FIN 365 Business Finance -

FIN 365 Business Finance -

FIN 360: Corporate Finance Topic 1: Introduction to Finance Larry Schrenk, Instructor 02:32 PM 1 of 27 Todays Outline 1. Some Syllabus Details 2. About the Course

3. Broad Goals of the Course A. Finance B. Economic Thinking 02:32 PM 2 of 27 1. Syllabus: The Boring Part 02:32 PM

3 of 27 Contact Information Office: Somsen 319F Telephone 507-457-2388 E-Mail [email protected] Webpage

02:32 PM 4 of 27 Class Details Syllabus Next Class Course Web Pages 02:32 PM

5 of 27 Office Hours Office Hours: 9:00-9:50 AM on Monday, Wednesday, Friday 12:00-12:50 PM on Monday, Wednesday, Friday 2:00-2:50 PM on Monday, Wednesday, Friday Tuesday and Thursday Mornings On Campus Policy Office Hour Conferences

Google Docs Sign Up 02:32 PM 6 of 27 Textbook Eugene F. Brigham and Joel F. Houston. Fundamentals of Financial Management, Concise Edition, 9th Edition. South-Western. Looseleaf or eBook bundled with MindTap

02:32 PM 7 of 27 Financial Calculator Acceptable Calculators: TI 83/84 Graphing TI BA II Plus, HP 10BII, HP 10BII+ If you want to use a different calculator, see me

Three Methods: Tables Formulae Calculator On NOT becoming an expert with a financial calculator 02:32 PM 8 of 27

Evaluation Exams (60%) Group Project (20%) MindTap Homework (20%) Collaboration 02:32 PM 9 of 27 Exams Three Exams (20% each)

No Crib Sheets, Formulae Sheets, Etc. Financial Ratios Exam Reviews Dates on Schedule Page First Exam Very Early (9/12) 02:32 PM 10 of Exam Format

Format 100 Points Short Answer: 10 Questions (50%) Calculation: 5 Questions (50%) Not Cumulative But Later Material Builds on Earlier! 02:32 PM 11 of

Pretest Friday D2L Format ??? Must have laptop No Impact on Course Grade! 02:32 PM 12 of

MindTap Online Homework (20%) Due Dates: Class after Exam Details Next Week 02:32 PM 13 of Course Project Group Project (20%)

Except in unusual circumstances, all group members receive the same grade S&P 500 Firm Analyze Financial Statements Statistical Analysis Price Bonds Etc. 02:32 PM 14 of

Schedule Financial Markets and Institutions Basic Financial Tools Risk versus Return Valuation Corporate Policies 02:32 PM 15 of

Getting Help Office Hours Listed above Exam Reviews 02:32 PM 16 of 2. About the Course

02:32 PM 17 of About Me ????? Home Page 02:32 PM

18 of About You Introductions Pairs Index Cards Pictures 02:32 PM

19 of About the Course Teaching Approach 02:32 PM 20 of About the Course

Teaching Approach Socratic Method Think-Pair-Share (T-P-S) Current Events/Important Themes 02:32 PM 21 of Note Taking Skills Here are some web sites that will help, if you want to improve your note taking: /articles/productivity/student-guide-effective-notetaking.html EntryId=3858 02:32 PM 22 of king_notes.pdf

3. Goals of the Course 02:32 PM 23 of Goals Finance Theory Calculation Real World Practice

Economic/Financial Thinking Personal Finance 02:32 PM 24 of What does Finance Do? Possibilities Make a Profit Analyze Corporations

Model Human Behavior Look at Incentives Study the Human Brain Predict the Future 02:32 PM 25 of Some Big Themes

Trade-Offs Short-Term versus Long-Term Valuation Quantification 02:32 PM 26 of Some

Big Ideas Risk versus Return ReturnEasy; RiskHard Diversification Market as Benchmark 02:32 PM 27 of

FIN 360: Corporate Finance Topic 1b: Financial Markets and Institutions Larry Schrenk, Instructor 02:32 PM 28 of Todays Outline 1. 2.

3. 4. 5. Syllabus and Project Types of Exchange Agency Issues Market Efficiency Behavioral Finance Website: Hoovers

02:32 PM 29 of Initial Concerns from Last Class Next time 02:32 PM 30 of

1. Syllabus and Project 02:32 PM 31 of Syllabus: Participation Required Penalty Up to 10% Deduction from Final Grade

Questions 02:32 PM 32 of Course Project: Overview Form Groups of 4-5 Students Groups Assigned Shorty Excel Spreadsheet

Due Last Day of Class One Excel Spreadsheet Submit in D2L One Spreadsheet per Group No E-mail Attachments

Project Guidelines and Example 02:32 PM 33 of Course Project: Firm S&P 500 (see Wikipedia for List) Alternates Must be Approved Firm Criteria: Solvent and Simple

No Financial Firms Issues Long-Term Bonds Paid Dividends for Last Five Years 02:32 PM 34 of Syllabus/Course Questions ?????

02:32 PM 35 of 2. Types of Exchange 02:32 PM 36 of Transfer Methods

Private Exchange Direct Transfer EXAMPLE? Brokers Third-Party Mediation EXAMPLE? Markets Public, Anonymous Exchange EXAMPLE?

02:32 PM 37 of Brokers Mediates buyer and seller Distinguish from Agent Distinguish from Dealer Commission Financial Institutions

02:32 PM 38 of Types of Financial Institutions Depository Commercial Banks Credit Unions Pension Funds and Life Insurance

Investment Vehicles Investment Banks Mutual Funds Hedge Funds Exchange Traded Funds Private Equity Companies 02:32 PM 39 of Functions of Financial

Institutions Mediation of Savers and Firms Pooling of Funds Efficient Flow of Capital Risk Reduction/Allocation 02:32 PM 40 of Markets

Public, Centralized Exchange of Good and Services Physical or Electronic Financial Markets Financial Assets Trade Investable Funds Return Risk 02:32 PM

41 of Market Characteristics Price Discovery Efficiency Economic Growth Monitoring 02:32 PM 42 of

Market Functions Raise Capital Investment Opportunities Liquidity Clearinghouse 02:32 PM 43 of The Market for Stock Primary

IPO versus Seasoned Issue Function? Secondary Transfer of Ownership Function? Importance for Firm? Risk and Return Implications 02:32 PM

44 of 3. Agency Issues 02:32 PM 45 of Agency Paradigm Delegation Actors

Principal Agent 02:32 PM 46 of Agency Paradigm Examples: Politics Law

02:32 PM 47 of Agency Paradigm Business Applications: Executive vs. Shareholder Bondholder vs. Stockholder 02:32 PM

48 of 4. Market Efficiency 02:32 PM 49 of Efficient Market Hypothesis Expectation Implications

Informational Efficiency Fair Price Luck 02:32 PM 50 of Types of Efficiency Weak Form Historical Prices

Semi-Strong Form All Public Information Strong Form All (Public and Private) Information 02:32 PM 51 of Anomalies and Critique January Effect

Bubbles Black Monday, 19 October 1987 Insider Trading Technical/Fundamental Analysis Behavioral Finance 02:32 PM 52 of 5. Behavioral Finance

02:32 PM 53 of T-S-P (Think-Pair-Share) Linda is 31 years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice and also participated in antinuclear demonstrations.

Which is most likely: A. Linda is a bank teller. B. Linda is a bank teller active in social causes. 02:32 PM 54 of Overview A field of finance that proposes psychology-based theories to explain some financial decision

making. /b/behavioralfinance.asp 02:32 PM 55 of Behavioral Finance Bounded Rationality Heuristics

Market Inefficiencies 02:32 PM 56 of Behavioral Finance Examples: Framing The term frame dependence means that the way people behave depends on the way that their decision problems

are framed Anchoring The concept of anchoring draws on the tendency to attach or "anchor" our thoughts to a reference point - even though it may have no logical relevance to the decision at hand. 02:32 PM 57 of Framing

Frame 1 Of 600 people infected, a proposed medication will save 200 of those infected. Frame 2 Of 600 people infected, a proposed medication will allow 400 of those infected to die. 02:32 PM

58 of Anchoring Two Questions What are the last three digits of your Social Security number? In what year did Attila the Hun threaten to attack Rome?. 02:32 PM

59 of

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