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Financial Management 3130
Dr. A. Frank Thompson Fall 2012
320 Baker Hall E-Mail: actuary1@uni.edu
Office Hours: 12 PM- 1:00 PM MWF or appointment
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Course Credit Section Time Location
Fin 3130 3 04 1-1:50 PM MWF CBB 24
Fin 3130 3 05 2-2:50 PM 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
August 20th 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
August 27th 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
September 3rd is a University holiday in commemoration to American workers, recognizing the role of labor unions as a countervailing influence on business activities intended to bring about,and foster, best business practices.
Brief Synopsis of Labor Day History
September 3rd Chapter 3: Analysis of Financial Statements Prob. 1-2,4,5,6-9
Financial Statement Analysis Problems
Chapter 3 Assigned Problem Solutions
Exam 1A [17 questions/ 3 points each]
September 10th Chapter 4: Time Value of Money Self Test Prob. 1-3
Note with Sample Interest Rate Problems from Chapter 2
September 17th Chapter 4: Continued -- Interest Problems Prob. 1-15,20,22,25,28-30
Interesting Interest Rate Problems
September 24th Chapter 5: Bonds, Bond Valuation and Interest Rates Self Test Prob.1, Prob. 1-16
Derivative Pricing Risk [Partnoy] Ch. 5-9
Canadian Institute of Actuaries Presentation on Techniques for Analyzing Financial Institution Risks
October 1st Exam 1B [17 questions/ 3 points each]
October 8th Chapter 6: Risk, Return and the Capital Asset Pricing Model Prob. 1-10
October 15th 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, and Lehman Brothers 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
October 22nd Exam 2A [17 Questions/ 3 points each]
October 29th Chapter 9: The Cost of Capital Prob. 1-5,7-12,15
Immunization of Pension Funds: Sensitivity To Actuarial Assumptions
November 5th Chapter 10: The Basics of Capital Budgeting Prob. 1-13.
Lecture Note on Efficient Markets: A Major Premise to CAPM
November 12th 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
Thanksgiving break begins November 16th class resume November 26th. Thanksgiving had its roots in the Protestant Reformation and was associated with recognizing the providence of God in giving early settlers the resources to survive. This day was associated with prayers and fasting. The practice of fasting was associated with calling on God to over come what we now consider to be natural disasters such as drought. The setting of a national Thanksgiving day did not come until the time of the Civil War when President Abraham Lincoln determined a time in November in an effort to bring together those in the Sourth and North in a day dedicated to thanking God for the nations' blessings. Later President Franklin Roosevelt set the current date to the fourth Thursday in the month of November.
US History Associated with Thanksgiving
November 26th Chapter 11: Cash Flow Estimation and Risk Analysis [Continued]
December 3rd ----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 October 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) MacBeth (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 November 26, 2012 to allow sufficient time to grade the assignment and provide feedback to participants.
Final Exam: -------------Section 4: Tuesday, December 11th from 1-2:50 PM
-------------------------Section 5: Monday, December 10th from 3-4:50 PM
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.