Title: Critical review of the recent literature on Dividend policy and Market efficiency hypothesis
 

• You are required to use University Library resources,journals and critically review at least five articles on the two above issues.
• Provide at a minimum the following structures in your report:
  • Table of Contents
  • Introduction
  • Data and Methodology
  • Analysis
  • Evaluation
  • Conclusion
  • References

·         In-text referencing: ü  Running text citation should be given properly  like (Simon, 2001) or (Fullan& Scott, 2009)   ü  End-text referencing: ü  Journal Paper Reference    ü  Lovichakorntikul, P. & Walsh, J. (2011). Effective Channels for Establishing an Irlen Centre to Help People with Reading Problems in Thailand. Information Management and Business Review, 2(3), 99-105.

ü  Book Reference    ü  Kotler, P. (1997). Marketing Management: Analysis, Planning, and Implementation and Control (9th ed), Englewood Cliffs, NJ: Prentice Hall International.

 

• The written report carries 30 marks and presentation carries 10 marks.
• Although it’s a take home assignment, just be aware that plagiarism is a form of cheating. The penalty for plagiarism is a mark of zero and possible expulsion from the unit and/or course of study.

 

• It is a group assignment with a maximum of 4 students per group.

 

• Remember, your good effort will lead to a good report.
• Good luck!

 
 

 

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Required Text:                      Essentials of Corporate Finance, Ross, Westerfield and
Jordan, McGraw-Hill, 4^th Edition.
 
 
Opening Statement:  Welcome to Finance 103.  While this course is largely about the financial management of corporations, the subject matter has value to all students, as will be demonstrated throughout the term.  Moreover, the material, if you apply yourself, can actually be fun to learn.
 
Course Description:  This course will provide an understanding of the fundamentals of financial management.  For the purpose of presenting these fundamentals, we will assume that the goal of financial management is to maximize the value of the firm for its owners.  Stockholders expect nothing less of the managers who run their firm and so the focus of this course is on the value creation activities of management.
 
The major areas of study for the course are as follows:
 

1. Understanding financial statements
2. Risk and return
3. Time value of money
4. Valuation of securities
5. Capital budgeting
6. Leverage and Capital structure

 
Course Expectations: The objective of college level courses is to teach you know to think.  Life in the business world is about solving problems none of which are like the end-of-chapter problems in your text; however, these problems are a first step.  Learning how to think begins with understanding theory and so for each new topic encountered we will begin with a discussion of the relevant theoretical foundations.  It is essential to grasp these ideas before attempting to address problem solving.
 
Under most of the topic headings below, a basic list of learning outcomes is given.  However, please note that you will also be responsible for all definitions provided in the chapters that we cover.
 
This course is very demanding and will command considerable work on your part; typically 2-3 hours per day is required.  It is highly recommended that you read the assigned chapters carefully at least twice.
 
Calculators:  I strongly recommend purchasing a financial calculator. However, it must be noted that financial calculators require considerable effort on your part to learn how to use them. The burden of learning how to use them is on you.
 
Prerequisites: Financial Management is a combination of economics, mathematics, statistics, and accounting.  Prerequisites are Economics C051 and C052, Accounting 0001 and 0002, and Statistics C011 and C012.  Since these courses are prerequisites, the material that we will cover uses this knowledge as a foundation.
 
The mathematical requirements of this course can be considerable.  You are required to be proficient in the mathematics covered in the above statistics courses.  For example, you should be able to solve single equations for single unknowns, solve simultaneous equations for more than one unknown, and understand how to use basic statistical concepts.  The statistical concepts that you are required to understand are mean or expected value, variance, standard deviation, covariance and correlation.  Without a good understanding of the mathematical and statistical requirements, it will be very difficult for you to pass this course.  Examples are provided at the end of the course outline.
 
Class attendance: Class attendance is required and role will be taken, randomly. After three absences, not supported by a documented excuse, you will receive a zero for attendance.
 
Grade determination: There will be three exams in total, two exams during the term and a final exam.  The mid-term exams will weigh 30% each and the financial will weigh 30%.  Class attendance will account for 10%.  The final exam is cumulative.  The grading scheme is as follows:
 
A:        93 – 100
A-:       90 – 92
B+:      87 – 89
B:        83 – 86
B-:       80 – 82
C+:      77 – 79
C:        73 – 76
C-:       70 – 72
D+:      67 – 69
D:        63 – 66
D-:       60 – 62
F:         less than 60
 
 
 
 
No extra work will be given to make up a low grade in any exam after they are graded.  A grade of “Incomplete” will not be assigned unless the following conditions are both met:
 

• You have successfully “C” or better) completed the first two exams and

your attendance is satisfactory.
 

• You cannot, because of a documented medical emergency, complete the

remaining items before grades must be reported.
 
Also, please note that students who are caught cheating in an exam will be assigned an “F” grade for that exam.
 
Qualifications: I intend to follow the outline below as much as possible, given weather or other unforeseen events.  If for any reason I believe that it is in the best interest of the class, I reserve the right to amend this syllabus during the courses of the term.
 
E-mail: Please allow 48 hours for e-mail responses, except on weekends.  Any e-mails received after 12:30 Friday afternoon will be answered by the end of the day on the following Monday.  I also prefer e-mail to voice-mail.  Since I am often on multiple campuses, I find e-mail to be more convenient.
 
Blackboard: On Blackboard I post PowerPoint presentations that represent a basic skeleton of the class lecture.  These include most graphs and most equations so that you do not have to draw or copy these.  This means that you should expect to take notes in class.
 
Weekly assignments: Below each topic to be covered is the chapter assignment for the week. The exception is the first day of class.  In addition you must solve the end of chapter problems. These will not be handed in but it is your responsibility to attempt to solve them.
 
Students with disabilities: Any student who has a need for accommodation based on the impact of a disability should contact me in private to discuss the specific situation as soon as possible.  Contact Disability Resources and Services at 215-204-1280 in 100 Ritter Annex to coordinate reasonable accommodations for students with documented disabilities.
 

Course Outline

 

• Introduction to Financial Management/Ethics in Finance, Chapter 1.

 

• Financial Statements, Taxes and Cash Flow, Chapter 2.

 
Learning Outcomes:

• Understanding financial statements and cash flow
• Understanding the difference between profit and cash flow and how to estimate cash flow.
• Understanding the impact of taxes and the difference between marginal and average tax rates.

 
Assignment: Problems 5, 6, 7, 8, 13, 19, and 21.
 

• Working with Financial Statements, Chapter 3.

 
Learning Outcomes:
 

• Know the meaning of the individual financial ratios as presented in the text.
• Know how to interpret a given numerical value for each of the financial ratios.
• Understand the basic DuPont analysis.
• Know the difference between internal and sustainable growth.

 
Assignment: Problems 1-25.
 

• The Time Value of Money, Chapter 4.

 
Learning Outcomes:
 

• Know how to determine the present and future value of a lump sum payment.
• Know how to estimate the return on an investment.
• Know how to determine the number of periods required for a given sum of money today to grow to a given sum in the future.

 
Assignment: Problems 1-25.
 

• Discounted Cash Flow Valuation, Chapter 5.

 
Learning Outcomes:
 

• Know how to determine the future and present values of annuities.
• Know how to determine the future and present values of uneven cash flows.
• Know how to determine the present value of perpetuity.
• Know how to estimate the annuity payment for future or present value sum.
• Know how to estimate the rate that an annuity must earn in order to provide a given future or present value.
• Know how to estimate the number of periods for a given annuity to provide a present or future value.
• Know the difference between an annuity and an annuity due.
• Know the difference between an APR and EAR and how to convert the APR to an EAR.

 
Assignment: Problems 1-20, 22, 23, 26 & 27.
 

• Interest rates and bond valuation, Chapter 6.

 
Learning Outcomes:
 

• Know what a coupon bond is.
• Know how to estimate the value of a coupon bond as interest rates change (for both annual and semi-annual coupon payments).
• Know how to estimate the yield to maturity.
• Know the difference between nominal and real rates of interest.
• Understand the concept of interest rate risk.
• Understand the term structure of interest rates.

 
Assignment: Problems 1-14.
 

• Equity markets and stock valuation, Chapter 7.

 
Learning Outcomes:
 

• Know how to determine the value of common stock under the following conditions:

 

• Zero grow
• Constant growth
• Non-constant growth
• Super-normal growth

• Understand the difference between a dividend yield and a capital gain yield.
• Know how to determine the value of preferred stock.

 
Assignment: Problems 1-6, 8, 10, 11, 22 & 23.
 
*October 1^st – Exam 1
 

• Net Present Value and Other Investment Criteria, Chapter 8.

 
Learning Outcomes:

• Rationale and mechanics of calculating the five featured criteria.
• Investment decision rules for each.
• Know what the NPV profile is, and how to interpret one.
• Understand the shortcomings of payback and IRR.
• Understand how the five criteria answer the two key questions of capital budgeting.

 
Assignment: Problems 1-20
 
 
 
 

• Making Capital Investment Decisions, Chapter 9.

 
Learning Outcomes:
 

• Know how to determine project cash flows.
• Know how to apply the concepts of NPV and IRR to project cash flows.

 
Assignment: Problems 1-15.
 

• Some Lessons from Capital Market History, Chapter 10.

 
Learning Outcomes:
 

• Understand how to use the concepts of expected value, variance, and standard deviation is estimating risk and return on marketable securities.
• Understand the concept of a risk premium and how they are estimated for various security classes.
• Know the concept of market efficiency and the difference between weak form, semi-strong form, and strong form efficiency.

 
Assignment: Problems, Chapter 10, 1-11, 13-23.
 

• Risk and Return, Chapter 11.

 
Learning Outcomes:
 

• Understand the expected return and risk of a portfolio.
• Know how these concepts differ from the expected return and risk of a single security.
• Understand the concepts of systematic and unsystematic risk.
• Know how diversification reduces unsystematic risk.
• Understand the concept of beta and how it measures market or systematic risk.
• Understand how the concepts of beta and market risk premium determine us to measure the required return to risky securities by the capital asset pricing model, CAPM.
• Understand the security market line (SML) and how this is a graphical representation of the CAPM.

 
Assignment: Chapter 11, 1-19, 22-31.
 
 
*November 5^th – Exam 2
 
 
 
 

• Cost of Capital, Chapter 12

 
Learning Outcomes:
 

• Know how to estimate the WACC.
• Know the difference between market and book weights.
• Understand the difference between a company’s cost of capital and a divisional or project cost of capital.
• Understand source-determined vs. use-determined cost of capital

 
Assignment: Problems 1-13, 15-25.
 

• Leverage and Capital Structure, Chapter 13.

 
Learning Outcomes:
 

• Understand financial leverage.
• Understand the static theory of capital structure.
• Understand how corporate taxes impact the capital structure decision.
• Understand the implications of bankruptcy on optimal capital structure.
• Understand how to solve for break-even EBIT

 
Assignment: Problems 1-15.
 
 

• Dividend Policy, Chapter 13. (Time Permitting)

 
Learning Outcomes:
 

• Understand the dividend irrelevance proposition.
• Understand how taxes and clienteles may impact the dividend decision and why taxes and clienteles should not impact the dividend decision.

 
Review for Final Exam
 

Final Exam – To Be Announ

 

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