University of Connecticut
Financial Mathematics II
Math 289Q/369
Fall 2003
Classes: MWF: 12:00 – 12:50 Instructor: James G. Bridgeman, FSA
MSB 415 MSB408
Office Hours: M: 3:30
– 4:30 860-486-8382
W:
1:00 – 2:30 bridgeman@math.uconn.edu
F:10:00 – 11:00 instructor's web site
Or by
appointment course web site
Context for the Course
Required for the
Professional Master’s degree in Applied Financial Mathematics
Partial preparation for SOA/CAS course 2 examination on Interest Theory, Economics and Finance
(Next scheduled for Wednesday November 5, 2003)
Introduction to the Applied Mathematics of Corporate Finance
Brealey & Myers, Principles of Corporate Finance (7th ed.)
Various resources as referenced in the text
Society of Actuaries, Study Note Package for course 2 examination
ACTEX/Mad River Books
(distr.), Study Manuals and related material for Course 2 Exam
Chew, The New Corporate
Finance/where theory meets practice (3rd ed.)
Megginson, Corporate
Finance Theory
Term Paper 10%
2 Take-home Quizzes 10%
Mini-cases 20%
Mid-term Exam 25%
Final Exam 35%
Outline & Intended Pace
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Week of |
Topic(s) |
Chapter |
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Aug. 25 |
Financial profession – decisions about value Financial statements and analysis – where (when) is the cash? |
Ch.1 Ch.29 |
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Sept. 1 |
Valuation principles; Common stock valuation |
Ch.2, 4.1-4.4 |
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Sept. 8 |
Enterprise/project valuation and decision-making |
Ch.4.5, 5, 6.1-6.2 |
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Sept. 15 |
Complex decisions; Portfolio and market risk |
Ch.6.3-6.4, 7 |
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Sept. 22 |
Risk, return and cost of capital; CAPM |
Ch.8, 9.1-9.3 |
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Sept. 29 |
Capital budgeting |
Ch.9.4-9.6, 10 |
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Oct. 6 |
Sources of value; Measurement of value creation |
Ch.11, 12 |
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Oct. 13 |
Market efficiency; mid-term exam (Oct. 17) |
Ch.13 |
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Oct. 20 |
Financing and financing vehicles |
Ch.14, 15 |
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Oct. 27 |
Dividends, debt, and capital structure theory |
Ch.16, 17 |
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Nov. 3 |
Capital structure and financing decisions; (no new material Nov. 5) |
Ch.18 |
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Nov. 10 |
Financing effects on valuation; Financial options |
Ch.19, 20.1 |
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Nov. 17 |
Use, value and pricing of financial options |
Ch.20.2-20.3, 21 |
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Dec. 1 |
Real options and their value; Course review |
Ch.29 |
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Dec. 8 |
Final Exam |
All |
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One paper will be due on December 3. Graduate students (369) will choose any of the main
topics (text chapters) in the syllabus and prepare a paper covering it in more depth after consulting
outside references. Undergraduates (289Q) may do the same, or they may write on a general topic
that will be announced in class early in the semester.
There will be two take-home quizzes assigned, the weeks of Sept 22 and Nov. 17. They will be
designed to challenge and you may work in teams to come up with the answers. In addition,
graduate students (369) will be expected to grade either one set of quizzes or one set of mini-cases.
Graduate students (369) will submit the mini-cases for chapters 6, 9, 11, and 21 within a week
after the completion of the chapter. Undergraduates (289) will submit the mini-cases for
chapters 6 and 11. In addition, graduate students (369) will be expected to grade either one
set of mini-cases or one set of quizzes.
Both the syllabus and the grading plan are subject to change with appropriate advance notice
to the class.