FNCE 611001-004: Corporate Finance

Dieckmann / Kaufold
Fall 2023 Syllabus

Prof. Stephan Dieckmann

[email protected], phone: 215-898-4260
Office hours: Monday 1.30 – 3.00pm (in-person room SHDH 2252), Friday
9.00 – 10.30am (zoom)

Prof. Howard Kaufold

[email protected], phone: 215-898-1439
Office hours: Quarter 2, Monday 1.30 – 3.00pm (in-person room SHDH
2338), Friday 9.00 – 10.30am (zoom)

We are available to meet with you during our office hours in-person and on
our zoom channels. Please make an appointment if you want to meet outside
of these times, either in-person or virtual. Teaching Assistants will also hold
office hours; their times will be posted on the Canvas course page.

Course Description

This core course serves as an introduction to business finance (corporate

financial management and investments) for both non-majors and majors
preparing for upper-level course work.

Financial managers, on one hand, are confronted with the universe of

investment opportunities. They must decide which assets to purchase and
projects to undertake. On the other hand, they must decide how to fund such
investments, whether to raise cash from lenders or from shareholders, and
what the best mix of debt and equity financing is. The goal of this course is to
provide students with the necessary skills to make such investment and
financing decisions.

You can think of this course having several parts. First, we study how to
calculate the present value of cash flows, allowing us to determine the value
of bonds and stocks, and to understand the basic rules for investment
decisions. Second, financial managers need to know about a good measure of
risk for their firm, and we formally introduce portfolio theory and the capital
asset pricing model. Third, we give an overview of financing instruments,

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study how corporations issue securities, and discuss market efficiency.
Fourth, we cover debt and payout policies and what ingredients to consider in
the firm’s capital structure decision. Last but not least, there will be an
introduction to option markets.

Class Etiquette & Recordings

Please turn off and put away your phones, they are too distracting for you and
the students around you. You may use tablets for notetaking purposes. Please
respect the classroom as an inclusive learning environment where diverse
points of view and experiences can be shared to facilitate everyone’s learning.
All standards in our Learning Agreement apply.

We expect students to attend all sessions. If you cannot attend a session due
to an excused absence, then we can make a recording available. Requesting a
recording for additional review of the material is also fine. You must request
access to a recording through Canvas.

Course Materials

1. Course notes, quizzes, problem sets, past exams and recordings will be
made available on Canvas. Please see the course schedule below for the
sequence of topics.

2. We will be using Ed Discussion for announcements and additional

asynchronous class discussion. The Ed Discussion system is catered to
interact fast and efficiently with classmates, the TAs, and instructors.

3. The required textbook for the course is:

Principles of Corporate Finance, by Richard Brealey, Stewart Myers,

Franklin Allen, and Alex Edmans, McGraw-Hill

The most current edition is #14. Using edition #13 is also fine. The book’s
way of presenting the material sometimes differs from the way it is done in
the course notes. It is a very good textbook and will be helpful in mastering
the material, as well as a general reference on the subject of corporate finance.
Our goal is to cover material up to chapter 22, and we have indicated on the
course schedule which book chapter corresponds to the respective topic. We
will not explicitly cover chapters 10, 11, 19, and 20 in this introductory course,

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but you will have plenty of opportunities to study project analysis and agency
problems in more advanced courses.

If you find it helpful to see the material presented in different ways, we also
recommend:

Corporate Finance, by Jonathan Berk and Peter DeMarzo, Pearson

Corporate Finance, by Stephen Ross, Randolph Westerfield, and Jeffrey Jaffe,

McGraw-Hill

Requirements

Students are expected to submit 15 quizzes for preparation, 5 problem sets for
practice, and sit for a midterm and a final exam. Grades will be based on:

Attendance & Participation 10%

Quizzes 15%
Problem Sets 15%
Midterm Exam 30%
Final Exam 30%

Attendance & Participation

Our goal is to make the classroom environment as engaging as possible. Your

focused attention and active involvement are important. In addition, we will
be using Ed Discussion for asynchronous class discussion. Rather than
emailing questions, we encourage you to post your questions on Ed
Discussion. We will post a score for attendance & participation at the end of
Q1, and at the end of the semester.

Quizzes

Quizzes are for class preparation, testing on some basic knowledge that is used
in the upcoming class. They are very brief, typically 4 short questions. Please
solve the questions on your own, don’t consult with classmates on these. The
quizzes will be graded automatically, and the answers are available at the end
of class.

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Problem Sets

Problem sets are for practice. They are designed to increase your
understanding of the material, provide early feedback, and help you prepare
for the exams. Solutions to each problem set will be made available soon after
the deadline. Students should prepare the solution in groups of up to 3
students, to be handed in as one write-up per group.

Math for Business, Calculators, and Spreadsheets

Several of the mathematical aspects of this course are covered in Math for
Business. If you have not used a spreadsheet software in the past, we highly
recommend you use FNCE6110 as an opportunity to learn Microsoft EXCEL.
All computations that we perform in this class can be carried out using such
software. It will also be very helpful for solving problem set questions if you
familiarize yourself with the EXCEL tools Goal Seek and Solver by the end
of the second week of class. Some students enjoy using a financial calculator
while studying for this class, but this is not required.

Exams

This class has a midterm exam on October 9 and a final exam during the MBA
core exam period, December 6 to 11. Both exams are mandatory. They will
be in-person exams, to be taken on your laptop. In accord with the guidelines
published by the MBA Program Office, there will be no rescheduling of
exams to accommodate job interviewing, personal travel, etc. If an emergency
or illness should force you to miss an exam, please contact your academic
advisor before the test is given. You will be allowed to take a makeup exam
only if you have a physician's explanation for your absence. We do not allow
verbal appeals of grades. Please provide a written statement to us as to why
there is a problem. All re-grade requests must be submitted within one week
after the results have been posted.

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Ethics Matrix
+
Materials People

Internet content (including

Laptop / other electronics

taking the class this term

Other student(s) in same
Textbooks / Class Notes

Past exams / problems

Past notes / summaries

sections (same term)

FNCE 6110

Wharton student not

Student(s) in other
Corporate Finance

Person outside of
Summary sheet

Chat GPT)

Group of 3
Calculator

Wharton
section
Quizzes A A A A D D D D D
Problem Sets A A A A W D D D D
Exam Preparation A A A A A A W W W D D
Midterm A A A A
Final Exam A A A A
W = Allowed to work together
A = Allowed material D = Discussion of general concepts
Shaded Cell = Not allowed and procedures is allowed but no
sharing of specific answers.
Shaded Cell = Not allowed

The information above covers many common situations but will not cover every circumstance. Remember:
The Wharton Code of Ethics that you accepted requires, among other things, that you represent yourself and your work
honestly, don’t try to gain unfair advantage over other students, follow the instructor’s guidelines and respect confidentiality
of your work and the work of others. Should you have questions, please contact your professor.

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 Course Schedule

Class Date Topic BMAE Chapter in

chapter 13th ed’n
1 Aug 29 Introduction to Corporate Finance 1 1
2 Aug 31 Time Value of Money and Calculating Present Values 2 2
3 Sep 5 Valuing Bonds and Stocks 3, 4 3, 4
4 Sep 7 Valuing Bonds and Stocks 3, 4 3, 4
5 Sep 12 Valuing Bonds and Stocks 3, 4 3, 4
6 Sep 14 Net Present Value and Other Investment Criteria 5 5
7 Sep 19 Investment Decisions using the Net Present Value Rule 6 6
8 Sep 21 Introduction to Risk and Return 7 7
9 Sep 26 Portfolio Risk and Diversification 7 7
10 Sep 28 Capital Asset Pricing Model I 8 8
11 Oct 3 Capital Asset Pricing Model II 8 8
12 Oct 5 Review for Exam
Oct 9 Midterm Exam (7 – 9 pm)
13 Oct 24 Cost of Capital I 9 9
14 Oct 26 Cost of Capital II 9 9
15 Oct 31 Market Efficiency I 12 13
16 Nov 2 Market Efficiency II 12 13
17 Nov 7 Capital Structure I 16 17
18 Nov 9 Capital Structure II 17 18
19 Nov 14 Capital Structure III 17 18
20 Nov 16 Valuation 18 19
21 Nov 21 Investment and Financing Interactions/Options I 18 (Sec 4)/ 21 19 (Sec 4)/ 20
22 Nov 28 Initial Public Offerings (Guest Speaker) 13,14 14,15
23 Nov 30 Options II 21 20
24 Dec 5 Review for Exam
Dec 7 Final Exam
to 11
TBD