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UNIVERSITY OF CALIFORNIA- IRVINE

DEPARTMENT OF ECONOMICS

SYLLABUS

ECON 134A CORPORATAE FINANCE

Term Summer I, 2017


Instructor: A. Sohrabian, Ph.D.
Office: 3237
Office Hours: 11:45-12:45 pm
Phone: TBA
E-Mail: asohrabian@cpp.edu

TABLE OF CONTENTS

* Course Objectives

* Prerequisites

* Required Materials

* Expectations

* Evaluations

* Course Policies

* Study Strategies

* Course outline and Assigned Readings

* Homework Assignments

* Instructor Profile

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Course Objectives:

This course provides an overview of the modern theory and practice of financial management and
focuses on two fundamental financial decisions; investment as well as financing. Beginning with
discounted cash flow analysis, basic theory will be applied to the valuation of stocks, bonds, and
individual capital budgeting projects. Students will subsequently learn to price assets under uncertainty,
including the tradeoff between risk and return, portfolio diversification and Capital Asset Pricing Model.
Next, the course will address the elements involved in financing decisions, such as, capital markets,
financing sources, debt and dividend policy. Alternative financial instruments, like warrants and
convertibles, will be introduced as well. Finally, the course will conclude with a survey of current issues
in finance, including mergers and acquisitions which require joint decisions of investment and financing.

Prerequisite:

ECON 10 A-B-C, and ECON 100 A-B, or Econ 105A.

Required Preparation and Materials

1. Text: Ross, Stephen A., Randolph W. Westerfield and Bradford D. Jordan, Fundamentals of
Corporate Finance, McGraw-Hill, Eleventh Edition, 2016
2. Calculator: If you do not already have a financial calculator, Texas Instruments BAII Plus is
recommended.
3. Lecture notes and homework solutions (available at EEE).

Expectations:

You are expected to have completed the assigned reading prior to the class and keep yourself informed
of the current events regarding financial matters often appear in the financial press such as the Wall
Street Journal.

Evaluations:

Grading will be based on:


Midterm I (TBA) 30%

Midterm II (TBA) 30%

Final Exam (TBA) 40%


TOTAL 100%

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1. Tests:

All tests will mostly consist of multiple-choice questions. The purpose of these tests is to
test your knowledge of the financial principles discussed in the textbook, handouts, and in
class. The materials discussed in class and the materials from the textbook and handouts
are all subject to be tested.

2. Homework:

Homework will consist of assigned problems from the text and will not be collected or
graded. Most of the Exam questions will be similar to these problems.

3. Class Participation:

Class participation is strongly encouraged. Demonstration of knowledge of course


material through verbal participation in class discussions will be another significant factor
in assigning final grades to students in borderline cases.

4. Extra-Credit Assignments:

In fairness to all other students, there will be no extra-credit assignments. Requests for
extra-credit assignments to make up for a poor performance on a test will not be granted.

Course Policies:

1. Incomplete Policy:

Do not ask for a grade incomplete for the course simply because you are doing poorly in
the class. The University has established clear-cut and highly restrictive limitations on
when the grade of incomplete can be granted, and what the contractual obligations of the
parties may entail

2. Academic Dishonesty:

The use of unauthorized material, communication with fellow students during an


examination, attempting to benefit from the work of another student, and similar behavior
that defeats the intent of an examination, or other class work is unacceptable to the
University. It is often difficult to distinguish between a culpable act and inadvertent
behavior resulting from the nervous tensions accompanying examinations. Where a clear
violation has occurred, however, the instructor may disqualify the students work as
unacceptable and assign a failing mark on the paper.

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3. Exam Policy:

All exams are closed book and closed notes.

You are required to follow all instructions given on the cover sheet of
each test. Failure to do so may result in your not receiving credit for
correct answers.

It is your responsibility to check your test to ensure that no pages are


omitted. The cover sheet to each test will explain how many pages
there are to the test, how many questions are included in the test, and how
many points are assigned to each question.

You are responsible to check the number and sequence of the pages of
each test. If your test is missing a page, ask the professor for a new test.
Requests for re-grades because pages are claimed to have been missing
from a test will not be honored.

If you have any questions during a test, raise your hand and ask the
instructor your question. No discussion with other class members
will be allowed during a test.

You may be asked to change seats during a test. This does not necessarily
mean that you are suspected of cheating.

You may be asked to show proper identification before, during, or after a


test. You are required to bring your university student picture
identification to each test.

The tests will be handed back within two class periods following the test.
Any questions regarding grading of a test must be brought to the attention
of the professor by 5:00 PM of the second- class period after the test is
handed back. No exceptions. Requests for a reread of a question must be
made in writing, and returned with the test.

If you allege you have taken an exam but have not received a grade, it is
your responsibility to inform the professor of this problem in writing
within two class periods after the grades are distributed and posted. Any
student not following this procedure will receive a zero for the test.

If you change your answer on the Scantron sheet, it is your responsibility


to properly erase any other answers you had previously selected. Scantron
sheets that are misgraded because of poor erasure marks will not be
regarded.

4. Missed Exam Policy:

There will be no make-up exams for all the tests. Students who miss any test will
receive the grade of zero for that particular test.

A missed midterm exam will receive a grade of zero unless the student does the
following: (1) a student gives notice to the professor prior to the exam that he or
she will be missing an exam, and (2) a legitimate and verified excuse (such as
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non-elective surgery with written documentation from a certified physician; is
presented to the professor within one week after the exam was administered.

If a student does not have a written acceptable, verified excuse for missing the
midterm exam, or does not give prior notice even with a valid excuse, the student
will receive a grade of zero for the missed exam.

If a student has a written, acceptable, verified excuse for missing the midterm
exam and has given proper prior notice of the excuse, his or her final exam work
will count for 70% of the course. Students cannot miss both midterms.

Study Strategies

One of the reasons for going to college is to learn how to learn. You will learn the most if you spend
some time formulating a good study strategy. What works for one person may not work for another;
you need to identify and develop a strategy that works best for you. Here are some suggestions where
you might begin.

First, do the reading once in advance of the lecture.

After the material is covered in class, read it again more carefully.

Be a skeptical reader. Do not trust the assertions of the author; always ask yourself, Why is that
right?

Read with a pencil in your hand so that you can take notes and work out problems and arguments
while you read. You are more likely to retain material if you actively translate it into your own
language. Throw away your highlighters.

Perhaps the most important part of studying (at least for this course) is to work through problems.
I will hand out practice problems and there are more in the book. Do them all! Write out your
answers; dont just do them in your head and then look at the solutions to see if you are correct.
Study with other students to make sure you have the correct answers and reasoning. Check with
me if your group cannot resolve some problems. You will really understand the concepts when
you are capable of repeating and applying them.

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TENTATIVE COURSE OUTLINE AND ASSIGNED READINGS

Date Topic Chapter

Week 1 Introduction to Corporate Finance 1


The Time Value of Money 5

Week 1 Multiple Cash Flows 6

Week 2 Valuing Bonds 7

Week 2 Valuing Bonds-Continued & Sock Valuation 7&8

Week 3 Stock Valuation-Continued 8

Capital Budgeting 9
Week 4

Week 4 Portfolio Risk and Return


12&13

6
Week 5 Cost of Capital
14

Week 5 International Finance

21

HOMEWORK ASSIGNMENTS

Chapter Questions and Problems

1 1-3, 6, 7, 11, 14
5 1, 6, 9, 10, 13-15, 17, 20
6 5, 6, 8, 10, 14, 15, 20, 24, 26, 32, 35, 36, 42, 57, 66-68
7 1-7, 9, 11, 16, 29, 30, 31
8 3, 4, 5, 7, 15-18, 23, 32, 34
9 2, 4, 9, 12a-b, 14, 15, 17, 25
12 1-7, 10, 13, 15
13 3, 5, 7, 11, 13-18, 23, 25, 26
14 2, 5-9, 16, 20, 22
21 1,4,7,8,9,14,15

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PROFESSOR AHMAD SOHRABIAN
INSTRUCTOR PROFILE

Ph.D., M.A. Economics, University of California, Santa Barbara, California.


B.A. Economic, National University of Iran, Tehran, Iran.

Professional

Professor of Finance, California State Polytechnic University, Pomona.


Visiting Professor, Economics Department, UCI
Visiting Professor, Marshall School of Business, University of Southern California
Visiting Professor, Claremont McKenna College and Graduate School of Management
Visiting Associate Professor, Department of Economics, UCLA
Visiting Assistant Professor, College of Business, University of Massachusetts-Amherst

Selected Research
Do MNCs Spur Financial Markets in Corrupt Host Countries, Journal of Economics and Finance- 2013..

Foreign Direct Investment, Financial Markets, and Political Corruption. Journal of Economic Studies- 2008 .
Capital Gain Expectations and Efficiency in the Real Estate Markets. Journal of Business and Economic Research
2008.
Internal Finance and Corporate Investment. Financial Review 2001.
International Transmission of Stock Market Movements: Evidence from the Asian Financial Crisis. International
Review of Economics and Business. 2000.
Causality Relations among Stock Returns, Interest Rates, Real Activity and Inflation: Some International Evidence.
Global Business and Finance Review. 1999.
The Wealth Effects of Bank Acquisitions. Applied Economics Letters. 1999.
Economic Fundamentals and Housing Markets. Applied Economics Letters. 1998.
The Efficiency of Foreign Exchange Markets: Evidence From Cointegration Test. Global Business and Finance
Review. 1998.
Testing for the Relationship between Nominal Exchange Rates and Economic Fundamentals. Global Finance Journal.
1995.
Co-Integration and Error-Correction Modes: The Temporal Causality between Investment and Corporate Cash Flow.
Journal of Post Keynesian Economics. 1994.
The Exchange Value of the Dollar and the U.S. Trade Balance: Evidence from Co-Integration and Granger Causality
Tests. The Quarterly Review of Economics and Finance. 1993.
The Investment - Cash Flow Linkage Revisited: Evidence from Aggregate Data and Multivariate Granger - Causality
Tests. The Quarterly Review of Economics and Finance. 1993.
Stock Prices and the Effective Exchange Rate of the Dollar. Applied Economics. 1992.