Syllabus: Financial Management Spring 2010 Contact information: Prof.

Darius Palia Office: 1142, 1 Washington Park Office hours: Tues 5-6 pm Email: dpalia@rci.rutgers.edu tel: (973)-353-5981 fax: (973)-353-1006

Course Description: This is an introductory course which covers many of the fundamental concepts in Finance. Topics include discounting and the time value of money, bond and stock valuation, corporate investment decisions, market efficiency, concepts of risk and return, construction of optimal portfolios, asset pricing models, venture capital and IPOs, mergers, banks, and an introduction to options. The course will largely involve lectures and problem solving in order to elucidate the important concepts and solidify the lecture material. Reading of the Wall Street Journal is necessary in order to relate class concepts with the financial world. Class time is very important, and a consistent work attitude through out the semester is necessary and optimal. Readings for the course: 1. Brealey, Myers and Allen (BMA), Principles of Corporate Finance, Irwin McGraw-Hill, ninth edition. 2. Wall Street Journal (optional). 3. Study Guide to accompany Brealey and Myers, Principles of Corporate Finance (very optional).

Course style: I want you to understand the fundamentals of finance as deeply as possible. Accordingly, being alert in class is important, as many of the points will be verbally exposited. If you miss any point in class please do not hesitate to stop me. No question will go unanswered. Hopefully we can both understand modern financial techniques, and why certain managerial decisions are optimal and others are not. We should also be to relate some of these concepts to current corporate events, for which I encourage you to buy the newspapers and magazines. For my part, I will try to make the lectures both enlightening and fun. All handouts will be placed at the appropriate time on Blackboard (the course web page). If you have any problems accessing Blackboard, please email the computer help desk as soon as possible. Grading: Your grade will be determined as follows: homework assignments (20%), mid-term examination (30%), and final examination (50%). Problem sets should be handed in. You can work in teams (with the maximum number being four and the minimum number being one). The main point about these assignments is that they help you learn, by ensuring that you think about the class material diligently
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throughout the semester. Do your best in answering the questions. Your thought process in answering them is important in preparing for the exams. Topics and their approximate order: These topics do not correspond to class sessions for each week. Some topics might take longer than anticipated and some shorter, but by and large we will follow the order of these topics. Some modifications will develop as the course develops.

Topics Introduction to course, corporations and finance managers, managerial agency, types of securities/markets, balance sheet model of the firm, NPV

BMA 1, 2

NPV, annuity, perpetuity, bonds, term structure

3, 4

Stock valuation, other investment criteria

5, 6

Efficient markets, pre-midterm review

14

Midterm (in class)

Making investment decisions using NPV

Risk and return

Equilibrium pricing

Venture capital and IPOs

Mergers, banks are special

Introduction to options, course review

21

Final (in class)