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G RAND V ALLEY S TATE U NIVERSITY Seidman College of Business The Seidman College of Business creates a rigorous learning environment with a student focus, regional commitment, and a global perspective. Managerial Finance (FIN 320 – 01, CRN 21848) Winter 2011 Day: Tue and Thu Instructor: Vijay Gondhalekar Time: 8:30 – 9:45 am Office: 462C DeVos Place: 614 EC Telephone: (616) 331-7395 Credits: 3 Fax: (616) 331-7445 Prerequisites: ACC 212 and MTH 110 E-mail: OVERVIEW AND OBJECTIVE The primary objective of this course is to introduce participants to the "World of Finance". The intention here is to develop a basic understanding of decisions and steps that finance managers have to take for maximizing firm value. Following are some of the topics we will cover in this class, 1) We will begin by introducing the idea of the 'business cycle'. This will cover the cyclical movements in variables such as stock prices, GNP, interest rates, etc., to develop a general understanding of the ever changing world in which finance managers have to operate. 2) We then cover time value of money, i.e., the concept of assessing the present worth of cash flows that may be received at some time in the future (and vice-versa). 3) The time-value of money idea is extended to cash-flow patterns typically encountered when dealing with securities such as stocks and bonds. Here we will learn to differentiate between 'price' and 'value' of the securities as well as the return we 'would' get and what we 'should' get from a security (sometimes these two returns are identical and are referred to as the ‘expected’ return of the security). 4) This sets the stage for discussing the concept of ‘riskiness’ of a security (stock, bond, etc.) and how to quantify it. 5) The natural next step is to link 'expected return' and 'risk' i.e., what is the return one 'should' expect for bearing a given level of risk. 6) Once a link between risk and return is established, we extend that idea to find the return investors want for supplying capital to the firm. This is called the company's cost of capital. 7) The cost of capital in turn dictates what projects may be worthwhile investments for a
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