Financial Management (251.301.

004)
Fall 2016, SNU-CBA Undergraduate

Instructor Kuan-Hui Lee

Associate Professor
College of Business, Seoul National University
http://hosting01.snu.ac.kr/~kuanlee/
Office LG-703
Phone 6924
Email kuanlee@snu.ac.kr (best way to contact me)
Class Time 9:00-11:50AM, Tuesday
Class Room 58-120
Office Hours By appointment
Class Web http://biz.snu.ac.kr/intranet/ (intranet)
Teaching Assistant: Minsu Ko (minsuko@snu.ac.kr)

This course provides the students with the fundamental principles of finance and their applications.
The topics include time value of money, risk and return tradeoff, pricing of bonds and equity, capital
budgeting, and market efficiency. This course uses a combination of assignments, classroom lectures
and discussions to convey the material. Each student is expected to contribute regularly to classroom
discussion. A list of planned topics and materials by class session is presented below (in the Course
Schedule). Before each exam, I may have a review session that most students find very helpful.

Course resources
Required:
Jonathan Berk, Peter DeMarzo
Corporate Finance (3rd ed., Pearson)

Richard A. Brealey, Stewart C. Myers, and Alan J. Marcus

Fundamentals of Corporate Finance (7th ed., McGraw-Hill).

For more on valuation:

Damodaran on valuation (by Damodaran)

For more on bonds:

Fixed income analysis (by Fabozzi)
Fixed income securities: Tools for Today’s markets (by Tuckman and Serrat)

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Grades
• Mid-Term Exam: 200
• Final Exam: 400
• Homeworks #1, #2: 100 (=50 x 2)
• Individual class participation: 100

• Total Score: 800

Exams
Make sure you need to bring your ID and calculator. During the exam, your cell phone and notebook
computers should be turned off.

Absence from the exams will not be excused, except for the most serious circumstances. Such
circumstances must be validated in writing by an appropriately accredited professional (e.g. medical
doctor, police officer). Remember that joining Wonder-girls concert cannot be a reason to miss the
exam. No make-up exams will be given (no exceptions).

Homeworks
All individual students are required to submit two separate reports for the two books below. The list of
books will be updated during the semester. Verbatim copy of homework is strictly prohibited and if
such activity is detected, the student will receive the failure grade for this course.

Readings for homeworks:

TBA

Individual class participation

Any activity that hampers class atmosphere will result in zero point for individual class participation. I
will not allow: 1) turning on laptop during the class, 2) making noises (private talking), 3) reading
materials that are not related to class, 4) going-out and coming-in during the class, 5) and any other
activity that violates honor code.

Academic Misconduct
It causes failing the course and triggers quite unpleasant university- mandated procedures which
result in further sanctions. Academic misconduct includes, but is not limited to, giving or
receiving information during an exam and submitting plagiarized work for academic
requirements.

Course schedule

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Each class period includes required readings from the textbook and other resources. Exam dates are
fixed. However, the dates and the topics in the course outline are approximate and could be subject to
change.

I. Introduction
Week 1
Course Overview; The Corporation and the Financial Manager
Reading: Chapter 1 (BMM)
Problem Sets: 2, 3, 4

Week 1, 2
Finance and Accounting
Reading: Chapters 3 and 4 (BMM)
Problem Sets: 1, 3, 5, 18, 19, 23 (Ch. 3); 1, 4 (Ch. 4)

II. Time value of money

Week 3, 4, 5
The Time Value of Money; Present Value (PV); Future Value (FV); Inflation; Net Present Value
(NPV); Discounted Cash Flow (DCF) Analysis; Investment Decision Criteria
Reading: Chapters 5, 8, 9, 10 (BMM)
Problem Sets: 1, 2, 7, 13, 15, 38, 52, 64, 72, 73 (Ch.5); 11, 13, 15, 22, 28 (Ch.8); 2, 3, 15, 18, 19, 28
(Ch.9); 6, 9, 10, 11, 16, 20, 23, 27 (Ch.10)

III. Bonds
Week 5, 6
Valuing Bonds; Yield to Maturity; Yield Curve; Interest Rate Risk; Default Risk
Reading: Chapter 6 (BMM)
Problem Sets: 1, 2, 9, 16, 21, 25
Due: Homework #1 (week 6)

Week 7 Midterm Exam Week: Exam

IV. Stocks
Week 8, 9, 10
Valuing Stocks; Risk and Returns; Diversification; Portfolio Theory; CAPM; Efficient Market
Reading: Chapter 7, 11, 12 (BMM)
Problem Sets: 1, 2, 6, 8, 11, 20, 21, 30 (Ch.7); 3, 9, 12, 17 (Ch.11); 1, 6, 11, 18, 29, 30 (Ch.12)

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V. Firms
Week 11, 12
Theory of Capital Structure and WACC
Reading: Chapter 14 (Berk and DeMarzo)

Week 13, 14
Capital Structure under Friction
Reading: Chapter 16 (BMM)
Due: Homework #2

Week 15
M&A

Week 16 Final Exam