90013 2020S2 Subject Guide PDF

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FNCE90013 Case Studies in Finance SUBJECT GUIDE

Semester 2, 2020

Prepared by Nicholas Crain [email protected]

Department of Finance Faculty of Business and Economics

Subject Outline Introduction Welcome to Finance 90013 This is a capstone subject for the program consisting of selected case studies on financial management, investment management, portfolio analysis, derivatives and risk management, mergers and acquisitions, raising capital and other topical issues. The case studies describe actual business situations which require analysis and decision-making.

Subject Overview and Aims This subject aims to improve your understanding on how to apply your theoretical knowledge to real-world issues in finance using case studies.

Learning Outcomes Learning Outcomes and Generic Skills To view the subject objectives and the generic skills you will develop through the successful completion of this subject, please see the University Handbook: https://handbook.unimelb.edu.au/view/current/FNCE90013

Eligibility and Requirements To view the eligibility and requirements, including prerequisites, corequisites, recommended background knowledge and core participation requirements for this subject, please see the University Handbook: https://handbook.unimelb.edu.au/2020/subjects/fnce90013/eligibility-and-requirements

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Academic Staff Contact Details Please see the subject LMS site for full contact details of the teaching staff in this subject. Subject Coordinator Contact Details Name: Nicholas Crain E-mail: [email protected] Phone: 3 8344 0635 (office, available if we return to campus) Consultation Hours: Wednesday, 1 PM-3 PM, schedule via appointments in LMS. Other times are available by appointment.

E-mail Protocol Please note that we are only able to respond to student e-mails coming from a University email address. Please do not use personal e-mail addresses such as Yahoo, Hotmail or even business e-mail addresses. E-mails from non-University e-mail addresses may be filtered by the University’s spam filter, which means that we may not receive your e-mail. All correspondence relating to this subject will only be sent to your University e-mail address. Note that you must first activate your University e-mail address before you can send or receive e-mails at that address. You can activate your e-mail account at this link: http://accounts.unimelb.edu.au/. I welcome e-mails with questions or comments about the course. I try to respond to e-mails promptly. However, it is impractical for me to be on e-mail constantly. In most cases, I will post the answers to questions I receive via e-mail on LMS. Before emailing me, please check the LMS discussion board and lecture page to see if your question has already been answered. Note: I will not post information on who asked a question.

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Lectures Zoom Lectures Each week I will lead a live lecture via Zoom that covers the weekly case. The link to each week’s Zoom lecture will be available through LMS, and they will take place during the class time given by the University timetable. Monday

1:00 PM – 4:00 PM

(Stream 1)

Tuesday

5:15 PM – 8:15 PM

(Stream 2)

During the first 30 minutes, a student group assigned that week’s case will give a presentation and take questions. Afterwards, I will lead a discussion about the case.

Zoom Lecture Participation Requirements You are not required to join the Zoom lectures. However, before each lecture, I will assign discussion questions to groups in the class. Your participation mark for the course will be based on how your group’s answers contribute to class discussion over the term. There is no need to prepare a presentation for these discussion questions. If it is helpful, you may share some analysis from your screen, otherwise, simply turn on your video and offer your group’s thoughts.

Pre-recorded Lectures In addition to the Zoom lectures, I will post a small number of pre-recorded lectures covering background material. While these lectures will be pre-recorded, I will leave time during our Zoom lectures to address your questions. I will not post a pre-recorded lecture every week. For example, I will post some pre-recorded lectures on Merger and Acquisition that will serve as a background for all cases in weeks 3-6. I’ll add additional material on LMS if needed to address questions that come up during the term.

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Lecture Schedule

The following is the preliminary schedule for the course. Any changes to the schedule will be announced on LMS. Week

Date Commencing

Pre-Recorded Lecture

1

3 Aug

Course Q & A Session

2

10 Aug

Valuing Uber (No Preparation Required)

3

17 Aug

Creating the First Public Law Firm: The IPO of Slater & Gordon Limited

4

24 Aug

Valuing SNAP after the IPO Quite Period

5

31 Aug

6

7 Sep

Dow’s Bid for Rohm and Haas

7

14 Sep

The Acquisition of Consolidated Rail Corporation

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21 Sep

Cost of Capital

Globalizing the Cost of Capital and Capital Budgeting at AES

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28 Sep

Risk Management

Hedging at Porsche

M&A

Live Lecture / Case

The Merger of Hewlett-Packard and Compaq

No Class

5 Oct 10

12 Oct

Real Options

MW Petroleum Corporation

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19 Oct

Private Equity

Bidding for Hertz: Leveraged Buyout

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26 Oct

Oregon Public Employees Retirement Fund: Push and Pull Over GP / LP Compensation

Lecture Slides Lecture slides will be placed on the LMS page for this subject after each zoom lecture. Lecture Capture I will post the capture of each Zoom lecture to LMS. In general, I will delay posting the lecture capture from Monday’s stream until the Tuesday stream has finished for the week.

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Private Tutoring Services Faculty has become increasingly concerned about the existence of a number of private tutoring services operating in Melbourne that heavily target University of Melbourne students enrolled in FBE subjects. Students are urged to show caution and exercise their judgement if they are considering using any of these services, and to please take note of the following: Any claim by any of these businesses that they have a “special” or “collaborative” or “partnership” style relationship with the University or Faculty is false and misleading. Any claim by a private tutoring service that they are in possession of, or can supply you with, forthcoming University exam or assignment questions or “insider” or “exclusive” information is also false and misleading. The University has no relationship whatsoever with any of these services and takes these claims very seriously as they threaten to damage the University’s reputation and undermine its independence. It is also not appropriate for students to provide course materials (including University curricula, reading materials, exam and assignment questions and answers) to operators of these businesses for the purposes of allowing them to conduct commercial tutoring activities. Doing so may amount to misconduct and will be taken seriously. Those materials contain intellectual property owned or controlled by the University. We encourage you to bring to the attention of Faculty staff any behaviour or activity that is not aligned with University expectations or policy as outlined above.

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Assessment Assessment Overview Your assessment for this subject comprises the following:

Assessment Task

Individual or Group

Due

Weighting

Group Case Presentation

Group

Weeks 3-12 (by group)

30%

Class Participation

Group

Weeks 3-12

10%

Final Examination

Individual

Assessment period

60%

Case Study Groups You will work in groups to present one of the weekly cases, and to prepare the discussion questions I assign. Choose a group during the first week of class: 

You must form groups with students from your stream.



After week 1, I will place any students who have not found a group in a new or existing group.



After week 2, it will require my permission to change groups.

Together with your group fill out the Group Presentation Preference sheet under the Assignments tab in LMS by August 12th. Missing the deadline will not count against your course grade, but I won’t be able to take your preferences into account when I assign case presentations.

Group Case Presentations Each group will be responsible for preparing a 30-minute presentation for one case during the term. Find additional details under the Assignments tab on LMS. The presentation will contribute 30% to your overall grade.

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Class Participation Cold calling on students during Zoom meetings doesn’t seem to work very well. So, starting in week 3, I will assign some of the questions I want to ask during the weekly Zoom lecture to different groups before the lecture. I expect that each group will be assigned a question roughly once every two weeks. Please ensure that someone in your group is prepared to answer the assigned question during the zoom lecture for your stream. Answer’s that contribute to our class discussion will be awarded a 1.0 for the week. If the group is unable to answer at all or fails to add anything meaningful, I will award less. I intend to encourage you to engage with the material, not to test your knowledge of the subject. At the end of the term, I will calculate the fraction of class participation points your group earned, and scale such that class participation will contribute 10% to your overall grade. For example, if over the term we cover 4 questions per group, a group that earned 3.75 / 4 = 0.9375, will receive 9.375% of a possible 10% toward their overall grade.

End-of-semester Examination A three-hour (plus 15 minutes reading time) end of semester, open book examination will contribute 60% to your overall marks. Additional details will be provided in class and on the LMS website.

Assignment Submission All written assignments are submitted via the Assignments tab in the navigation menu on the LMS page for this subject. Please refer to the Turnitin section of the LMS website for detailed submission instructions if needed (http://go.unimelb.edu.au/zax6). Please note that you are required to keep a copy of your assignment after it has been submitted as you must be able to produce a copy of your assignment at the request of teaching staff at any time after the submission due date. Penalties for Late Submission The penalty for submitting a group presentation late will be 10% per day. Students with a genuine and acceptable reason for not completing an assignment (or other assessment task), such as illness, can apply for special consideration (see policy below).

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Subject Resources Prescribed References There is no prescribed text for this subject. Any of the commonly used advanced undergraduate or graduate-level corporate finance books would be useful. Some good options are: Fundamentals of Corporate Finance, Parrino, Gillan, Bates and Kidwell, Wiley, 4th Edition, 2017. Corporate Finance, Jonathan Berk and Peter DeMarzo, Peason, 4th Ed., 2016 Corporate Finance, Ivo Welch, 4th Ed., 2018, available at http://book.ivo-welch.info/home/ Note: Welch’s book is good, and made available free by the author at the link above. Cases Required HBS case material available via the LMS website, including case, supplementary spreadsheet and questions.

Supplementary Readings I will post any Supplementary readings with the lecture notes, or under the Readings Online tab in LMS.

Academic Integrity Academic Honesty The University maintains high academic standards in its courses and subjects and expects students to conduct themselves in a manner which is fair, honest and consistent with the principles of academic integrity, particularly when undertaking assessment and research. http://academicintegrity.unimelb.edu.au/ Referencing All sources used for a written piece of assessment must be referenced. This is to acknowledge that your material is not based entirely on your own ideas, but is based, in part, on the ideas, information, and evidence of others. This is desirable as you are attending University in order to learn from others. You will be required to use the Harvard of referencing. The library has prepared a website to help students correctly reference: http://www.lib.unimelb.edu.au/recite/citations/harvard/generalNotes.html 9

It is important that all material you present for assessment is referenced correctly. Material that has not been referenced correctly may be considered to be plagiarised, and as such may be penalised. We will also look for evidence that material included in the bibliography has been used in the assignment. Including references that have not been used may also result in your assignment being penalised The Academic Skills Unit has produced resources to assist students with referencing https://services.unimelb.edu.au/academicskills/undergrads/top_resources The Library also provides advice on referencing: http://library.unimelb.edu.au/cite

University Services Timetable MyTimetable is a class timetabling system that creates individual timetables for students based on submitted class preferences, ensuring everyone has an equitable opportunity of getting their preferred class timetable. You will use this system to create your class timetable prior to each study period. By following a preference-based model, students who have other commitments, such as employment or carer responsibilities, or who are returning or living overseas during the timetabling period, aren’t disadvantaged by their limited availability. When allocating class timetables, MyTimetable also takes into consideration factors such as class size limits and potential clashes to ensure all students are equally accommodated. Further information is available on the web at https://students.unimelb.edu.au/admin/class-timetable Stop 1: Connecting Students and Services Stop 1 is here to provide you with a range of support services throughout your university degree, from help with enrolment, administration and wellbeing to advice on building your skills and experiences. https://students.unimelb.edu.au/stop1 Academic Skills Academic Skills offers a range of workshops and resources to help you with study skills including researching, writing and referencing, presentation skills and preparing for exams. Visit their website via http://services.unimelb.edu.au/academicskills. Service Finder The University of Melbourne offers one of the most comprehensive student support networks in Australia. Use this site to locate a wide range of services http://services.unimelb.edu.au/finder Student Counselling Students attend counselling to talk about personal, emotional, or mental health issues which might be affecting their study and life. The University’s Counselling and Psychological

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Services (CAPS) provides free, confidential, short-term professional counselling to currently enrolled students and staff. https://services.unimelb.edu.au/counsel/individual Student Equity and Disability Support Student Equity and Disability Support provides services for students who need ongoing support with their studies. They understand that adjustments to learning and assessment are sometimes required to allow all students to reach their full potential. Learn more about the services provided, how to find support and how to register for assistance. http://services.unimelb.edu.au/student-equity University of Melbourne Library Services As well as holding an extensive collection of books, ebooks, digital media and periodicals, library staff provide research guidance and support for students. http://library.unimelb.edu.au/ These Business and Economics Library Guides have been designed specifically for Faculty of Business and Economics staff and students. http://unimelb.libguides.com/sb.php?subject_id=80310

Policy Alternative Exam Arrangements (AEA) The definition of and eligibility requirements for alternative exam arrangements (AEA) can be found via http://students.unimelb.edu.au/admin/alternate . Assessment and Results Policy The University’s assessment policy provides a framework for the design, delivery and implementation of assessment of students in award and non-award courses and subjects. Assessment is designed to contribute to high quality learning by students, and to allow for quality assurance and the maintenance of high academic standards. https://policy.unimelb.edu.au/MPF1326 Assignment Extension Requests for an assignment extension should be submitted here: http://go.unimelb.edu.au/yh9n. Before completing this form, please read the Assignment Extension Policy, which can be found at: http://policy.unimelb.edu.au/MPF1326 Exam Policy The University requires that you are available for the entire examination period. Please see the University’s Principal Dates via http://www.unimelb.edu.au/dates#2020 for the full annual calendar. Supplementary exams will not be provided in cases of absence during the

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examination period unless the absence is due to serious illness or other serious circumstances and a Special Consideration application is submitted and approved. Information on Calculators in Examinations Effective from 1 January 2017, the approved calculator for all subjects is the Casio FX82 (any suffix). No equivalent models of calculators will be permitted in exams. You are required to purchase your own calculator and are responsible for ensuring your calculator is in good working order with fresh batteries. Plagiarism and Collusion Plagiarism (failure to cite your sources correctly and completely) and collusion (unauthorised collaboration with another person to prepare an assessment task) are considered academic misconduct and attract severe penalties. More information is available on the University’s Academic Integrity website via http://go.unimelb.edu.au/rha6. Special Consideration As a student, you may experience extraordinary or unusual circumstances, or ongoing circumstances that adversely affect your academic performance. The University has policies in place to support students who are experiencing academic disadvantage. For more information, visit http://students.unimelb.edu.au/admin/special.

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