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COMM 298 Syllabus

COURSE INFORMATION Course title: Introduction to Finance Course code: COMM 298 Session and term: 2019W2 Sections: 203, 204 Course duration:

Division: Credits: Class location: Class times:

Finance 3 HA491 Tue/Thu 9:30 am – 11 am; Tue/Thu 11 am – 12:30 pm

Jan 6 to April 7, 2020

Pre-requisites: COMM 290, COMM 293 and one of COMM 295, ECON 201, or ECON 301 INSTRUCTOR INFORMATION Instructor: Ruth Freedman, PhD Phone: 604-822-8361 Office location: HA 879 Email: [email protected] Office hours: Mon 11–12; Tue/Thu 12:30–2 pm ICOURSE DESCRIPTION This course provides an introduction to finance and its fundamental principles. We will develop a conceptual framework and quantitative tools to understand the functioning of financial markets as well as key decisions that corporate managers and investors make. We will also identify the goals of the firm and differentiate between debt and equity instruments. In the time value of money section, we will learn how to value streams of cash flows that arrive at different times. We will apply this knowledge to value bonds and stocks and will introduce the concept of market efficiency. Next, we will consider how corporate managers make capital budgeting decisions and the investment rules they apply to make these decisions. Finally, we will cover the risk-return trade-off when investing. This includes the measurement of risk and return, diversification, the mathematics of portfolios, and the Capital Asset Pricing Model, as well as how this ties back to a firm’s cost of capital. COURSE FORMAT Class time will be used for a combination of lectures, discussion and solution of example problems. Attendance is expected to accomplish the learning objectives below. Lectures and discussions will assume that students have completed the readings listed in the course schedule in advance of class. LEARNING OBJECTIVES The purpose of the course is to provide an overview of finance and investments and to enable students to analyze a variety of financial problems. At the end of the course students will be able to: • Identify the objectives of a corporation and the various claims on firm value • Describe features of financial markets and securities such as debt and equity • Perform time value of money calculations including annuities and perpetuities • Value bonds and stocks using their expected cash flows • Describe market efficiency and its implications • Compute risk and return measures from stock prices, for individual securities and for portfolios • Distinguish systematic from idiosyncratic risk; design strategies to diversify market-wide risk • Assess the risk-return tradeoff of an investment strategy

COMM 298 Sections 203 and 204

COMM 298 Syllabus ASSESSMENTS Summary Component Midterm Exam Final Exam Total

Weight 35% 65% 100%

Details of Assessments The evaluation weights listed above are non-negotiable. Students are required to take both exams in order to obtain a passing grade in the course. Both exams are closed book. In order to pass the course, a student must achieve a minimum of 50% on the final exam and achieve a weighted average on the combined midterm and final of at least 50%. The midterm exam for all sections is scheduled for Wednesday, February 26 from 6:30-8 pm. Specific exam rooms for each section will be announced closer to the midterm date. The alternate midterm exam has been scheduled for Tuesday, 10 March at 7 pm. The final exam will be cumulative, but the emphasis will be on material not previously examined in the midterm. The date and location of the final exam will be scheduled by the Registrar. Please see the section COURSE-SPECIFIC POLICIES for additional important information. LEARNING MATERIALS Required Lecture notes will be posted on Canvas before each lecture. The lecture notes are the most important study materials. Students should print and bring notes with them to the lectures. These notes may contain blank spaces which students are responsible for completing in class. Practice problem sets are not graded, but are essential for understanding the course material. The problems and solutions will be posted regularly on Canvas. Students are encouraged to solve the problem sets on their own or in a small study group. Additional readings or supplementary material will be made available on Canvas.

Recommended Corporate Finance, 2019 (8th Canadian Edition) by Ross, Westerfield, Jaffe, Roberts and Driss (RWJRD) is recommended. The RWJRD textbook is available at the bookstore. An older edition of the textbook can also be used. The textbook provides a good discussion of most topics covered in class, many practical examples and practice questions. If you would prefer to purchase access to an e-book, you can register at: https://connect.mheducation.com/class/comm-298-w2-2019 COMM 298 Sections 203 and 204

COMM 298 Syllabus COURSE-SPECIFIC POLICIES Regrading of midterm exams  Only midterm exams written in INK will be eligible to be regraded. Students may, of course, choose to write an exam in pencil but, in doing so, will lose their right to request a regrade.  Students wishing to have their midterm exam regraded must submit their detailed request in writing within five business days of the date the midterm exams were returned in class. If a request is made, all questions on the exam may be re-evaluated and a new higher or lower grade may be assigned. Academic Concessions  Requests for academic concession should be submitted to the Sauder Undergraduate Office, not to the instructor. Please visit https://mybcom.sauder.ubc.ca/academic-concession to submit an academic concession request.  A student who knows in advance that they will be unable to write the midterm exam on the scheduled date or time due to a conflicting responsibility (e.g., a UBC course conflict) should submit an academic concession request as soon as they are aware of the conflict.  If a student is unable to write the midterm exam at the scheduled time due to a conflicting responsibility and receives academic concession, then it is possible that an alternate exam time can be arranged on the same day.  If a student misses the midterm exam and receives academic concession for the absence, then the student will write an alternate midterm exam on Tuesday, 10 March at 7pm.

Other Course Policies  Students must attend ONLY their registered section of COMM 298. Since the sections of the course are full, attending at an alternative time will deprive another student of their seat.  Students should arrive to class at the designated time to avoid disturbing the class after it has begun.  Students should not use cell phones or send/view text messages during class. For emergency situations, students should excuse themselves from the classroom.  The responsible use of laptops is allowed only for class purposes, like taking notes or as directed by the instructor.  Students are encouraged to ask questions and make comments during the lecture. Comments should be addressed to the whole class and private discussion among students should be avoided.  Only non-graphing scientific and business calculators are allowed during the exams.  Students who miss class for any reason are responsible for completing the blank spaces in the lecture notes themselves. Completed lecture notes will not be provided to students.

COMM 298 Sections 203 and 204

COMM 298 Syllabus UNIVERSITY POLICIES AND RESOURCES UBC provides resources to support student learning and to maintain healthy lifestyles but recognizes that sometimes crises arise and so there are additional resources to access, including those for survivors of sexual violence. UBC values respect for the person and ideas of all members of the academic community. Harassment and discrimination are not tolerated nor is suppression of academic freedom. UBC provides appropriate accommodation for students with disabilities and for religious observances. UBC values academic honesty and students are expected to acknowledge the ideas generated by others and to uphold the highest academic standards in all of their actions. Details of the policies and how to access support are available on the UBC Senate website at https://senate.ubc.ca/policies-resources-support-studentsuccess. PASS sessions Optional Peer Assisted Study Sessions (PASS) will be scheduled to encourage practicing problems in groups, led by a peer. Peer Assisted Study Sessions (PASS) are group study sessions led by an upper-year student and offer a collaborative environment for extra revision where no grades are taken. Each session will cover practice problems or material from the previous week(s) in a manner that focuses on course concepts and study skills.

Academic Integrity The academic enterprise is founded on honesty, civility, and integrity. As members of this enterprise, all students are expected to know, understand, and follow the codes of conduct regarding academic integrity. This means students must not cheat, copy, or mislead others about what is their own work. Violations of academic integrity (i.e., misconduct) lead to the breakdown of the academic enterprise, and therefore serious consequences arise and harsh sanctions are imposed. For example, incidences of cheating may result in a mark of zero on the exam and more serious consequences may apply if the matter is referred to the President’s Advisory Committee on Student Discipline. Careful records are kept in order to monitor and prevent recurrences.

COPYRIGHT All materials of this course are the intellectual property of the instructor or licensed to be used in this course by the copyright owner. Redistribution of these materials by any means without permission of the copyright holders constitutes a breach of copyright and may lead to academic discipline. Audio or video recording of classes is not permitted.

COMM 298 Sections 203 and 204

COMM 298 Syllabus COURSE SCHEDULE WEEK # WEEK 1

WEEK 2

WEEK 3

WEEK 4

WEEK 5

WEEK 6

DATE

CLASS TOPICS

READINGS RWJRD

6/7 Jan

Course logistics & Introduction to Finance

1

8/9 Jan

Introduction to Finance

1

13/14 Jan

Time value of money

5

15/16 Jan

Time value of money

5

20/21 Jan

Time value of money

5

22/23 Jan

Time value of money

5

27/28 Jan

Valuing bonds

6

29/30 Jan

Valuing bonds

6

3/4 Feb

Valuing bonds

6

5/6 Feb

Valuing stocks

6

10/11 Feb

Valuing stocks

6

12/13 Feb

Efficient capital markets

14

WEEK 7

17 – 21 Feb

WEEK 8

26 Feb

MIDTERM EXAM

WEEK 9

2/3 Mar

Capital budgeting

7

4/5 Mar

Capital budgeting

7; 8.1 - 8.3

9/10 Mar

Capital budgeting

8.1 - 8.3;

11/12 Mar

Capital budgeting

9.1 - 9.2

16/17 Mar

Risk & return

10

18/19 Mar

Risk & return

10,11

23/24 Mar

Risk & return

11

25/26 Mar

Risk & return

11

30/31 Mar

Risk & return

11

1/2 Apr

CAPM beta & cost of equity capital

11,13.1 - 13.5

6/7 Apr

Weighted average cost of capital

13.1 - 13.5

WEEK 10

WEEK 11

WEEK 12

WEEK 13

WEEK 14

COMM 298 Sections 203 and 204

READING BREAK...