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Financial Management 3130
Dr. A. Frank Thompson Spring 2013
320 Baker Hall E-Mail: actuary1@uni.edu
Office Hours: 9:00 AM- 10:00 AM MWF or by appointment
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Course Credit Section Time Location
Fin 3130 3 01 8 AM MWF CBB 24
Fin 3130 3 05 10 AM MWF CBB 24
Required Course Materials:
Brigham, Eugene F., and Michael Ehrhardt, Financial Management, Theory, and Practice, 13th Edition, (South-Western Cengage Learning, Mason, Ohio 20110, and the Study Guide to Accompany the text. The Study Guide is reference material and should be used to review financial management concepts prior to exams. .
HP-10B calculator
Reference Materials:
Frank Partnoy, FIASCO: The Inside Story of a Wall Street Trader, (Penguin Books, New York, NY, 1999) .
Mary Buffett, and Davud Clark, Buffettology: The Previously Unexplained Techniques that Have Made Warren Buffett the World's Most Famous Investor, (Scribner Publishing, Scribner, NE, 1999).
Thomas Stanley and William Danko, The Millionaire Next Door, (Taylor Trade Publishing, New York, NY, 2010) [reprint edition]
William Shakespeare, MacBeth, (Simon and Brown, New York, NY, 2011[reprint]).
Willaim Dean Howells, The Rise and Fall of Silas Lapham, (Penguine Classics, New York, NY, 1983 [reprint]).
Thomas Hardy, The Mayor of Casterbridge, (Penguine Classics, New York, NY., 2003 [reprint]).
Dave Barry, Money Secrets, (Three Rivers Press, New York, New York, 2006).
Rod Library Basic Reference for Security Valuation Research: http://www.lib.uni.edu/ris/business/
Recent Research Papers Relating to Managerial Finance:
PFGBest Failure Literature:
Time Line and Additional Information on Wassendorf Fraud and PFGBest Collapse
Client Money Missing from PFGBest
PFGBest Founder and CEO Arrested on Fraud Charges
$2 Million Donation from Wassendorf to the UNI Athletic Program
Lessons from the PFGBest Financial Fraud
Recent Publication on SIPC and Broker Fraud
Readings Related to Financial Failures and Other Financial Topics
(2) Current Perspectives on the Actuarial Adequacy of PBGC
(4) Fidelity Insurance: Are There Differences in Experience Among Financial Institutions?
(5) Homeowner's Equity: Providing Lifetime Annuities for the Elderly
(6) Immunization of Pension Funds: Sensitivity To Actuarial Assumptions
(7) Auditor Concentration in the S&L Industry
Schedule of Learning Activities
For the Week of: Material Reading/Research Problem Assignment
January 14 Chapter 1 Overview of Financial Mangement and the Finacial Markets Questions 1-2, 1-4,1-8
Rob Library Financial Databases Reference Guide by Stan Lyle Business Librarian
Sample Solutions to Chapter 1 Problems
January 21 Chapter 2: Financial Statements, Cash Flow and Taxes Prob. 1-2,7-9,11
Financial Ratios -What Do They Mean? by Deloitte & Touche LLP
The History of Taxes in America
History of the Pittman-Robertson Excise Tax
January 21st is the day we observe Dr. Martin Luther King's contributions to American equality and the ideals of freedom and justice for all US citizens. We will not have class on Monday, January 21st, but you are welcome to complete an outside extra credit writing assignment worth 10 points on Dr. King's - "I've Been to the Mountain Top Speech" given in Memphis Tennessee in support of sanitation workers [available through YouTube at:
http://www.youtube.com/watch?v=ixfwGLxRJU8].
After reviewing this speech and doing some research on the issues related to the sanitation strike you will need to write a 5 page paper with complete reference citations answering the following questions: (1) What were the main issues related to the sanitation strike and why did Dr. King become involved in their struggle? (2) What was Dr. King seeking in the way of change and on what basis was he asking for it? (3) Dr. King was able to bring about significant change using a nonviolent approach, what allowed him to do this? (4) In what ways were the conditions described by Dr. King when giving his speech similiar to today, in what ways are there differences? (5) Some have argued that Dr. King's methods are antiquated and unity amongst workers is impossible in today's times, why is this view disingenuous to the memory of Dr. King? In preparation for this assignment you might want to consider these references coming out of the labor movement, highlighting traditional struggles between worker and management. [This assignment is due Friday, January 25th, 2013]
History and Background of the Memphis Sanitation Worker's Strike
How the Nonviolent Civil Rights Concept and Traditions Evolved
Little Boxes Youtube video - access at: http://www.youtube.com/watch?v=ONEYGU_7EqU
Which Side are You on Youtube video: access at: http://www.youtube.com/watch?v=msEYGql0drc
Brief Synopsis of Labor Day History
Tribute to Stan Musial in Des Moines Register Jan 22, 2013
January 28th Chapter 3: Analysis of Financial Statements Prob. 1-2,4,5,6-9
Financial Statement Analysis Problems
Chapter 2 Assigned Problem Solutions on Cash Flows, Taxes and Fin. Statements
Sample Solution to Problem 2-6
February 1st Exam 1A [17 questions/ 3 points each]
February 4th Chapter 4: Time Value of Money Self Test Prob. 1-3
Note with Sample Interest Rate Problems from Chapter 2
February 11th Chapter 4: Continued -- Interest Problems Prob. 1-15,20,22,25,28-30
Interesting Interest Rate Problems
February 18th Chapter 5: Bonds, Bond Valuation and Interest Rates Self Test Prob.1, Prob. 1-16
February 25th Derivative Pricing Risk [Partnoy] Ch. 5-9
Answers and Sample Solutions to Chapter 5 Problems
Canadian Institute of Actuaries Presentation on Techniques for Analyzing Financial Institution Risks
March 1st Exam 1B [17 questions/ 3 points each]
March 4th Chapter 6: Risk, Return and the Capital Asset Pricing Model Prob. 1-10
The week of March 28th is Spring Break, class will resume on March 25th, travel safely and use good judgement.
March 25th Chapter 7: Stock and Stock Valuation Prob. 1-4,10,13,17
Difficulties of Relying too much on Mathematical Models: [Lowenstein] Ch. 1-5
[Graham] Chapters 4-5
NOTE: For further, even more compelling evidence, review the value of the UNI Krause Challenge portfolio since inception showing how by mathematical modeling, a managed portfolio went from $100K to just under that amount in the span of 10 years. Within the last 2 years the UNI Kruase Challenge Fund has managed to reach a value above $100K, but it is well below those schools that used a value oriented approach to investing. Spectacular losses from Long Term Capital Management, Bernard Madoff Investments, Lehman Brothers, IMF Global, and PFGBest reinforce the need for developing a set of investment guidelines that emphasize investment over speculation when developing a portfolio of stocks and bonds for the long run..
Spring 2007 Midwest Meeting Presentation: SPIC Problems and Prognosis
Some Perspectives on Pension Valuation and Funding
March 29th Exam 2A [17 Questions/ 3 points each]
April 1st Chapter 9: The Cost of Capital Prob. 1-5,7-12,15
Immunization of Pension Funds: Sensitivity To Actuarial Assumptions
April 8th Chapter 10: The Basics of Capital Budgeting Prob. 1-13.
Lecture Note on Efficient Markets: A Major Premise to CAPM
April 15th Chapter 11: Cash Flow Estimation and Risk Analysis Prob. 1-4,6,7-12.
Issues in the Valuation of a Business - Insurance Agency Application
Problems Involving Rights Offering and Dilution of Ownership with Share Sales
April 22nd Chapter 11: Cash Flow Estimation and Risk Analysis [Continued]
April 29th ----Exam 2B [17 Questions/ 3 points each]
For the final exam project in the course students will be given two choices: (1) take a comprehensive final exam over the course or (2) complete a written research paper on corporate finance and business ethics using a set of outside readings, along with a set of questions related to the recently discovered financial fraud with PFGBest. If you select the latter course grade method, I will need a written statement from you no later than October 1st indicating your interested in writing the paper. I will then give you additional matierals to develop your research project. Due to the time involved in developing materials for this assignment, you will not be able to change from one final exam project to another after Ocober 15th.
Information and Requirments on Option 2: Corporate Finance Business Ethics Paper
Before February 15th, those students wishing to meet the final exam requirement by writing a corporate finance business ethics paper will indiate, in writing, that they will be developing a business ethics paper relating to history, motivations, consequences, regulatory failures, and possible remedies for the PFGBest Collapse and the fraud perpetrated by Russell Wassendorf Sr. and provide a list of references. The final product will be a written paper of no less than 15 pages with biobliography and full reference citations on this particular topic. You will need to research all relevant business information and articles on PFGBest and the financial fraud that was discovered on July 9th, 2012. In addition you will need to read at least one of the following references: (1) Julius Ceasar (2) FIASCO (3) The Rise and Fall of Silas Lapham or (4) The Mayor of Casterbridge in order to be able to do a campare and contrast between the main protagonists in these books and Russell Wassendorf Sr. You easy should cover the following relevant issues (1) what are the character traits of individuals that results in the tragic consequences or societal benefits from their actions (2) who are the individuals irreparably harmed and stand to gain from the actions of main character (3) what are the responsibilities of those working underneath the flawed individuals to take action to protect innocent people (4) how has this research impacted you view of business ethics particularly as it related to corporate finance (5) what is the role of universities, hospitals, and non-profit organizations in dealing with unscrupulous individuals such as Russell Wassendorf Sr., particularly in regards to donations to a foundation (6) what were the regulatory failures of the "self-regulator" in this case the National Futures Association and how does this contrast with appropriate, governmental regulation in the public interest. This paper will be due no later than April 22nd 2013 to allow sufficient time to grade the assignment and provide feedback to participants.
Final Exam: -------------Section 1: Monday, May 6th 8-9:50 AM
-------------------------Section 3: Monday, May 6th 10-11:50 AM
Grading Information:
Grading Policy: Your course grade will be based on (1) accumulation of total points from exams, quizzes, homework and outside assignments, (2) meaningful class participation, (3) work with class projects and (4) voluntary extra credit assignments.
Grades will be determined by taking the highest student score and then applying grade lines using a 2% incremental standard from 100% based on the average of the three exams in the class.
The usual caveats with respect to this class are the same as with any UNI course. Students are expected to be familiar with the rules of the University and College concerning its academic ethics policy. You may obtain a copy of this policy through the Undergraduate Programs Office in Room 321B of the Business Building. With respect to any outside assignments, you are expected to fully cite the work of others. Any work turned in for this course whether a regular assignment, or extra credit project, will be deemed subject to this policy. Failure to fully cite the work of others in an assignment turned in for this course will result in a class grade of F.
Special Needs Considerations: UNI is an Affirmative Action Equal Opportunity Institution. The Americans with Disabilities Act of 1990 provides protection from discrimination for qualified individuals with disabilities. Students with a disability, who require assistance, will need to contact the Office of Disability Services (ODS) for coordination of academic accommodations. The ODS is located in 213 Student Services Center. Their phone number is 319/273-2676.