MBA 6223 Finance

Fall 2015
Professors Berk Sensoy and Jay Wellman
Class Schedule
Time:
Section 1: Tuesday and Thursday, 1:15 PM 2:45 PM, Gerlach 365
Section 2: Tuesday and Thursday, 3:00 PM 4:30 PM, Gerlach 375
Section 3: Thursday, 6:00 PM 9:15 PM, Gerlach 365
Section 4: Tuesday, 6:00 PM 9:15 PM, Gerlach 365
This is a co-taught course. There are a total of 28 90-minute class sessions. Each evening class meets for two
sessions per day. Professor Sensoy will teach the first 14 sessions, and Professor Wellman the remaining 14.
Their contact information is below.
Professors:
Berk Sensoy
Office: 812 Fisher Hall
E-mail: sensoy.4@osu.edu
Office Hours (First 7 weeks):
Tu Th 12:00 PM 1:00 PM
Tu Th 4:45 PM 5:45 PM

Jay Wellman
Office: 850 Fisher Hall
E-mail: wellman.67@osu.edu
Office Hours (Second 7 weeks):
Tu Th 10:30 AM 11:30 AM
Tu Th 4:45 PM 5:45 PM

To avoid waits for office hours, please email us in advance to claim a time. If you cannot make these office
hours, please email to suggest an alternative time.
Teaching Assistants:
Abhijit Saha
Office: Gerlach 248
E-mail: saha.56@osu.edu
Office Hours: Th 4:45 PM 5:45 PM, Fr 9 AM 10 AM
Please do not hesitate to contact the professor or the TAs if you need assistance.
Course Description
This course provides a market-oriented framework for analyzing the major types of financial decisions made by
corporations. The first part of the course provide an introduction to present value techniques, capital budgeting
principles and problems, asset valuation, and the fundamentals of portfolio theory and asset pricing. The second
part of the course discusses market efficiency, options, capital structure in a perfect market, debt and taxes,
financial distress, payout policy, capital budgeting and valuation with leverage, valuation and financial
modeling, risk management, raising equity capital, mergers and acquisitions, and ethics in corporations

Course Materials
1. Berk, J. and P. DeMarzo. Corporate Finance. 3rd edition, Prentice Hall, 2014.
[Referred to as BD below.]
The required textbook can be purchased at the OSU bookstore in two formats: the regular book (ISBN
9780133424157) and a student value edition (ISBN 9780133424140). The student value edition is the
whole book, but has no cover and is three-hole punched. Both formats come with an access card for the
electronic text version of the book and the publishers online learning tool (MyFinanceLab). We will use
MyFinanceLab for the homework assignments.
Unfortunately, the publisher has several different versions of the book, including an undergraduate
version. To make sure you buy the right thing, please make sure the ISBN of what you are about to buy
matches those given above. Please note that Amazon and other sources are usually cheaper than the
OSU bookstore. You can search online retailers by ISBN to ensure the correct match. Please also note
that any book marked as a global or international edition will not have a functioning MyFinanceLab
access code.
If you prefer an electronic text only, you can buy it along with MyFinanceLab access from the publisher
directly at www.myfinancelab.com for $105.
Finally, used copies of the 2nd edition of this book are fine as far as the key concepts go. However, we
do not support the 2nd edition so if you buy it, you are solely responsible for locating the readings that
correspond to those listed below. If you go this route, or buy a used copy of the 3rd edition, you will need
to buy MyFinanceLab access separately at www.myfinancelab.com at a cost of $60.
2. MyFinanceLab access: www.myfinancelab.com. See additional purchase information above. To access
MyFinanceLab, you need our course ID, which is osumbafin42863.
3. All lecture material and any additional class material will be posted on the course web page on Carmen https://carmen.osu.edu/.
4. Additional resources: In the course calendar below, we recommend some (most) end-of-chapter
problems as a purely optional opportunity for extra study and practice. You can do these the old
fashioned way or within the study guide on MyFinanceLab.
If your exposure to finance has been limited so far you may also find the following optional additional
text useful:
Downes, John, and Jordan Elliot Goodman, Barrons Financial Guides: Dictionary of Finance and
Investment Terms, 8th edition (Barrons Educational Series, 2010)
Also, Google, Investopedia and Wikipedia are often your friends for basic definitions and terminology.

Seating Arrangements
You are welcome to sit in any section you choose, although sitting priority is given to the students registered in
the section. All exams must be taken with your registered section. We would like each of you to sit in the same
seat each class. This makes it easier for you to interact during class discussions, and easier for us to keep track
of who you are. Please bring and display your nameplate during each class session.
Evaluation
50% of your grade will come from Professor Sensoys half of the course, and 50% from Professor Wellmans
half.
Both professors will break down their 50% as follows:
Five homework assignments each worth 2.5% of your grade.
Two midterm exams. The first is worth 15% of your grade and the second 22.5%. (The second midterm
in Professor Wellmans half of the course will be the final exam, which will only cover the material
from Professor Wellmans half of the course.)
The following are the primary principles for evaluation:

Grading in this class is relative to the performance of your peers (the grade is curved).

The grade distribution is not truncated. It is possible to earn any of the official OSU grades (i.e., A to E)
in this course.

Please note that there will be no make-up exams except as required by university policy. If illness or an
emergency should force you to miss an exam, please try your best to contact us before the exam is
given.

Homework
All homework must be completed in MyFinanceLab. The purpose of the homework is to keep you up to date
with the class material. You may talk about the problems with others in the class, and work on them together.
The only way you can be sure you understand the class material is to do the problems.
Because students have unlimited attempts on MyFinanceLab to get each assignment right (before each
assignment is due), we expect almost all students to receive full points on the homework. This means that not
doing an assignment puts you at a considerable disadvantage relative to others when the final grades are
computed.
While the homework assignments are all that is required, you should try to work as many of the recommended
end-of-chapter problems as you can. The more problems you do, the more deeply you will understand the
material.
Exams
There will be three midterm exams. The second is cumulative but with an emphasis on the material covered
after the first midterm. The third midterm will cover only Professor Wellmans material.
The final exam for the course, taken during the universitys exam period in December, will cover Professor
Wellmans material only. All exams must be taken with your registered section.
All exams are closed-book exams. You will need a calculator (phone apps are OK). A formula sheet will be
provided for each exam.
You are on your honor not to use an electronic device for any extra assistance. You may not communicate with
any person except the instructor during the exams.

The problems we do in class and on the homework assignments are designed to prepare you for the exams. In
addition, we will solve practice questions together in class. Our goal is for you to know exactly what to expect
on the exams.
Regrading Policy
All regrading requests must be made in writing within two weeks of the day an assignment is returned. Any
assignment submitted for regrading of a question is subject to a complete regrade of the entire assignment. As a
result, the regraded score may increase, stay the same, or decrease.
Academic Integrity
You have promised to adhere to the following honor statement:
As a member of the Fisher College of Business community, I am personally committed to the highest standards
of ethical behavior. Honesty and integrity are the foundation from which I will measure my actions. I will hold
myself accountable to adhere to these standards. As a leader in the community and business environment, I will
pledge to live by these principles and celebrate those who share these ideals.
In addition, the University's Code of Academic Integrity is designed to ensure that the principles of academic
honesty and integrity are upheld. All students are expected to adhere to this Code. Please visit the following
website for more information on the University's Code of Academic Integrity and possible sanctions:
http://oaa.osu.edu/procedures. In accordance with University Faculty Rule 3333-5-487, all instances of
academic misconduct will be reported to the Committee on Academic Misconduct, which recommends
appropriate sanctions to the Office of Academic Affairs. There will be no exception to this rule.
Do not distribute solutions to any class materials to future students in this class. Doing so will be considered
an honor violation.

Course Calendar
Note that the schedule for covering material in lectures may change somewhat. Because of questions we may
sometimes run over or under the time allotted.
Homework assignments are due at 11:59 PM on the indicated days.
Professor Sensoys half of the course.
Week

Class

Date

Topics

Readings

Comments

Especially
recommended
BD practice
problems

FT: Tu 8/25

BD Ch. 1, 3,
4.1-4.4

BD Ch.2 is
accounting review
material.

3.1-3.19

WP: Tu 8/25
or Th 8/27
FT: Th 8/27

WP: Tu 8/25
or Th 8/27
FT: Tu 9/1

Course outline. Review of

background material. Time
value of money. Net present
value (NPV) rule.
Net present value (NPV) rule.
The objective function of the
corporation. No arbitrage and
the law of one price (LOOP).
Calculating present values.

WP: Tu 9/1 or
Th 9/3
FT: Th 9/3

BD Ch. 6.1, 9.1,

9.2

WP: Tu 9/1 or
Th 9/3
FT: Tu 9/8

Applying the NPV rule to the

valuation of bonds and
stocks.

BD Ch. 8

WP: Tu 9/8 or
Th 9/10
FT: Th 9/10

WP: Tu 9/8 or
Th 9/10
FT: Tu 9/15

Applying the NPV rule to

corporate investment
decisions: Determining cash
flows.
Applying the NPV rule to
corporate investment
decisions: Exercises.
Midterm 1 review
Midterm 1

WP: Tu 9/15
or Th 9/17
FT: Th 9/17

BD Ch. 4.9
(IRR), Ch. 7

4.46-4.49, 7.17.10, 7.19-7.21

WP: Tu 9/15
or Th 9/17
FT: Tu 9/22

Comparing the NPV rule to

other investment criteria
(payback, IRR, etc.)
Statistics Review and
Portfolio Mathematics

BD Ch. 10.110.4, 11.1-11.2

10.1-10.7, 11.111.13

10

WP: Tu 9/22
or Th 9/24
FT: Th 9/24

Measuring Risk, MeanVariance Analysis,

Diversification and beta

BD Ch. 10.510.8, 11.3-11.4

10.20, 10.2210.26, 10.2910.38, 11.1411.32

Capital Asset Pricing Model

(CAPM). Portfolio and
CAPM examples.

BD Ch. 11.511.8, 10.7, 10.8,

12.1-12.3

Beta and the banana birds.

Review of diversification and

Same as prior
class.

WP: Tu 9/22
or Th 9/24

11

FT: Tu 9/29

12

WP: Tu 9/29
or Th 10/1
FT: Th 10/1

Same as prior
class

BD Ch. 4.1- 4.8

(skip IRR)

Same as prior
class

HW 1 due (9/4)

4.1-4.45

6.1-6.7
9.1-9.15

HW 2 due (9/11)

Same as prior
class

8.1-8.4, 8.68.10, 8.12-8.14,

8.17, 8.18, 8.20
Same as prior
class

HW 3 due (9/18)

HW 4 due (10/2)

11.33-11.51,
12.1-12.10
Same as prior
class.

13

WP: Tu 9/29
or Th 10/1
FT: Tu 10/6

14

WP: Tu 10/6
or Th 10/8
FT: Th 10/8
WP: Tu 10/6
or Th 10/8

CAPM. More examples.

Course wrap-up. Practice
problems.
Midterm 2

HW 5 due (10/9)

Professor Wellmans half of the course.

Week

Class

Date

Topics

Readings

15

FT: Tu 10/20

BD Ch. 13

13.4-13.9,
13.11-13.12

16

WP: Tu 10/20 or
Th 10/22
FT: Th 10/22

Introduction
Investor behavior and
Capital market efficiency

BD Ch. 13

Same as prior
class

17

WP: Th 10/20 or
Tu 10/22
FT: Tu 10/27

Continue: Investor
behavior and Capital
market efficiency
Capital structure in a
perfect capital market

BD Ch. 14

18

WP: Tu 10/27 or
Th 10/29
FT: Th 10/29

14.1-14.6,
14.8, 14.1114.19

Debt and taxes

BD Ch. 15

19

WP: Tu 10/27 or
Th 10/29
FT: Tu 11/3

Debt and taxes

Financial distress

BD Ch. 15, 16

20

WP: Tu 11/3 or
Th 11/5
FT: Th 11/5

Capital budgeting and

valuation with leverage

BD Ch. 12, 18

21

WP: Tu 11/3 or
Th 11/5
FT: Tu 11/10

BD Ch. 12, 18

22

WP: Tu 11/10 or
Th 11/12
FT: Th 11/12

Continue: Capital
budgeting and valuation
with leverage
Midterm 1 review
Midterm 1: Chapters 1316, 12, 18

23

WP: Tu 11/10 or
Th 11/12
FT: Tu 11/17

Valuation and financial

modeling: A case study

BD Ch. 19

19.1-19.19

24

WP: Tu 11/17 or
Th 11/19
FT: Th 11/19

BD Ch. 19

Same as prior
class

25

WP: Tu 11/17 or
Th 11/19
FT: Tu 11/24

Continue: Valuation and

financial modeling: A case
study

10

10

11

11

12

12

13

WP: Tu 11/24
(Recorded for Th
WP section)

Comments

HW 1 due (10/30)

Especially
recommend
ed BD
practice
problems

15.1-15.19

16.1-16.6,
16.8, 16.1216.15
HW 2 due (11/6)

12.1-12.10,
12.18-21,
12.23, 12.2512.27
18.1, 18.718.8, 18.18

HW 3 due (11/13)

Corporate ethics (case)

- Conflict on a trading
floor (HBS case)
- Securities misselling prefinancial crisis

Read Conflict on
the Trading
Floor Case

Delivered together with

Professor David Freel
14

26

FT: Tu 12/1
WP: Tu 12/1 or
Th 12/3

Options I

BD Ch. 20

HW 4 due (12/4)

20.1-20.13,
20.15-20.19

14

15

27

FT: Th 12/3

Options II

28

WP: Tu 12/1 or
Th 12/3
FT: Tu 12/8

Final Review

Same as prior
class

HW 5 due (12/11)

WP: Tu 12/8 or
Th 12/10
Final exam (covering only material from Prof. Wellmans half of the course):
FTMBA sections: Wednesday, December 16, 1:15pm, GE 365 and 375
Tuesday WPMBA: Tuesday, December 15, 6pm, GE 365
Thursday WPMBA: Thursday, December 17, 6pm, GE 365