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Department of Management Studies, UWI, Mona Course Outline Financial Management II - MGMT3048 (MS38H) (Semester

Department of Management Studies, UWI, Mona

Course Outline

Financial Management II - MGMT3048 (MS38H) (Semester 2: 2011/12)

Instructor& Noel Reynolds Email Address: noel.reynolds@uwimona.edu.jm

Class Times:

Tuesdays: 12noon-2pm (SR10) & Wednesdays: 89am (SR16) or Mondays: 7-9pm(SR10) & Wednesdays: 89pm (SR16)

Office:

Room 37 (DOMS) Tel: 977-3775/3808/6960, ext. 282

Office Hours:

Mondays: 6:00pm 7:00pm; Tuesdays: 9:00am 11:00am; Wednesdays: 11:00am 12:00noon & 6:30pm 8:00pm

Text:

Financial Management Principles and Applications, (11 th Edition - International), Titman, Keown & Martin, Prentice Hall (Pearson Education Inc.), 2011

Introduction Finance is an exciting, challenging, and ever-changing discipline. Financial Management II is an advanced managerial finance course that ties together theory and applications of financial management; covering the essential aspects of financial decisions. Financial decisions are primarily concerned with providing solutions to the following problems: (1) what assets should the enterprise acquire? (this is the capital budgeting decision); (2) how should these assets be financed? (this is the capital structure decision); and (3) how should short-term operating cash flows be managed? (this is the working capital decision). This course focuses predominantly on learning the tools and techniques needed to analyze and evaluate financial information. This type of analysis enables the financial manager to identify and solve management problems related to the financial operations of business corporations. It builds on the basic principles covered in the first course in Financial Management.

It builds on the basic principles covered in the first course in Financial Management. MGMT3048 -
It builds on the basic principles covered in the first course in Financial Management. MGMT3048 -

Department of Management Studies, UWI, Mona

Learning Objectives

Upon completing this course, students should be able to:

1. State and discuss the classic theorems of financial management

2. Explain the ramifications of the theorems for corporate decision making.

3. Analyze and evaluate alternative decision problems that require the applications of the basic tools of finance.

4. Understand the big picture of corporate finance and how things fit together.

5. Arrive at alternative approaches for addressing whether and how the financial structure of a firm matters.

Pedagogical Approach Lecture presentations will generally consist of notes (presentation, slides, and blackboard) and in-class discussions and problem solving. Problems and selected solutions will also be given to students. Suggested practice problems (quantitative) from the end of chapter questions in the text are identified in the following detailed course content. In addition, students are expected to attempt the review questions (theoretical) at the end of the relevant text chapters. (Students should reacquaint themselves with the material covered in Financial Management I if they are to properly grasp the concepts and techniques presented here). The teaching/learning process will be interactive to a large extent, thus students should make an effort to read/scan the topic to be covered before class. Efforts will be made to give students a summary of most of the material at least one day before class. This will be done electronically, or through the copy room (in this case, students will have to purchase the material). Though the objective of this course is not one of pass- fail; be advised that if you fail to prepare, be prepared to fail! All course material (course outline, class notes, tutorial sheets, and tutorial sheet solutions) may be accessed on the University’s Virtual Learning Environment website (OurVLE):

http://ourvle.mona.uwi.edu

Additional materials are also available at the textbook’s companion website:

http://wps.prenhall.com/bp_keown_finmgmt_10

Table 1: Grading Scheme

Category

Topics Examined*

Percentage (%)

Format

Mid-term exam

A, B & C

40

Multiple Choice (MCQ)

Final exam

All Topics

60

MCQ & Essay/Problem

* See Table 2 (Course Content and Schedule) for list of topics.

MCQ & Essay/Problem * See Table 2 (Course Content and Schedule) for list of topics. MGMT3048
MCQ & Essay/Problem * See Table 2 (Course Content and Schedule) for list of topics. MGMT3048

Department of Management Studies, UWI, Mona

Table 2: Course Content & Schedule

   

PRACTICE

TOPIC BY WEEK

READINGS*

PROBLEMS

Weeks 1-3, beginning January 23, 2012

   
 

Preliminaries

   

A.

Some Complications in Capital Budgeting Analysis

Chpt. 11:

Study Problems (11-4 to 11-5)

pgs. 341-344

- Choosing among Mutually Exclusive Projects with unequal lives.

Chpt. 13

All questions from Study Questions (13-1 to 13-7) & Study Problems (13-4 to 13-7; 13- 12 to 13-16)

- Measuring and adjusting for Risk in Capital Budgeting decisions. - Business Risk and Operating Leverage

- Real Options in Capital Budgeting

Week 4-5, beginning February 13, 2012

   

B.

Capital Structure and Leverage

Chpt. 15

All questions from Study Questions (15-1 to 15-22) & Study Problems (15-11 to 15-14)

- Financial Risk and FinancialLeverage

- Capital Structure Theory

- Determining the Optimal Capital Structure

- EBIT-EPS Indifference Analysis

 

Weeks6-7, beginning February 27, 2012

   

C.

Dividend Policy

Chpt. 16

All questions from Study Questions (16-1 to 16-14) & Study Problems (16-2 to 16-8)

- Dividend Policy Theories

- Other Dividend Policy Issues and Dividend Payment Procedures

- Stock Dividends, Stock Splits, and Stock Repurchases

 

Weeks 8-9, beginning March 12, 2012

   

D.

Working Capital Management

Chpt. 18

All questions from Study Questions (18-1 to 18-13) & Study Problems (18-8 to 18-11)

- Working Capital Management &Policy

- Short-term Financing

- Management of Cash and Marketable Securities

- Accounts Receivables and Inventory Management

 
and Marketable Securities - Accounts Receivables and Inventory Management   MGMT3048 - DOMS,UWI, Mona Page 3
and Marketable Securities - Accounts Receivables and Inventory Management   MGMT3048 - DOMS,UWI, Mona Page 3

Department of Management Studies, UWI, Mona

   

PRACTICE

TOPIC BY WEEK

READINGS*

PROBLEMS

Weeks 10-11, beginning March 26, 2012

   

E.

International Business Finance

Chpt. 19

All questions from Study Questions (19-1 to 19-12) & Study Problems (19-2 to 19-4; 19- 15 to 19-20)

- Foreign Exchange Markets & Transactions

- Interest Rate & Purchasing-Power Parity

- Capital Budgeting for Foreign Direct Investment

Weeks 12-13, beginning April 9, 2012

   

F.

Corporate Risk Management

Chpt. 20

All questions from Study Questions (20-1 to 20-13) & Study Problems (20-2 to 20-3; 20-9 to 20-12)

- The Risk Management Process

- Instruments used in Managing Corporate Risk Exposure Insurance Contracts & Derivatives (Forwards, Futures, Options & Swaps)

* All references are from the prescribed text, unless otherwise stated.

& Swaps ) * All references are from the prescribed text, unless otherwise stated. MGMT3048 -
& Swaps ) * All references are from the prescribed text, unless otherwise stated. MGMT3048 -