Course Manual Corporate Finance

and Behavior (2019-2020)

Code: ECB2FIN
Period: 1
Timeslot: B+C
Level: 2
Credits: 7.5 ECTS
Course type: Required
Year: 2019/2020
Book: Brealey, R., S. Myers, F. Allen, Principles of Corporate
Finance 13th edition. McGraw Hill. (Connect code
should be included). ISBN: 978-1-447-02182-7

Department: USE / Finance

Lecturer: Drs A.M.Osté
Coordinator: Drs A.M.Osté
E-mail: a.m.oste@uu.nl
To be used for mail corresp. ECB2fin19@uu.nl

One of the most important things is to start working right at the beginning of the
course and to read the chapters and work through the exercises in the week in
which they are taught.

Topics:

Financial statements, Time value of money, Corporate governance, DCF (discounted

cashflow) and loans, Bonds and equity, Capital budgeting, Market efficiency, Risk,
CAPM model and SML, Cost of capital, Capital structure, Risk management, Options,
Loose ends and rehearsal.

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Analytical skills:

 Being able to solve problems (identifying the problem, devising a path towards
the solution, follow this path, verify the outcome) for more complex assignments.
 Being able to identify, interpret and critically evaluate the main line of
reasoning, for more complex problems.
 Being able to evaluate evidence in text and presentations for more complex
problems.

Format

There will be plenary lectures and plenary tutorials.

The main focus of the lectures is on knowledge transfer and creating an

understanding for the subject.

In plenary tutorials, assignments and typical exam questions will be worked out
together so that you are well prepared for the upcoming weekly quiz and the final
exam. The main focus of the plenary tutorials is to get you to work, to work through
exercises together, and to have more time for your questions.

Assessment method

The final course grade will be the weighted average of your weekly quiz grades
(together 15% weight) and a final exam (85% weight). There will be seven weekly
quizzes.

Quizzes
The weekly quizzes will be open book online assignments on 'Connect'. 'Connect' is
an online learning and testing environment of the publisher of the textbook,
McGraw-Hill. To access Connect you need the unique login code from your textbook.
It is your responsibility to have access to the online environment on which the
weekly quiz will be offered and that you have a reliable and working internet
connection for the weekly quiz. You do not need to pass the weekly quizzes in order
to pass the course.

There will be 7 weekly quizzes, all with a time limit of 60 minutes and they should be
completed between 7:00 AM and 9:00 PM every Friday. All questions in the weekly
exercises will be unique. Each student will get a random draw out of a pool of
questions about the same topic and all calculus questions will be algorithmic. Each of
the quizzes (up to a maximum of 4 quizzes) adds 2 points to your Connect grade as
long as you score over 50%.

The build-up of your Connect grade looks as follows:

0 Connect quizzes above 50%: Connect grade = 1
1 Connect quiz above 50%: Connect grade = 3
2 Connect quizzes above 50%: Connect grade = 5
3 Connect quizzes above 50%: Connect grade = 7

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4 or more Connect quizzes above 50%: Connect grade = 9

Additionally, you can earn an additional point for your Connect grade by
participating in the plenary tutorials. In total, there will be 7 tutorials, each with
about 15 questions (so a total of about 105 questions). If you answer 50 or more
questions correctly, you add 1 point to your Connect grade.

So, as an example: Suppose you get more than 50% of the answers right on 3
Connect quizzes (this translates to a 7), and get a total of 60 tutorial questions right,
your Connect grade is 7+1=8, which then counts for 15% towards your final grade.

There is no opportunity to retake individual weekly quizzes or all weekly quizzes

altogether. As you only need to complete four quizzes for a maximal Connect grade
you can miss some weekly quizzes without endangering your course grade. If you
cannot take a weekly quiz or two, for example because of sickness, then there are
still enough other weekly quizzes left to get a good grade. You can miss up to three
weekly quizzes, provided you do the other four. The quizzes are generated and
graded automatically with an algorithm of Connect.

Similarly, you only need to answer 50 out of a total of around 105 questions on the
plenary tutorial correctly for the additional point to your Connect grade. As such, you
can also miss weeks of tutorials and still get the bonus point. Of course, you are
encouraged to keep up with the work on a weekly basis and still participate even
after you have already attained the maximal grade.

Make sure that you hand in 4 weekly quizzes as early as possible. It is your
responsibility if you get sick late in the course and you speculated on handing in only
the last four weekly assignments. There will be no retake opportunity for the weekly
quizzes!

If you cannot attend an exam, e.g., because you are sick, then you need to contact
the exam commission.

Online registration for Connect is already available and in the first lecture on
September 10th, we will review the instructions to register.

Repeaters
Repeaters will have the same curriculum as a regular student, this includes the
weekly Connect quizzes.

Note that we only teach from the indicated textbook, we don't take any
responsibility in translating the course material to previously used textbooks.

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A typical week in Corporate Finance and Behavior

Tuesday 09.00 – 11.00 Tuesday 12:00 – 14:00

(Megaron): ASH 1.20
Plenary Lecture Office Hours
(Arjan M.Osté)

Thursday 13:15 – 15:15 Friday 07.00 – 21.00

(Ruppert – Blauw): Connect Quizzes
Plenary Tutuorial
(Arjan M.Osté)
Fac. 16:00

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 Friday – Monday:
Reading, exercises on Connect
And whatever else you like…….

Note that weeks of Corporate Finance and Behavior run from Tuesday - Monday,
starting with the lecture and ending with the Connect quiz.

Final exam
The final exam is a closed-book exam which consists of approximately 35 multiple
choice questions and 3 open questions. The final exam will cover all topics of the
course, including the topics of the weekly quizzes. This is not an online exam and you
are not allowed to bring any books or notes to the final exam. Only non-
programmable calculators are allowed. A sheet with the most important formulas
will also be provided (and posted in advance of the exam on Blackboard).

Effort requirements

There will be no effort requirement for this course, so following USE policy, a 4
means you are eligible for a full retake and a 5 means you can choose between a full
retake or a supplementary retake.

All slides and answers will be posted on Blackboard/Connect a.s.a.p. after the
lectures/tutorials/quizzes.

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Venue, time and contents of the course sessions.
NB: all information in this schedule is subject to change. Consult BlackBoard for the
most updated information!!!
Date & Time
10 September: Lecture 1
12 September: Plenary Tutorial 1
13 September: Weekly Quiz 1
17 September: Lecture 2
19 September: Plenary Tutorial 2
20 September: Weekly Quiz 2
24 September: Lecture 3
26 September: Plenary Tutorial 3
27 September: Weekly Quiz 3
1 October: Lecture 4
3 October: Plenary Tutorial 4
4 October: Weekly Quiz 4
8 October: Lecture 5
10 October: Plenary Tutorial 5
11 October: Weekly Quiz 5
15 October: Lecture 6
17 October: Plenary Tutorial 6
18 October: Weekly Quiz 6
Venue Chapters and topics
Educatorium - Megaron
09.00 - 11.00
Ruppert – Blauw 13.15 - Chapter 1, 2
15.00 / fac. 16.00 Introduction, time value of money
Online between 07.00 -
21.00
Educatorium - Megaron
09.00 - 11.00
Ruppert – Blauw 13.15 - Chapter 2, 3 (3.4-3.6 read only)
15.00 / fac. 16.00 DCF, perpetuities & annuities, Bonds
Online between 07.00 –
21.00
Educatorium - Megaron
09.00 - 11.00
Chapter 4.1-4.3,
Ruppert – Blauw 13.15 -
5 (5.4 read only), 6.1
15.00 / fac. 16.00
Equity, Capital Budgeting, NPV
Online between 07.00 –
21.00
Educatorium - Megaron
09.00 - 11.00
Chapter (7.3 read only), 8.1-8.2 (8.3 read
Ruppert – Blauw 13.15 -
only) 9.1-9.2
15.00 / fac. 16.00
Risk & return, CAPM
Online between 07.00 -
21.00
Educatorium – Megaron
09.00 - 11.00 Chapter 13, 17
Ruppert – Blauw 13.15 - Market efficiency, Behavioral finance, MM
15.00 / fac. 16.00 irrelevance theorem, financial statements
Online between 07.00 -
21.00
Educatorium – Megaron
09.00 - 11.00
Ruppert – Blauw 13.15 - Chapter 18.1, 18.3, 28.1-28.6
15.00 / fac. 16.00 Capital Structure
Online between 07.00 -
21.00
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 22 October: Lecture 7
24 October: Plenary Tutorial 7
25 October: Weekly Quiz 7
Educatorium - Megaron
09.00 - 11.00
Chapter 20, 21.1-21.2, 26.1-26.2
Ruppert – Blauw 13.15 -
Risk Management & Options
15.00 / fac. 16.00
Online between 07.00 -
21.00

29 October: Lecture 8 Educatorium - Megaron

Exam Prep / Questions
09.00 - 11.00
31 October: Plenary Tutorial 8 Ruppert – Blauw 13.15 - Review, practice questions and
15.00 / fac. 16.00 instructions exam

4 November: Exam 17.00 - 20.00 Exam

Office hours
Office hours are every Tuesday from 12.00 - 14.00 in Adam Smith Hall 1.20.

Questions
Please direct any additional questions to ECB2fin19@uu.nl. We strive to answer
most questions within 24 hours on weekdays. We’ve created a FAQ on Blackboard
with frequently asked questions. Please make sure you checked Blackboard and the
Course Manual first, before you mail. Please ask content questions in the week when
the content is covered. So, ideally no panic emails in the week before the exam.

Some final remarks

We strongly advise you to stick to the following basic rules to (at least) pass the
course:
1) Read through the relevant chapters before the lecture and the tutorial.
2) Come to all lectures/tutorials, come prepared, and participate actively!
3) After the lecture, work through the practice problems in Connect.
4) Each week, come to the tutorial to work through all the exercises. If you did not
understand all exercises in the tutorial, then make sure that you rehearse them on
Connect. The exercises will only be discussed in the tutorials or in the office hours
after the tutorial, not via email after the tutorial.
5) Participate in the weekly quizzes on Connect every week and right from the start.
The easy stuff is at the beginning so the chance that you get good grades is higher at
the start. Also, if you do the weekly quiz every week there is a bigger chance that you
get high grades in some weeks.
6) Once again, it is very important that you keep up with the weekly readings and
exercises right from the start!

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GOOD LUCK WITH THE COURSE!