THE CHINESE UNIVERSITY OF HONG KONG

DEPARTMENT OF FINANCE

ADVANCED FINANCIAL MANAGEMENT (FINA 6092 FA, FB & FC)

Term 1 2023-2024

Professor: Anthony B. Rice

Email: anthonyb.rice@cuhk.edu.hk Office Hours: Tuesday, by appointment only
Office Phone: 3946-3216 Office Location: CYT 1242

Tutor: Plato Chan

Email: platocpt@cuhk.edu.hk Office Hours: by appointment only
Office Phone: 3943-3735 Office Location: CYT 1237

Class Section: FA FB FC
Class Location: Wu Ho Man Yuen Bldg Wu Ho Man Yuen Bldg Cheng Yu Tung Bldg
WMY 406 WMY 306 CYT 409
Class Time: Monday, Monday, Tuesday,
9:30 am – 12:15 pm 2:30 pm – 5:15 pm 2:30 pm – 5:15 pm

Course Overview
This course is the introductory course in Financial Management in the MSc Finance program. The purpose
of this course is to equip students with the fundamental tools and techniques essential for a financial
manager or a general manager with a good understanding of finance. This course is also designed to
provide a foundation for and to supplement other coursework in investments, fixed income, and valuation.

Covered Topics
The primary focus of this course is on financial valuation. We will first discuss the concept of present
value in extensive detail and then apply the principles of valuation to value (a) investment projects and
(b) financial securities (stocks and bonds). Since financial decision-making virtually always involves risk
and uncertainty, we will then introduce the concept of risk from the perspective of modern portfolio theory.
We will integrate our knowledge of cash flow valuation with our understanding of risk to modify valuation
techniques in the presence of uncertainty. The course will conclude with an introductory treatment of the
effects of financing on capital budgeting decisions.

Textbook
Corporate Finance by Ross, Westerfield, Jaffe, and Jordan (McGraw-Hill, Inc., 12 th Edition; ISBN:
9781259918940). Some editions come with an S&P card, which will not be required for our class.
FINA 6092 - Advanced Financial Management (Term 2022)

Please see the announcement “Welcome to Advanced Financial Management” on Blackboard,

which provides information about various cost-efficient options for the textbook before you decide. For
cost considerations, you may also use earlier editions of the text, such as the 11 th edition (ISBN:
9780077861759) or the 10th edition (ISBN: 9780077511388).

Computing Resources
To obtain proficiency in Excel you must use it on all course assignments and are encouraged to do so on
the final exam. Financial calculators, while permitted, are not required.

Grading Policy
Group homework problem sets (4) 25%
Individual homework assignment 20%
Final exam 40%
Class participation 10%
Class citizenship 5%
The lowest group problem set score will be dropped automatically.

Problem Sets
The problem sets can be done in groups between 3-4 students. You are welcome to determine the group
size that fits your preferences. To give you some additional flexibility, you may also form groups with
students from the other section that I teach. I encourage you to start your group coordination early because
the first group homework is due on Tuesday, Sept. 17th.

Homework assignments and their solutions will be posted on Blackboard. All problem sets are to be
submitted electronically via Blackboard by 11 pm (the evening before the first class) on the dates specified
in the course schedule. You must submit your homework as an Excel file. The submitted file should list
the names of all group members, so that each team participant will receive credit. Only one person per
group (any team member) needs to submit the team homework on Blackboard. The graded assignment
will be returned to the submitting team member via email or in tutorials (where the submitting team
member will be able to see both the grade and the feedback on your submission). The submitting team
member is responsible for sharing this feedback with the rest of the group.

To ensure timely feedback and the potential for partial credit please ensure that the steps taken to answer
questions are easily traceable, i.e., no hardcoded answers (must be traceable) or intermediate steps, and
do not use the “Solver” function in Excel.

Individual Assignment
The individual assignment is similar in its structure to the group problem sets. While the goal of the group
assignments is to build on team members’ complementary skills to advance each other’s knowledge, the
purpose of this problem set is to assist you with reviewing course material from the first six lectures. To
give you an opportunity to apply the skills you have developed, you are asked to complete this problem
set individually. Like group assignments, make sure your steps are traceable and do not use hardcoded
answers or Solver.

2
FINA 6092 - Advanced Financial Management (Term 2022)

Course Materials
Electronic copies of class notes, news articles, and Excel spreadsheets will be posted on Blackboard under
Course Outline shortly before each class. There is no course pack, and all class materials will be available
via Blackboard.

Homework Questions
You are welcome to ask any questions about the homework after it is due. Before the due date, however,
we will answer only clarifying questions to ensure fairness to all students. If you need help with
interpreting the information or the tasks assigned in the problem, please post such questions in the
Blackboard forum under Discussion Boards. This method ensures transparency to all students since
everybody can view this information when completing their homework.

Final Exam
The final exam is comprehensive. The format of the exam is open book and open notes. You are also
permitted to use your laptop computers on the exam. The exam will consist of multiple choice and
problem-solving questions. Further details will be announced as we get closer to the end of the class.
Please note that the exam will be held in class on Monday, November 27 th and plan your schedules ahead
to avoid a conflict with the exam.

Optional Practice Problems

To provide additional practice material, I have developed a list of optional problems for each class session.
These problems are available on Blackboard under Final Exam Resources  Exam Practice Question.
These questions are intended for self-study and extra problem-solving practice and do not need to be
submitted.

Participation
Students are rewarded for engagement, participation in case discussions, and questions that demonstrate
preparation for mini-cases and insights into course material.

Class Citizenship
To ensure a productive and enjoyable experience for everyone, students are rewarded for punctuality,
professionalism, and attendance. Points are deducted for tardiness and unprofessional behavior. Students
must attend the classes according to their assigned section (i.e. FA, FB & FC).

Code of Conduct
There are also a few rules specific to our course:
 You may discuss group problem sets with students outside your group. However, you are not
allowed to copy part or all of someone else's spreadsheet on an assignment. Each group should
produce its own solutions to each problem set.
 The individual assignment should be completed without contact with other students.

3
 FINA 6092 - Advanced Financial Management (Term 2022)

 To ensure information symmetry any questions that you may have regarding the course material
being covered in the current lecture, must be asked during the lecture. No questions about the
day’s material will be answered after the class has concluded.

Students with Disabilities

If you need accommodation for a disability, please let me know at your earliest convenience. Some aspects
of the course, the assignments, and the in-class activities may be modified to facilitate your participation
and progress. As soon as you make me aware of your needs, we can work with the Office of Services for
Students with Disabilities to help us determine appropriate accommodation. I will treat the information
you provide as private and confidential.

Course Schedule (Tentative)*

Class Date Topic Text Chapter Homework Due

(12th Edition)
Introduction to the Course and Capital
1
Mon., Sept. 4 Markets
1 Tues., Sept. 5 Financial Statements and Cash Flow
2
4.1-4.2
Time Value of Money
Mon., Sept. 11 Valuation of Multiple Cash Flows
2 4.3-4.6
Tues., Sept. 12 Interest Rate Quotes
Mon., Sept. 18 HW 1 due at 11 pm,
3 Capital Budgeting Criteria 5
Tues., Sept. 19 Sunday, Sept. 17
Mon., Sept. 25
4 Cash Flows and Investment Decisions 6.1-6.2
Tues., Sept. 26
TBD Inflation and Capital Budgeting HW 2 due at 11 pm,
5 6.5
Tues., Oct. 3 Mid-course Review Sunday, Oct. 1
Mon., Oct. 9 Bond Valuation 8
6
Tues., Oct. 10 Stock Valuation 9
Mon., Oct. 16 10 Individ. assignment
7 Tues., Oct. 17
Return, Risk, and Diversification
11.1-11.6 due 11 pm, Oct. 15
TBD 11.7-11.9
8 Capital Asset Pricing Model
Tues., Oct. 24 13.1-13.5
Weighted Average Cost of Capital
Mon., Oct. 30 13.6-13.10 HW 3 due at 11 pm,
9 Tues., Oct. 31
Capital Structure: Basics and Limits 16, 17 Sunday, Oct. 29
Market Efficiency, Behavioral Biases, and 14
Mon., Nov. 6 Investing 19
10 Tues., Nov. 7 Payout Policy, Mergers and Acquisitions 29
Financial Distress 30
Mon., Nov. 13 Pioneer Petroleum Case HW 4 due at 11 pm,
11 Tues., Nov. 14 Course Wrap-up Sunday, Nov. 12
12 Mon., Nov. 27 Final Exam, Location: TBD
* This schedule is tentative and subject to changes throughout the Term. Any revisions to the schedule
will be communicated in class and associated materials will posted on Blackboard

4
 FINA 6092 - Advanced Financial Management (Term 2022)

Grade Descriptors
A/A- Outstanding performance on all learning outcomes.
B+/B/B- Substantial performance on all learning outcomes, OR high performance on some
learning outcomes which compensates for less satisfactory performance on
others, resulting in overall substantial performance.
C+/C/C- Satisfactory performance on the majority of learning outcomes, possibly with a
few weaknesses.
D+/D Barely satisfactory performance on a number of learning outcomes.
F Unsatisfactory performance on a number of learning outcomes, OR failure to
meet specified assessment requirements.