Syllabus for Principles of Finance
Shanghai Advanced Institute of Finance, SJTU
MBA2013 PTA, Fall 2013
Professor YAN, Hong
(021) 6293 2031
Dr SHAN, Chenyu
(021) 6293 4514
Associate Professor WU, Fei
(021) 6293 4499
Room 304, Datong Plaza
October 26, November 2, 9, December 1, 8, 15
Morning Session: 9:00 - 12:00
Afternoon Session: 13:30 - 16:30
Evening Session: 18:30-21:30
Finance consists of two broad areas: Investment Analysis and Corporate Finance. This course provides you with an introduction to the most fundamental elements of both investment analysis and corporate ﬁnance. As managers, your goal is (or should be) to create value for your organization. The course makes value creation its centerpiece and establishes a systematic set of principles that are general, as they may apply to any investment project you or your ﬁrm might consider, including investment in land or plants, marketing campaigns, research and development programs, changes in the supply chain or information systems, etc. Therefore, the Principles of Finance course lays down the foundation will enable us to learn how to eﬃciently manage assets, liabilities, and equity in order to maximize the wealth of respective owners while handling the conﬂicts between them in this and subsequent courses. These principles are reﬂected in the capital-budgeting process. The basic idea is to view an investment project as a series of cash outﬂows and inﬂows over the life of the project. Once the 1
project’s cash ﬂows have been fully identiﬁed, we adjust them to reﬂect how desirable these cash ﬂows are in terms of timing and risk – this adjustment is called discounting – and add up the discounted cash ﬂows to obtain the value of the project. This value, known as the Net Present Value (NPV), tells us directly how much value a project creates or destroys and whether it should be undertaken or not.
To fully implement the appropriate discounting procedure, we need to understand the basic concepts of risk and the determinants of reward for bearing such risk. In this course, we will also learn the theoretical framework for risk characterization and its applications the valuation of stocks and bonds.
Textbook: Stephen A. Ross, Randolph W. Westerﬁeld, Jeﬀrey F. Jaﬀe, Corporate Finance, 9th edition. Other materials such as slides, assignments, solutions, announcements etc will be uploaded on Blackboard. You should check the course website regularly for newly uploaded materials.
ASSESSMENT AND GRADING
Your ﬁnal grade will be based on the following components: Class Participation
Quizzes (count top 2)
Final Exam (Parts 1 & 2)
Active class participation is important for your learning experience and strongly encouraged. It helps you to think actively rather than passively, keeps you involved and motivated rather than removed and disinterested. Your class participation also helps the instructor gauge whether you understand the materials.
Class participation includes class attendance, in-class attitude, active questions/discussions and “cold call” responses. It is your responsibility to be active in class. Do not simply wait to be called on; raise your hand and speak up.
We will hold a few quizzes to keep you current in your study and provide you with timely feedback on your mastery of the materials, or lack thereof. These quizzes will be open-book but require advanced preparation as the allotted time will be too short to “learn” on the ﬂy. Each quiz will only test on the materials recently covered in class. There will be no make-up quiz if you...
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