Finance Capstone (Advanced Corporate Finance)Part II – Applied Security Analysis235. 790. 81, 4 creditsTuesday 6:00 – 9:00 pmFall 2012Harbor East Campus| Instructor Randy Befumo, CFA Contact Information Phone: 410-454-5965 Email: [email protected] com Office Hours By appointment Required Text and Learning Materials Class 1 * Merton H. Miller and Franco Modigliani, “Dividend Policy, Growth and the Valuation of Shares,” The Journal of Business, 34, October 1961. * Burton G. Malkiel, “The Efficient Market Hypothesis and Its Critics,” The Journal of Economic Perspectives, Winter 2003. Eugene Fama, “Efficient Capital Markets: A Review of Theory and Empirical Work,” The Journal of Finance, 25, no. 2, May 1970, 387. Blackboard Site A Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at https://blackboard. jhu. edu. Support for Blackboard is available at 1-866-669-6138. Course Evaluation As a research and learning community, the Carey Business School is committed to continuous improvement.
Therefore each student must complete the course evaluation as part of the continuous improvement process. Information on how to complete the evaluation will be provided near the end of the course. Disability Services Johns Hopkins University and the Carey Business School are committed to making all academic programs, support services, and facilities accessible. To determine eligibility for accommodations, please contact the Carey Disability Services Office at time of admission and allow least four weeks prior to the beginning of the first class meeting.
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Students should contact Rachel Hall in the Disability Services office by phone at 410-234-9243, by fax at 443-529-1552, or email: carey. [email protected] edu. Important Academic Policies and Services * Honor Code * Statement of Diversity and Inclusion * Tutoring * Carey Writing Center * Inclement Weather Policy Students are strongly encouraged to consult the Johns Hopkins Carey Business School Student Handbook and Academic Catalog and the School website http://carey. jhu. edu/syllabus_policies for detailed information regarding the above items. Course Description:
Students will be trained in a step-by-step fashion similar to professional security analysts. Students will review the basic framework for capital markets and learn basic techniques in financial analysis including due diligence, financial models, valuation and investment decisions. Students will also interact with investment professionals in order to understand how the tools they are being taught are applied in real life. Time allowing, students will also learn about security selection, portfolio construction, performance analysis and client interaction. Course Overview:
Understanding how capital markets price securities, which requires a strong understanding of corporate finance, is critical for any manager or investor. A core of this class will be understanding how markets price securities and what information can be extracted from this to understand how markets view companies. Student Learning Objectives for This Course All Carey graduates are expected to demonstrate competence on four Learning Goals, operationalized in eight Learning Objectives. These learning goals and objectives are supported by the courses Carey offers.
For a complete list of Carey learning goals and objectives, please refer to the website http://carey. jhu. edu/LearningAtCarey/LGO/index. html. Student Learning Objectives for this course are: 1. Students should be able to evaluate investment proposals in relation to a company’s overall strategy and objectives 2. Students should be able to appraise and develop a firm’s capital structure policy 3. Students should be able to determine the relationship and trade-offs among a company’s investment, financing, and dividend policies 4.
Students should be able to exercise various valuation models/skills in valuing a company 5. Students should be able to discuss and appraise alternative views on financial problems on a group basis as a result of working in co-operation with other class members Attendance Policy It is imperative that you attend every class. Missing classes will certainly have a negative impact on your exam scores. If you miss a class, it is your responsibility to keep up with materials that were covered during your absence. Exam There will not be a final exam. Evaluation and Grading Determination of course grades will be based upon your point accumulation from the following sources: Assignment| Learning Objectives| Points| * Class Exercises| * 1, 2, 3, 4, 5| * 15 points each case| * Individual Project| * 1, 2, 3, 4, 5| * 100 points | Group Project| * 1, 2, 3, 4, 5| * 100 points| Students close to a cutoff point may receive subjective consideration based on their class attendance and participation. Please participate actively, and ask questions whenever something is not clear. Course Calendar The instructor reserves the right to alter course content or adjust the pace to accommodate class progress. Wk| * Date| * Lecture| * Assignments| * 1| October 9| Framework| * | * 2| October 16| Security Analysis – Mental Models / Due Diligence| * | * 3| * October 23| * Financial / Forecast Models| | * 4| * October 30| * Valuation & Decision Models / Investment Case| * | * 5| * November 6| * Security Selection| * Individual Project due. * 6| * November 13| * Portfolio Construction| * | * 7| * November 20| * Performance Analysis / Client Interaction| * | * 8| November 27| Group Project Presentation| * Group Project due. Each class group will present a group project. Each group member must participate in the presentation. | * Class Structure * Case Homework * I will assign reading after each class. Each student is expected to complete the readers. The purpose of these readings is to ensure that students are prepared to participate in the class discussions and to avoid going over basic materials. * I will also assign some projects after each class based on the work from that class. Projects should be returned at the beginning of the next class. The goal is to operationalize the techniques and ensure that each student has understood what was assigned. * * Individual Project * Each student will be assigned a company to analyze. The student will run the company through the framework outlined in the class. * The output will be a written report of between 2000 and 5000 words plus exhibits that incorporates due diligence using public sources, financial analysis including forecasts, valuation models and a decision model for when and how to invest in the security. * I am looking for students to apply concepts from class as well as anything they have learned either at Carey or at prior professional experience. * Group Project Presentation * Using the existing groups Professor Yook has put together, I will assign each group a security selected by a professional portfolio manager. Each team will present their findings in 20 minutes to that portfolio manager on the final class. The portfolio manager will then comment on the work and emphasize what they found effective and where they would improve. * PowerPoint slides and spreadsheets should be used for the Group Project. Each team should send the presentation files to me by 5 pm Monday, the previous day of presentation. I will prepare handouts for audience. * The presentation counts as 100 points and all members in the presenting group will receive the same score based on quality of analysis, organization of ideas, delivery skills, and how much they leverage skills taught in class in the group (in the order of importance). *