email: jh4@stern.nyu.edu
web: http://people.stern.nyu.edu/jh4/
This page last updated: Thursday September 14, 2023 1:19 PM.
Class notes, announcements, and supplementary material will be posted to the NYU Brightspace site (under development)
This course is an introduction to the world's financial system: securities and institutions that create, trade, hold, manage and regulate them. In this course we mostly take the viewpoint of a long-term investor, someone who is going into the financial markets to maximize gain and minimize risk. In the follow-on course (corporate finance), we take the perspective of financial manager, someone who is making firm-specific business decisions to maximize the value of the firm. By the end of this course, you should be able to comprehend most of the Markets section of the Wall Street Journal.
Finance, even at the introductory level, is a rigorously quantitative discipline that builds on prior knowledge. Prior to starting Foundations, you should have successfully completed a calculus-based microeconomics course and a statistics course (such as Statistics for Business Control & Regression/Forecasting Models). If you have not taken these classes (or if you are planning to take one or both concurrently) please email me and we can discuss things.
The departmental policy states:
- For Foundations of Finance and Corporate Finance, for sections with enrollments of more than 20 students, we expect that approximately 35% of students will receive an A or A- grade. This policy is identical to the Stern School guidelines for grading in undergraduate core courses.
- Within the “A range” of 35% for both core courses and elective courses, we would expect the number of A- grades to be at least equal to if not more than the number of straight A grades, in a proportion such as 15% A’s and 20% A-’s, with the understanding that instructors will be attentive to the “bunching” of grades so that students with nearly identical performance will receive the same letter grades.
- The remaining grades should be awarded mostly in the “B range,” with an expectation that approximately 60% of the students will receive some type of B. Grades should be distributed fairly equally between the B+, B, and B- subgroups, with the straight B grades ordinarily being the most numerous.
- For students who perform significantly below most of the class, grades of C+, C, C-, D, and F are appropriate. We would expect approximately 5% of the grades in larger sections to fall into this range and encourage instructors to take account of noticeable separations in performance when differentiating the grades awarded to individual students
The "books" that we'll be using are
- Bodie, Kane and Marcus, Essentials of Investments, 12th US edition, abbreviated as "BKM", not to be confused with "Investments" by the same authors. Most of the course material is taken from this book.
- Ross, Westerfield, and Jordan, Fundamentals of Corporate Finance, 13th edition, abbreviated as "RWJ". We're using only two chapters (5 and 6) from this book.
We'll be accessing the BKM text using the McGraw-Hill Education Connect platform. Connect is required for this section. it is an electronic access platform. It is purchased through Follet via the NYU books store. It will appear on your bursars bill; the charge will be refunded if you drop the course within the indicated time window. We'll access the RWJ chapters as an eBook through another McGraw app.
On the Brightspace class webpage, go to Books/Materials
MHE Connect is slightly more expensive than renting the print texts from a third-party reseller. The system is also rather rigid. Despite these drawbacks I'm using it for several reasons:
- The Connect editions are optimized for online presentation and delivery of the material. I think that it will make your study time more productive.
- Connect has well-integrated self-check questions that many students have found useful.
- Uniformity. Everyone will have the same editions of the materials.
- If we find ourselves having to go remote, Connect will help us stay on schedule and keep organized.
You'll need a financial calculator to work problems and exams. The best calculator for this course is the HP 10bII+. (Most of the examples and problems in the notes will be worked using HP 10bII+ keystrokes.) The TI BA II Plus is a good alternative, but the keystrokes are slightly different. Older versions of these calculators should also be okay: anything in HP 10B or TI BA series should suffice. I don't recommend top-of-the line financial calculators such as the HP 17 or similar: the extra power comes with extra complexity. Smartphone calculator apps are not permitted in exams.
I generally make class notes available online prior to class. I usually make class videos available after class. (This is on a "best efforts" basis. Technical problems sometimes arise. I can't guarantee availability.) Class notes will be posted to Brightspace in the lessons tabs, under "Topics and Classes"; Video recordings will be posted in the Mediasite tab.
Is the final exam cumulative?
On the final I do not directly test on earlier (that is, midterm) material. You should be aware, though, that the material is inherently cumulative. For example, we cover the time value of money for the midterm. This material is used extensively in the analysis of bonds (which is covered on the final). Variance is used in portfolio theory (midterm) but also in the analysis of option markets and valuation (final). And so on. So a certain amount of retention is assumed: don't develop amnesia for the first-half material.