Subject Code/Name: BFC2140 - Corporate Finance 1 Workload: 1x 2hr lecture
1x 1hr tute
Assessment: 5% tutorial participation
20% online exercises
25% Mid-semester test
50% Exam
Recorded Lectures: Yes, with screen capture
Past exams available: No past exams provided, only one sample paper. However past exams can be obtained from past students or by looking online
Textbook Recommendation: Fundamentals of Corporate Finance 3rd edition by Berk is the only prescribed textbook for this unit. Previously, the Parrino textbook was prescribed however an error with the bookstore on my.monash lead to this being displayed as the prescribed textbook when in fact a newer model had been introduced. Despite this, I found the textbook to not be that valuable of a resource, as I only used it for the weekly tutorial questions. The lecture slides are a far more reliable tool as to what is going to appear in the exam.
Lecturer(s):Dr Emma Zhang - Wks 1-6, also Chief Examiner
Dr Ying Dou - Wks 7-12
Year & Semester of completion: Semester 1, 2018
Rating: 3.5 out of 5
Comments:Despite there being past reviews on this subject, the assessment structure has changed over the past few years warranting me to write a new review for it.
Firstly, I'd have a look at my review for BFC1001
here, as a lot of the content in this subject builds upon the basics discussed in BFC1001, despite it not being a pre-req for this subject. Mostly this subject focuses upon capital budgeting and capital structure, with some lectures covering things like dividend policy and net-working capital management.
The lecture outlines were:
Week 1 - Introduction to business finance and financial mathematics - reviews discounting and PV and FV discussed in BFC1001
Week 2 - Corporate Financial Mathematics - looks at annuities & perpetuities and how to value them
Week 3 - Valuation of bonds and equities - looks at pricing bonds and shares both ordinary and preference, which helps in later topics
Week 4 - Capital Budgeting 1 - NPV method discussed
Week 5 - Capital Budgeting 2 - discussed alternative methods of valuation such as matching cycle method and equivalent annual annuity
Week 6 - Mid-semester test held in your allocated lecture
Week 7 - Working capital management
Week 8 - Capital Budgeting 3 - looked at sensitivity analysis, was hardly examinable
Week 9 - Risk and return - Looked at means and standard deviations of returns, as well as covariance and correlation
Week 10 - Cost of capital - Showed how to calculate weighted average cost of capital (WACC) applying previous knowledge
Week 11 - Capital structure - Looked at Modigliani & Miller (M&M) assumptions and how they change for values of levered firms (firms that consist partially or fully of debt) and unlevered firms (firms with no debt in the value of their company)
Week 12 - Payout policy - Looked at market efficiency as will as the dividend payout policy
Emma lectured for all the lectures up to the mid-semester test, whilst Ying conducted the last 6 lectures. Both lecturers were decent, although personally I preferred Ying due to his humour and knowledge in the topics taught, particularly as he also lectures Corporate Finance 2.
In terms of the assessments:
Tute participation - Every week there are allocated questions uploaded to Moodle to be completed
before each tutorial. The tutes run a week behind the lecture content, which is a good way to revise the content covered in the past lectures. Then in the tutes you go over the answers to these questions, as well as additional questions posted online. I had Yash as my tutor who was excellent as he's taught the subject previously and knows the content inside-out. However, it's a shame that he's heading off to America, so I'd recommend Sarah as well as a tutor as she's taught me in the past in Foundations of Finance and knows the content relatively well. As long as you complete the work beforehand and attend all your tutes, then you should have no trouble scoring the full 5%.
Online exercises - These consisted of a bunch of short-answer and multiple choice questions delivered on the Pearson website via a link from the Moodle page. After the last lecture of the week, which was on 5-7pm Friday, then the quiz would open at 9pm to cover the content taught from that lecture's week. You then had from 9pm of that Friday until 9pm the following Friday to complete the work. That way, week 2's quiz would cover week 1's content for example. However, I found these to be quite tedious as often they didn't correlate to what was taught in the lectures or what was being asked to be done in the tutes. Therefore, the questions often took a while to complete, even though there was unlimited time to complete them online. Sometimes they took me up to 4hrs to complete, which I found to be quite an annoyance to carry out in the first place.
Mid-semester test - This was held in your allocated lecture slot in week 6. However, due to there being over 900 people enrolled in the subject, some people based on surnames had to complete the test in the M2 lecture theatre, which isn't that far from South 1 where both lecture streams were held. This consisted of some true/false questions, multiple choice questions and short answer questions. There were tricks here and there, however most people that I know did well and the average was close to 70%, with 34% of people scoring a HD in this assessment. Personally, I found it relatively straightforward with just enough time to finish everything, although some careless errors did deprive me from receiving a higher mark.
Exam - The exam was 2hrs closed book, consisting of short-answer questions mainly focusing on stuff taught in the second half of the unit. However, I found this exam to be quite difficult as some of the terminology used in the exam, such as soft rationing limit was barely explained upon in the lectures. Therefore, if you had prepared heavily for the exam, then you'd be fine, however it was much harder than I was expecting, probably due to the 34% high distinction rate in the mid-semester test telling of the unit being made too easy up until that point. Despite this, with good revision habits and reading over the lecture slides and memorising as much as you can then you would be fine in the exam.
Overall, I found this unit to be a great introduction to a finance major, as for most students this is the first finance unit they are taking at Clayton, with BFC1001 not being offered this year. However, it could use a number of improvements, in particular more past exams to be provided that accurately highlight the structure of the final exam, rather than just a sample exam which pieced together parts of the course, some of which was not examinable at all.