13th edition. Thomson-SouthWestern. 2010.

Cases:

How Cash Connects with Everything Else: Understanding the Cash Flow Statement Karen Berman, Joe Knight and John Case. HBS 6559BC

Cash Flows and Proformas UV 2260

New Heritage Doll Company HBS 4212

Shareholders Equity Accounting and Analysis HBS 111055

Kohler HBS 205034

Marriot Corporation: The Cost of Capital HBS298-101

Blaine Kitchenware Capital Structure HBS 4040

Course Contents:

Session TopicActivities

1Introduction to Corporate Finance

Read chapter 1 (RWJ)

2Financial Statements and Cash Flow


Read Appendix 2A

Read: How Cash Connects with Everything Else: Understanding the Cash Flow Statement Karen Berman, Joe Knight and John Case.

Solve chapter 2 problems

3Financial Statements Analysis and Financial Models


Solve case Cash Flows and Proformas

Work on Final Term paper.

4Discounted Cash Flow Valuation


Solve Problems in chapter 4

Work on Final Term paper.5

Net Present Value and Other Investment Rules

Read Chapter 5

Solve case New Heritage Doll Company


MID TERM EXAMINATION

Written exam, individually solved and applied in the classroom

7 Interest Rates and Bond Valuation




8Stock Valuation


Read Shareholders Equity Accounting and Analysis

Solve Case Kohler


9 Alternative Investment Rules

Net Present Value and Capital Budgeting




10 Capital Market Theory Read chapter 10 & 11(RWJ)

Solve Case Marriott


11 Capital structure Read Chapter 16 and 17 RWJ

Solve Case Blaine Kitchenware


FINAL EXAMINATION Written exam, individually solved

and applied in the classroom

10 Minutes presentation of the most important highlights of the Final Term paper of every team.

Case Analysis Methodology

Case Analysis will be done following three stages:

Stage 1: Individual Activity

Stage 2: Collaborative Analysis.

Stage 3: Plenary Session in the classroom.

Stage 1: Individual Activity

Objective of Stage 1: To develop the basis for collaborative work.

Description of Stage 1:

In this stage the student should read and carefully analyze the case.

Write his (her) analysis of the case. This document should include:

o Problem found.

o Critical aspects founded (people, resources, activities, etc).

o Possible solutions.

Every student should write these elements in the section designated in the Course Blackboard Group Pages.

This stage will prepare the student to discuss the case with his (her) team.

Stage 2: Collaborative analysis (team discussion).

Objective: To exchange knowledge and experiences with the team members to widen the analysis of the situation, problem or case. The starting point is every member contribution in stage 1.

Description of stage 2:

It is required to organize the team and assign roles to become efficient in work and time

Read the individual analysis of everyone of the team and start ideas exchanges.

Develop questions and answers.

Support the initial proposals through the ideas proposed by the team members.

Choose and develop a solution or solutions.

Once you shared your different points of views and discussed possible solution alternatives, every team must prepare a report titled “Stage2_preliminary_Team#_CaseXX” including:

o Introduction (Background and general description) to the situation.

o List of critical points related to the situation (people, resourses, etc).

o Reflections about pro/cons effects of the information provided.

o Develop a solution proposal (s) supported by the facts of the problematic situation, theory, concepts read about the topic analyzed and additional required research.

o Bibliography used.

One member of the team should upload the file to the Group Pages in the Stage 2 section for the specific case.

Stage 3: Plenary Session.

Objective of Stage 3: To exchange knowledge and experiences with other teams to widen and open the analysis of the problematic situation analyzed. The starting points are the reports prepared by every team.

Decription of stage 3:

Active discussion in the plenary session it is required to every student to share his knowledge, debate his (her) points of view and answer the professor questions.

In this section you are allowed to question to the other teams, reply to those with contrary positions to your team or question “weak” arguments stated by other teams with your same statement.

At the end of the Plenary Session the professor will

o Summarize the most important issues of the case.

o Will provide feedback to every team

At the end of the Plenary Session, every team should:

o Read again its own report of Stage 2 and add the new ideas acquired in the plenary session.

o Rewrite the proposed solution (s) or keep the same

o Provide an evaluation of the team activity related to:

What helped get the work done and reach the learning objectives?

What did not help to get the work done and reach the learning objectives?

Compromises acquired by the team members.

One of the team members should upload the final report in the Team Group Pages. The file should be named “Stage3_definite_Team#_CaseXX”

Note of the professor:

I encourage every team that in the following meetings every team member met the requirements and observations done by the other team members.

Please keep in mind that

Your learning will always impact in the other team-members learning.

Everyone should be responsible of his (her) role in the team in the benefit of everybody.

A complete and precise communication is a requirement of a successful team in every organization, institution or society.

Exchange help and information to others with a good attitude will help to the confidence of the team.

Please, do not forget to evaluate your team.

syllabus fundamentals of finance summer 2014(1)

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