Wharton Waiver Guide

Wharton MBA Class of 2017
Waiver
Information
Guide
Table of Contents
Introduction .................................................................................................................................................4
Accounting (ACCT 611/612/613) ..............................................................................................................9
Syllabus ACCT 611.........................................................................................................................13
Course Outline ACCT 611.............................................................................................................18
Syllabus ACCT 612.........................................................................................................................23
Syllabus ACCT 613.........................................................................................................................28
Corporate Finance (FNCE 611/612) ........................................................................................................38
Syllabus FNCE 611 .........................................................................................................................39
Course Outline FNCE 611 .............................................................................................................42
Syllabus FNCE 604 .........................................................................................................................45
Syllabus FNCE 612 .........................................................................................................................49
Macroeconomics and the Global Economic Environment (FNCE 613/615) ......................................56
Syllabus-1 FNCE 613......................................................................................................................57
Course Outline-1 FNCE 613 .........................................................................................................59
Syllabus-2 FNCE 613......................................................................................................................61
Syllabus-3 FNCE 613......................................................................................................................68
Syllabus-4 FNCE 613......................................................................................................................71
Syllabus FNCE 615 .........................................................................................................................78
Economics of Managerial Decision Making (MGEC 611/612) .............................................................83
Syllabus MGEC 611........................................................................................................................85
Course Outline MGEC 611............................................................................................................88
Syllabus MGEC 612........................................................................................................................91
Course Outline MGEC 612............................................................................................................94
Marketing Management: Program Design (MKTG 611) ......................................................................97
Syllabus MKTG 611........................................................................................................................98
Course Outline MKTG 611..........................................................................................................104
Marketing Management: Strategy (MKTG 612) ...................................................................................107
Syllabus MKTG 612......................................................................................................................109
Table of Contents (cont.)

Strategic Marketing Simulation (MKTG 613) ......................................................................................114
Syllabus MKTG 613......................................................................................................................116
Operations Management: Quality and Productivity (OPIM 611) .....................................................119
Syllabus OPIM 611.......................................................................................................................120
Course Outline OPIM 611...........................................................................................................123
Regression Analysis for Business (STAT 613/621) ...............................................................................124
Syllabus STAT 613 ........................................................................................................................126
Course Outline STAT 613 ............................................................................................................129
Syllabus STAT 621 ........................................................................................................................132
Course Outline STAT 621 ............................................................................................................135
Introduction 4
Introduction
The Wharton MBA is designed to help you make the most of your academic experience. For
many, this is an opportunity to learn an entirely new skill set. For others, it is a chance to upgrade
and update.
Not Everyone Waives

Your class will experience a curriculum designed to meet the real-time needs of forward-thinking
business leaders. This innovative curriculum builds a customizable foundation in business
essentials while providing ample time to explore Whartons wide array of elective offerings.
The foundation of the curriculum is built around a series of classes referred to as Core Courses.
Please see the MBA Curriculum Snapshot for a full list of the Core classes which can be accessed
at https://spike.wharton.upenn.edu/mbaprogram/curriculum/curriculum_snapshot.pdf. Core
Course descriptions can be found in the current 2014-2015 Resource Guide which can be accessed
at https://spike.wharton.upenn.edu/mbaprogram/publications/Res_Guide_2014.pdf (the 20152016 Resource Guide will be available in May 2015). Many students find that their previous
course-work does not cover the subject material addressed in these Core offerings. If that holds
true for you, simply select the decline to waive options when completing the waiver questionnaire on the SPIKE Waiver Registration page which can be found at
https://spike.wharton.upenn.edu/mbaprogram/index.cfm.
Taking the entire Core will not put you at a disadvantage. Near 40% of your class will not waive a
single course and many who do waive will waive only one subject. (See below for statistics on
waivers for the Class of 2016). Additionally, you have choices to make within the context of the Core,
allowing you to tailor your educational experience even before registering for elective coursework.
Waiver Statistics for the Class of 2016 (WG16)
ACCT
FNCE
MGEC
MKTG
OPIM
STAT
611
612
611
612
613
611
612
611
612/613
611
613
621
Waiver by Credential
22
34
30
81
38
Waiver by Exam
84
22
45
149
68
36
49
Placement by Credential
20
131
Placement by Exam
114
93
173
Substitution
38
10
106
134
22
224
45
149
68
72
40
117
87
177
Total
Not Approved
30
44
13
99
70
15
12
% Approved
89%
84%
78%
60%
49%
91%
73%
91%
38%
97%
% of Class
27%
28%
5%
17%
8%
8%
5%
14%
10%
21%
Introduction 5
Sometimes Waivers Make Sense

You may have educational or professional experience that makes some of the material covered
in the Core redundant. Provided you can prove your mastery of such material by credential or
examination, you have the opportunity to waive related elements from the Core.
This publication outlines each of the Core courses that may be waived and the requirements for
waiving. Enclosed you will find abridged syllabi for all of the courses that may be waived. If the
content in one of these syllabi looks familiar, consider waiving that course.
How to Waive
Beginning in mid-April, you will be asked to complete a waiver questionnaire on the SPIKE
Waiver Registration page. Depending upon your responses, it may be recommended that you:
Submit credentials verifying that you meet the waiver requirements;

Take a waiver exam; or
Take the class.
If the waiver questionnaire recommends that you waive a particular course by credential, an
application will be made available to you online. If you wish to submit a request to waive by
credential, please complete the following steps:
1. Fill out the application (you will need to print it out once you have completed it online);
2. Enclose copies of the material required to waive by credential these may include a copy
of your transcript (please highlight the courses and grades for the subject you are attempting
to waive), a syllabus, or a detailed resume;
3. Mail the completed application to the MBA Program Office at:
Wharton MBA Program Office
ATTN: Waiver Coordinator
University of Pennsylvania
300 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
OR
Save the petition as an Adobe .pdf, attach .pdf scans of your transcript, syllabi and/or
other supporting documentation, and send the completed packet via email to:
[email protected]
(if not in PDF format, your submission will be rejected)
Your application to waive by credential will be forwarded to a member of the faculty for review.
If the questionnaire recommends that you take a waiver exam, please register for that exam
through the SPIKE Waiver Registration page. The Waiver Exam Guide provides sample questions
from several of the waiver exams.
Introduction 6
Prep Coursework for ACCT, FNCE, and STAT

WEDNESDAY, JULY 29 FRIDAY, JULY 31
(Please note that these classes take place before the start of Pre-Term.)
These ACCT, FNCE, and STAT classes are the only classroom review offered for waivers.
Attendance is not required to take the waiver and placement exams but highly recommended.
ACCT 604: This course is meant for students seeking placement into ACCT 612. ACCT 604 is
meant to help qualified students who may need to refresh their knowledge of basic financial
accounting concepts. It is not designed for students with little or no previous exposure to
accounting.
ACCT 608: This course is designed for students who may be able to waive entirely the accounting
requirement but need to refresh their understanding of graduate-level financial accounting concepts. This course is not designed for students with little or no previous exposure to accounting.
FNCE 604: This course is designed for students seeking placement into FNCE 612. FNCE 604 is
meant to help qualified students who may need to refresh their knowledge of basic corporate
finance concepts. It is not designed for students with little or no previous exposure to corporate
finance.
STAT 608: This course is designed for students who wish to review the prerequisite materials for
STAT 621 to prepare for the placement exam. It is not designed for students with little or no
previous exposure to statistics.
Should You Waive?

Advantages include:
Making room in your schedule for more elective coursework

Avoiding repetitive coursework
The disadvantages include:
Missing out on course work that would better prepare you for advanced study in the field
Less time spent developing relationships with members of your cohort and learning team
Waiver Policies
There are two deadlines for submitting waiver by credential:
Monday, June 1 results will be returned by Monday, June 15

Monday, July 6 results will be returned by Monday, July 20
Introduction 7
We encourage you to submit your credentials as soon as possible in order to determine if

you will need to take the waiver prep courses and exams that take place before Pre-Term.
Credentials will not be accepted after the July 6 deadline.
All waiver exams must be completed by Tuesday, August 4, 2015.

To waive by credential, you must meet the stated deadlines. No credentials will be accepted
after Monday, July 6.
If you do not meet the requirements to waive a course by credential, you may try to waive
the same course by taking the waiver exam in all subjects that offer a waiver by exam, except
OPIM 611. For OPIM 611, you can only take the waiver exam if that is recommended.
You have only one attempt at each waiver exam and are eligible to take them only in the
summer preceding your first year at Wharton. If you are unable to waive a Core course by
credential and cannot take the waiver exam at the scheduled time, you must take the course.
There are no make-up waiver exams.

If the online waiver questionnaire does not recommend you attempt to waive by credential,
you may not submit credentials. If you still wish to waive the course, the only way to do so is
by taking and passing the waiver exam.
Students granted waivers for fixed Core courses may still choose to enroll in said courses
provided they enroll prior to the close of the add period. To enroll in a waived course, students
should contact their academic advisor in the MBA Program Office.
What should you do?

Academic advisors are available to discuss your best course of action. Second-year students
can also give a perspective on waivers but keep in mind that they may not be familiar with your
background or experience. Even if you receive waivers, you can later decide to take the courses as
you may decide that it would be good to have a review. It also may be helpful to take a Core class
to learn about Whartons approach to a particular subject in preparation for advanced electives.
If you have any questions, please dont hesitate to contact the MBA Program Office at
[email protected].
Introduction 8
Waiver and Placement Exam Schedule 2015 (subject to change)

Monday, August 3 and Tuesday, August 4
Course ID
Course Title
Day
Date
Time
ACCT 611/612
Accounting
(Waiver and Placement Exams)
Mon
3-Aug
5:00 - 7:00 p.m.
FNCE 611/612
Corporate Finance
Mon
3-Aug
8:30 - 11:30 a.m.
FNCE 613
Macroeconomics and the

Global Economic Environment
Mon
3-Aug
2:30 - 4:30 p.m.*
MGEC 611
Microeconomics for Managers: Foundations
Tues
4-Aug
8:30 - 10:00 a.m.
MGEC 612
Microeconomics for Managers: Advanced Applications
Tues
4-Aug
10:15 - 11: 30 a.m.
OPIM 611
Managing the Productive Core of the Firm:

Quality and Productivity
Mon
3-Aug
12:00 - 2:00 p.m.
STAT 613
Regression Analysis for Managers
Tues
4-Aug
12:00 - 2:00 p.m.
Students who score sufficiently well on the FNCE 611 waiver exam are granted waivers for FNCE 611, FNCE 612, and FNCE 614.
*Students who score sufficiently well on FNCE 613 waiver exam will be granted waivers for both FNCE 613 and FNCE 615.
Accounting (ACCT 611/612/613) DESCRIPTION 9
Accounting (ACCT 611/612/613)

Course Description
The role of accounting is the accumulation, analysis, and presentation of relevant financial data
of an enterprise to serve the needs of decision makers. The provision of multiple purpose information to serve the needs of interested parties outside a firms management is referred to as
financial accounting. The provision of information for internal decision making is referred to as
managerial accounting. The objective of the core requirement in accounting is to teach the basic
concepts, standards, and practices of financial reporting, leading to the ability to read and understand published financial statements and depending on the course chosen provide some of the
rudiments of managerial accounting.
TRACKS WITHIN FINANCIAL ACCOUNTING
Students entering the MBA program at Wharton come with diverse backgrounds in accounting.
Some are Certified Public Accountants with extensive academic and professional training. Others
have had a course or two at school or in training programs. Other students enter Wharton with
no exposure to accounting. As a result, we offer three courses with which students can meet the
accounting requirement: ACCT 611 (a full semester, 1 credit unit course), ACCT 613 (a full
semester, 1 credit unit course) and ACCT 612 (a half semester, 0.5 credit unit course). The difference between them is the material covered and the amount of time allotted to each topic. For
example, ACCT 611 and ACCT 613 review basic accounting transactions, debits and credits, and
income statement and balance sheet preparation, while ACCT 612 does not as students are
expected to have that knowledge coming into the course. ACCT 611, 612 and 613 all discuss a
variety of financial accounting topics in depth beyond those listed immediately above. ACCT 611
and ACCT 613 differ in that ACCT 611 is purely a financial accounting course, while ACCT 613
also teaches basic managerial accounting concepts and covers some of the financial accounting
topics in less depth.
Students have three basic options for fulfilling their accounting requirement. They can:
1. Waive accounting altogether, either by credential or exam.
2. Place into the accelerated course (ACCT 612) either by credential or exam. Students in
ACCT 612 are presumed to understand the following concepts:
the recording of economic transactions in the accounting records

(i.e., bookkeeping);
the basic financial statements which summarize a firms economic transactions

(the balance sheet, the income statement and the statement of cash flows);
the fundamental concepts needed to prepare and understand published financial

statements (e.g., use of accrual accounting);
how to construct the basic financial statements from transactions information and
how to recreate the transactions by looking at the financial statements;
how to use the indirect method to construct the cash flow statement from balance
sheet, cash receipt, and supplemental information; and
how to use accounting statements and disclosures to reconstruct the underlying

economic events in which the firm participated.
3. Take one of the full semester courses (ACCT 611 or ACCT 613).
Please read the next section to decide which option is appropriate for your situation.
The Accounting Waiver and Placement Process

WAIVING OR PLACING BY CREDENTIALS
DEADLINE: See Introduction to this Waiver Guide.

Waiving the Accounting Core Requirement By Credentials
Waiver of the accounting core requirement without taking the waiver exam is only granted on the
basis of credentials where there is no question about a students background. Waiving of the
accounting core requirement without the exam is allowed only for the following persons:
Individuals holding one of two professional certifications in accounting: certified
public accountant (CPA) or chartered accountant (CA) AND who have practiced as
an auditor within the prior five years.
Placing into ACCT 612 by Credential
Placement into ACCT 612 without taking the placement exam is only granted on the basis of
credentials where there is no question about a students background. Placement into ACCT 612
without the exam is allowed only for (1) individuals who, within the last five years, have taken
introductory AND intermediate financial accounting (note that intermediate accounting is not
managerial accounting, but is an advanced financial accounting course) with a grade of B or
better in both courses within the last five years or (2) Wharton undergraduates who, within the
last five years, received a grade of B or better in Accounting 101. Students placing into ACCT 612
by credential are not required to take ACCT 604, which takes place before Pre-Term, but it is
recommended for those who feel they need a refresher given that the instructor will presume that
students know the basic accounting concepts discussed above prior to the beginning of the course.
Documenting Your Credentials
Students interested in either placing into ACCT 612 by credential or waiving the accounting core
requirement by credential must formally apply to the Wharton MBA Program Office by filling out
and submitting the placement or waiver form.
Persons holding professional certification (CPA or CA) have to submit a copy of their
certification and submit a resume or a copy of their application which includes their recent
work history.
WAIVING OR PLACING BY EXAM
EXAM DATE: Waiver and Placement Exam Schedule, and sample exams and solutions can be found in
the Waiver Exam Guide.
A common misinterpretation of the waiver by credential criteria is that students must know
accounting at the CPA level in order to waive the accounting core requirement. In fact, many students who do not meet the above criteria may be well qualified to waive the core requirement, or
at least to place into ACCT 612. However, because it is difficult to objectively measure preparation
from transcript materials, the department relies on waiver and placement exams when a students
credentials do not unambiguously meet the criteria.
Two different exams in Financial Accounting will be offered just prior to the official start of
Pre-Term. Except as noted above, a student can waive the accounting core requirement or be
placed into ACCT 612 by taking the appropriate exam. Students with some prior coursework in
accounting are encouraged to sit for the placement exam so that they may take ACCT 612 and
those with extensive work experience or prior coursework in accounting are encouraged to take
the full waiver exam, so that they may waive the accounting core requirement completely. Students who complete ACCT 604 should sit for the placement exam, not the waiver exam. Students
who complete ACCT 608 should sit for the waiver exam, not the placement exam. If a student sits
for the waiver exam, but does not pass it, it is still possible to be placed in ACCT 612 with a sufficiently high score. Students with just some accounting background are likely better served by taking the placement exam, not the waiver exam.
The Waiver and Placement Exam selects from financial accounting topics covered throughout
ACCT 611/612/613. The exams will be closed book,closed notes, and similar in form and content to past ACCT 611/613 and ACCT 612 exams. Copies of past ACCT exams are included in the
Waiver Exam Guide.
Exam Preparation
The following are the accounting courses offered in the week prior to Pre-Term that help you
prepare for the waiver and placement exam, as well as the fall semester.
ACCT 608: Financial Accounting Waiver Prep Course
Upon completion of this review course, the student should be prepared to take the Waiver Exam.
This course will meet on-campus in the week prior to Pre-Term. It is designed for students who
have had substantial prior exposure to financial accounting but were not able to waive by credentials. It is presumed that the student enrolled in ACCT 608 has previously studied all of the financial accounting topics covered in ACCT 611/612/613. See the syllabi for these courses for more
details, but these topics include provisions for uncollectible accounts, LIFO-FIFO inventories,
leases, and deferred income taxes. The course will review these topics and more, emphasizing their
implications for analyzing and interpreting financial statements.
ACCT 604: Financial Accounting Review Course

Upon completion of this course, the student should be prepared to take the Placement Exam.
This course will meet on-campus in the week prior to Pre-Term. It is not a class for individuals
who have had no prior exposure to financial accounting. Rather, it is a class for students with
prior training in financial accounting, but who have been unable to place by credentials into the
half semester financial accounting course, ACCT 612. Students who have placed into ACCT 612
by credentials who feel a need of a refresher can also take ACCT 604 as knowledge of all material
covered in this course will be presumed in ACCT 612. ACCT 604 will briefly review the concepts
underlying preparation of the balance sheet and the income statement. The course will also
emphasize the preparation of the statement of cash flows as well as the interpretation of these
statements using actual annual reports, and the reconstruction of the underlying economic
events that affected these annual reports. It is presumed that the student taking this course has
previously studied all of this material or had significant exposure to financial statements.
NEITHER WAIVING NOR PLACING (BY CREDENTIALS OR EXAM)
ACCT 603: Financial AccountingBasic Course

The material covered in this on-line summer course is required for all students taking one of the
full semester versions of accounting (ACCT 611 or ACCT 613). ACCT 603 consists of on-line
video lectures, homework, and a self-assessment exam. Students must complete ACCT 603 and
pass the self-assessment exam prior to taking ACCT 611 or 613. ACCT 603 should require five
hours to complete and students are strongly encouraged to complete it during July before
arriving on campus. Student participation in ACCT 603 will be reported to the ACCT 611 or 613
instructors.
This chart may help you decide which preparatory course may be appropriate for you:
IF YOU HAVE:
NO Previous Accounting
Experience
Previous Accounting
Experience
Taken NO Previous Financial

Accounting Courses
Take ACCT 603
Take ACCT 603
Taken ONE Previous Financial

Accounting Course
Take ACCT 604
Take ACCT 604 or 608
Taken MORE THAN ONE Previous

Financial Accounting Course
Take ACCT 608
Take ACCT 608
Fundamentals of Financial Accounting (ACCT 611) SYLLABUS 13
Syllabus (ACCT 611) Fundamentals of Financial Accountingi

Overview
The role of accounting is the accumulation, analysis, and presentation of relevant financial data
of an enterprise to serve the needs of creditors, investors and other external decision makers. The
objective of this course is to familiarize the student with the basic principles and practices of
financial accounting. This course focuses on the concepts underlying corporate financial statements. The course begins with an overview of the procedures necessary to prepare and understand
the balance sheet, income statement, and statement of cash flows. The remainder of the course
examines the accounting for the most common and significant transactions of a firm, such as
accounts receivable and revenue recognition, inventories, longterm assets, debt, income taxes,
investments, and stockholders equity. Although a solid understanding of the rules and procedures
required to construct financial statements is essential, this course emphasizes the analysis of
financial statements and other financial disclosures.
Course Website
The website for this course can be found on Canvas: https://canvas.upenn.edu/courses/1254101
Course Material
TEXTBOOK (REQUIRED)
Dyckman, T., R. Magee, G. Pfeiffer, A. Hartgraves, and W. Morse, Financial & Managerial
Accounting for MBAs, Wharton Custom Edition, 2014, Cambridge Business Publishers. This
textbook is especially customized for our course, covers all the chapters in the class, and is available
only in the Penn Bookstore. In the detailed schedule below, practice problems from the textbook
are assigned to reinforce the material covered for each topic. Solutions to the problems in the
textbook are posted on the course website.
MATERIAL ON COURSE WEBSITE
Lecture Slides: the lecture slides will be made available in advance of class (at least one week
before the scheduled date).
Homework Assignments (for submission on Canvas) and Cases (for in-class discussion)
Exam Practice Problems and Solutions (from old exams)
Articles: business press articles are sometimes referenced in the course syllabus and provide
context for issues, which will be discussed in class.
Grading Policy
Final grades will be determined using the following weights (Total: 100 points):
Midterm Exam
35 pts.
Final Exam
35 pts.
In-Class Quizzes
15 pts.
Homework
10 pts.
Class Participation
5 pts.
The grading scheme will be re-weighted to take into consideration improvement in student performance over the semester. If a students mean-adjusted score on the Final Exam (i.e., adjusted
for the mean class score) improves relative to his or her mean-adjusted score on the Midterm
Exam, then the weight on the Midterm Exam will be reduced by 5 pts. (from 35 pts. to 30 pts.)
and the weight on the Final Exam will be increased by 5 pts (from 35 pts. to 40 pts.). Final course
grades adhere to the schools mandated grade guidelines.
Midterm & Final Exams

The Midterm Exam will cover the material in Sessions 1 through 12, inclusive. The Final Exam is
scheduled by the University Registrar and will be comprehensive, with a heavy emphasis on the
material in Sessions 13 through 24.
All exams are closed-book, but you are allowed to bring to each exam one piece of 8 x 11" paper
with notes. This paper may contain handwritten or typed (any font and size) notes. You may write on
both sides.
It is the students responsibility to attend examinations at the times and places that are specified. If a
student cannot attend an examination, it is his/her responsibility to notify the MBA Office and the
instructor prior to the exam (or as soon as possible). Only the MBA Office may grant a student authorization to be absent from an examination; there are no exceptions to this rule. In the event of an
authorized absence from any exam, a make-up exam will be given during the official make-up exam
period that is set by the Registrar. You will receive a final grade of Incomplete for the course pending
the completion of the make-up exam. An unauthorized absence from an examination will result in a
grade of zero for that examination.
The graded mid-term exam will be returned to the student mail folders. Scores will be posted to
Canvas. If you believe that your exam has been incorrectly graded, you should return your exam to me
not a TA within one week of the return of the examination (requests made after that will not be
considered). You must submit the original copy of the examination together with a written note that
clearly explains what you believe is the error. The entire exam will be re-graded.
In-Class Quizzes
There will be five in-class quizzes during the semester that will be held on the dates indicated in
the course outline. Quizzes will be given at the beginning of the class (late arrivals will not be
accommodated, so make sure that you arrive to class on time), usually before we start a new topic.
Each quiz will take about 10 to 20 minutes and will usually consist of about four or five questions
(primarily multiple choice). The quizzes will be closed-book and no notes will be allowed. The
material covered in each quiz is set out in the syllabus below. Quiz scores will be posted to Canvas.
In computing a students final grade, only the four highest quiz scores will be counted (i.e., the
lowest quiz score will be dropped from the computation of your grade). If for some reason you
are unable to attend class on one of the five quiz days, I will simply count the four quizzes that are
completed. No make-up quizzes will be given. The solutions will be posted on the class web site
on the day of the quiz.
Homework
There will be three homework assignments with due dates indicated in the course outline. The
homework assignments may be discussed in groups. However, you must submit your own solutions that represent your own individual work. It is not acceptable to copy another students work
and submit it as your own. The homework assignments will be available on the course website
about one week before they are due. All homework must be submitted electronically (via
Canvas) by 6 p.m. on the due date. I strongly recommend that you submit your homework
answers in advance of the 6 p.m. deadline. Please do not hand in a hard-copy to me or the
TAs. It will not be accepted. Homework scores and solutions will be posted on Canvas within
shortly after the homework is due.
Class Participation and Conduct

Class participation grades will be based on what you add to the learning experience of the entire
class. Students who consistently make contributions that facilitate discussions, help to clarify technical points, or provide new insights will receive five points. No contribution or contributions
that are obvious, confusing, or peripheral will receive zero points. Consistently discourteous
behavior (see below) will also result in zero class participation points. Contributions between
these two extremes will receive between one and four points. Please make sure to display your
name tents to help me learn your names and to help facilitate the classroom discussion.
As a courtesy to both me and your fellow students and to ensure that everyone has the greatest
opportunity to learn, please adhere to the following:
Students should sit in the same seat each class session to help me keep track of where
everyone is.
Class starts and ends on time. If a unique situation arises such that you must come in late,
please inform your professor ahead of time and sit in an open aisle seat close to the door you
arrived through.
Students should remain in attendance for the duration of class, except in an emergency. If a
unique situation arises such that you must leave early, please inform your professor before
class and sit in an open aisle seat near the exits of the classroom.
All phones and other electronic devices should be turned off, with the exception of computers/
tablets. Use of computers/tablets, however, must be strictly for the purpose of this class.
Please do not carry on private conversations during class.

Class Preparation
You should come to class having reviewed the daily class slides and, on days with an assigned
article or case study, having read these materials and worked through the case questions. You
should also read the suggested sections from the textbook either before or immediately after class,
and work through at least some of the suggested practice problems from the textbook.
Teaching Assistants and Review Sessions

There are seven teaching assistants for the course. Each of these TAs is a second-year MBA student
who performed extremely well in the introductory financial accounting course last year. The TAs
will hold regular office hours on four out of five days every week (except during breaks or for
holidays) based on the schedule posted on the course website.
During office hours, one of the TAs will be present and will assist with questions about concepts,
assigned problems/cases, or homework problems (however, they will not give you the solution to
the homework assignments). Note that the TAs are jointly servicing both ACCT 611 and ACCT
613, so you may encounter students from both courses attending the same office hours.
Ethics Matrix
The Wharton MBA Code of Ethics typically requests an Ethics Matrix for each class to provide
ground rules and ethical guidelines for course materials and assistance from classmates or others.
Below is the completed matrix for this course. If you have any questions about the matrix, please
feel free to ask me.
Learning team / approved work team
Other student(s) in same section
Student(s) in other sections (same term)
Homework Problem Sets
In-Class Quizzes
Person outside of Wharton
Internet content / other outside materials
Past exams / assignments
Past notes / summaries
Current book / class notes
In-Class Readings & Cases
Summary sheet of notes
Laptop / other electronics
People
Approved calculator
Materials
Wharton student not taking the class this term
--
A = Allowed material
W = Allowed to work together
Shaded Cell = Not allowed
D = Discussion of general concepts and procedures is allowed but no sharing of specific answers.
The information above covers many common situations but will not cover every circumstance. Remember:
The Wharton MBA Code of Ethics that you accepted requires, among other things, that you represent
yourself and your work honestly, dont try to gain unfair advantage over other students, follow the instructors
guidelines and respect confidentiality of your work and the work of others.
Should you have questions, please contact your ethics liaison or professor.
Fundamentals of Financial Accounting (ACCT 611) COURSE OUTLINE 18
Course Outline (ACCT 611) Fundamentals of Financial AccountingKEY

TB refers to the Dyckman et al. textbook (Wharton custom edition);
x-y means problem y in chapter x of the textbook.
Session 1. Introduction
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 1
Chapter 1
M1-24, E1-28, E1-29, P1-36, P1-37
Basics of Accounting Are Vital to Survival
Session 2. Accounting Process; Mapping Business Activity into Financial Statements
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Session 2
Animatronics (Q1 Q4)
Chapters 2 and 3
Chapter 2: M2-18, M2-19, M2-26, E2-33, E2-44
Chapter 3: M3-22, M3-24, E3-32, E3-38
U.S. Firms Clash Over Accounting Rules
Session 3. Economics vs. Accounting; Balance Sheet Presentation; Introduction

to Accrual Accounting
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 3
Chapters 2 and 3
Chapter 2: P2-58, P2-64
Chapter 3: P3-42, P3-49
When Balance Sheets Collide With the New Economy
Session 4. Revenue Recognition; Accrual Accounting and the Matching Principle
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Session 4
United Airlines
Chapter 6, p. 267-277
M6-14, M6-24, E6-32, E6-39, E6-40
Accounting Shift Would Lift Tech Profits; Zynga Explains Method for
Recording Real Revenue; Boeing Hits a Milestone; Digging into Online
Coupon Firms Dealings; Microsoft Financials
Session 5. Statement of Cash Flows
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Quiz #1:
Sessions 5 & 6
Animatronics (Q5)
Chapter 4
M4-23, M4-26, M4-31, E4-34, E4-38, E4-41, E4-44
Cash Never Flow Lies; PepsiCo Statement of Cash Flows
10-20 minute quiz, covering Sessions 1-4
Session 6. Statement of Cash Flows (continued)
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Sessions 5 & 6
Callaway Golf
Chapter 4
P4-51, P4-54
Quick Cash Via Receivables Deals
Session 7. Introduction to Financial Statement Analysis (FSA)
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 7
Chapter 5
M5-14, M5-24, E5-27, E5-33, P5-46
Decline of the P/E Ratio; A Tower of Babel in Accounting; Home Depot
Working Capital; PepsiCo Financials
Session 8. Accounts Receivable
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Quiz #2:
Session 8
Barnes & Noble
Chapter 6
M6-18, M6-20, E6-33, E6-34
Accounting Issues at WorldCom At Nortel, Warning Signs Existed
Months Ago
Session 9. Inventory & Cost of Goods Sold
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Session 9
Research in Motion
Chapter 7
M7-15, M7-19, M7-22, E7-26, E7-29, E7-31
Big Oils Accounting; Unraveling Inventorys Riddle; Supplement to
LIFO vs. FIFO; Boeing Hits a Milestone; Chesapeakes Obscure Costs
Session 10. Earnings Quality & Earnings Management
Slides:
Case:
TB Reading:
Add. Reading:
Session 10
Detecting Earnings Management
Chapter 6, p. 288-290; Earnings Quality (back of TB)
Autonomy Trails Rally; Tesla Earnings Quality Sketchy; Quality of
Earnings and Earnings Management
Homework #1 (due at 6 p.m. two days after Session 10)

Topics covered: Accounts Receivable and Inventory
Session 11. Long-Lived Assets
Slides:
TB Reading:
TB Problems:
Add. Reading:
Sessions 11 & 12
Chapter 8
M8-11, M8-14, E8-24, P8-36
IFRS Spells Write-Downs; DirecTV Write-Downs
Session 12. Long-Lived Assets (continued)
Slides:
Case:
TB Problems:
Add. Reading:
Sessions 11 & 12
Snap-On Tools
M8-17, M8-21, E8-29, E8-32, E8-35
Demystify the Lehman Shell Game; HP to Book 8 bn Charge;
SEC Makes B&N Justify Goodwill
Homework #2 (due at 6 p.m. on the day after Session 12)

Topics covered: Long-Lived Assets
MIDTERM EXAM
Topics covered: Sessions 1-12, inclusive
Session 13. Long-Term Debt
Slides:
TB Reading:
TB Problems:
Add. Reading:
Sessions 13 & 14
Chapter 9, Appendix A (Time-Value of Money)
M9-21, M9-22, M9-29, M9-31, M9-34, E9-39
Citigroup Finds a Profit
Session 14. Long-Term Debt (continued) and Leases (begin)
Slides:
Case:
TB Problems:
Add. Reading:
Sessions 13 & 14; Session 15

Starbucks
M9-23, M9-26, E9-47, P9-53
Morgan Stanley to Post a Loss from Bonds
Session 15. Leases (continued)
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 15
Chapter 10, p. 453-466
M10-13, M10-15, E10-23, E10-26
New Accounting Rules Ruffle the Leasing Market; Leases Suffer Identity
Crisis; Northeast Airlines Financials
Session 16. Deferred Taxes
Slides:
TB Reading:
TB Problems:
Add. Reading:
Quiz #3:
Sessions 16 & 17
Chapter 10, p. 476-483
M10-22, E10-33, P10-40, P10-41
SEC Challenging Multinationals on Plans for Foreign Earnings;
Sony Profits Are Far Off with Write-Down
Session 17. Deferred Taxes (continued)
Slides:
Case:
TB Problems:
Add. Reading:
Sessions 16 & 17
Safeway Inc.
E10-32, P10-42, C10-47
Motorola Deal Offers Google Tax Benefits; Tax Twist: At Some Firms,
Cutting Corporate Tax Rates May Cost Billions
Session 18. Stockholders Equity
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Session 18
Pepsico
Chapter 11
M11-20, M11-21, M11-25, M11-35, E11-45, E11-54
Stock Buybacks Consume Cash; When Friending Becomes a Source of
Funds; Time for BofA to Bid Warren Buffett Adieu
Session 19. Marketable Securities, Intercorporate Investments & Segment Reporting
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Quiz #4:
Sessions 19 & 20
Peets Coffee
Chapter 12, p. 555-567
M12-11, M12-12, E12-24, E12-26
Bank Quandary Valuing the Assets; Distortions in Baffling
Financial Statements
Session 20. Marketable Securities, Intercorporate Investments & Segment Reporting
Slides:
TB Reading:
TB Problems:
Add. Reading:
Sessions 19 & 20
Chapter 12, p. 568-581; Back Chapter 12, p.589-599
E6-38, M12-14, M12-15, Back Ch. 12: E-28, E-29, P-33
Buyers Beware: The Goodwill Games; The Importance of Segment Data;
FASB Rethinks Business Segment Reporting
Session 21. Pensions and Other Post-Employment Benefits (OPEB)
Slides:
Case:
TB Reading:
TB Problems:
Add. Reading:
Session 21
Johnson & Johnson
Chapter 10, p. 466-475
M10-17, M10-20, E10-29, P10-38
U.S. Corporate Pension Plans Funding Deficit; S&P 500 Companies Post
Record Level of Pension Underfunding
Session 22. Interim Financial Reporting
Slides:
TB Reading:
Add. Reading:
Quiz #5:
Session 22
Back Chapter 12, p. 599-608
Taking Stock of S&P Earnings
Session 23. Accounting for Financial Institutions
Slides:
Add. Reading:
Session 23
Distortions in Baffling Financial Statements; Deutsche Bank to Reduce
Assets; Accounts Misled Us into Crisis
Session 24. Capstone Case and Review
Case:
Target Corp. Comprehensive Case
Homework #3 due at 6 p.m. two days after Session 24

Topics covered: Marketable Securities and Pensions
FINAL EXAM
Topics covered: Comprehensive with emphasis on Sessions 13-24
Accelerated Financial Accounting (ACCT 612) SYLLABUS 23
Syllabus (ACCT 612) Accelerated Financial Accountingi

Overview
Course objectives: Learn to read, understand, and analyze financial statements. The course adopts
a decision-maker perspective of accounting and emphasizes the relation between accounting data
and the underlying economic events that generate them. To achieve the objective of helping students become effective financial statement users, the course strikes a balance between the teaching
of accounting mechanics and the analysis of financial statements. After a review of the construction and analysis of the Statement of Cash Flows, the course turns to an in-depth examination of
the major asset, long-term liability, and shareholders' equity accounts. After completing this
intensive introduction to financial accounting, students should be able to read, understand and
recreate transactions from the financial statements.
Intended Audience: This course is intended for students with strong command of the material
covered in the ACCT 604 pre-term class. Specifically, students entering ACCT 612 are expected to
already understand: (1) The recording of economic transactions in the accounting records (i.e.,
bookkeeping); (2) The basic financial statements that summarize a firm's economic transactions
(balance sheet, income statement and statement of cash flows); (3) The fundamental concepts
needed to prepare or understand published financial statements (e.g., use of accrual accounting);
(4) How to construct the basic financial statements from transactions information and how to
recreate the transactions by looking at the financial statements; (5) How to use the indirect
method to construct the cash flow statement from balance sheet, income statement, cash receipt
and disbursement, and supplemental information; and (6) How to use accounting statements and
disclosures to reconstruct the underlying economic events in which the firm participated.
ACCT 612 will be fully integrated into its companion, full semester, introduction-to-financialaccounting courses, ACCT 611 and ACCT 613. Fully integrated mean(s) that all three courses
will use the same textbook, and similar cases, lecture slides, etc.: in effect, ACCT 612 will cover
the same core material as ACCT 611 and ACCT 613, but at an accelerated pace because of the
presumed background of students enrolling in ACCT 612.
Course Material
COURSE WEBSITE
The website for ACCT 612 can be found on Canvas: https://canvas.upenn.edu/courses/1253246.

Course material that can be found on the website includes:
Lecture slides (which will be available in advance of the scheduled class date)
Solutions to the assigned textbook exercises and problems
Cases for in-class discussion (along with solutions after the case is discussed)
Supplementary reading
Accelerated Financial Accounting (ACCT 612) SYLLABUS 24
TEXTBOOK (REQUIRED)
Accounting for MBAs, Wharton Custom Edition, 2014, Cambridge Business Publishers.
Cambridge Business Publishers customized this textbook for use in ACCT 611, 612, and 613 (in
conjunction with offering a substantial discount to students); this textbook is only from the Penn
Bookstore.
OTHER SUPPLEMENTARY READING
IFRS and US GAAP: similarities and differences, PwC
Revenue recognition Multiple element arrangements, Ernst & Young
Lehmans $hell Game Poor Risk Management, Dutta, Caplan, and Lawson
Grading
Because ACCT 612 is an elite class for elite students, grading will be as straightforward as possible:
the midterm exam will be graded based on 50 pts., the final exam will be graded based on 50 pts.,
and a students course grade will be based on the cumulative score on both exams (in other words,
based on 100 pts.). There will be no other quizzes, assignments, homework, required problems
to-be-turned-in, etc., and class attendance and class participation will be completely voluntary.
Midterm and Final Exams

The midterm exam will cover the course material in Classes #1-6: see the Course Outline below.
The final exam will be comprehensive; nonetheless, as a practical matter, it will focus primarily on
the course material in Classes #7-12. In continuing with the theme of ACCT 612 being an elite
class for elite students, both exams will be closed book, closed notes, no electronic devices, etc.:
in effect, the only items a student can take with him or her to the exam are writing materials and
calculators (we will supply blank scratch paper if a student so desires).
Students have a responsibility to attend examinations at the specified times. If a student cannot
attend an examination, it is his/her responsibility to notify the MBA Office (and me) prior to the
exam. The MBA Office has exclusive purview over whether to grant a student authorization to be
absent from an examination. In the event of an authorized absence from any exam, a make-up
exam will be administered during the official make-up exam period that is set by the Registrar:
a student will receive a final grade of Incomplete for the course pending the completion of the
make-up exam. An unauthorized absence from an examination will result in a grade of zero for
that examination.
Summary statistics of performance on the midterm and final exams, along with suggested solutions,
will be posted to Canvas. Requests to re-grade exams are strongly discouraged! Exams should be
thought of as part of a collaborative process between an instructor and students; if a student has a
valid inquiry about how a specific question was graded, he or she must submit: 1) the original copy
of the exam; and 2) a detailed explanation of the issue/controversy/error. When processing a
re-grade request, we reserve the right to review the entire exam not just the issue in question.
Accelerated Financial Accounting (ACCT 612) COURSE OUTLINE 25
Course Outline (ACCT 612) Accelerated Financial AccountingKEY

TB = T(ext)B(ook): Dyckman, Magee, Pfeiffer, Hartgraves, and Morse (2014).
Preliminary Course Preparation
Case:
Animatronics (Questions 1-4)
Slides:
TB Reading:
TB Problems:
Cases:
Supp. Reading:
Class #1
Chapter 4
E4-34, E4-38, E4-41, E4-44, P4-51, P4-52, P4-54
Animatronics (Question 5); Callaway Golf
Cash Never Flow Lies; PepsiCo Statement of Cash Flows;
Quick Cash via Receivables Deals
Session 2. Revenue Recognition
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #2
Chapter 6, p. 267-277
M6-14, M6-24, E6-32, E6-39, E6-40
United Airlines
Gotem, Gotham; Accounting Shift Would Lift Tech Profits; Zynga
Explains Method for Recording Real Revenue; Boeing Hits a Milestone;
Digging into Online Coupon Firms Dealings; Microsoft Financials
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #3
Chapter 6
M6-18, M6-20, E6-33, E6-34
Barnes & Noble
Freedom to fudge; Accounting Issues at WorldCom; At Nortel, Warning
Signs Existed Months Ago
Session 4. Inventory and Cost of Goods Sold (COGS)
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class 4
Chapter 7
M7-15, M7-19, M7-22, E7-26, E7-29, E7-31
Research in Motion
Big Oils Accounting; Unraveling Inventorys Riddle; Fade to BlackBerry;
Boeing Hits a Milestone; Chesapeakes Obscure Costs
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Classes #5 & #6
Chapter 8
M8-11, M8-14, E8-24, P8-36
Berwick Tools
Slides:
TB Problems:
Supp. Reading:
Classes #5 & #6
M8-17, M8-21, E8-29, E8-32, E8-35
Review for Midterm Exam
MIDTERM EXAM (Topics covered: classes #1-6)

Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #7
M9-22, M9-23, M9-31, M9-34, E9-47, P9-53, P9-55
Starbucks
Citigroup Finds a Profit; Morgan Stanley to Post a Loss from Bonds
Session 8. Leases
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #8
Chapter 10, p. 453-466
M10-13, M10-15, E10-23, E10-26
Safeway (Leases)
New Accounting Rules Ruffle the Leasing Market; Leases Suffer Identity
Crisis; Northeast Airlines Financials
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #9
Chapter 10, p. 476-483
M10-22, E10-32, P10-40, P10-41, P10-42, C10-47
Safeway (Taxes)
SEC Challenging Multinationals on Plans for Foreign Earnings; Sony
Profits Are Far Off with Write-Down; Motorola Deal Offers Google Tax
Benefits; Tax Twist: At Some Firms, Cutting Corporate Tax Rates May
Cost Billions
Session 10. Marketable Securities and Intercorporate Investments
Slides:
TB Reading:
TB Problems:
Case:
Supp. Reading:
Class #10 & #11

Chapter 12, p. 555-581
M12-11, M12-12, E12-24, E12-26, E12-38
Peets Coffee
Bank Quandary Valuing the Assets; Distortions in Baffling Financial
Statements
Session 11. Marketable Securities and Intercorporate Investments (continued)
Slides:
TB Reading:
TB Problems:
Supp. Reading:
Class #10 & #11

Chapter 12, p. 555-581
M12-14, M12-15, E12-28, E12-29, E12-34
Buyers Beware: The Goodwill Games
Session 12. Financial Statement Analysis: Professor Stephanie A. Sikes
Slides:
TB Reading:
Class #12
Chapter 5
Review for Final Exam
FINAL EXAM (Topics covered: comprehensive, but primary focus on Classes #7-12)
Fundamentals of Financial and Managerial Accounting (ACCT 613) SYLLABUS 28
Syllabus (ACCT 613) Fundamentals of Financial and Managerial Accountingi
Overview
This course provides an introduction to both financial and managerial accounting, and
emphasizes the analysis and evaluation of accounting information from the perspective of both
investors as well as managers in the processes of planning, decision-making, and control. A large
aspect of the course covers the fundamentals of financial accounting. The objective is to provide
an overview of financial accounting and external reporting, including basic accounting concepts
and principles, as well as the structure of the income statement, balance sheet, and statement of
cash flows. The course also introduces elements of managerial accounting and emphasizes the
development and use of accounting information for internal decisions. Topics include cost
behavior and analysis, product and service costing and relevant costs for internal decisionmaking.
This course is recommended for students who will be using accounting information for
making strategic decisions in manufacturing and service operations, as well as those going into
general consulting, thinking of starting their own businesses, or simply seeking a broad
understanding of accounting and financial reporting as it relates to shareholders, creditors,
managers and other users of financial information.
Course Website
The website for this course is on Canvas.
Course Material
TEXTBOOK (REQUIRED)
Accounting for MBAs, Wharton Custom Edition, 2014, Cambridge Business Publishers.
This textbook is specifically customized for our course, covers all the chapters in the class, and is
available only in the Penn Bookstore. In the detailed schedule below, practice problems from the
textbook are assigned to reinforce the material covered for each topic (we refer to TB for textbook in the syllabus). Solutions to the problems in the textbook are posted on the course website.
MATERIAL ON COURSE WEBSITE
Lecture Slides: the lecture slides will be made available in advance of class (at least one week
before the scheduled date).
Homework Assignments (for submission on Canvas) and Cases (for in-class discussion)
Exam Practice Problems and Solutions (from old exams)
Articles: business press articles are sometimes referenced in the course syllabus and provide
context for issues, which will be discussed in class.
Grading Policy
Final grades will be determined using the following weights (total: 100 points):
Midterm Exam
35 pts.
Final Exam
35 pts.
In-Class Quizzes
15 pts.
Homework
10 pts.
Class Participation
5 pts.
The grading scheme will be re-weighted to take into consideration improvement in student
performance over the semester. If a students mean-adjusted score on the Final Exam (i.e.,
adjusted for the mean class score) improves relative to the mean-adjusted score on the Midterm
Exam, then the weight on the Midterm Exam is reduced by 5 pts. (from 35 pts. to 30 pts.) and the
weight on the Final Exam is increased by 5 pts (from 35 pts. to 40 pts.).
Final course grades adhere to the school mandated grade guidelines. Note that this allows for up
to 5% failing grades. Historically this course does give some failing grades each year.

The midterm exam covers the material in lectures 1 through 12, inclusive. The final exam is scheduled by the University Registrar and covers the material in lectures 13 through 24, inclusive.
Exams are closed-book, but you are allowed to bring to each exam one piece of 8 12 x 11" paper with
notes. This paper may contain handwritten or typed (any font and size) notes. You may write on
both sides. You are allowed to use a regular calculator during the exams.
It is the students responsibility to attend examinations at the times and places specified. If a student
cannot attend an examination, it is his/her responsibility to notify the MBA Office and the
instructor prior to the exam (or as soon as possible). Only the MBA Office may grant a student
authorization to be absent from an examination; there are no exceptions to this rule. In the event
of an authorized absence from any exam, a make-up exam is given during the official make-up exam
period set by the Registrar. You will receive a final grade of Incomplete for the course pending the
completion of the make-up exam. An unauthorized absence from an examination will result in a
grade of zero for that examination.
The graded mid-term exam will be returned to the student mail folders. The graded final exam can
be picked up at the reception area of the accounting suite (SH-DH 1300) until the first week of
spring semester classes (you will need to bring your student ID to collect the exam). Exam scores
will be posted online. If a student feels that an exam has been incorrectly graded, he/she should
return the exam to the professor not a TA within one week of the return of the examination
(requests made after that will not be considered). The student should submit the original copy of the
completed examination together with a written note that carefully explains the point of contention.
The entire exam will be re-graded.
In-Class Quizzes
There are five in-class quizzes during the course of the semester. Quizzes are given at the beginning of the class (late arrivals will not be accommodated with extra time, so be punctual). Each
quiz will take about 15 minutes, and will consist of about 4-5 questions (primarily multiple
choice). The quizzes will be closed-book and no notes will be allowed. The material covered in
each quiz is set out in the
syllabus below.
In computing a students final grade, only the four highest quiz scores will be counted (i.e., the
lowest quiz score will be dropped from the computation of your grade). If for some reason you
are unable to attend class on one of the five quiz days, we will simply count the four quizzes that
are completed. No make-up quizzes will be given. The quiz solutions and scores will be posted
on the class web site within a day or so of taking the quiz.
Homework
There are four homework assignments with due dates indicated in the class outline. The homework assignments may be discussed in groups. However, the solution submitted by each student
must be his/her own individual work. It is not acceptable to copy another students work and submit it as your own. Doing so will be considered an act of cheating. The homework assignments
#1, #2, and #4 will be available on the course website. They must be submitted via Canvas by the
due date and time listed. Please do not hand in a hard copy to me or the TAs. It will not be
accepted. Scores and solutions for homework assignments #1, #2, and #4 will be posted online on
the course website within a day or so of the homework being due.
The homework assignment #3 consists of preparing a written solution for either Case #10, #11, or
#12 as indicated in the class outline. This homework assignment must be submitted as hard copy
(no more than 3 pages) before the beginning of class when the respective case is on the course
outline. Each student must only pick one of the three cases. Again, the case solutions may be
discussed in groups, but the write-up submitted must be each students own work.
Class Participation and Conduct

Class participation grades are based on what you add to the learning experience of the entire class.
Students who consistently make contributions that facilitate discussions, help to clarify technical
points, or provide new insights will receive 5 points. No contribution or contributions that are
obvious, confusing or peripheral will result in zero points. Consistently discourteous behavior
(see below) will also result in zero class participation points. Contributions between the endpoints
will receive between 1 and 4 points, accordingly. Please display name tents to make it easier for me
to keep track of participation (Im not great with names sorry, and thank you!).
Both as a courtesy to your fellow students and the professor, and to ensure that everyone has the
greatest opportunity to learn, please observe the following:
Students should sit in the same seat each class session to help me keep track of where
everyone is.
Class starts and ends on time. If a unique situation arises such that you must come in late,
please inform your professor ahead of time and sit in an open aisle seat close to the door you
arrived through.
Students should remain in attendance for the duration of class, except in an emergency. If a
unique situation arises such that you must leave early, please inform your professor before
class and sit in an open aisle seat near the exits of the classroom.
All phones and other electronic devices should be turned off, with the exception of computers/
tablets. Use of computers/tablets, however, must be strictly for the purpose of this class.
Please do not carry on private conversations during class.

Student Preparation
Students should come to class having reviewed the daily class slides and, on days with an assigned
article or case study, having read these materials and worked through the case questions. It is also
recommended that students read the suggested chapter sections from the textbook either before
or immediately after the class, and work through at least some of the suggested practice problems
from the textbook.
Teaching Assistants and Review Sessions

There are seven teaching assistants for the course. Each of these TAs is a second-year MBA student
who performed extremely well in the introductory financial accounting course last year. The TAs
will hold regular office hours on four out of five days every week (except during breaks or for holidays) based on the schedule posted on the course website.
During office hours, one of the TAs will be present and will assist with questions about concepts,
assigned problems/cases, or homework problems (however, they will not give you the solution to
the homework assignments). Note that the TAs are jointly servicing both ACCT 611 and
ACCT 613, so you may encounter students from both courses attending the same office hours.
Ethics Matrix
The Wharton MBA Code of Ethics typically requests an Ethics Matrix for each class to provide
ground rules and ethical guidelines for course materials and assistance from classmates or others.
Below is the completed matrix for ACCT 613. If you have any questions about the matrix, please
feel free to ask me.
Homework Problem Sets
In-Class Quizzes
In-Class Readings & Cases
Summary sheet of notes
People
Approved calculator
Materials
--
The Wharton MBA Code of Ethics that you accepted requires, among other things, that you represent yourself and your work honestly, dont try to gain unfair advantage over other students, follow the instructors
Fundamentals of Financial and Managerial Accounting (ACCT 613) COURSE OUTLINE 33
Course Outline (ACCT 613) Fundamentals of Financial and Managerial Accounting-
KEY
TB refers to the Dyckman et al. textbook (Wharton custom edition);
x-y means problem y in chapter x of the textbook.
All of the topics listed below will be covered.
Session 1. Introduction
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 1
Chapter 1
M1-24, E1-28, E1-29, P1-36, P1-37
Basics of Accounting Are Vital to Survival
Session 2. Accounting Process; Mapping Business Activity into Financial Statements
Slides:
Case #1:
TB Reading:
TB Problems:
Add. Reading:
Session 2
Animatronics (Q1 Q4)
Chapters 2 and 3
Chapter 2: M2-18, M2-19, M2-26, E2-33, E2-44
Chapter 3: M3-22, M3-24, E3-32, E3-38
U.S. Firms Clash Over Accounting Rules
Session 3. Economics vs. Accounting; Balance Sheet Presentation;

Introduction to Accrual Accounting
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 3
Chapters 2 and 3
Chapter 2: P2-58, P2-64
Chapter 3: P3-42, P3-49
When Balance Sheets Collide With the New Economy
Session 4. Revenue Recognition; Accrual Accounting and the Matching Principle
Slides:
Case #2:
TB Reading:
TB Problems:
Add. Reading:
Session 4
United Airlines
Chapter 6, p. 267-277
M6-14, M6-24, E6-32, E6-39, E6-40
Accounting Shift Would Lift Tech Profits; Zynga Explains Method for
Recording Real Revenue; Boeing Hits a Milestone; Digging into Online
Coupon Firms Dealings; Microsoft Financials
Slides:
Case #1:
TB Reading:
TB Problems:
Add. Reading:
Quiz #1:
Sessions 5 & 6
Animatronics (Q5)
Chapter 4
M4-23, M4-26, M4-31, E4-34, E4-38, E4-41, E4-44
Cash Flow Never Lies; PepsiCo Statement of Cash Flows
Session 6. Statement of Cash Flows (continued)
Slides:
Case #3:
TB Reading:
TB Problems:
Add. Reading:
Sessions 5 & 6
Callaway Golf
Chapter 4
P4-51, P4-54
Quick Cash Via Receivables Deals
Session 7. Introduction to Financial Statement Analysis (FSA)
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 7
Chapter 5
M5-14, M5-24, E5-27, E5-33, P5-46
Decline of the P/E Ratio;
A Tower of Babel in Accounting; Home Depot Working Capital;
PepsiCo Financials
Slides:
Case #4:
TB Reading:
TB Problems:
Add. Reading:
Quiz #2:
Session 8
Barnes & Noble
Chapter 6
M6-18, M6-20, E6-33, E6-34
Accounting Issues at WorldCom; At Nortel, Warning Signs Existed
Months Ago
Session 9. Inventory, Product Costing, and Cost of Goods Sold
Slides:
Case #5:
TB Reading:
TB Problems:
Add. Reading:
Session 9
Research in Motion
Chapter 7
M7-15, M7-19, M7-22, E7-26, E7-29, E7-31
Big Oils Accounting; Unraveling Inventorys Riddle;
Supplement to LIFO vs. FIFO
Session 10. Inventory, Product Costing, and Cost of Goods Sold (continued)
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 10
Chapter 17, p. 17-1 to 17-19
M17-14, M17-15, E17-21, E17-25, E17-26
Boeing Hits a Milestone; Chesapeakes Obscure Costs
Slides:
TB Reading:
TB Problems:
Add. Reading:
Sessions 11 & 12
Chapter 8
M8-11, M8-14, E8-24, P8-36
Homework #1 due at 6 p.m. on the day after Session 11

Topics covered: Accounts Receivable and Inventory
Slides:
Case #6:
TB Problems:
Add. Reading:
Sessions 11 & 12
Snap-On Tools
M8-17, M8-21, E8-29, E8-32, E8-35
Homework #2 due at 6 p.m. two days after Session 12

Topics covered: Long-Lived Assets
MIDTERM EXAM
Slides:
TB Reading:
TB Problems:
Add. Reading:
Sessions 13 & 14
M9-21, M9-22, M9-29, M9-31, M9-34, E9-39
Citigroup Finds a Profit
Session 14. Long-Term Debt (continued) and Leases (begin)
Slides:
Case #7:
TB Problems:
Add. Reading:
Sessions 13 & 14; Session 15

Starbucks
M9-23, M9-26, E9-47, P9-53
Morgan Stanley to Post a Loss from Bonds
Session 15. Leases (continued)
Slides:
TB Reading:
TB Problems:
Add. Reading:
Session 15
Chapter 10, p. 453-466
M10-13, M10-15, E10-23, E10-26
New Accounting Rules Ruffle the Leasing Market;
Leases Suffer Identity Crisis; Northeast Airlines Financials
Slides:
TB Reading:
TB Problems:
Add. Reading:
Quiz #3:
Session 16
Chapter 10, p. 476-483
M10-22, E10-33
SEC Challenging Multinationals on Plans for Foreign Earnings;
Motorola Deal Offers Google Tax Benefits
Session 17. Deferred Taxes (continued); Owners Equity (begin)
Slides:
Case #8:
TB Reading:
TB Problems:
Chapter 11:
Add. Reading:
Session 16 & Session 17

PepsiCo
Chapter 11
Chapter 10: P10-40, P10-41
M11-20, M11-21
Sony Profits Are Far Off with Write-Down;
Stock Buybacks Consume Cash
Session 18. Owners Equity (continued)
Slides:
Case #8:
TB Reading:
TB Problems:
Add. Reading:
Session 17
PepsiCo (continued)
Chapter 11
M11-25, M11-35, E11-45, E11-54
Friending Becomes a Source of Funds; Time for BofA to Bid
Warren Buffett Adieu
Session 19. Managerial Accounting & Cost Concepts
Slides:
TB Reading:
TB Problems:
Add. Reading:
Quiz #4:
Sessions 19 & 20
Chapters 13 and 15
Chapter 13: M13-14, E13-22, E13-24
Chapter 15: M15-11, M15-12, M15-16, E15-25
Lobster Glut Slams Prices; Will Costs Drive U.S. Firms Home?
Session 20. Cost Concepts (continued)
Slides:
Case #9:
TB Reading:
TB Problems:
Add. Reading:
Sessions 19 & 20
Forest Gump
Chapter 16
M16-12, M16-15, M16-17, E16-22, E16-26
Paramount Pictures Resolves Lawsuit
Session 21. Cost Allocation and Activity-Based Costing
Slides:
Case #10:
TB Reading:
TB Problems:
Add. Reading:
Session 21
Wilkerson Company (HW #3)
Chapters 14 and 18, p. 18-1 to 18-13
Chapter 14: M14-11, M14-14, P14-27
Chapter 18: M18-10, M18-13, M18-16, E18-22
Knee Replacements Boost Health Costs
Session 22. Customer Profitability Analysis
Slides:
Case #11:
TB Reading:
TB Problems:
Add. Reading:
Quiz #5:
Session 22
Infinity Bank (HW #3)
Chapters 18, p. 18-14 to 18-17, and 19, p. 19-1 to 19-9
Chapter 18: M18-18, E18-26, E18-27
Chapter 19: M19-17
Free Checking Accounts Cost More
Session 23.Decentralization and Transfer Pricing
Class Notes:
Case #12:
TB Reading:
TB Problems:
Add. Reading:
Session 23
Caribbean Brewers (HW #3)
Chapters 22, p. 22-1 to 22-9, and 23, p. 23-7 to 23-10
Chapter 22: MA22-42
Chapter 23: M23-19, E23-24, MA23-41
Tax Court Rules Against IRS
Session 24. Final Review and Course Wrap-Up
Slides:
Session 24
Homework #4, due at 6 p.m. on the day after Session 24

Topics covered: Managerial Accounting, Cost Concepts, Cost Allocation
FINAL EXAM
Corporate Finance (FNCE 611/612) DESCRIPTION 38
Corporate Finance (FNCE 611/612)

Course Description
These courses serve as an introduction to business finance (corporate financial management
and investment) for both non-majors and majors preparing for upper-level coursework. The
primary objective is to provide a framework, concepts, and tools for analyzing financial decisions
based on fundamental principles of modern financial theory.
The Corporate Finance (FNCE 611/612) Waiver and Placement Process

WAIVING BY EXAM
EXAM DATE: See Waiver and Placement Exam Schedule table in the Introduction to this
Waiver Guide. A sample exam and solution set can be found in the Waiver Exam Guide.
The Finance Department recognizes that many students enter the MBA program with strong
backgrounds in economics and/or finance. Nonetheless, before permitting them to waive the core
courses, we want to verify their mastery of these subjects on a waiver exam.
Students who score sufficiently well on the Corporate Finance waiver exam are granted waivers for
all three versions of Corporate Finance the full-semester version (FNCE 611), the accelerated,
half-semester version (FNCE 612), and the half-semester version (FNCE 614). Students who hope
to take the accelerated version of Corporate Finance (FNCE 612) should register for the Pre-Term
preparation class, FNCE 604.
Exam Preparation
Either of the following two books can be used to prepare for the Waiver and Placement Exams.
R. A. Brealey, S. C. Myers, and F. Allen, Principles of Corporate Finance, 11th edition

(New York: McGraw Hill, 2014).
J. Berk, and P. DeMarzo, Corporate Finance, 3rd edition (Boston: Pearson, 2014).
PLACING BY EXAM OR CREDENTIALS INTO FNCE 612
Students who were finance majors in college may place directly into FNCE 612 by submitting
credentials such as a transcript. Note that being a finance major is the only credential that allows
one to place into FNCE 612 without taking the Placement Exam. Students who were not finance
majors but would like to take FNCE 612 will need to pass the Placement Exam to be
eligible to register.
Corporate Finance (FNCE 611) SYLLABUS 39
Syllabus FNCE 611 Overview

This course covers the foundations of finance with an emphasis on applications that are vital for
corporate managers. We will discuss most of the major financial decisions made by corporate managers both within the firm and in their interactions with investors. Essential in most of these decisions is the process of valuation, which will be emphasized throughout the course. Topics include
criteria for making investment decisions, valuation of financial assets and liabilities, relationships
between risk and return, capital structure choice, payout policy, the effective use and valuation of
derivative securities (futures, options, and convertible securities), and risk management.
Students who are more comfortable with the subject matter because of previous academic or professional experience are encouraged to take the course with Professor Van Binsbergen. Students
who are new to finance, less familiar with the institutional environment, or generally less comfortable with the subject matter are encouraged to take the course with Professor Roberts. This division is solely for the purpose of improving the in-class experience by encouraging everyone to
engage in the classroom discussion. The subject matter, materials, and exams for all 611 sections
will be identical to ensure that all students regardless of their instructor receive the same training.
Course Materials
READING MATERIAL
The textbook for the course is: Corporate Finance (plus MyFinanceLab), Jonathan Berk and
Peter DeMarzo, 3rd ed., Pearson - Prentice Hall, 2014. (SBN-10: 0-13-342415-4; ISBN-13:
978-0-13-342415-7).
Other required readings are listed in the syllabus and made available through Canvas or Study.net.
SLIDES
PowerPoint slides for all of the class sessions are available on Canvas.
CASES
Cases are available on Study.net. Case-related material, if any, will be made available on Canvas.
ADDITIONAL MATERIAL
Additional copywritten material (e.g., readings) will be made available on Study.net, non-copywritten material (e.g., notes, supplemental exercises) will be made available on Canvas.
Class Preparation
Coming to class prepared is crucial for your success in the course, and the success of the course.
Class participation comprises a significant component of your overall grade for the course
(discussed below), where participation refers to active engagement in the classroom discussion on
a recurring basis. The classroom environment will be one of discussion and collaboration. An
integral part of the learning experience is learning from your colleagues, their experiences, and the
classroom discussion.
Preparation consists of completing the relevant readings and cases prior to the session in which
they will be discussed. Cold calling will be used liberally. Answers to case questions must be placed
in a PowerPoint file one slide per question and turned in the night before the case is discussed
in class. I will randomly choose case solutions to discuss in class.
An important by-product of proper preparation is that it lessens the chances of falling behind in
the course and being unable to catch up. This course covers a large amount of material in significant depth. It is very easy to fall behind. Consider this a warning. Do not fall behind.
Class Preparation
You should bring a laptop or tablet with a spreadsheet application to class. You may need these for
problem solving sessions during class. Other than these indicated times, no electronics (e.g., laptops, tablets, phones, etc.) should be used in class.
Students are expected to respect the University of Pennsylvanias Code of Academic Integrity
(http://www.upenn.edu/academicintegrity/ai_codeofacademicintegrity.html) and to behave with
integrity in all aspects of the course. Students are encouraged to discuss the cases and other content of the course with first-year MBA student in their own section and in other sections. However, students should not discuss the content related to the current days class discussion or exam
during the time period between sections to avoid giving later sections an unfair advantage.
Violations of the honor code will be immediately reported to the administration.
Grading
Your course grade will be determined by your class participation (20%), completion of the
MyFinanceLab homework assignments (20%), a midterm (20%), and a final exam (40%). If your
score on the final exam is greater than that on the midterm, I will replace your midterm score
with your final score, which will then count for 60% of your grade. However, this substitution can
only occur if you take the midterm and receive a minimum number of points to be determined at
the time of the exam.
The purpose of the MyFinanceLab homework, like preparing for course, is to keep you up to date
with the course material. Because students have unlimited attempts on MyFinanceLab to get each
assignment right (before its due date), almost all students receive full points on the homework.
This means that not doing an assignment (or getting less than full points on it) puts you at a considerable disadvantage when the final grade is computed.
Grades are determined using a class-wide (i.e., across all of my sections) curve that respects any
constraints imposed by the University or Wharton.
REGRADES
Students have exactly one week from the day they receive their midterm exam to request a
regrade. The request must be attached to the exam and clearly state the reason(s) for the regrade.
The only valid reason for a regrade is an error on my part. I will not debate the merits of my grading scheme. If the regrade request is accepted, the exam will be regarded in its entirety. As a result,
the revised score may go up, down, or stay the same.
I will schedule two days during the Spring semester during which you may view your final and
discuss your grades. These days will be announced during the semester. Any concerns regarding
final exam or course grade will be settled at that time.
Attendance
Students are expected to attend all classes. It is also expected that students will be on time for class
and will not disrupt the class by leaving early or by leaving and returning to class. I recognize that
personal emergencies can arise, causing a student to miss a class or part of a class. If such a
circumstance arises, please notify me via email of the situation. If circumstances do not permit
prior notification, please do so as soon after the missed class as possible.
Exams
There are no makeup exams. If you miss the midterm exam, regardless of the reason, your final
score will be used in its place. If you miss the final exam, you will automatically fail the course.
The only excuse for missing the final exam is a medical emergency, the validity of which will be
verified by the University.
Corporate Finance (FNCE 611) COURSE OUTLINE 42
Course Outline FNCE 611Course Introduction and Overview
Read:
Syllabus
Canvas course website containing all non-copywritten material
Study.net containing all copywritten material
Topic 1: Time Value of Money
Read:
Concepts:
Applications:
Chapter 3: Financial Decision Making and the Law of One Price

Chapter 4: The Time Value of Money
Compounding and discounting, Future value and present value,
Annuities, Retirement savings
Valuing zero-coupon bonds, Valuing and structuring annuities,
Retirement planning
Topic 2: Financial Decision Making and Capital Budgeting
Read:
Prepare:
Concepts:
Applications:
Chapter 2: Introduction to Financial Statement Analysis

Chapter 8: Fundamentals of Capital Budgeting
Case: Callaway Golf FX-1
Free cash flow, Discount rates and cost of capital, Discounted cash flow
(DCF), Net present value (NPV), Sensitivity analysis, Scenario analysis,
Breakeven analysis, Value drivers, Profit margins and operating leverage,
Profitability index
Strategic decision-making, Capital budgeting, Financial statement
analysis, Strategic decision making with resource constraints
Topic 3: Financial Analysis: Return on Investment
Read:
Prepare:
Concepts:
Applications:
Chapter 5: Interest Rates

Chapter 7: Investment Decision Rules
Should you pay cash for a new car?
Internal rate of return, Hurdle rate
Amortizing loans, Personal finance (auto loans, leases, mortgages)
Topic 4: Interest Rates and Bond Valuation
Read:
Prepare:
Concepts:
Applications:
Chapter 6: Valuing Bonds

Chapter 30: Duration (30.4)
Case: Orange County
Yield to maturity, Yield curves, Bond Institutions and Markets, Valuing
risk-free bonds, Bond-interest Rate Relation, Bond arbitrage, Interest
rate sensitivity of bond prices (Duration), Leverage
Valuing and investing in treasury securities, Managing a bond portfolio,
Further Concepts:, Collateralized debt obligations (CDOs), Immunization and duration matching, Forward rates, Credit risk
Topic 5: Valuing Stocks
Read:
Prepare:
Concepts:
Applications:
Chapter 9: Valuing Stocks

Case: Interco
Measuring returns, Equity cost of capital, Dividend yield, Capital gains,
Dividend discount model, Cum- and Ex-dividend prices, Share repurchases, Price-earnings (P/E) ratio, Return on investment, Enterprise
value, Comparables analysis
Mergers and acquisitions
Topic 6: Risk and the Cost of Capital
Read:
Prepare:
Concepts:
Applications:
Of Interest:
Chapter 10: Risk and Return

Chapter 11: Portfolio Choice and Diversification
Case: Partners Healthcare
Expected return, Stock volatility, Risk-return tradeoff, Portfolio risk,
Diversification, Equity market integration, Mean-variance frontier,
Minimum variance portfolios, Short sales, Leverage, Sharpe ratio
Portfolio management
Portfolio Optimizer and Instructions (on the course website)
Topic 7: Market Pricing of Risk
Read:
Prepare:
Concepts:
Applications:
Chapter 12: Capital Asset Pricing Model

Case: Cost of Capital at Ameritrade
Capital market line
Security market line, Beta, Market risk, Volatility, Estimating beta, Alpha,
Security mispricing, Efficient portfolios
Portfolio management, Capital budgeting
Topic 8: Corporate Capital Structure
Read:
Prepare:
Concepts:
Applications:
Chapter 14: Capital Structure in a Perfect Market,

Chapter 15: Debt and Taxes
Chapter 16: Financial Distress, Incentives, and Information
Chapter 17: Payout Policy (optional)
Case: Blaine Kitchenware Inc.
Leverage, Modigliani and Miller Irrelevance Propositions, Weighted
Average Cost of Capital (WACC), Arbitrage, Equity issuance dilution
fallacy, Earnings per share (EPS) fallacy, Market Imperfections, Interest
Tax Shields, Bankruptcy, Bankruptcy costs, Direct and indirect costs of
financial distress, Tradeoff theory, Valuation with leverage, Adjusted
Present Value (APV), Project specific risk, Incentives and agency costs,
Debt overhang, Overinvestment, Information asymmetry and security
mispricing, Signaling, Announcement Effects, Initial public offerings
(IPOs), Personal taxes
Industry capital structure, Optimal capital structure, Refinancing
Topic 9: Risk Management
Read:
Prepare:
Concepts:
Applications:
Chapter 30: Futures and Forwards ( 30.2, 30.3)

Chapter 20: Financial Options ( 20.1-20.2)
Case: Hedging Currency Risks at AIFS
Price-Fixing Contracts, Forwards, Futures, Swaps, Price-Insurance
Contracts, Options, Basis Risk, Covered interest parity, European
Options, Option premia
Hedging currency risk via futures and options, Value creation via
hedging
Topic 10: Financial Option Valuation
Read:
Prepare:
Concepts:
Applications:
Downloads:
Chapter 20: Financial Options ( 20.3-20.5)

Chapter 21: Option Valuation
Case: Retaining Top Talent
Portfolio insurance, Put-Call Parity, American Options, Binomial
Option Pricing Model, Black-Scholes Formula, Implied volatilities,
Option Sensitivities (Greeks)
Employee Stock Option (ESO) Valuation
Options Calculator (on the course website)
Topic 11: Real Options
Read:
Prepare:
Concepts:
Applications:
Chapter 21: Review Option Valuation ( 21.1-21.2)

Chapter 22: Real Options ( 22.1-22.5)
Case: When to Build
Option to delay, Option to expand, Option to abandon
R&D Staging
Topic 12: Further Applications
Prepare:
Case: Twitter IPO

Case: Priceline Acquisition of OpenTable (or LBO)

This pre-term course is intended for those students wishing to prepare for the Placement Exam to
get into FNCE 612. The FNCE 612 course will fulfill the core requirement in finance in half a
semester, instead of the usual full semester course, FNCE 611. Since the pace of FNCE 604/612 is
fast1, only students with prior knowledge of finance (either by coursework or by practical experience) or with strong analytical backgrounds should consider taking this course sequence.
Together, FNCE 604 and FNCE 612 form the foundation for subsequent courses in corporate
finance, corporate valuation, investments, and financial derivatives. Their purpose is to develop a
framework for analyzing a firms investment and financing decisions. This course, FNCE 604, will
provide an introduction to present value, capital budgeting under certainty, and bond/stock valuation. The FNCE 612 course will start where FNCE 604 stops, and will cover risk and return, capital budgeting under uncertainty, the efficiency of capital markets, the capital structure and payout
policy of the firm, and options.
Since the emphasis is on the fundamental concepts underlying modern finance, the approach will
be analytical and rigorous, and requires familiarity with accounting, mathematical and statistical
tools. This academic approach is necessary to provide you with a strong foundation for the
(more applied) elective courses at Wharton.
Prerequisites
Although there are no official prerequisites for FNCE 604 and FNCE 612, both courses will make
use of mathematical and statistical manipulations at the level taught in the pre-term course. In
particular, knowledge of calculus is not at all necessary for this course, nor is it for the Placement
Exam or FNCE 612. Finally, some basic familiarity with Excel will be assumed for both FNCE 604
and FNCE 612.
Course Material
The textbook for FNCE 604/612 (and for FNCE 611) is:
Berk, Jonathan, and Peter DeMarzo, Corporate Finance, 3rd edition, Pearson: Boston.
(Referred to as BD below)
The textbook should be purchased with the option to access the web platform offered by Pearson, called MyFinanceLab2. Although this web platform is optional for FNCE 604, it will be
used for homework assignments and course grading in FNCE 612 (and FNCE 611). Note that,
if you prefer a soft copy of this textbook, Pearson also makes it available in digital format at
www.pearsonhighered.com/berk demarzo.
1 The pace of FNCE 604/612 will be about 35-40% faster than that of FNCE 611.
2 It is also possible to subscribe to MyFinanceLab separately, if the book does not come with access to it.
The rest of the material for the course will be made available only electronically. In particular,
my notes for every lecture will be available on Canvas at least one day in advance. It is your
responsibility to bring a printed or electronic copy with you in class. Additional materials will also
be made available on Canvas. They will include problem sets (and their solutions), practice exams
(and their solutions), spreadsheets, and other useful handouts.
Grading and Exam Schedule

As the course is only a preparatory course for the Placement Exam, it will not be graded. In fact,
students are allowed to take the Placement Exam even if they choose not to take this course. The
Placement Exam will allow students to place into FNCE 612. This will be an open-book exam;
that is, you can use your notes and the textbook. You can also use a calculator, but email-capable
devices (laptops, tablets, cell phones, etc.) will not be allowed.
The Placement Exam also constitutes the first half of the Waiver Exam. The second half of the
Waiver Exam will follow the Placement Exam and will cover the material taught in FNCE 612. If
you are aiming to waive the entire core course in finance, you must complete both parts of the
exam. If you are only aiming to place into FNCE 612, you can leave after the Placement Exam (i.e.,
the first half of the Waiver Exam).
The two halves of the exam are graded separately. Thus, it is possible to fail the Waiver Exam overall but do sufficiently well in the first half to pass the Placement Exam and qualify for FNCE 612.
Conversely, good performance in the second half of the Waiver Exam does not facilitate placement into FNCE 612.
Class Etiquette and Code of Conduct

I do not grade attendance nor participation as I trust students to attend and contribute where
appropriate. Particularly for an accelerated course, it is essential to (a) attend class in order to
absorb the material, and (b) ask questions if anything in the lecture is unclear. While I am flexible
regarding the above, I expect classroom conduct to be on a high level. Students should arrive on
time for class and remain until the class is completed. During class it is not acceptable to use
cell phones or send text messages, leave temporarily to get coffee or make a call, do other
work, or use laptop computers for any reason other than to take notes.
Although it should go without saying, I fully expect you to adhere to the schools Code of Academic Integrity (www.upenn.edu/academicintegrity/ai codeofacademicintegrity.html). In particular, the use of past problem set solutions or past exams (except when distributed by the instructor)
is expressly forbidden. Any violation of this code, such as cheating in any form, will be treated
with severity.
Preparing for Classes

The material for this course (and for FNCE 612) needs to be absorbed consistently. As the course
progresses, students should work on the problem sets distributed on Canvas and, optionally, on
the textbook problems that I will recommend from MyFinanceLab. Even though these problems
are not formally graded in FNCE 604 (they will be in FNCE 612), they are an integral part of the
course and it is insufficient to just attend lectures for a full understanding of the material. The
Placement Exam will systematically include questions that are very similar to the recommended
problems.
Since I will move at a fast pace, it is recommended that you read up on the lecture notes ahead of
time. Students are also encouraged to read from the BD textbook the chapters/sections relevant to
the material covered (and to be covered) in class.
Canvas
The course website on Canvas contains the material for FNCE 604 as well as the most updated
information and announcements for the course. This website is the information center for the
course. Please check the course website regularly.
MyFinanceLab
Although access to MyFinanceLab will be required for FNCE 612 (and FNCE 611), it is optional
for FNCE 604. For FNCE 604, access to MyFinanceLab will allow you to work on some extra textbook problems that I will recommend for every topic. That is, if you feel that the problem sets
available on Canvas are not quite sufficient to prepare for the Placement Exam, you have the
option to work on a few extra problems online.
Calculators and Computers

You will definitely need a calculator for the course (and the Placement Exam). Any calculator that
has a yx button will do. In fact, when constructing the exam, I will make sure that the people who
do not have a fancy calculator are not at a disadvantage. Financial calculators are not necessary
for this or subsequent finance courses at Wharton. However, if you would like to acquire one,
consider buying an HP-17BII, HP-19BII, or their subsequent models. Finally, please note that
email-capable devices (like laptops, tablets, cell phones, and so on) will not be allowed for the
Placement Exam.
Course Outline FNCE 604The material for this course essentially corresponds to chapters 3-9 of the BD textbook. Below is
the sequence of topics that will be covered in class, along with the relevant chapters/sections in BD.
Session 1. Time Value of Money
Readings:
Topics:
BD: Sections 3.1-3.3, chapter 4, sections 5.1-5.3.

Introduction to financial decision-making, compounding and future value,
discounting and present value, the concept of net present value, more frequent
compounding, effective annual rate, nominal and real rates.
Session 2. Investment Decisions and Capital Budgeting
Readings:
Topics:
BD: Sections 7.1-7.4, chapter 8.

The goal of the firm and the net present value (NPV) rule, using the NPV rule
for capital budgeting, other capital budgeting considerations, alternatives to the
NPV rule.
Session 3. Bond and Stock Valuation
Readings:
Topics:
BD: Sections 6.1-6.3, sections 9.1-9.4.

Term structure, forward rates, bonds, no-arbitrage pricing, dividend-discount
model, investment and growth, terminal values and multiples.
Disclaimer: This document represents my current plans for the course at the time of writing, but is subject to change.
Any changes will be communicated promptly and clearly to the students.

This course is intended for students with prior knowledge of finance or with strong analytical
backgrounds. Together with the pre-term preparation course (FNCE 604), it forms the foundation for subsequent courses in corporate finance, corporate valuation, investment, and financial
derivatives. Its purpose is to develop a framework for analyzing a firms investment and financing
decisions. The course will start where FNCE 604 ends. More precisely, it will provide an introduction to the relationship between risk and return, capital budgeting techniques under uncertainty,
the operation and efficiency of capital markets, the optimal capital structure and payout policy
of the firm, and options. In short, it will cover all the topics of a typical semester-long finance
introduction class in six weeks.1
While the course does not concentrate exclusively on theory, the basic theoretical underpinnings
of the various topics will be formally discussed as they are necessary for competent financial
analysis. The course emphasizes the development of problem-solving skills based on a good
understanding of general principles that can accommodate the constantly evolving nature of the
business environment. Because of the practical importance of the material and as an illustration
of the relevant theory, several examples and applications will be discussed throughout the course.
Prerequisites
The course assumes that students are familiar with the material covered in FNCE 604, and will
often make use of this material. No time will be spent reviewing it. As a result, FNCE 612 is available only to those students who placed into it based on past credentials or by successfully passing
the Finance Placement Exam.2
The course makes use of mathematical and statistical manipulations at the level taught in the
pre-term Math for Business course (STAT 611). Although the first section of the notes in
FNCE 612 will include a review of the statistics material that will be used throughout the course,
very little class time will be spent on it. Finally, as in FNCE 604, some basic familiarity with Excel
will be assumed for FNCE 612.
Course Material
The textbook for the course is:
Berk, Jonathan, and Peter DeMarzo, Corporate Finance, 3rd edition, Pearson: Boston.
(Referred to as BD on the course outline)
1 Of course, since FNCE 604 has already covered some of the material studied in a typical finance introduction class, the pace
of FNCE 612 will effectively be about 35-40% faster than that of FNCE 611.
2 Students who placed into the course by credentials should make sure that they are still comfortable with all the topics
covered in FNCE 604.
The textbook should be purchased with the option to access the web platform offered by Pearson,
called MyFinanceLab.3 This web platform will be used for homework assignments and course
grading. Note that, if you prefer a soft copy of this textbook, Pearson also makes it available in
digital format at www.pearsonhighered.com/berk demarzo.
To show you how the concepts developed in class can be applied to the real world, we will cover
a number of cases throughout the course. These cases will be available through Study.Net
(www.study.net), which is itself accessible through Canvas.
The rest of the course material will be made available only electronically. In particular, the notes
for every lecture will be available on Canvas at least one day in advance of each class. It is your
responsibility to bring a printed or electronic copy with you in class. Additional materials will also
be made available on Canvas. They will include additional problem sets (and their solutions),
practice exams (and their solutions), spreadsheets, and other useful handouts.
Grading
By default, the course grade will be based on two exams (75%), three mini-case reports (15%),
and one final case report (10%). Students will also have the option to work on periodic individual
homework assignments that will be factored into their grade.4 By default, the midterm and final
exams will account for 1/3 and 2/3, respectively, of the exam weight of 75%. However, the entire
exam weight will be put on your final exam if your performance in it exceeds that on your
midterm exam.
The midterm exam will test the material already covered up to that point. The final exam is comprehensive; that is, it will test the material for the entire course. Both exams will be open-book
exams, i.e., you can consult the course materials while taking them. The material covered in
FNCE 604 will not be directly examined again in FNCE 612. Of course, we will still need to use
many of the tools developed in that course (e.g., annuity formulas, NPV rule, free cash flows, etc.).
The exact material covered in each of the two exams will be announced in class.
The medians of the midterm and final exams will be standardized so that they are equal. For
example, if the midterm and final have medians of 85 and 75 respectively, 5 points will be subtracted from all midterm scores and 5 points will be added to all final scores so that both exams
have a median of 80. This is to ensure that a sufficient number of students end up with a better
score in the final than the midterm and therefore benefit from the weighting system, even if the
final turns out to be difficult. The grades on the case reports and homework assignments will not
be adjusted.
Individual homework assignments will be assigned periodically from MyFinanceLab, Pearsons
website for the textbook by Berk and DeMarzo. The site can be accessed from the following
address: www.pearsonmylabandmastering.com. Each of six assignments is to be completed before
11:55 p.m. every Sunday.
3 It is also possible to subscribe to MyFinanceLab separately, if the book does not come with access to it.
4 More information about the cases and individual homework assignments is provided below.
Each assignment is optional and will potentially count for 3% of your total (midterm and final)
exam score. More specifically, the total weight given to your two exams will be reduced by your
total score on these six assignments. For example, if you get 2/3, 3/3, 3/3 and 2/3 on the first
four and choose not to work on the last two, then your two exams will count for
75%2%3%3%2% = 65% of your final grade, and I will add 10% to it to get to 75%.
Your letter grade for the course will be based on your ranking in the course (curve), and on performances/scores that I consider reasonable for this course.
Make-up Exams
There will be absolutely no make-up exam for the midterm exam. If a student cannot take or
even chooses not to take the midterm exam, the final exam will count for the entirety of the exam
weight in his/her final grade. There is no need to notify the instructor in that event. That said, it is
strongly recommended that you prepare for and take the midterm exam if you can.
Students who, for some reason, cannot attend the final exam will either be allowed to take the
same exam early (upon signing an honor agreement that they will not disclose its content), or a
different exam later, depending on the circumstances. To be clear, this will only be considered for
extraordinary circumstances, as judged by the instructor.
If extraordinary circumstances prevent a student from attending the final exam, it is his/her
responsibility to notify the instructor before the exam or, if impossible, as quickly as possible after
the exam. Please note that, as per Wharton policy, traveling, interviews and job-related absences
are not considered to be extraordinary circumstances. In the case of illness, a signed doctors
note must be provided.
Regrading Policy
Regrade requests for the midterm and final exams must be made within one week after the graded
exams are distributed back to students. All such requests must be made in writing. Hard copies of
the exam and the request will then be forwarded to the TA who graded the question(s) to be
regraded. The TAs decision is final and may not be appealed. In making your requests, keep in
mind that the whole exam is potentially subject to regrading.
Cases
Preparation for the cases is done in groups of five or six students, all from the same section of the
course. Students will be randomly assigned to teams by the instructor.
A total of five mini-cases will be discussed in class.5 The exact dates of the various case discussions
will be announced as the course progresses. For each mini-case, teams are expected to prepare a
short PowerPoint presentation and submit it by 11:55 p.m. on the day before the class discussion.
5 They are listed in the Course Outline below.
These presentations should not exceed four slides; a cover page/slide is not required, as long as
the team number and team members names appear somewhere on the first slide and/or in the
footer on each slide.
For each class discussion, one team will be picked randomly to present their slides (they will have
five minutes to do so), and one other team will be asked to initiate the discussion following this
presentation. The presentations and discussions will be factored into the teams performance on
these mini-cases. Note that the first case (The State of South Carolina) will be used as practice and
will not be graded. Note also that, of the other four mini-cases, only the top three will count
towards a teams mini-case performance.
The course will end with a wrap-up class discussion revolving around one more case: Harris
Seafoods, Inc. This final case is meant to provide students with an overview of many of the
topics covered in FNCE 604/612. Specifically, every team will be required to submit one pdf file
that includes three to five pages of text, and an appendix for supporting material (such as figures
and tables). Every team will also be required to submit the Excel spreadsheet that contains their
analysis. All students should come to this last class ready to discuss issues relevant to the case.
Supplementary Problem Sets

In addition to the team cases and individual assignments, supplementary problem sets (and their
solutions) will be distributed via Canvas throughout the term. These problem sets are structured
to reinforce the major themes in the course material and to provide students with extra practice
for the two exams. Write-ups for these problem sets will not be collected or graded.
Class Etiquette and Code of Conduct

I do not grade attendance nor participation as I trust students to attend and contribute where
appropriate. Particularly for an accelerated class, it is essential to (a) attend class in order to
absorb the material, and (b) ask questions if anything in the lecture is unclear.
Students should attend the section of the course for which they are registered, especially on days
that include a case discussion. When a conflict is unavoidable, students can attend another of my
sections without notifying me. If it is impossible to make any section on a given day, you may miss
class without notifying me, and are trusted to catch up on the material in your own time.
While I am flexible regarding the above, I expect classroom conduct to be on a high level. Students
should arrive on time for class and remain until the class is completed. During class it is not
acceptable to use cell phones or send text messages, leave temporarily to get coffee or make a
call, do other work, or use laptop computers for any reason other than to take notes.
Although it should go without saying, I fully expect you to adhere to the schools Code of
Academic Integrity (www.upenn.edu/academicintegrity/ai codeofacademicintegrity.html). In particular, the use of past problem set solutions or past exams (except when distributed by the
instructor) is expressly forbidden. Any violation of this code, such as cheating in any form, will be
treated with severity.
Preparing for Classes

The material for this course needs to be absorbed consistently. As the course progresses, students
should work on the problems that I will assign from MyFinanceLab and, optionally, on the supplementary problem sets that I will make available. These problems are an integral part of the
course and it is generally insufficient to just attend lectures for a full understanding of the material. The two exams will include questions that are very similar to these problems.
Since I will move at a fast pace, it is recommended that you read up on the lecture notes ahead of
time. Students are also encouraged to read from the BD textbook the chapters/sections relevant to
the material covered (and to be covered) in class.
Canvas
The course website on Canvas contains the material for FNCE 612 as well as the most updated
information and announcements for the course. This website is the information center for the
course. Please check the course website regularly.
Teaching Assistants
Several Ph.D. students and 2nd-year MBA students will be assisting me in this course. Their
names, functions and schedules will be posted on Canvas and announced in class.
Calculators and Computers

You will definitely need a calculator for the course (and the two exams). Any calculator that has
a yx button will do. In fact, when constructing the exam, I will make sure that the people who
do not have a fancy calculator are not at a disadvantage.
Financial calculators are not necessary for this or subsequent finance courses at Wharton.
However, if you would like to acquire one, consider buying an HP-17BII, HP-19BII, or their subsequent models. Finally, please note that email-capable devices (like laptops, tablets, cell phones,
and so on) will not be allowed for the two exams. Unfortunately, this also means that it will be
impossible to consult digital versions of the textbook during the exams.
Semester Deadlines
Students are allowed to drop the course (and join FNCE 611) during Whartons official drop/add
period. Students who choose to join the FNCE 611 course are encouraged to promptly contact the
instructor in that course to make sure that they have not missed any deadlines.
lCourse Outline FNCE 612The material for this course essentially corresponds to chapters 10-18 and 20-21 of the BD
textbook. Below is the sequence of topics that will be covered in class, along with the relevant
chapters/sections in BD. Note that the first four modules of the FNCE 604/612 sequence were
covered during the pre-term.
Module 5 Risk and Return: Measurement
Readings:
Topics:
Mini-Case:
BD: Sections 10.1-10.4 and 10-6; sections 11.1-11.3

Returns as random variables; mean, variance, and covariance of returns;
using historical returns; diversification
The State of South Carolina
Module 6 Risk and Return: Capital Asset Pricing Model
Readings:
Topics:
Mini-Case:
BD: Sections 11.4-11.8; sections 12.1-12.3

Portfolio risk and return; portfolio choice and Sharpe ratios; equilibrium
and the market portfolio; the Capital Asset Pricing Model (CAPM); estimating beta
Alex Sharpes Portfolio
Module 7 Cost of Capital
Readings:
Topics:
Mini-Case:
BD: Sections 12.4-12.5

Debt, equity, and the cost of capital; comparable firms, leverage, and
asset betas; cost of capital for a division or project
Cost of Capital at Ameritrade
Module 8 Market Efficiency and Asset Management
Readings:
Topics:
Mini-Case:
BD: Chapter 13
Index investing; average abnormal return and performance evaluation;
market efficiency and active portfolio management; multifactor models
and hedge funds; behavioral finance
Balliss Benchmark A&B
Module 9 Capital Structure
Readings:
Topics:
Mini-Case:
BD: Chapter 14; chapter 15; sections 16.1-16.5

Capital structure in a perfect capital market; the role of corporate taxes;
the role of personal taxes; the trade-off theory
Blaine Kitchenware, Inc.: Capital Structure
Module 10 Payout Policy
Readings:
Topics:
BD: Sections 17.1-17.6

Dividends and share repurchases; the role of taxes; tax clienteles; the
signaling role of payout policy; the effects of agency costs
Module 11 Valuation
Readings:
Topics:
Case:
BD: Sections 18.1-18.3 and 18.5.

Weighted average cost of capital; adjusted present value.
Harris Seafoods, Inc. (to be covered in the courses last class)
Module 12 Options
Readings:
Topics:
BD: Sections 20.1-20.4; sections 21.1-21.4.

Financial options; payoffs at maturity; binomial option pricing; the
Black-Scholes formula.
Disclaimer: This document represents my current plans for the course at the time of writing, but is subject to change.
Any changes will be communicated promptly and clearly to the students.
Macroeconomics and the Global Economic Environment (FNCE 613/615) DESCRIPTION 56
Macroeconomics and the Global Economic Environment (FNCE 613/615)

Course Description
The purpose of Macroeconomics is to train students to think systematically about the current
state of the economy and macroeconomic policy, and to be able to evaluate the economic environment within which business and financial decisions are made. The course emphasizes the use
of economic theory and data to understand the workings of financial markets and the operation
and impact of government policies. Specifically, the course studies the determinants of national
income, employment, investment, interest rates, the supply of money, inflation, exchange rates,
and the formulation and operation of stabilization policies.
The Macroeconomics and the Global Economic Environment

(FNCE 613/615) Waiver Process
Waivers are not encouraged in macroeconomics since the past mastery of tools is considered
only part of receiving a well-rounded macroeconomic education. Much of the course time is
spent on analyzing current events, financial markets, and major policy issues. Even students who
already have had substantial training in economics have found the classes rewarding since they
focus on current economic problems. International students, in particular, have found the
emphasis on American markets and institutions to be unique and unlike the material covered
in their previous courses.
WAIVING BY EXAM
EXAM DATE: Waiver and Placement Exam Schedule, and sample course exams with solutions can be
found in the Waiver Exam Guide.
The Finance Department recognizes that many students enter the MBA program with strong
backgrounds in macroeconomics and/or corporate finance. Nonetheless, before permitting them
to waive the core courses, we want to verify their mastery of these subjects on a waiver exam.
Students who score sufficiently well on the Macroeconomics waiver exam will be granted
waivers for both the full-semester version (FNCE 613) and, of course, the half-semester version
(FNCE 615). Students who score somewhat less well, but demonstrate substantial mastery of the
subject can waive FNCE 615, but not FNCE 613.
Please note that a waiver for FNCE 615 will not be sufficient to enable a student to become a
Finance major.
Exam Preparation
Macroeconomics (eighth edition), by Andrew B. Abel, Ben S. Bernanke, and Dean Croushore,
Addison-Wesley Publishing Co., 2014.
Macroeconomics and the Global Economic Environment (FNCE 613) SYLLABUS 1 57
PLEASE NOTE: FNCE 613 is taught by several faculty members, thus

there is variation in the course content. The following four syllabi and
course outlines show the variations in the course content.
Syllabus-1 FNCE 613 Overview

Finance 613 is a course in macroeconomic analysis and policy in the context of globally integrated
economies.
Its purpose is to train students to think systematically about the current state of the economy
and macroeconomic policy, and to be able to evaluate the economic environment within which
business and financial decisions are made. The course emphasizes the use of economic theory to
understand the workings of financial markets and the operation and impact of government
policies. Specifically, we study the determinants of the level of national income, employment,
investment, interest rates, the supply of money, inflation, exchange rates, and the formulation
and operation of stabilization policies. The exact structure of the class and topic coverage will be
linked to the current economic issues around the world.
Course Materials and Information

COURSE SITE
Our Canvas site will contain all lecture notes and other additional readings, useful links, and
general course information. This is also a useful hub to start and participate in course-related
discussions. The site is linked to http://spike.wharton.upenn.edu/courses/. If you need a Wharton
account you can apply online at http://accounts.wharton.upenn.edu.
TEXTBOOK
There are several good textbooks covering the core theoretical concepts in macroeconomics at an
intermediate level. The best, which I recommend, is Macroeconomics, 8th edition, by Abel,
Bernanke and Croushore. Although this is an excellent text in macroeconomic theory, our classroom discussions and notes often cover more applied topics and are guided by current events
around the world.
ADDITIONAL READINGS
The Wall Street Journal, The Financial Times, and The Economist are all world-class publications
that offer many insightful discussions about the global economy. You are encouraged to subscribe
to one of them or find an alternative source of similar quality. Occasionally we may use articles
from these or other business newspapers and economic research centers around the world to the
list of required readings during the term.
PROBLEM SETS AND QUIZZES
There will be weekly quizzes. They can be accessed and submitted on Canvas. Due dates are also
posted on Canvas.
Students are encouraged to work out the answers to the numerical problems at the end of each
chapter of the recommended textbook and to go through the formal exercise of writing the
answers. Recommended problems and their answers are available on Canvas.
Grades
COMPOSITION
The final grade breakdown for this course is as follows:

Quizzes
30%
Case Discussions
20%
Final Exam
50%
Attendance is not required but it is hard to participate without being present.

The final exam is comprehensive. You will be able to bring one double-sided sheet with notes
and one calculator.
SCHEDULING CONFLICTS
This class is offered in the Spring Semester. Therefore if you have a conflict with the date for the
Final Exam you should drop the class now. Any additional conflicts will be resolved according to
the MBA Resource Guide. Specifically:
If you find yourself with a conflict due to your career search or recruiting activity, you should
work with the MBA Career Management Office to find a resolution
You should never approach your instructors with requests to reschedule exams or to
make special accommodations
EXAM REVIEW
Any requests for a review of an exam must be submitted in writing within 7 days from the date
that exams are made available and must be accompanied by the Statement of Honesty in Regrade
Request form posted on Canvas.
Macroeconomics and the Global Economic Environment (FNCE 613) COURSE OUTLINE 1 59
Course Outline - 1 FNCE 613Session 1. Background: World Economy Today
Readings: Ch. 1
Session 2. Measuring Macroeconomic Performance: Income
Readings: Sec. 2.1-2.3

Session 3. Measuring Macroeconomic Performance: Prices
Readings: Sec. 2.4

Session 4. The Core Macroeconomic Model
Readings: Sec. 3.1; FRB/US Model

Session 5. Household Consumption and Savings
Readings: Sec. 4.1, 4.A

Session 6. Corporate Investment
Readings: Sec. 4.2, 2.5

Session 7. Budget Deficits and Interest Rates
Readings: Sec. 15.1, 4.3

Session 8. International Trade and Finance
Readings: Sec. 5.1

Session 9. Sources of Trade Deficits

Session 10. Money and Inflation
Readings: Sec. 7.1-7.3, 7.5

Session 11. Money and Financial Markets
Readings: Sec. 7.4

Session 12. Discussion: Financial Market Valuation
Session 13. The Labor Market

Session 14. Labor Frictions and Unemployment
Readings: Sec. 3.5-3.6, 11.1
Session 15. General Macroeconomic Equilibrium

Session 16. Understanding Business Cycles
Readings: Sec 8.1, 9.4-9.6

Session 17. Monetary Policy and Institutions
Readings: Ch. 14
Session 18. Macroeconomics in an Open Economy

Session 19. Discussion: Spains Debt Crisis
Readings: Spain Case

Session 20. Fixed Exchange Rates
Readings: Sec. 13.5

Session 21. A Brief History of Economic Cycles

Session 22. Discussion: World Economic Outlook
Readings: IMF World Economic Outlook (Ch. 2)

Session 23. Long Run Growth
Readings: Ch. 6
Session 24. Discussion: The Fiscal Outlook
Readings: Sec 15.3, CBO Budget Outlook, IMF Fiscal Outlook

Finance 613 is a course in macroeconomic analysis and policy in the context of globally integrated
economies. The course begins by introducing national income accounts for an open economy and
then focuses on a classical analysis of labor markets, goods markets, and asset markets. This part
of the course examines the determination of employment, output, prices, wages, interest rates,
national saving, investment, and international flows of goods, services, and assets in the long run.
Then the course shifts its focus to the study of business cycles. The analysis of business cycles
begins with a description of the cyclical behavior of various economic variables. This cyclical
behavior motivates the development of business cycle models and the application of these models
to study monetary and fiscal policy. The analytic engine of this part of the course is the IS-LM
model, which is applied in both a classical mode and a Keynesian mode. The course extends the
classical and Keynesian IS-LM models to models of large open economies with flexible exchange
rates to study the international transmission of business cycles. The course concludes by analyzing
the conduct of monetary and fiscal policy in a rich institutional framework.
Lectures
Each lecture is one hour and twenty minutes. Most lectures are divided into two parts. The first
hour is devoted to discussion of core analytic material, and the final twenty minutes are devoted
to a current policy topic.
Course Materials
CANVAS
The Canvas site for this course contains the syllabus, lecture notes, problem sets and answers, old
exams, regrade request forms, TA office hours, and other useful links.
READING MATERIALS
The textbook for this course is Macroeconomics (eighth edition) by Andrew B. Abel, Ben S.
Bernanke, and Dean Croushore, Addison-Wesley Publishing Co., 2014. The textbook will be available to you in two alternative formats that are substantially less expensive than a traditional
bound book. (format 1): The e-text version, which is directly available from Pearson at
www.pearsonmylabandmastering.com/northamerica/. This format of the book also includes
MyEconLab. To register for MyEconLab for this course, which provides access to the e-text version
of the textbook, you will need the following course ID: abel74378. (format 2): Student Value
Edition (SVE) is a looseleaf version of the book. It will be available at the bookstore.
There is an optional bulkpack for the course that is available from Study.Net. The bulkpack
contains the lecture notes for the core analytic material. It is optional because these notes are also
available from Canvas.
Handouts for current policy topics will be distributed in class each day and will be made available
on Canvas as the term progresses. You will be charged for these handouts via the bursar-billed
handout fee from Reprographics.
OPTIONAL PROBLEM SETS
Canvas contains suggested problems and answers arranged by textbook chapter. Most of the questions are taken directly from the textbook. In addition, for most chapters Canvas contains one or
two questions that are not in the textbook. Unlike the Quizzes/Graded Homeworks discussed
below, the problem sets are optional and will NOT be collected and graded.
Grades
Your course grade will be based on your performance on the midterm and final exams, the
Macro Policy Simulation, and Quizzes/Graded Homework.
Exams
There will be one midterm exam and a final exam. The exams will be closed-book and closednote. You may bring a single double-sided cheat sheet (no larger than 8.5 x 11) to the midterm
exam, and you may bring two double-sided cheat sheets (again no larger than 8.5 x 11) to the
final exam. The final exam will be cumulative over the material from the entire course.
SCHEDULE OF EXAMS
The midterm exam will be 90 minutes in length. The final exam will be two hours in length and
will be given during the final exam period as scheduled by the registrar.
Students should take note of the following paragraphs from the Academic Policies section of the
MBA Resource Guide (www.wharton.upenn.edu/mbaresource/misc/academic-policies.cfm),
specifically the section on Examination Policies:
If you have documentable special circumstances such as time conflicts between multiple exams, illness, or grave personal difficulties such as a death in the family, you
should petition the MBA Program Office, which will work with the faculty in appropriate cases to find a resolution. The MBA Program Office will require documentation
of your conflict as a matter of course. See the University website (Pennbook) for policies covering absences resulting from religious observances. You should never
approach your instructors with requests to reschedule exams or to make special
accommodations.
If you find yourself with a conflict due to your career search or recruiting activity, you
should work with the MBA Career Management Office to find a resolution. Employers
cannot require a student, as a condition of his or her employment candidacy, to participate in recruiting-related activities at a time that conflicts with his or her academic
schedule. An employers inflexibility on this issue is considered a violation of
Whartons recruiting policies. A time conflict due to a job interview, a career

pursuit or travel is not an appropriate reason to request accommodation on an
academic commitment.
REGRADING OF EXAMS
Any requests for regrading of exams must be submitted in writing within one week from
the date that exams are returned in class, and must be accompanied by the Regrade
Request form and Statement of Honesty in Regrade Request form, which are available on
Canvas. The one-week period for submission of exams for regrading begins on the date
that the exams are returned in class, not on the date that you pick up the exam, if for some
reason you are absent from class the day the exams are returned. If you miss the class during which the exams are returned, it is your responsibility to pick up your graded exam
within the one-week period. Requests for regrading must be very specific. Do not mark or
make notes on your exam, and do not alter in any way the answers to the questions. Such
alterations will be construed as violations of the Code of Academic Integrity and may
be referred for disciplinary action. When you request a regrade, I retain the right to
regrade your entire exam. Please be aware that your exam score may fall as a result of
regrading, if I determine that you received too many points for the question(s) you identify, or for other questions on the exam.
Macro Policy Simulation

We will have a Macro Policy Simulation. The Macro Policy Simulation will be conducted as a
tournament. Winning teams will receive bonus points on the final exam and will be asked to
discuss their decisionmaking process.
Quizzes/Graded Homework
Quizzes/Graded Homework are on Canvas under the Quizzes tab on the left. Because they are
graded exercises, you must work on these quizzes/graded homeworks alone. When you take these
quizzes, you can use any written material from the course and you can use a calculator or computer,
but you cannot communicate in any way with any of your classmates or any other person.
Course Grade
The course grade has an exam component and a quizzes/graded homework component. The exam
component of the grade, which is based on the midterm exam and the final exam, counts for 90% of
the course grade. The quizzes/graded homework component of the grade counts for 10% of the grade.
The exam component of the grade will calculated as follows: The midterm exam will count as one
grade and the final exam (including bonus points from the Macro Policy Simulation) will count as
two grades. The lowest grade among these three grades will be dropped. The policy of dropping the
lowest exam grade provides insurance against having a bad day or against being unable to attend the
midterm exam. Because this insurance is being provided to you, there will be NO MAKE-UP EXAM
FOR THE MIDTERM EXAM FOR ANY REASON. If you miss the midterm exam for any reason
whatsoever, then you can simply use your insurance policy to drop that exam; in that case, the exam
component of your course grade will be based solely on the final exam.
The quizzes/graded homework component will be calculated as follows: The lowest quiz/graded
homework grade will be dropped. The quiz/graded homework component will be based on the
remaining quizzes/graded homeworks.
Ethics Matrix
--

W
Summary sheet
Approved calculator
People
Materials
MacroSim
Quizzes/Homeworks
Exam Prep
The Wharton MBA Code of Ethics that you accepted requires, among other things, that you represent
yourself and your work honestly, dont try to gain unfair advantage over other students, follow the instructors
Course Outline -2 FNCE 613Details of this outline are subject to change, as announced in class and posted on Canvas.
Session 1. Introduction and Overview
Reading:
Ch. 1
Current policy topic: Macroeconomic Data Sources
Session 2. National Income Accounting
Reading:
Ch. 2
Current policy topic: Interpreting GDP Relaeses
Session 3. Production and Employment
Reading:
Ch. 3, Secs. 1, 2, 4
Current policy topic: Minimum Wage
FOCUSED INTERVIEW PERIOD NO CLASS
Session 4. Labor Supply and Unemployment
Reading:
Ch. 3, Secs. 3, 5, 6
Current policy topic: Jobless Recoveries
Session 5. Consumption and Saving: Basic Analytics
Reading:
Ch. 4, pp. 103-111; App. 4.A pp. 149-157)
Current policy topic: The Future of Social Security
Session 6. Consumption and Saving: Using the Basic Analytics
Reading:
Ch. 4, pp.111-120; App. 4.A, pp.157-163
Current policy topic: Tax Incentives to Saving
Session 7. Investment and Goods Market Equilibrium
Reading:
Ch. 4, Secs. 2 - 3
Current policy topic: Is There a New Industrial Revolution?
Session 8. A Framework for the Open Economy
Reading:
Ch. 5, Secs. 1 - 2
Current policy topic: Outsourcing
Session 9. Saving, Investment, and the Current Account
Reading:
Ch. 5, Secs. 3 - 5
Current policy topic: Current Account Balances in Mexico and Greece
Session 10. Asset Markets, Money and Prices
Reading:
Ch. 7
Current policy topic: Indexed Bonds
Session 11. In-Class Review Session for Midterm Exam

Session 12. MIDTERM EXAM
Q3 CORE FINAL EXAMS NO CLASS
Session 13. Asset Returns and Prices: Term Structure and Tobins Q
Current policy topic: Bubbles

Session 14. Business Cycles
Reading:
Ch. 8
Session 15. IS-LM Model
Reading:
Ch. 9, Secs. 1 - 5
Session 16. Classical and Keynesian Versions of the IS-LM Model
Reading:
Ch. 10, Secs. 1 2; Ch. 11
Current policy topic: Hyperinflations
Session 17. Aggregate Demand and Aggregate Supply
Reading:
Ch. 9, Sec. 6; Ch. 10, Sec. 3
Current policy topic: Forecasts of the Price Level
Session 18. The Phillips Curve: Unemployment and Inflation
Reading:
Ch. 12
Current policy topic: Political Business Cycles
Session 19. Exchange Rates
Reading:
Ch. 13, Secs. 1 - 2
Current policy topic: Is the Chinese Yuan Undervalued ?
Session 20. Macroeconomic Policy in the Open Economy
Reading:
Ch. 13, Secs. 3 - 5
Current policy topic: Monetary Policy in Argentina
Session 21. Monetary Policy and Institutions
Reading:
Ch. 14, Secs. 1 - 2
Current policy topic: Taylor Rule
Session 22. Issues in Monetary Policy
Reading:
Ch. 14, Sec. 3 and Ch. 15, Sec. 4
Current policy topic: Inflation Targeting
Session 23. Macro Policy Simulation

Session 24. Government Spending and Its Financing
Reading:
Ch. 15, Secs. 1 -3
Current policy topic: Outlook for the Federal Budget
In-Class Review Session for Final Exam
FINAL EXAM

This course presents the analysis of macroeconomic theory with a current events perspective.
The material in the class concentrates on lecture notes, which are the primary learning source,
and readings from a course packet of articles drawn from journals, magazines, newspapers, and
other economic publications.
The material covered will include: (1) Economic Statistics, GDP, Price Indices, Productivity and the
nature of the business cycle, (2) The government budget and Social Security, (3) Monetary policy,
The Fed and other Central Banks, (4) Interest rates indexed bonds and the term structure, (5)
Aggregate Demand and the determination of income and interest rates, (6) Money and Inflation
the Velocity Approach, (7) Reaction of Financial Markets to economic data, (8) Inflation,
inflationary expectations and the Phillips Curve, (9) Supply-side shocks and macro-dynamics,
(11) International Balance of Payments, the current account and capital flows, (12) Determination
of Exchange Rates, exchange rate systems, purchasing power and interest rate parity.
Course Materials
Required: Course Pack of Lecture Notes from Wharton Reprographics
Recommended: Stock for the Long Run, 5th Edition
Problem Sets
Problem sets must be handed in; they are graded and are designed as learning tools. They are
more analytical than questions on the exams, although exam questions are often patterned after
questions taken from the problem sets. All problems are to be handed in online. Instructions will
be forthcoming.
Students may work in groups to solve the problem sets but must hand them in individually.
Worksheets cannot be shared. Students violating these rules will be considered to have
cheated and will be treated accordingly.
Examinations
Examinations are based on understanding and not memorization. All formulas will be provided
on the examination sheets. The examinations are closed book, except students, if they wish, may
bring in notes covering one, and only one side of an 8 by 11 inch piece of paper for the midterm
and two sides for the final examination. The final examination is cumulative.
One hand-held calculator may be brought into the examinations. All cell phones and other
communications devices must be completely off and stowed. Re-grade policy found below.
There will be no make-ups for the final examination. Students who know in advance that,
because of their schedule, they cannot sit for the--- final examination must drop the course.
Grading
There are 200 total points (TP) in the course. Ten percent or 20 points will be allocated to the
problem sets (PS) and 90% or 180 points to exams. Of the exams, the midterm (MT) will be 40%
(or 72 points) and the final examination (F) will count for 60% (or 108 points).
You cannot do worse than your performance on the final examination.
Total Points (TP) in course will be computed as:
TP = Max [MT, 2F/3] + Max [PS, 0.185F] + F.
Course grade will be based on total points.
Exam Regrade Policy

Re-grades will only be considered if a student writes in detail on a separate piece of paper why he
or she deserves more points on a certain question. Such a request must come after carefully reading and understanding the answers given in the answer sheet for the exam, which will be posted
on my website. This explanation must accompany your exam for a regrade.
If any question on the exam is submitted for a re-grade, the ENTIRE EXAM WILL BE REGRADED to make sure the proper grade has been given. Therefore it is possible to lose points on
other questions even if you gain on the question submitted. For that reason, it usually does not
pay to submit for one or two points unless you are confident of all the points allotted on your
other questions. A tough grade on one question is often offset by an easy grade on another.
EXAMS RESUBMITTED BECAUSE OF AN ADDING MISTAKE WILL NOT HAVE THE
QUESTIONS RE-GRADED.
I have learned that in almost all cases where a student asks for re-grades on 4 or 5 questions
this means that the student is fishing for more points. I will not be sympathetic to such
requests.
Please limit re-grades to those question(s) that you specifically believe have been mis-graded.
As stated above, if any question is submitted for re-grade, the entire exam will be re-graded.
Deadline for submission of re-grades will be two weeks following the date of the examination.
Re-grade requests can be submitted in class or placed in my mailbox in the Finance Department.
Course Outline - 3 FNCE 613Sessions 1-2. Financial Crisis, GDP

Session 3. Economic Statistics
DEDICATED INTERVIEW PERIOD
Sessions 4-5. Economic Statistics/Government Budgets
Sessions 6-7. Monetary Policy
Sessions 8-9. Monetary Policy
Probem Set 1 Due: GDP and Price Indices

Sessions 10-11. Interest Rates
Probem Set 2 Due: Budget Deficits

Session 12. Interest Rates
Probem Set 3 Due: Monetary Policy

Sessions 13-16. Equilibrium with money and goods
Probem Set 4 Due: Interest Rates

Probem Set 5 Due: Term Structure
MIDTERM
Sessions 17-18. Money and Inflation
Probem Set 6 Due: Aggregate Demand

Sessions 19-20. Financial Markets DD-RR Model
Probem Set 7 Due: Money and Prices

Sessions 21-22. DD-RR Model/Phillips Curve
Probem Set 8 Due: Financial Markets

Sessions 23-24. Balance of Payment/Exchange Rates
Probem Set 9 Due: Flexible price DDRR

Probem Set 10 Due: Exchange rates, PPP, and Interest Rate Parity
FINAL EXAMINATION

Macroeconomics and the Global Economic Environment is a course in macroeconomic analysis,
with an emphasis on current events and policy applications. The goal of this course is to provide
the background needed to recognize and understand the broad economic and financial movements in the global economy. Key topics include national income accounting, production,
employment, innovations and economic growth, consumption and saving decisions, investment,
the financial markets, the business cycle, monetary and fiscal policy, international trade and
investment, international capital flows, exchange rates and international finance. By the end of the
course, students will be able to evaluate and discuss the global economic environment in which
business and financial decisions are made.
Course Material
CANVAS
The Canvas website contains the syllabus, lecture notes, weekly quizzes, teaching assistants office
hours, regrade request forms, and other useful information. You need to have a Wharton account
to access the website. If you do not have a Wharton account, you can apply for one online.
READING MATERIAL
The bulk of the course material comes from the lecture notes, the textbook, and course readings.
The lecture notes are available on Canvas. The course textbook is Macroeconomics (eight edition)
from Andrew B. Abel, Ben S. Bernanke and Dean Croushore (referred to as ABC), AddisonWesley, 2014. The study guide that supplements this textbook is a useful aid to students who
would benefit from additional explanations and practice with the material. I also recommend
Macroeconomics (third edition) from Charles I. Jones (referred to as Jones), Norton, 2014. Both
of these textbooks are on reserve at the library.
Most other course readings come from The Economist newspaper and from Federal Reserve Banks
publications. They are hyperlinked to web sources from within the syllabus. As such, I suggest you
buy a subscription to The Economist to access these readings online. If you do not want to buy a
subscription to The Economist, you can use the Penn library subscription. However, your online
access will be limited to Penn computers. Access to Federal Reserve Banks publications is free.
In addition to the regular course material, you are expected to follow current economic events.
While no subscription to any particular journal is required, it is recommended that you regularly
read The Wall Street Journal and The Financial Times.
Grading
Grades are based on two examinations (80%), ten quizzes (10%), and class participation (10%).
EXAMINATIONS
The midterm and the final examinations are comprehensive and closed book, except for one
single handwritten 8.5 x 11 double-sided sheet of notes. Calculators are permitted. The final
examination is cumulative over the material from the entire course.
The midterm examination counts as one grade and the final examination counts as two grades.
The total examination grade is computed as the average of the best two out of three grades. In other
words, the lowest grade among these three grades is dropped. This policy of dropping the lowest
examination grade provides you insurance against scheduling conflicts (inability to attend the
midterm examination) and anomalous performances (a bad day). Because this insurance is being
provided to you, no requests to reschedule or retake the midterm examination will be entertained
unless specifically mandated by university policy. If you miss the midterm examination for any reason, you can simply use your insurance policy and drop that exam. The final examination can be
rescheduled only if required by university policy and only during the official make-up period.
SCHEDULING CONFLICTS
Scheduling conflicts should be resolved according to the MBA Resource Guide. If you find yourself with a conflict due to your career search or recruiting activity, you should work with the MBA
Career Management Office to find a resolution. You should never approach your instructor with
requests to reschedule exams or to make special accommodations.
REGRADE REQUESTS
Regrade requests must be submitted using the regrade request form and the statement of
honesty posted on Canvas and must be accompanied by your exam. Requests must be submitted
within one week from the date the examination is returned (whether or not you actually pick up
the exam on that date). Regrade requests must be very specific. For any request, the entire exam
will be automatically regraded; meaning, the grade may stay the same, go up or go down after
regrading. Any alteration of the exam is therefore strictly forbidden and will be considered as a
violation to the Code of Academic Integrity.
QUIZZES
There will be eight (weekly) quizzes available on Canvas. The quizzes are designed to reinforce key
concepts from the classes and to help you prepare for the final examination. Your final quiz grade
will be the average of your best seven quizzes. In other words, I will drop your lowest quiz grade.
The quizzes must be submitted by 9:00 a.m. on the due date. Quizzes will not be accepted late and
no regrade requests will be entertained. Answers to quizzes will be posted on Canvas shortly after
the due date.
Academic Integrity
All relevant University policies regarding Academic Integrity must be followed. Please consult the
Code of Academic Integrity for details.
Course Outline -4 FNCE 613TOPIC 1: INTRODUCTION TO MACROECONOMIC DATA

Session 1. National Accounting
Readings: ABC Ch. 2.1-2.3

Jones Ch. 2.1-2.2
Boundary problems, The Economist, August 2013
Topics:
origin of national income accounting, definitions and measurements of Gross
Domestic Product (GDP), GDP components, production, income, and expenditure
approach of measuring GDP, saving and wealth, GDP and happiness
Session 2. Measuring Economic Changes over Time
Readings: ABC Ch. 2.4 and 2.5

Jones Ch. 2.3-2.4
A creeping ascent (2013 in charts), The Economist, December 2013
This time is worse, The Economist, January 2014
Topics:
nominal and real GDP, GDP across countries, growth rates, the rule of 70, price
indexes and inflation, nominal and real interest rates, the Fisher equation
QUIZ #1 DUE
TOPIC 2: PRODUCTION AND ECONOMIC GROWTH
Session 3. The Production Function
Readings: ABC Ch. 3.1 and 6.1

Jones Ch. 4
Labour pains, The Economist, November 2013
Topics:
production function, return to scale, Cobb-Douglas production function, capital
and labor inputs, Total Factor Productivity (TFP or technology), marginal product of
capital and labor, diminishing marginal products, capital and labor inputs allocation,
production and shocks to labor, capital, or technology, capital and labor income
share, sources of economic growth, income differences across countries, growth
accounting
Session 4. Drivers of Productivity and Global Competitiveness

Jones Ch. 5
A reasonable supply, The Economist, November 2013
Topics:
the Solow growth model, endogenous growth theory, innovation and economic
growth, government policies and long-run growth
Session 5. The Solow Growth Model Unleashed
Case study: The Solow Growth Model Unleashed, by Nicolas Vincent and Pierre Yared
Columbia Business School ID#130304 on Study.Net
QUIZ #2 DUE
TOPIC 3: ECONOMIC MARKETS
Session 6: The Labor Market, Wages, and Unemployment

Jones Ch. 7
The price of getting back to work, The Economist, January 2014
What is the new normal unemployment rate? Economic Letter, Federal Reserve Bank
of San Francisco, February 2011
Topics:
the U.S. labor market, labor demand, labor supply, income and substitution effects,
labor market equilibrium, full-employment output, wages and inequality, labor
market measurements, frictional vs. structural unemployment, natural rate of
unemployment, labor markets around the world, Okuns law
Session 7: Consumption and Saving Decisions
Readings: ABC Ch. 4.1 and appendix 4.A

Jones Ch. 16
Topics:
consumption and saving decisions, the intertemporal budget constraint, income and
wealth, income and substitution effects, permanent-income hypothesis, Ricardian
equivalence, borrowing constraints, empirical evidence on consumption
QUIZ #3 DUE
Session 8: Investment and Goods Market Equilibrium

Jones Ch. 17
Topics:
firms investment decisions, the user cost of capital, desired capital stock and investment, the stock market and financial investment, components of physical investment,
saving and investment equilibrium and the real interest rate
Session 9: Money and Inflation
Readings: ABC Ch. 7

Jones Ch. 8
Closing the gap, The Economist, February 2014
Topics:
monetary aggregates, portfolio allocation and the demand for assets, money demand,
the quantity theory of money, asset market equilibrium, money growth and inflation,
the costs of inflation
QUIZ #4 DUE
TOPIC 4: BUSINESS CYCLE MODELS

Session 10: The Business Cycle and the IS/LM Model
Readings: ABC Ch. 8 and 9.1-9.4

The New IS-LM Model: Language, Logic, and Limits, Economic Quarterly, Federal
Reserve Bank of Richmond, Summer 2000 Read Sections 1 and 2, pp 45-54.
Topics:
business cycle trends and fluctuations, actual and potential output, , international
aspects of business cycles, overview of the short-run model, equilibrium in the labor,
goods, and asset markets, macroeconomic shocks and the IS/LM model
Session 11: Review Session
MIDTERM EXAMINATION
Session 12: Firms Pricing Behavior and the Phillips Curve
Readings: ABC Ch. 11.2 and 12

Jones Ch. 12
Topics:
Firms pricing behavior over the business cycle, price adjustment and inflation
expectations, unemployment and inflation, the Phillips curve, the role of inflationary
expectations
Session 13: Aggregate Demand and Aggregate Supply

Jones Ch. 13
The perils of falling inflation, The Economist, November 2013
In the danger zone, The Economist, January 2014
Topics:
aggregate demand curve, aggregate supply curve, the AS/AD framework, the liquidity
trap, the dangers of deflation, expectations and economic activity
QUIZ #5 DUE
TOPIC 5: MONETARY POLICY
Session 14: The Federal Reserve System and U.S. Monetary Policy

Tools of Monetary Policy, Ch. 15 by Frederic Mishkin on Study.Net
Age shall not weary her, The Economist, December 2013
Monetary policy, money, and inflation, Economic Letter, Federal Reserve Bank
of San Francisco, July 2012
Topics:
the Federal Reserve System, central banking around the world, the Federal Open
Market Committee, money supply creation, conventional monetary policy, open
market operations, the federal fund market
Session 15: Monetary Policy Rules and Unconventional Monetary Policies

Will unconventional policy be the new normal? Economic Letter, Federal Reserve
Bank of San Francisco, October 2013
Topics:
monetary policy rules, the Taylor rule, the limits of conventional monetary policy,
the Great Recession, unconventional monetary policy
QUIZ #6 DUE
Session 16: The Term Structure of Interest Rates and Monetary Policy
Readings: Term Structure of Interest Rates, by Frederic Mishkin on Study.Net

Case study: The yield curve and growth forecasts, by Francis Warnock
Harvard Business School #UV5689 on Study.Net
Session 17: SPEAKER TBD
TOPIC 6: THE GLOBAL ECONOMY
Session 18: International Trade
Readings: Jones Ch. 19

The U.S. content of Made in China, Economic Letter, Federal Reserve Bank of
San Francisco, August 2011
Topics:
facts about international trade, reasons for trade, risk sharing, absolute and
comparative advantage, costs and benefits of international trade
Session 19: Exchange Rates and International Finance 1
Readings: ABC Ch. 5

Topics:
balance of payment accounting, goods market equilibrium in an open economy,
saving and investment in an open economy, fiscal policy and the current account,
trade and capital flows, twin deficits
QUIZ #7 DUE
Session 20: Exchange Rates and International Finance 2
Readings: ABC Ch. 13

Jones Ch. 20
Unconventional monetary policy and the Dollar? Economic Letter, Federal Reserve
Bank of San Francisco, April 2013
Topics:
the nominal and real exchange rates, the law of one price, the foreign exchange
market, interest rates and exchange rates movements, multinational pricing behavior,
the real exchange rate and net exports
TOPIC 7: FISCAL POLICY

Session 21: The Government and the Macroeconomy

Fiscal Headwinds: Is the other shoe about to drop? Economic Letter, Federal Reserve
Bank of San Francisco, June 2013
Topics:
U.S. government spending and revenue, fiscal policy and aggregate demand, government debt and deficits, sustainability of public debt, problems of the 21st century
QUIZ #8 DUE
Session 22: The World Today and Global Growth Prospects
Readings: World Economic Outlook, Chapter 1-2, April 2015, International Monetary Fund
Session 23: Review Session
FINAL EXAMINATION
Macroeconomics and the Global Economic Environment (FNCE 615) SYLLABUS 78

This is a survey course in macroeconomics with an emphasis on current events and policy applications. The objective of the course is to provide students with the background needed to understand current global macroeconomic events. Key topics include economic growth, technological
change, booms and recessions, inflation, interest rates, monetary and fiscal policy, international
trade and exchange rates. By the end of the course, students should be able to read and understand the discussion of macroeconomic issues in newspapers such as The Economist, The New
York Times, The Wall Street Journal and The Financial Times.
Course Material
CANVAS
There is a Canvas site containing the syllabus, lecture notes, quizzes, and other useful information.
You need to have a Wharton account to enter the site. If you do not have a Wharton account, you
can apply for one online.
READING MATERIAL
The course material consists of lecture slides, the textbook, and course readings. The lecture slides
will be posted on Canvas prior to class. The main textbook is Macroeconomics (8th edition) by
Andrew B. Abel, Ben S. Bernanke and Dean Croushore (henceforth ABC), Addison-Wesley, 2013.
I will also assign select chapters from two other books: Macroeconomics (3rd edition) by Charles
Jones (henceforth Jones), W.W. Norton, 2014; and The Economics of Money, Banking, and Financial Markets (10th edition) by Frederic Mishkin (henceforth Mishkin), Prentice Hall, 2013. These
chapters are available for download through the Study.Net tab on Canvas. Finally, there will be a
few course readings from The Economist and other publications that are hyperlinked in the course
outline section of Canvas; and we will work through two case studies, also available for download
through the Study.Net tab on Canvas.
Course Etiquette
While attendance is not mandatory, your learning experience will be most successful if you come
to class regularly and complete the assigned readings in advance. Macroeconomics is a complex
subject about key current issues. You will be able to understand and form your opinion about
these issues only if you actively engage with the material. Moreover, the lecture slides posted on
Canvas are not comprehensive. They only provide context for the topics discussed in class.
If you come to class, consider it like a contract. Your end of the contract is to come prepared and
to engage fully in the classroom conversation. My end of the contract is that I will do everything
in my power to make it worth your time to be there. To that end, I may sometimes call on students, asking questions about the assigned readings. This is not meant to embarrass but instead
intended to create an incentive for everyone to complete the reading assignments ahead of time
and participate, thereby contributing to a stimulating class discussion.
Macroeconomics and the Global Economic Environment (FNCE 615) SYLLABUS 79
To further promote a good learning environment free of distractions, I ask you to refrain from
using laptops, phones and other electronic devices during class. With your laptop open, it is
almost impossible not to check email or briefly surf the internet, even if you dont mean to or
have told yourself that you wont. Recent research has shown that this kind of multitasking
impairs your learning and distracts your peers. Moreover, even if you are just taking class notes
with your laptop, it takes away from the sense of conversation I would like to foster during class.
Of course, you may disagree with me and strongly prefer to take notes with your laptop. If that is
the case, please come talk to me and we will find a way to make it work.
Grading
Grades are based on a final exam (65%), five quizzes (25%), and class participation (10%).
FINAL EXAM
The final exam will cover the entire course material and is closed book, except for one single 8.5
x 11 double-sided sheet of notes. Calculators (that cannot communicate with each other) are
permitted. The exam cannot be rescheduled except if required by university policy. For more
information on how to resolve scheduling conflicts, consult the MBA Resource Guide or contact
the MBA program office.
If you feel your final exam is graded incorrectly, you can fill out the regrade request form as well
as the statement of honesty posted on Canvas and submit them together with your exam within
one week from the date the exam is returned (whether or not you actually pick up the exam on
that date). Regrade requests must be very specific, providing a clear description of the problem
and why you think the exam should be graded differently. For any request, the entire exam will
automatically be regraded; meaning, the grade may stay the same, go up, or go down after regrading. Any alteration of the exam is therefore strictly forbidden and will be considered as a violation
to the Code of Academic Integrity.
QUIZZES
There will be 4 quizzes, administered through Canvas. The quizzes are designed to reinforce key
concepts from class and to help you prepare for the final. Due dates will be indicated under the
course outline section of the syllabus. Quizzes are due by 9:00 a.m. of the indicated due date and
will not be accepted late. No regrade requests will be entertained for quizzes.
CLASS PARTICIPATION
The class participation grade will be determined by how actively you ask questions and contribute
to class discussions. It is intended to reward students for their efforts in contributing to a stimulating class environment. Past experience has shown that a good class participation grade is a
quasi-guarantee for obtaining an above-LT grade even if you do not perform well on the quizzes
and the final exam.
Academic Integrity
All relevant University policies regarding Academic Integrity must be followed. Please consult the
Code of Academic Integrity for details.
Macroeconomics and the Global Economic Environment (FNCE 615) COURSE OUTLINE 80
Course Outline FNCE 615MACROECONOMIC DATA

Session 1. National Income Accounting and Gross Domestic Product
Readings: ABC Chapters 1, 2.1 2.3

The real wealth of nations The Economist, June 30, 2012
Topics:
Definition and measurement of Gross Domestic Product (GDP); GDP components;
savings and wealth; alternative measures of economic performance and wealth.
Session 2. Prices, Inflation and Economic Measurement over Time
Readings: ABC Chapters 2.4 2.5

Jones Chapters 3.1 3.5
The $210 Million Baseball Contract That Explains How Inflation Works The New
York Times, January 21, 2015.
Topics:
Real and nominal GDP; price indices and inflation; nominal and real interest rates;
the Fisher equation; growth rates; the Rule of 70.
QUIZ #1 DUE
THE LONG RUN
Session 3. A Model of Production
Readings: ABC Chapters 3.1 and 6.1

Topics:
Production function; constant returns to scale; diminishing marginal returns to
capital and labor; Total Factor Productivity (TFP); growth accounting.
Session 4. The Sources of Economic Growth

Jones Chapters 6.1 6.2
Has the ideas machine broken down? The Economist, January 12, 2013.
Topics:
Solow growth model; conditional convergence; technological progress; human
capital; research and development; the Economics of Ideas.
Case study:The Solow Model Unleashed: Understanding Economic Growth, by Nicolas Vincent
and Pierre Jared, Columbia Business School Case #130304 (available at Study.Net)
CASE STUDY DUE
THE LABOR MARKET
Session 5. Labor Demand, Labor Supply and Unemployment
Readings: ABC Chapters 3.2 3.5, 12.3

The Missing Millions The Economist, September 28, 2013
Topics:
The U.S. labor market and labor markets around the world; labor demand; labor
supply; labor market equilibrium; frictional vs. structural unemployment; the natural
rate of unemployment.
QUIZ #2 DUE
THE SHORT RUN
Session 6. Business Cycles: Facts and Explanations
Readings: ABC Chapters 3.6, 8.1 8.4

Jones Chapters 12.2 and 13.2
Topics:
Trends and business cycle fluctuations; actual and potential output; Okuns law; the
IS curve, the MP curve and the aggregate demand/aggregate supply (AS/AD)
framework.
Session 7. The Great Recession and Cyclical Macroeconomic Policy
Readings: ABC Chapters 10.1 10.3, 11.2 11.4, 12.1 12.2

The Morning After The Economist, June 24, 2010
Topics:
The Great Recession viewed through the AS/AD framework; the American Recovery
and Reinvestment Act; Classical and Keynesian explanations of business cycles and
their implications for macroeconomic policy; price rigidities and the Phillips curve.
QUIZ #3 DUE
MONETARY POLICY
Session 8. The Federal Reserve System and Conventional Monetary Policy
Readings: ABC Chapters 14.1 14.2, 14.4 (up to page 560), 14.5
Mishkin Chapter 15 (page 355 371)
Topics:
The Federal Reserve System; fractional reserve banking; money multiplier; the
Federal Funds market; open market operations; rules versus discretion.
Session 9. The Financial Crisis of 2008 and Unconventional Monetary Policy
Readings: ABC Chapter 14.4 (from page 560 on)

Mishkin Chapter 6
The Federal Reserves unconventional policies, Economic Letter, Federal Reserve
Bank of San Francisco, November 13, 2012
Monetary Policy, Money, and Inflation Economic Letter, Federal Reserve Bank of
San Francisco, July 9, 2012
Topics:
The Zero-Lower Bound; forward guidance; large-scale asset purchases; Fed balance
sheet expansion.
QUIZ #4 DUE
FISCAL POLICY
Session 10. Government Spending and Its Financing

Budget Puzzle: You Fix the Budget The New York Times, November 13, 2010
Topics:
U.S. government spending and revenue; fiscal policy and aggregate demand;
automatic stabilizers; incentive effects of fiscal policy; government debt and deficits;
sustainability of public debt.
THE GLOBAL ECONOMY

Session 11. International Trade and Exchange Rates

Oily and easy The Economist, January 24, 2015
Topics:
Nominal and real exchange rates; the real exchange rate and net exports; the foreign
exchange market; short-run and long-run determinants of exchange rates; the
open-economy AS/AD framework.
Case study:Draghis commitment? by Francis Warnock
Darden Business School Case UVA-GEM-0113 (available at Study.Net)
CASE STUDY DUE
Session 12. The European Debt Crisis and the Future of the Euro
Readings: ABC Chapters 13.4 13.5(skim)

Topics:
Fixed and flexible exchange rate regimes; currency unions; speculative attacks; the
policy trilemma.
FINAL EXAMINATION
Economics of Managerial Decision Making (MGEC 611/612) DESCRIPTION 83
Economics of Managerial Decision Making (MGEC 611/612)

Course Description
MGEC 611: Microeconomics for Managers Foundations establishes the micro-economic
foundations for understanding business decision-making and includes consumer theory and
market demand with full information, production theory and economic cost.
MGEC 612: Microeconomics for Managers: Advanced Applications covers the economic
foundations of business strategy and decision-making in market environments with less than full
information and includes game theory and strategies.
Waiver by Exam
Incoming students may waive the first or both Quarter courses of Microeconomics for Managers:
Quarter I (MGEC 611): Microeconomics for Managers: Foundations and Quarter II (MGEC
612): Microeconomics for Managers; Advanced Applications. To waive these required courses
acceptable performance on a waiver examination will be required.
To be exempted from enrolling in MGEC 611: Microeconomics for Managers: Foundations,
students have to pass a 90-minute waiver exam. Similarly, to be exempted from enrolling in
MGEC 612: Microeconomics for Managers: Advanced Applications, students have to pass a
60-minute exam, in addition to taking the MGEC 611 exam. All students who pass the MGEC 612
waiver exam will automatically be exempted from enrolling in MGEC 611, provided their performance on the MGEC 611 exam is adequate, even if not outright passing. Topics covered by the
two exams are listed below and sample examinations are provided in the Waiver Exam Guide.
The MGEC 611 waiver exam tests mastery of the following topics:
1. Demand, Consumer Surplus, and Elasticities
2. Production and Cost Minimization
3. Costs and Opportunity Costs
4. Competitive Market Equilibrium
5. Taxation and Regulation
6. Monopoly Power
7. Price Discrimination
8. Bundling
9. Two-Part Tariffs
10. Double Marginalization
Economics of Managerial Decision Making (MGEC 611/612) DESCRIPTION 84
The MGEC 612 exam tests mastery of the following topics:

1. Pricing strategies in Oligopolies, including collusion
2. Game theory, including solving Prisoner Dilemma Games, Commitment Strategies,
Credible Threats
3. Auctions
4. Decision Making under Uncertainty
5. Risk Sharing and Strategies for Managing Risk
6. Moral Hazard and Incentive Contracting
7. Asymmetric Information and Signaling
Texts which can help prepare students for these exams include:
Robert Pindyck and Daniel Rubinfeld, Microeconomics.

David Besanko and Ronald Braeutigam, Microeconomics.
Michael Baye, Managerial Economics and Business Strategy.
David Kreps, Microeconomics for Managers.
Economics of Managerial Decision Making (MGEC 611) SYLLABUS 85
Syllabus MGEC 611 Readings

The primary textbook is Microeconomics, Doug Bernheim and Michael Whinston, 2nd Edition,
McGraw-Hill [BW in course outline]. It is not mandatory, but will be extremely useful for students with no or little background in economics, or those who have not seen similar material in
many years. For some topics, we will suggest additional readings from other texts, such as
Intermediate Microeconomics: A Modern Approach, Hal Varian, 8th Edition, Norton. The text is
available at the bookstore.
Before each class, we expect all students to have read the assigned newspaper articles for that class
to facilitate a classroom discussion on the lectures lesson. PDF versions of the assigned articles are
available under Files\Readings on Canvas.
Teaching Assistants
TAs will hold recitations, at which they will solve practice exam problems, and office hours, which
are a more free-form time for questions. Attendance of either recitations or office hours is not
mandatory. Feel free to attend whichever office hours or recitation fit your schedule. Please
contact the head TA concerning administrative details and use Canvas discussion board
for questions related to the material.
The teaching assistants will hold two reviews for the Final Exam.
Mathematical Requirements
You should review elementary algebra and calculus and:
1. Be able to graph an equation, especially a linear equation.
2. Be able to solve a system of two linear equations and two unknowns.
3. Understand what a derivative is.
4. Be able to compute the derivative of a simple equation.
5. Know how to find the maximum or minimum of a function using derivatives.
There is a practice problem set (no need to submit your answers; it is just for your own self-assessment) posted on Canvas. If you understand how to do the problem set, you should be fine in terms
of the math for this course. If you have any difficulty, please talk to a TA about steps you can take to
get your math skills up to speed.
Grading Policies
1. Each student must submit his or her own problem set. Collaboration is permitted ONLY
WITHIN LEARNING TEAMS while working through the questions.
2. Problem sets should be submitted to the section-labeled hanging folders just inside 1041
Steinberg Hall-Dietrich Hall (i.e. the smaller door to the left of the main entrance to the 1400
suite). The door will be closed at 4 p.m. on the day of the deadline. Please be mindful that this
is a working office. Submissions will not be accepted once the door is closed, and submissions
will not be accepted through any other method, including email.
3. The exam is closed book, but a one page crib sheet of formulas is allowed along with a
stand-alone (not a phone or a computer) calculator (details to be discussed in class).
4. Each problem set is graded on a twenty point scale across all problems in the problem set.
Full points will be given for correct answers showing the derivations; Points will be subtracted
for mathematical and logical errors. Zero points will be given for no answers; correct answers
without supporting derivation; or simply stating economic concepts without applying them
to the specific question.
5. If you wish to dispute a grade on an assignment or an exam, you must do so by the dispute
deadline we will announce in class. In order to file a dispute, you must ante up 5% of the value
of the assignment. If we conclude that your dispute is valid, you will receive the 5% back, but if
not, we will keep it. We also reserve the right to re-grade all parts of a disputed assignment, not
only the specific parts you wish to dispute. Finally, your dispute must be put into writing,
attached to the original graded exam, and submitted to the same place that the homework
assignments are submitted, by 4 p.m. on the dispute deadline. Again, disputes will not be
accepted beyond the deadline, and disputes will not be accepted through any other method.
6. Any evidence of cheating is sent immediately to the Dean.
7. Your score for the course will be calculated according to the following table. Course grades
will be curved at the instructor level across his/her sections, i.e. not across all sections.
Assessment
% of Grade
Problem Set 1
20%
Problem Set 2
20%
MGEC 611 Exam
50%
Attendance and Participation
10%
Classroom Policies
1. Each student must sit in his or her assigned seat with name-card displayed.
2. You are expected to have read the assigned articles before class. We suggest that you briefly
discuss them with your learning teams as well.
3. We will cold-call people.
4. If you would like to take notes electronically, tablets, but not laptops or smartphones, can be
used in the classroom.
5. Wharton concert rules apply: be seated when class is scheduled to start and dont leave the
room unless absolutely necessary. Individual faculty will set policies regarding late arrivals
to class.
Attendance Policies
We will rely on the attendance app developed by the MBA Program Office (MBAPO) in conjunction with the seating chart to record attendance. Arriving ten or more minutes late for class is
treated as an absence and absences will be excused only for the specific reasons listed on the
MBAPO website. Please review the MBAPOs core course attendance policy here:
https://spike.wharton.upenn.edu/mbaprogram/Policies/MBA%20Program%20Attendance
%20Policy.cfm
Economics of Managerial Decision Making (MGEC 611) COURSE OUTLINE 88
Course Outline MGEC 611KEY

BW Microeconomics, Doug Bernheim and Michael Whinston, 2nd Edition, McGraw-Hill.
Session 1: Course Introduction and Market Demand
1. Overview of the Course

2. Reservation Prices and Demand
3. Aggregating Demand Curves
4. Measuring Satisfaction: Consumer Surplus
Reading: BW Chapters 2.1, 6.1, 14.2 section on Market Demand, 14.5
Article: Frustrations of Air Travel Push Passengers to Amtrak, Ron Nixon, The New York Times,
8/15/2012
Session 2: Production and Supply Curves
1. Types of costs firms face

2. Production functions
3. Solving for the optimal ratio of inputs
4. Solving for a variable cost function
Reading: BW Chapters 2.2, 7.2, 7.3 (through p. 223), 8.1-8.6
Article: Here Come the Robot Lawyers, James OToole, CNN Money, 3/28/2014
Article: Game over for 520 Zynga workers, Brett Molina and Jon Swartz, USA Today, 6/4/2013
Session 3: Equilibrium and Elasticity
1. Market Equilibrium
2. Understanding Consumer Demand: Price elasticity, income elasticity, and cross-price elasticity
Reading: BW Chapters 2.3, 2.4
Article: Food Prices Surge as Drought Exacts a High Toll on Crops, Tony C Dreibus, Leslie
Josephs, Julie Jargon, The Wall Street Journal, 3/18/2014.
Article: NY reaches price limit deal with car service Uber, The Wall Street Journal, 7/8/2014
Session 4: Government Interventions
1. How interventions affect a market equilibrium

2. Incidence of interventions
3. Externalities, and why governments intervene.
Reading: BW Chapter 15.1, 15.2, 20.1, 20.3
Article: PA House passes cigarette tax for Philly schools, Kevin McCorry, WHYY, 7/2/2014.
Article: A Price Tag on Carbon as a Climate Rescue Plan, Justin Gillis, The New York Times,
5/30/2014
Session 5: Perfectly Competitive Industries
1. What do we mean by a perfectly competitive market?

2. Profit maximization by perfectly competitive firms
3. Market outcomes in perfectly competitive markets
4. Short Run vs. Long Run decision-making
Reading: BW Chapter 9 (in particular 9.3), 14.3, 14.4
Article: Freighter Oversupply Weighs on Shipowners and Banks" Keith Bradsher, The New York
Times, 1/25/2012
Article: Asian Group Tries to Stem Rubbers Swoon, Huileng Tan, The Wall Street Journal,
2/10/2014
PROBLEM SET 1 DUE
Session 6: Firms with Market Power: Monopoly
1. What is market power?

2. Marginal Revenue and Uniform Pricing with market power.
3. Sources of Market Power: patents, licenses, etc.
4. The Inverse-Elasticity Pricing Rule
Reading: BW Chapter 17.1-17.3
Article: Rapid Price Increases for Some Generic Drugs Catch Users by Surprise, Elisabeth
Rosenthal, The New York Times, 7/8/2014.
Article: Rare Earth Minerals: An End To Chinas Monopoly Is In Sight, Paul Martyn, Forbes,
6/8/2012.
Session 7: Pricing with Market Power Single Unit Price Discrimination
1. Different types of Price Discrimination: how well are you able to target consumers with
different tastes
2. Perfect price discrimination: applications and outcomes
3. Pricing on demographics
4. Self-selecting prices.
Reading: BW Chapter 18.1-18.4 (readings overlap with Lecture 8)
Article: Supermarkets Offer Personalized Pricing, Olga Kharif, Bloomberg Businessweek,
11/14/2013.
Article: Websites Vary Prices, Deals Based on Users Information, Jennifer Valentino-Devried,
Jeremy Singer-Vine and Ashkan Soltani, The Wall Street Journal, 12/24/2012
Session 8: Pricing with Market Power Multi-Unit Price Discrimination
1. Designing products for consumers to self-select

2. Quantity discounting
3. Versioning, Damaged Goods
Reading: BW Chapter 18.1-18.4 (readings overlap with Lecture 7)

Article: All-You-Can-Fly Airline Plies the California Coast, Billy Witz, The New York Times,
8/5/2013
Article: Nibbled to Death, Pete Wells, The New York Times, 10/9/2012,
Session 9: Pricing with Market Power Two-Part Tariffs
1. Introduction to two-part pricing

2. Optimal two-part tariffs with full information
3. Two-part pricing to markets with multiples types of consumers
Reading: BW Chapter 18.2 (from p. 631), 18.4 (p. 644-648)
Article: Microsoft Squeezes Little Profit out of Each XBOX One, Lance Whitney, CNET
11/26/2013
Article: A Stingy Spirit Lifts Airline's Profit, Jack Nicas, The Wall Street Journal 5/12/2012
PROBLEM SET 2 DUE
Session 10: Pricing with Market PowerBundling
1. Capturing surplus from bundling goods together

2. When Pure and Mixed bundling strategies are profitable.
3. Tying goods together.
Reading: BW Chapter 18.5
Article: The CBS Standoff and the Enduring Beauty of Bundled TV, Justin Bachman,
Bloomberg Businessweek, 8/6/2013
Article: New Netflix Pricing Gets Thumbs DownStock Falls 19% As Customers Leave
Ian Sherr, The Wall Street Journal, 9/16/2011
Session 11: Pricing in vertical markets
1. How market structure at different levels affects the final goods market
2. Double markups and how to avoid them
3. Implications of forms of downstream/retail competition
4. Optimal contracts to overcome vertical market distortions
Reading: PR Appendix to Chapter 11, available on study.net.
Article: Fallout From Apples Loss on E-Books, Brian X. Chen and Julie Bosman, The New York
Times, 7/10/2013
Article: Sticker shock: Why are glasses so expensive?, Lesley Stahl, CBS News, 10/7/2012
Session 12: Course Review and Other Topics
PROBLEM SET 3 DUE

MGEC 611 EXAM
Syllabus MGEC 612 Readings

The primary textbook is Microeconomics, Doug Bernheim and Michael Whinston, 2nd Edition,
McGraw-Hill [BW in course outline]. It is not mandatory, but will be extremely useful for students with no or little background in economics, or those who have not seen similar material in
many years. For some topics, we will suggest additional readings from other texts, such as
Intermediate Microeconomics: A Modern Approach, Hal Varian, 8th Edition, Norton [Varian in
course outline]. The text is available at the bookstore.
Before each class, we expect all students to have read the assigned newspaper articles for that class
to facilitate a classroom discussion on the lectures lesson. PDF versions of the assigned articles are
available under Files\Readings on Canvas.
Teaching Assistants
TAs will hold recitations, at which they will solve practice exam problems, and office hours, which
are a more free-form time for questions. Attendance of either recitations or office hours is not
mandatory. Feel free to attend whichever office hours or recitation fit your schedule. Please
contact the head TA concerning administrative details and use Canvas discussion board
for questions related to the material.
The teaching assistants will hold two reviews for the Final Exam.
Mathematical Requirements
You should review elementary algebra and calculus and:
1. Be able to graph an equation, especially a linear equation.
2. Be able to solve a system of two linear equations and two unknowns.
3. Understand what a derivative is.
4. Be able to compute the derivative of a simple equation.
5. Know how to find the maximum or minimum of a function using derivatives.
Grading Policies
1. Each student must submit his or her own problem set. Collaboration is permitted ONLY
WITHIN LEARNING TEAMS while working through the questions.
2. Problem sets should be submitted to the section-labeled hanging folders just inside 1041
Steinberg Hall-Dietrich Hall (i.e. the smaller door to the left of the main entrance to the 1400
suite). The door will be closed at 4 p.m. on the day of the deadline. Please be mindful that this
is a working office. Submissions will not be accepted once the door is closed, and submissions
will not be accepted through any other method, including email.
3. The exam is closed book, but a one page crib sheet of formulas is allowed along with a
stand-alone (not a phone or a computer) calculator (details to be discussed in class).
4. Each problem set is graded on a twenty point scale across all problems in the problem set.
Full points will be given for correct answers showing the derivations; Points will be subtracted
for mathematical and logical errors. Zero points will be given for no answers; correct answers
without supporting derivation; or simply stating economic concepts without applying them
to the specific question.
5. One of the learning components of this course is a group project that you will complete with
the members of your learning team. Its objective is to apply the concepts studied in the course
to a current event, such as a product pricing analysis, a merger case, or a policy debate. We
would like you to choose a topic based on a recent newspaper story and conduct an analysis
using some of the tools from class. The deliverables for the project consist of a report of at
most two pages in length and up to three PowerPoint exhibit slides, together with a copy of
the original article. We will choose a random subset of topics for presentation in class 11.
Each invited group will get 10 minutes to present an overview of their topic and their analysis
followed by 5 minutes of Q&A.
Each project will be graded out of ten points based on the summary write-up and the PowerPoint presentation. Grades will reflect the relevance of economic concepts used. Each team
will receive a single group grade.
6. If you wish to dispute a grade on an assignment or an exam, you must do so by the dispute
deadline we will announce in class. In order to file a dispute, you must ante up 5% of the value
of the assignment. If we conclude that your dispute is valid, you will receive the 5% back, but if
not, we will keep it. We also reserve the right to re-grade all parts of a disputed assignment, not
only the specific parts you wish to dispute. Finally, your dispute must be put into writing,
attached to the original graded exam, and submitted to the same place that the homework
assignments are submitted, by 4 p.m. on the dispute deadline. Again, disputes will not be
accepted beyond the deadline, and disputes will not be accepted through any other method.
7. Any evidence of cheating is sent immediately to the Dean.
8. Course grades will be curved at the instructor level across his/her sections, i.e. not across all
sections. Your score for the course will be calculated according to the following table:
Assessment
% of Grade
Problem Set 1
15%
Problem Set 2
15%
Group Project
10%
MGEC 612 Exam
50%
Attendance and Participation
10%
Classroom Policies
1. Each student must sit in his or her assigned seat with name-card displayed.
2. You are expected to have read the assigned articles before class. We suggest that you briefly
discuss them with your learning teams as well.
3. We will cold-call people.
4. If you would like to take notes electronically, tablets, but not laptops or smartphones, can be
used in the classroom.
5. Wharton concert rules apply: be seated when class is scheduled to start and dont leave the
room unless absolutely necessary. Individual faculty will set policies regarding late arrivals
to class.
6. Professors reserve the right to record classroom sessions. Videos will not be made public, but
may be made available to students that missed a session for an approved reason.
Attendance Policies
We will rely on the attendance app developed by the MBA Program Office (MBAPO) in conjunction with the seating chart to record attendance. Arriving ten or more minutes late for class is
treated as an absence and absences will be excused only for the specific reasons listed on the
MBAPO website. Please review the MBAPOs core course attendance policy here:
https://spike.wharton.upenn.edu/mbaprogram/Policies/MBA%20Program%20Attendance
%20Policy.cfm
Course Outline MGEC 612KEY

BW Microeconomics, Doug Bernheim and Michael Whinston, 2nd Edition, McGraw-Hill.
Varian Intermediate Microeconomics: A Modern Approach, Hal Varian, 8th Edition, Norton
Session 1: Strategic Interactions I: Intro to Game Theory
1. Overview of MGEC 612

2. Game theory as a framework for thinking about strategy
3. The elements of a game and different types of games.
4. Simultaneous move games: drawing a game board, dominant strategies, dominated strategies,
and Nash Equilibrium
Reading: BW Chapter 12.1-12.2, 12.3 (through p. 406), 12.4 (through p. 417)
Video: Golden Balls: www.youtube.com/watch?v=S0qjK3TWZE8
Video: Golden Balls 2: www.youtube.com/watch?v=S0qjK3TWZE8
Session 2: Strategic Interactions II: Advanced Game Theory
1. Sequential games, the game tree, and backwards induction.

2. Finitely-Repeated simultaneous move games.
3. Credible and non-credible threats.
4. Changing the game structure to change the outcome.
Reading: BW Chapter 12.4 (from p. 418), 12.5
Article: Best Buy Holiday Pricing Will Match Rivals Even After Items Are Sold, Mae Anderson,
Associated Press, Nov. 21, 2013.
Article: Companies Cash In on Tax-Credit Arms Race, Emily Chasan, The Wall Street Journal,
June 16, 2014.
Session 3: Strategic Interactions III: Basic Oligopoly
1. Bertrand Competition: Choosing Price

2. Cournot Competition: Choosing Quantity
3. Horizontal Mergers and Collusion
Article: Dominant in the U.S., Enterprise Holdings looks offshore, A. Ananthalakshmi, Reuters,
Oct 12, 2012.
Article: Holcim, Lafarge in Merger Talks to Create Cement Giant, Inti Landauro and John
Revill, The Wall Street Journal, April 4, 2014.
Session 4: Strategic Interactions IV: Advanced Oligopoly
1. Bertrand-Nash Competition: Competitive Pricing with Market Power

2. First-mover advantage
3. Limit pricing to prevent entry
Article: AIRSHOW-How plane giants descended into global price war, Tim Hepher, Reuters,
July 7, 2012.
Article: U.S., Filing Suit, Moves to Block Airline Merger, Jad Mouawad, The New York Times,
August 13, 2013
Session 5: Strategic Interactions V: Sustaining Cooperation
1. Review of time-value and discounting principles

2. Building a reputation through repeated interactions.
3. Price Wars
4. Sustaining cooperation without collusion.
Article: $1 Pizza Slice is Back After a Sidewalk Showdown Ends Two Parlors Price War, Matt
Flegenheimer, The New York Times, September 5, 2012.
Article: Silicon Valley Tech Giants Struck Deals on Hiring, Say Documents, Jeff Elder, The Wall
Street Journal, April 20, 2014.
Session 6: Strategic Interactions VI: Sustaining Cooperation and Mixed Strategies
1. Wars of Attrition
2. Playing with an element of randomness: mixed strategies.
3. Equilibria in mixed strategies.
4. Firm applications of mixed strategies: when coordination wins.
Reading: BW
Article: Play 20 rounds of Rock-Paper-Scissor versus a machine (on Veteran mode) at this
webpage: www.nytimes.com/interactive/science/rock-paper-scissors.html?_r=0
Article: Some Caterpillar Workers Cross Picket Line, James R. Hagerty, The Wall Street Journal,
July 24, 2012
PROBLEM SET 1 DUE
Session 7: Bidding and Selling in Auctions
1. Common issues in auction design and format

2. Bidding functions in different auctions
3. The winners curse
4. Considerations when running or bidding in auctions
Reading: Varian Chapter 17
Article: Buyer of $142.4 Million Bacon Triptych Identified as Elaine Wynn, Carol Vogel,
The New York Times, January 15, 2014.
Article: Google confirms it bid up spectrum for open rules, John Letzing, The Wall Street
Journal MarketWatch, April 3, 2008.
Session 8: Dealing with uncertainty
1. Risk preferences and risk aversion

2. Buying insurance: Paying to mitigate risk
3. Behavioral evidence of risk aversion
Article: Deliver us from competition, The Economist, June 25th 2009.
Article: The Dark Magic of Structured Finance, Alex Tabarrok, Marginal Revolution,
May 13, 2010.
Session 9: Asymmetric Information and Signaling
1. Strategic interaction where one party knows more than the other
2. Market outcomes under asymmetric information
3. Signaling and screening to overcome adverse selection
Article: HP's $8.8 Billion Fiasco Exposes Flaws In M&A Process, Michael Bobelian, Forbes,
Nov. 21, 2012.
Article: The Economics of All-You-Can-Eat Buffets, Adam Ozimek, Forbes, May 23, 2012.
Session 10: Moral Hazard: Giving people incentive to do what you want them to do
1. The issues of unobserved effort and unobserved preferences

2. Sales force motivation
3. Efficiency wages
4. Executive compensation
Article: Paying Employees to Stay, Not to Go, Steven Greenhouse and Stephanie Strom,
The New York Times, July 4, 2014.
Article: Mary Barra's GM Pay Could Top $14 Million, Putting Her in the Big Three, Joshua
Brustein, BusinessWeek, Feb 10, 2014.
GROUP ASSIGNMENT DUE
Session 11: Group Presentations
Session 12: Course Wrap-Up
PROBLEM SET 2 DUE

MGEC 612 EXAM
Marketing Management: Program Design (MKTG 611) DESCRIPTION 97
Marketing Management: Program Design (MKTG 611)

Course Description
This course addresses the management challenge of designing and implementing the best
combination of marketing actions to carry out a firms strategy in its target markets. Specifically,
the course seeks to develop your skills in applying the analytic perspectives, decision tools, and
concepts of marketing to business decisions.
The Marketing Management: Program Design Waiver Process

WAIVER BY CREDENTIAL
DEADLINE: See Introduction to this Waiver Guide

To waive or substitute by credential, a student must have completed an Introduction to Marketing
or Marketing Strategy course at a four-year college within the last 5 years. To waive MKTG 611
altogether, the course must have included decision-oriented case analyses with analytical rigor and
the student must have earned a grade of A. To substitute MKTG 611 by an upper-level elective
marketing course of 0.5 credit units or more to be taken for a grade, the course need not have
included case analysis and the student must have earned a grade of A- or better.
Transcripts with course and grade highlighted

Title and author of textbook used in the class
Titles of cases analyzed
Copy of syllabus (credentials cannot be reviewed without the syllabus)
WAIVING BY EXAM
There is no waiver exam for this class.
Marketing Management: Program Design (MKTG 611) SYLLABUS 98
Syllabus MKTG 611 Overview

The first-quarter marketing course (MKTG 611) has two main objectives:
First, to help you develop an understanding of how organizations can benefit from creating
and delivering superior value to their customers and stakeholders.
Second, to learn skills in applying analytic perspectives, decision tools and frameworks so you
can build a disciplined approach to the analysis of business situations and develop successful
marketing plans.
We shall achieve this by learning how to make sound decisions pertaining to:
1. Segmentation, targeting, and positioning. How to: assess market potential, understand
and analyze customer behavior, and focus resources on specific customer segments and
against specific competitors.
2. Branding. How to: develop, measure, and capitalize on brand equity.
3. Pricing. How to: set prices that demonstrate value to the customer and capture value for
the firm.
4. Distribution channels. How to: understand the role of distributors, retailers, and other
intermediaries in delivering products, services and information to customers.
5. Marketing communications. How to: develop an effective mix of marketing communication efforts.
In addition, the course also helps you develop the following important skills:
Make and defend marketing decisions in the context of stylized real-world problem situations
with incomplete information (case studies).
Improve your skills in group problem-solving and in written and oral communication
(case write-ups and presentations).
Make cross-functional connections between marketing and other areas of business.

We believe that these skills will serve you in any business situation, any geography, and any
industry.
Course Materials
The MKTG 611 cases and copyrighted reading materials are available through Study.Net.
Canvas will be used as the source for additional readings, class handouts and other materials.
Learning Support
Teaching Assistants (TAs) are available to review lecture and case topics. Their names, contact
information, and cohort assignment are on the last page of this syllabus and will be posted on
Canvas.
Canvas will be used extensively as a forum for communication, including:
Distributing case discussion questions.

Sharing additional materials related to lectures and case discussions.
You are encouraged to post articles in the Canvas Discussion section that apply whatweve covered
in class or provide updates on examples discussed.
Grading
The components for the final course grade and their relative weightings are:
Class participation and attendance
15%
Case write-up (lower score)
15%
Case write-up (higher score)
25%
Final examination
Total
45%
_____
100%
CLASS PARTICIPATION AND ATTENDANCE (15%)
Constructive participation in lectures and case discussions is based on analysis rather than mere
opinion, and builds on the discussion flow at the time (a good participant is a good listener).
Class participation will account for 10 out of the 15 points.
Attendance is required for every class session. Students will use the class check-in feature in the
Wharton Connect mobile app to indicate their attendance in class. Students who come more than
5 minutes late will not receive attendance credit for that class session. Class attendance will
account for 5 out of the 15 points. If you are unable to attend, email your TA ahead of time
explaining why. Absences must be excused by the MBA Office. Two or more unexcused absences
will result in a grade of zero for class participation and attendance.
CASE WRITE-UPS (40%)
See the instructions and due date information at the end of this document.
FINAL EXAMINATION (45%)
The exam will be a timed 4-hour open-note, take-home case analysis. The exam will be made
available to students via Canvas at 3 p.m. Students will have 4 hours to complete the exam and
will then upload their exam, in Microsoft Word or PDF Format, to Canvas by 7 p.m. Excel
spreadsheets may be used for calculation purposes but cannot be submitted. Any tables must be
presented in Word or PDF and included as exhibits in the completed exam document. Students
must work individually and may refer to course materials when completing the exam but should
not use or access any outside materials during the exam period. Additional details regarding
downloading the exam and uploading answers will be provided. TAs and faculty will be available
via email during the exam period to answer student questions.
All submitted exams will be processed via Turnitin. The University of Pennsylvania is using
Turnitin originality reporting services designed by iParadigms, LLC. Your exam submission will
be processed through Turnitin only to compare against other papers submitted for this assignment, along with Turnitins database and other Internet sources. Your exams will not be retained
by iParadigms. The Turnitin service does not assess whether a paper has been plagiarized, but
instead provides instructors with a report regarding how similar your text is to other sources.
Your privacy is protected under the agreement between the University and iParadigms.
The exams will be graded by the TAs with guidance from the faculty, and grades will be posted.
If you would like us to re-evaluate the score on your final due to an error in calculating your score
or if you believe there is a significant mistake in grading, please contact your professor by email
within 1 week after the exam scores are posted. Requests after that point will not be considered.
In your request, please explain your reasons in detail. Please do not forget to include your section
number and Penn ID number with your request.
Calculation errors will be corrected immediately.

If you are challenging the points you receive for a given answer, we shall examine your
explanation for why you believe you deserve a higher score, and if it is reasonable, we shall
re-grade the entire exam, not just the part you identified; therefore, your final score might go
up or down, or remain the same.
Policy on using outside sources of information

Do not use any outside information when preparing for case discussions, producing written
case analyses or completing the final exam. Outside sources of information include the library,
the mass media, the Internet, and, on group-based assignments, any people outside of your learning team. If you use other sources, you are cheating yourself as well as other students.
For course topics in general, in contrast, you are obviously welcome to use outside sources to
expand your knowledge.
Learning team case write-ups

1. Case Citibank India Credit Cards: Strategy for Profitable Growth
2. Case: TaKaDu
OBJECTIVE
Case write-ups provide you experience in: (1) defining marketing problems, performing appropriate analyses and crafting marketing plans, (2) developing oral and written communication
skills, and (3) developing skills to work effectively and efficiently in teams.
CASE ASSIGNMENT
Recommend a specific plan of action for these firms. Be sure your analyses and recommendations
address the problems explicitly mentioned in the case. In addition, your definition of the problem
and your analyses may reveal other important issues you believe must be addressed. Your recommended marketing plan should be based on appropriate and defensible analyses.
PAPER FORMAT
Each write-up should be no longer than 1,500 words (regardless of type font, spacing, etc.).
Be sure to include your course section number, learning team number and names of all team
members on the cover page. Use your word processor to count the words and report the final
count on the cover page. Leave the rest of the cover page blank, beginning your write-up on the
second page. Up to four additional pages of exhibits beyond the 1,500-word limit are permitted.
The style and structure of the text and exhibits is up to you, but one of the exhibits should be a
sample advertisement that illustrates your chosen positioning for the product or service.
Exhibits should be clearly titled, and included only if they provide supporting details for your
analyses and recommendations. They should not introduce new ideas that are not explicitly presented in the text. Quantitative analyses must be clear and show the calculation in full with precise
explanations (e.g., footnotes that describe the methods and assumptions used). Key conclusions
from the exhibits should be discussed in the text, and references to your exhibits should be made
as appropriate places in the text (see Exhibit A). Write-ups where some team members prepare
the exhibits while others do the writing without coordinating the two typically lead to a disjointed
analysis. You should not reproduce any exhibits that are in the case study, although, of course, you
may use information in case exhibits and you should reference them when you do (from case
Exhibit 3).
It is generally a good idea to follow the 5Cs, STP, 4Ps framework used in class when writing your
papers. The best papers will also typically consider several strategic alternatives that emerge from
their analyses, making a case for why their preferred course of action is the best one to pursue,
and then detail that course of action in their target market choice, positioning statement and 4Ps
presentation.
CLASS PRESENTATIONS AND DISCUSSION
Presenting teams should be prepared to give a 5-minute presentation plus Q&A that covers only
their recommendations and a concise rationale for those recommendations.
One of the slides in the presentation should be a sample television, magazine, or online
advertisement or other type of marketing communications example that conveys to
customers the product positioning that you intend with recommended strategy. This slide
should also be one of the exhibits in your write-up. The purpose is to provide an interesting
and relevant focus for the presentation this does not mean that this advertisement should
be central to your written analysis thats for you to decide. In general, the positioning
idea is what counts, not your artistic abilities.
One of the slides should contain at least one clearly-labeled and explained calculation
you performed, since its likely that only the end-result of this calculation will be shown in
other slides.
Non-presenting teams should be prepared to ask questions in class of the presenting teams. These
questions will often seek clarification on a teams reasoning behind a specific point in their plan.
The tone of these questions should be one of curiosity and engagement, not interrogation.
Important Note: There should be only two files submitted on Canvas: the write-up you are
submitting and the presentation slides.
ORAL PRESENTATION AND THE WRITE UP
Because only of the learning teams present each case, your teams case write-up grade will be
based on the written paper you submit.
One of the goals of MKTG 611 is to provide you with opportunities to improve your skills in
written and oral communication (case write-ups and presentations). If you would like feedback
from an instructor in the Communication Program, before you submit your case write up or
presentation, please contact Larry Quartana ([email protected]; 215-898-5331) to
schedule an appointment.
Similarly, your in-class group presentations will be recorded. If you would like feedback after you
have completed the assignments, please contact Larry Quartana to schedule an appointment.
FINAL EXAM REVIEW SESSIONS
The faculty will conduct final case exam review sessions. Details regarding dates, times and
locations of these review sessions are TBA and will be updated on Canvas and announced in class.
Ethics Matrix
Individual Cases & Projects
Working with Learning Team
Yes
Working with Other Classmates
Yes, but not encouraged
Discussing with Other Classmates
Yes, but not encouraged
Consulting Material from Former Students

(e.g., formula sheets, solutions, old exams, etc.)
Using Material from External Sources*

(e.g., reports, articles, books, online research, etc.)
No
No
Group Cases & Projects

Yes
No
No


No
No
Take-Home Tests & Exams

No
No
No


Consulting Textbook / Class Notes

Using a Formula Sheet / Note Sheet
(consult syllabus or professor for size/format/source req'ts)
No
No
Yes
Yes
Using an Approved Calculator
Yes
Using a Computer / Programmable Device
Yes
Saving a Copy
Yes
* Note that all borrowed content should be cited as appropriate.
Marketing Management: Program Design (MKTG 611) COURSE OUTLINE 104
Course Outline MKTG 611Pre-Session. How to Prepare a Marketing Case: Kodak FunTime Case
This class session will provide students with insights regarding how to prepare for cases in MKTG
611 and other courses, will provide a glimpse of what a typical in-class case discussion might look
like and will illustrate some simple but useful quantitative methods that can be used to improve
case analysis.
Preparation Questions:
1. Why is Kodak losing market share in the case?
2. What might be some short-term options available to Kodak (at the time of the case) to prevent
market share loss?
3. Evaluate the viability of the following options:
a. a 15% reduction in the price of Gold
b. Doubling advertising expenditures to $100million
4. A brand like Funtime is often referred to as a fighting or flanker brand. What issues should
a major brand like Kodak be sensitive to when it launches such a flanker brand?
Reading Assignment: 1. A Note on Break-Even Analysis, 2. A Note on Contribution Analysis
Session 1. Introduction, Analyzing Markets and Customers (I)
This class discusses the role of marketing in the firm. It focuses on the importance of segmenting
the market and creating a clear positioning statement.
Reading Assignment: 1. A Note on Positioning
Session 2. Analyzing Markets and Customers (II)
This class explores more detailed approaches to market analysis, including models of customer
decision making and customer lifetime value (CLV).
Reading Assignment: 1. A Note on Contribution Analysis, 2. A Note on Customer Lifetime
Value [CLV]
Session 3. Unilever Brazil Case
1. Prepare a positioning statement for Unilevers offering in NE Brazil.
2. Develop a marketing plan covering all decisions the company is struggling with. These are
clearly described in the case. Be specific about product (brand, formulation, packaging, etc.),
price, types of distribution and marketing communication.
3. How much cannibalization can your proposed product cause before becoming unprofitable?
Reading Assignment: 1. A Note on Break-Even Analysis
Session 4. Branding
In this session we examine how brands can affect consumer behavior, which in turn provides
insights into the importance of building brand equity and the risks and benefits of some branding
practices, such as brand extensions.
Reading Assignment: A Note on the Financial Approach to Brand Valuation

Session 5. Bank of America: Mobile Banking Case
This case provides an opportunity to apply many of the concepts covered to date in MKTG 611
such as positioning, customer decision-making processes and CLV. While the immediate decision
in the case pertains to the design of a mobile app, the main purpose of the case is to examine how
deep customer analysis can guide a company to better understand, respond to and capitalize on
an emerging business opportunity.
1. What should BofAs mobile banking strategy be?
a. Should BofA offer multiple apps for different lines of business? If so, which new apps
would you develop and in which order?
b. Should BofA offer a single app with enhanced features? If so, which new features would
you add and in what order?
c. Should BofA keep the current app as is?
2. How should BofAs mobile banking be positioned in the long run?
3. What factors should be considered when making these decisions?
Session 6. Case Write Up and Presentation:
Citibank India Credit Cards: Strategy for Profitable Growth
Each team should upload a docx or PDF copy of its case write up by 8:00 a.m. to Canvas. Only
even numbered learning teams will present this case; these teams should also upload a pptx or
PDF file for its presentation to Canvas by 8:00 a.m.
Session 7. Pricing
In this session we will discuss assessing customers willingness to pay (economic value to the
customer), measuring price sensitivity, and psychological aspects of pricing.
Reading Assignment: A Note on Economic Value to the Customer [EVC]
Session 8. Rohm and Haas Case
1. What factors should be taken into account in setting a price for Kathon MWX?
2. What price do you recommend for Kathon MWX?
3. Come to class prepared with a marketing plan for Kathon MWX including: Positioning (target
segment, POD, FOR), Price (and a rationale for the price), Distribution and Promotion.
Session 9. Live Case Discussion:
Neil Blumenthal Co-Founder and Co-CEO, Warby Parker
Session 10. Distribution
This session examines how to design and coordinate distribution channels.
Session 11. Case Write-Up and Presentation: TaKaDu
Each team should upload a docx or PDF copy of its case write up by 8:00 a.m. to Canvas. Only
odd numbered learning teams will present this case; these teams should also upload a pptx or
PDF file for its presentation to Canvas by 8:00 a.m.
Session 12. Marketing Communications
This session provides an overview for the role of advertising as a key element of the
communication mix and provides a step-by-step framework for making advertising decisions.
FINAL EXAMINATION
Dynamic Marketing Strategy (MKTG 612) DESCRIPTION 107
Marketing Management: Strategy (MKTG 612)

Description
This course focuses on helping you refine your skills in developing a marketing strategy and
seeing how the marketing tactics selected need to be in alignment with that strategy. We will focus
specifically on issues such as the selection of which businesses and segments to compete in, how
to allocate resources across businesses, segments, and elements of the marketing mix, as well as
other significant strategic issues facing todays managers in a dynamic competitive environment.
All of these issues will be discussed and couched in the context of the dynamic nature of market
evolution that occurs throughout the Product Life Cycle (PLC), pictured above. Students will
develop strategic thinking skills and learn to apply analytical tools to help formulate effective
marketing tactics in each phase of the PLC.
The Marketing Management: Strategy Waiver Process

DEADLINE: See Waiver by Credential table in Introduction to this Waiver Guide

Waiver by credentials will be given only to students with:
1. Completion of a full-term marketing simulation using SABRE or a close parallel
(e.g., Markstrat) within the past 5 years; or
2. Within the past 5 years did you complete and receive a grade of A or better in a course at a
four-year college that included a minimum of 6 weeks of exposure to cases/lectures on
marketing strategy, taken either as part of a semester long marketing fundamentals course or
an advanced marketing course?
To substitute MKTG 612 or MKTG 613 by an upper-level elective marketing course of 0.5 credit
units or more which must be taken for a grade, the student must have earned a grade of A- or
better.
Dynamic Marketing Strategy (MKTG 612) DESCRIPTION 108
Supporting credentials must include course syllabi of all previous Marketing courses and a
transcript with courses and relevant grades highlighted.
WAIVING BY EXAM
Fulfilling the Marketing Flexible Core Requirement

Please note that to fulfill the MKTG flexible core requirement, students are required to take either
MKTG 612 or MKTG 613 (students also have the option to take both if they have the interest).
A waiver by credential of MKTG 612 or MKTG 613 will fulfill this requirement; students do not
have to submit credentials to waive both.
Dynamic Marketing Strategy (MKTG 612) SYLLABUS 109
Syllabus MKTG 612 Outline of Each Class Session

While the exact structure of each class will vary depending on whether it is a case or lecture, in
general each session will have three facets:
1. The real world business problem. Most classes will begin with an example of a critical
current issue that managers confront. This could be either a formal case, or a mini-case. For
formal case discussions, we will assume that everyone has read and is prepared to discuss the
case. It is not necessary to do any library work or bring in outside information about the
company or the industry beyond what is described in the case. In fact, it will distract from the
case discussion as we are learning how to make better strategic marketing decisions given the
information available at the time of the case. We will focus on principles, theories, and basic
applications of marketing strategy. Discussion and questions are strongly encouraged.
2. Analytical frameworks for thinking through the problem. For the business problem being
discussed, the class will explore a range of general analytic frameworks through which the
problem might be approached, and evaluate their comparative strengths and weaknesses.
The purpose of this is to provide a systematic basis for narrowing down the set of candidate
options, and choosing a best option in light of available data.
3. Informing the decision through data. Given a general analytic framework, most classes will
go on to explore how greater precision can be brought to their application through the use of
data both in the form of customer insights (marketing research), and secondary data.
Course Materials
Course materials will be available at www.study.net and on the course Canvas site.
Course Website
Many of the courses activities will involve the use of Whartons Canvas software, which you
can access at: https://wharton.instructure.com/login
Please bookmark this website and check it as often as necessary. This site will contain copies of
class handouts, and other general information about the course.
Grading
The weighting of the inputs for the final course grade is:
Class Participation
25%
Midterm Examination (take home)
40%
Final Assignment (take home)
35%
Missing more than two sessions (unexcused) will result in an automatic loss of your full class
participation grade (i.e. you will receive 0 of 25%).
CLASSROOM PARTICIPATION
All course sessions involve active classroom discussion based on careful preparation of the readings and cases, with a focus on both theoretical questions and practical implications. You should
be prepared both to share your ideas and to listen to and interpret issues presented by others. The
quality of your contribution counts for much more than the quantity. Comments that move a
discussion forward in a productive direction are particularly welcome.
In each class, your participation will be scored on a 0-4 scale, first by the TA in attendance and
then adjusted by me after class. Students who are seated in class at the regular start time would
initially receive a CP score of 2, and this value could then be either increased (or possibly
decreased) based on the quality of your discussion/contribution. Students who arrive late would
initially receive a CP score of 1. An unexcused absence from a class will be scored a 0.
Also included in your class participation grade are numbers that are due for the Medicines Case
and Canadian Childrens Cereal Case, your 1-page article on Customer Analytics in the News,
and participating in the FutureView Simulation. All of these assignments are due PRIOR to the
class in which they are covered, and the due dates are clearly listed on the course calendar. No late
assignments will be accepted.
If you have documentable special circumstances such as time conflicts between multiple exams,
illness, or grave personal difficulties such as a death in the family, you should petition the MBA
Program Office, which will work with me in appropriate cases to find a resolution. The MBA
Program Office will require documentation of your conflict as a matter of course.
If you find yourself with a conflict due to your career search or recruiting activity, you should
work with the MBA Career Management Office to find a resolution. Employers cannot require a
student, as a condition of his or her employment candidacy, to participate in recruiting-related
activities at a time that conflicts with his or her academic schedule. An employers inflexibility on
this issue is considered a violation of Whartons recruiting policies. A time conflict due to a job
interview, a career pursuit or travel is not an appropriate reason to request accommodation on an
academic commitment.
Assignments and Examinations

ASSIGNMENTS
The links for the Medicines company numbers, CCC case assignment, Customer Analytics in the
News, and FutureView will all be in the course Canvas site. Each of these assignments will also be
discussed in the lecture that precedes their due date.
All assignments should be submitted via Canvas, and/or the weblink on Canvas that provides a
form for submitting numbers.
MIDTERM EXAMINATION
The midterm examination for this course will be a take-home examination. It will be made available on the course Canvas site. The exam will consist of short essay questions about marketing
strategy, and will also cover the cases that we have discussed in class (up until this point). In particular, the first six lectures of material in the course are covered. From the time that you start the
examination (not download, but start), you have 2 hours to complete it. You must then upload
your answers to the canvas site prior to the due date. The Wharton School and University of
Pennsylvania Honor Code applies. This is an individual-level examination. You are not allowed to
discuss this exam with anyone, during or even after the examination period. You may use outside
materials, and it is openbook and open-notes, but note that the 2 hour time limit includes any
time you might use to do outside research, look at your notes, etc.
FINAL ASSIGNMENT
You have one of three options for your final assignment. There is no advantage, or disadvantage,
from a grading perspective by choosing any of the three. My intent is to allow flexibility so that
you choose the final assignment that best fits your skill set.
OPTION 1: Imagine that there was an additional lecture in MKTG 612. Create a powerpoint
deck, with graphics, content (text), builds/animations, etc that would reflect that content. The
powerpoint deck should be no more than 35 slides in total. Your grade will be based on the choice
of topic area, the content of the slides, the coherence of the layout, and the presentation style.
OPTION 2: While we covered numerous cases in the course (Kindle Fire, Shell Oil, Medicines
Company, Canadian Childrens Cereal, and Aqualisa Quartz), one could imagine other cases that
would add to the course content going forward. Your assignment is to write a mini-case that is
complete with exhibits (tables and figures), questions for readers, and a teaching note (instructing a professor how to teach the case and the key takeaways) that would add to the content of
MKTG 612. The case should be no more than 15 pages (including the figures and tables) and the
teaching note should be no more than 5 pages.
OPTION 3: Choose from one of the topics below and write a paper on this subject.
1. How do you measure the financial return of social media? Provide a roadmap of how to assess
the financial returns of social media efforts. Use a specific example.
2. How should a firm decide between how much to spend on traditional advertising versus online
advertising? Create a process for making this evaluation.
3. Market sizing and product diffusion plays a very significant role in marketing strategy. If you
were Apple Inc, how would you forecast the number of units sold, price elasticity, and diffusion
curve for next i-device?
This report should not exceed fifteen double-spaced typewritten pages (including tables and
appendices).
Dynamic Marketing Strategy (MKTG 612) COURSE OUTLINE 113
Course Outline MKTG 612Session 1:
Overview of Strategic Marketing Issues

Case: Kindle Fire
Session 2:
Market Research for New Product Design

Case: Shell Oil (mini-case + in-class)
Session 3:
Social Media and Product Diffusion

Social Media Question due previous day
Session 4:
Pricing for New Product Launch

Case: The Medicines Company (A)
Medicines Case numbers due previous day
Session 5:
Pioneering v. Follower (Entry Strategy)
Session 6:
Competing in the Growth/Mature Phase
Session 7:
Dealing with Competition

Case: Canadian Childrens Cereal
CCC case assignment due previous day
MIDTERM EXAMINATION DUE

Session 8:
Multi-Product Resource Allocation
Session 9:
Customer Analytics for CLV growth in mature markets

Customer Analytics in the News due two days prior
Session 10: Marketing in the Decline Stage

Session 11:
Marketing for Products of the Future

FutureView Simulation due two days prior
Session 12: Selecting the Entire Marketing Mix/Course Wrap-Up
Case: Aqualisa Quartz

FINAL ASSIGNMENT DUE
Strategic Marketing Simulation (MKTG 613) DESCRIPTION 114
Strategic Marketing Simulation (MKTG 613)

Description
Marketing 613 is an intensive immersion course designed to develop skills in formulating and
implementing marketing strategies for brands and businesses. The central activity will be
participation in a realistic integrative product management simulation named SABRE. In SABRE
students will form management teams that oversee all critical aspects of modern product
management: the design and marketing of new products, advertising budgeting and design, sales
force sizing and allocation, and production planning. As in the real world, teams will compete for
profitability, and the success that each team has in achieving this goal will be a major driver of
the class assessment.
The SABRE simulation is used to convey the two foci of learning in the course: the changing
nature of strategic problems and their optimal solutions as industries progress through the
product life cycle, and exposure to the latest analytic tools for solving these problems. Specifically,
SABRE management teams will receive training in both how to make optimal use of marketing
research information to reduce uncertainty in product design and positioning, as well as decision
support models to guide resource allocation.
The Marketing Management: Strategy Waiver Process

DEADLINE: See Waiver by Credential table in Introduction to this Waiver Guide

Waiver by credentials will be given only to students with:
1. Completion of a full-term marketing simulation using SABRE or a close parallel
(e.g., Markstrat) within the past 5 years; or
2. Within the past 5 years did you complete and receive a grade of A or better in a course at
a four-year college that included a minimum of 6 weeks of exposure to cases/lectures on
marketing strategy, taken either as part of a semester long marketing fundamentals course
or an advanced marketing course?
To substitute MKTG 612 or MKTG 613 by an upper-level elective marketing course of 0.5 credit
units or more which must be taken for a grade, the student must have earned a grade of A-
or better.
Supporting credentials must include course syllabi of all previous Marketing courses and a
transcript with courses and relevant grades highlighted.
Strategic Marketing Simulation (MKTG 613) DESCRIPTION 115
WAIVING BY EXAM
Fulfilling the Marketing Flexible Core Requirement

Please note that to fulfill the MKTG flexible core requirement, students are required to take either
MKTG 612 or MKTG 613 (students also have the option to take both if they have the interest).
A waiver by credential of MKTG 612 or MKTG 613 will fulfill this requirement; students do not
have to submit credentials to waive both.
Strategic Marketing Simulation (MKTG 613) SYLLABUS 116
Syllabus MKTG 613 Pedagogic Approach

The learning objectives of the course will be achieved through a blend of large-group common
lectures, small group consulting interactions with faculty, and independent team work on the
SABRE simulation. While the exact structure of each day varies somewhat (see course schedule
below), the general format is:
1. Large-group Lecture. The goal of each the large-group lecture is to provide both common
exposure to tools and frameworks that can be used to make decisions in the SABRE simulation, as well as how these tools are used in the real world. More specifically, early in the week
lectures will focus more on analytic topics as how to interpret and apply marketing research
information, while later in the week lectures will focus on how strategies should be modified
as consumer tastes change and competition becomes more intense---two central features of
business dynamics that arise both in SABRE and the real world.
2. Application of Lecture ideas to SABRE. After each lecture the class will be broken up into
smaller management teams who will review the results of their latest decisions and plan their
next decision. Each lecture will be designed to provide a new set of formal tools or frameworks that can be used to aid decision making at that stage in the simulation, and teams will
have the opportunity to immediately apply these ideas.
3. Team-based consulting meetings. During the course of independent group work faculty
will schedule short meetings with each team. The goal of these meetings is to give faculty an
opportunity to customize the application of the days lecture materials to each teams particular strategic situation, as well as for each team to seek faculty guidance on how they might
ideally proceed in the simulation.
Course Materials
All course materials will be available on Canvas (Files Folder)
Grading
The weighting of the inputs for the final course grade is:
SABRE Performance
Periods 1-3
40%
Periods 4-6
40%
Final SABRE Memo and Presentation

Total
20%
_____
100%
Strategic Marketing Simulation (MKTG 613) SYLLABUS 117
DETAILED COURSE EVALUATION CRITERIA

1. Measuring SABRE Performance
Your teams performance in the SABRE simulation will constitute a major part of your grade.
The primary measure we will use is the net cash flow generated by your business (Cumulative
Net Contribution), which you will be striving to maximize within your virtual industry. Each
industry will have six independent teams with different starting positions.
In order not to discourage any team prematurely, we will measure and grade your SABRE team
based on Cumulative Net Contribution at two points in time, first for the early three decisions
(periods 1-3) and then again for the later three decisions (periods 4-6). This will give us the
possibility to reward turnarounds and penalize fizzle-outs. Hence, you will receive two scores
which will then be averaged for your grade in this component of the course.
When your SABRE decisions have been run, you will receive an email. Then, you may download
your results and data for the next round of decisions. See the course outline at the end of the
syllabus for specific dates and times.
2. Final SABRE Memo TEAM ASSIGNMENT
Discuss the evolution of your strategy as the simulation progressed. This report should address
three major aspects:
1. Your initial your market position, including your products, competitors, and potential for
growth. In doing so, consider questions such as: How did buyer-preferences vary throughout
the market? What were the principal strengths and weaknesses of your firm and its starting
position? What was your strategy based on this analysis?
2. Your final market position, including your products, competitors, and discuss how your
strategies have changed over time in response to competition, industry evolution, and other
strategic dynamics. Write this memo as if the audience were the next marketing management
team that will be taking over your firm in the next hypothetical period. Discuss strengths and
weaknesses, blind spots that you missed, and things that you would do differently. Describe
briefly the strategy you foresee for your firm in the next hypothetical six periods. Please provide a clear statement of your firms future objectives, strategies and tactics looking forward,
based on what you have learned throughout the 613 course. This report should use the results
through round five decisions made by each team.
3. In addition, provide a forecast of what you predict will be your teams period-six dollar
market share will be within the Regalto and Innovo markets (actual performances will be
revealed in the last class).
This report should not exceed SIX double-spaced typewritten pages (not including tables and
appendices) and 10 pages in total.
Strategic Marketing Simulation (MKTG 613) COURSE OUTLINE 118
Course Outline MKTG 613Session 1:
Common Lecture: Opening Class Overview:

The Mechanics of the Sabre Simulation
Session 2:
SABRE Decisions and Faculty consulting meetings
Session 3:
Optional Large Group Q&A session
Session 4:
SABRE Decision 1 Due

Session 5:
Common Lecture: Marketing Research for Strategic Decision Making
Session 6:
Common Lecture: Optimal Resource Allocation
Session 7:
Decisions and Faculty consulting meetings
SABRE Decisions 2-4 Due

Session 8:

Session 9:
Common Lecture: Target-market selection and new-product Launch decisions,

PLC Forecasting
Session 10: SABRE Decisions and Faculty consulting meetings

Session 11:
SABRE Final Report, Presentation Preparation
Session 12: Common Class: team presentations, summary, share results across industries
Operations Management: Quality and Productivity (OPIM 611) DESCRIPTION 119
Operations Management: Quality and Productivity (OPIM 611)

Course Description
Matching supply with demand is an enormous challenge for firms: excess supply is too costly,
inadequate supply irritates customers. In the course, we will explore how firms can better organize
their operations so that they more effectively align their supply with the demand for their products and services. Throughout the course, we illustrate mathematical analysis applied to real
operational challenges we seek rigor and relevance. Our aim is to provide both tactical knowledge and high-level insights needed by general managers and management consultants. We will
demonstrate that companies can use (and have used) the principles from this course to significantly enhance their competitiveness.
In OPIM 611, the emphasis is on the design of business processes to maximize productivity and to
achieve world-class quality. The course details different kinds of business processes and explains
how to measure key process parameters like capacity and lead time. The course also covers process
improvement and examines classic ideas in quality management.
The OPIM 611 Waiver Process

WAIVING BY CREDENTIALS
DEADLINE: See Introduction to this Waiver Guide

OPIM 611 can be waived based on academic credentials if ALL the following criteria are met:
a) the course has the word Operations Management in the title (Operations Research, Quality
Management, Industrial Engineering, etc. do not count); b) the course was taught at a business
school and included at least some case work; and c) the student obtained a grade of B or better.
WAIVING BY EXAM
EXAM DATE: Waiver and Placement Exam Schedule, and a sample exam with solutions can be found
in the Waiver Exam Guide.
To register for the OPIM 611 waiver exam, students must submit documentation showing: a) relevant work experience related to process management (e.g. black belt training, lean transformation);
or b) experience in related courses (e.g. industrial engineering, operations research, production).
Students must meet the above criteria in order to be allowed to register for the waiver exam.
Exam Preparation
See Waiver Exam Guide. The exam is based on Chapters 1-8 of Cachon, G. P. & Terwiesch, C.
2009. Matching Supply with Demand: An Introduction to Operations Management, Boston, MA:
McGraw Hill.
Operations Management: Quality and Productivity (OPIM 611) SYLLABUS 120
Syllabus OPIM 611 Overview

See Course Description on previous page.
Course Policy
This syllabus provides details on course policy and the schedule for OPIM 611. Students should
read this material carefully at the start of the course.
Grading
Each students final numerical score for each course is based on the following items and weights:
Homework assignments
Attendance
Class participation
Final exam
15 pts
12 pts
20 pts
64 pts
We add up the points from these grading ingredients to compute a total score. We then use the
standard Wharton MBA grade distribution to translate the points into the final grades.
HOMEWORK ASSIGNMENTS
There are three homework assignments for the course.

Every homework question carries the same weight.
Assignments are due by 8:00 a.m. of the due date. All homework must be submitted
electronically through Canvas.
Each student must turn in his or her own assignment. We encourage students to attempt to
complete the assignments on their own. However, to promote learning, students are allowed
to discuss each assignment with other students in their cohort.
Partial credit is not given. Please follow the format outlined in the homework.
CLASS ATTENDANCE AND PARTICIPATION
You are expected to attend class and be in class on time.
Attendance is worth 1 point per class session. To receive this point, you must be in your seat
at the start of class (there is no grace period) and you must remain throughout the session.
2 points will be deducted for each absence beyond and including the third session missed.
Physical presence is necessary but not sufficient to ensure a good class participation score.
The class participation score is based on your contribution throughout the entire course. To
contribute during case discussions, you must read cases carefully before coming to class and be
prepared to discuss and defend your recommended actions.
FINAL EXAM
There is a final exam based on the contents of the course: analytical tools, case discussions,
lectures, etc.
The format of the final exam is open book and open notes.
See Use of Electronic Devices below for details regarding computer usage during the final.
Course Text, Readings and Handouts
All lectures will follow the textbook by Cachon and Terwiesch very closely. The relevant chapters
for each session are listed later on in this document.
We have created a custom published text that includes the chapters of Cachon and Terwiesch that
are relevant for OPIM 611. This custom published text is based on the third edition of the book.
Please go to the bookstore to get a copy of the book (NOT Wharton Reprographics).
Cases are available via Study.net.
Note that all other course material (slides, etc) will be posted on Canvas. If you want to get a
copy of the textbook from another source (2nd year student, Amazon, used book, etc), here is
the reference:
Cachon, G. P. & Terwiesch, C. Matching supply with demand: An introduction to operations
management 3rd Ed. Boston, MA: McGraw Hill.
The e-book version (example: Kindle) will not be permitted for use during the final exam, which
is open book.
Use of Electronic Devices

The following states our policy with respect to the usage of electronic devices during class time
and during the final exam.
In class, students are allowed to use laptops and tablets only for work directly related to the class (no
email, no other work); at some classes, the faculty will ask you to come to class with a computer.
In the final exam, you may not use an electronic device that can communicate with another
device (e.g., phones, computers, tablets, etc.) You may use a traditional calculator (assuming it
does not communicate with other devices).
All phones should be turned off / be muted.
Ethics Matrix
W1
Final Exam
Cases
Homework
People
Summary sheet
Approved calculator
Materials
--
1. Students are encouraged to test their understanding of the material by working on the homework individually. Once the student has diagnosed his/her skill level, communication is allowed
2. Students are encouraged to collaborate on the end-of-chapter problems
3. Computers and devices with network capability are prohibited. Only calculators are allowed.
The information above covers many common situations but will not cover every circumstance.
Remember: The Wharton MBA Code of Ethics that you accepted requires, among other things, that
you represent yourself and your work honestly, dont try to gain unfair advantage over other students,
follow the instructors guidelines and respect confidentiality of your work and the work of others.
Operations Management: Quality and Productivity (OPIM 611) COURSE OUTLINE 123
Course Outline OPIM 611Session 1. Introduction
Text:
Introduction, The Process View
Session 2. Process Flow Analysis
Text:
Understanding the Supply Process, Estimating and Reducing Labor Costs
Session 3. The Operations Finance Link
Text:
Link between Operations and Finance, Multiple flow units
Session 4. Process Flow Analysis
Case:
National Cranberry
HOMEWORK #1 DUE
Session 5. Lean Operations
Exercise:
Text:
Electronics Assembly
Lean Operations
Session 6. Lean Operations in Services
Case:
Capital One
Session 7. Managing Variability: Waiting Time Problems
Text:
Variability and its Impact on Process Performance: Waiting Time Problems

(except section 3)
Session 8. Managing Variability: Waiting Time Problems
Case:
Call Center
HOMEWORK #2 DUE
Session 19. Managing Variability: Throughput Losses
Text:
Variability and its Impact on Process Performance: Throughput Losses
Session 10. Quality Management, Six Sigma
Text:
Quality Management, SPC, and Six Sigma
Session 11. Quality Management
Case: Toyota Production System

Session 12. Review Session
HOMEWORK #3 DUE
FINAL EXAM
Regression Analysis for Business (STAT 613/621) DESCRIPTION 124
Regression Analysis for Business (STAT 613/621)

Course Description
These courses develop ideas for helping to make management decisions using regression analysis
a fundamental statistical methods. The ideas in this course reappear in many other MBA classes,
and are part of the basic tool kit expected of all MBAs in their careers.
Specific important topics covered include least squares estimation, residuals and outliers, tests
and confidence intervals, correlation and autocorrelation, co-linearity and randomization. The
presentation relies heavily on computer software for most of the needed calculations, and the
resulting style focuses on construction of models, interpretation of results, and critical evaluation
of assumptions.
The Statistics (STAT 613/621) Waiver and Placement Process

The Statistics Department recognizes the varying degrees to which incoming students have been
exposed to statistical analysis in a classroom setting. While we encourage only those students who
have recently completed substantial work in statistics to waive core course work entirely, we recognize that some students are equipped to begin their study of statistics at a more advanced level.
We therefore invite those students who have studied statistics prior to matriculation at Wharton
to consider the half-credit unit course, STAT 621, which covers the statistical methodology known
as regression analysis and presupposes a students knowledge of the fundamental methods of
statistical analysis.
For data on the percentage of last years entering class who waived STAT 613, see the Waiver
Statistics table in the Introduction to this Waiver Guide. You will note that all but a few of those
who waived did so by passing a waiver examination scheduled before Pre-Term.
WAIVING BY CREDENTIALS
DEADLINE: See Introduction to this Waiver Guide.

Very few students (typically fewer than 20 each year) waive statistics by credentials. The students
who are granted waivers-by-credential possess an extensive background in statistics, such as an
undergraduate degree in statistics. The analogy is that of a CPA waiving accounting by credentials.
Students allowed to waive STAT 613 must have:
at least four college courses in statistics. Of these four courses, at least two must cover
regression analysis (if you completed a regression course as a part of the CFA requirement,
it can count as one of the two regression courses). The application for waiver by credential
must include syllabi that describe the courses covering regression.
AND
have received a grade of A- or better in both courses that cover regression analysis and a
grade of B or better in the other two courses.
Regression Analysis for Business (STAT 613/621) DESCRIPTION 125
AND
two of the four courses were taken within the last seven years.
WAIVING BY EXAM
EXAM DATE: Waiver and Placement Exam Schedule, and a sample exam with solutions can be found
in the Waiver Exam Guide.
Most students who pass the waiver exam will have recently completed a full-year course in
business statistics that heavily emphasized regression analysis. Be aware that the waiver exam, like
STAT 613, focuses upon the interpretation and critique of statistical results with most of the
calculation left to the computer. For example, the waiver exam includes questions regarding the
violation of assumptions that underlie regression coefficients. Students who are able to pass the
waiver exam tend to share the following characteristics:
1. They have had a course in regression within the past two or three years;
2. The focus of their course work has been the interpretation and critique of statistical methods
rather than the memorization of formulas and grind-it-out calculation;
3. They understand the underlying assumptions of statistical procedures like regression and
know how to check the assumptions;
4. They are familiar with multiple regression in particular and some features of the analysis of
variance.
The waiver examination itself is open-book, with a limit of one textbook. You are also permitted
to bring a calculator to the waiver exam, though it will not be very useful.
PLACING INTO STAT 621 BY EXAM
EXAM DATE: Waiver and Placement Exam Schedule, and a sample exam with solutions can be
found in the Waiver Exam Guide.
Students who possess a mastery the concepts outlined in the prerequisites for the STAT 621
course must prove that mastery by passing a placement exam administered prior to PreTerm in order to register for STAT 621. Students may not place into STAT 621 by credential.
The placement examination itself is open-book, with a limit of one textbook. You are also
permitted to bring a calculator to the placement exam, though it will not be very useful.
Placement Exam Preparation
Students who wish to review the prerequisite material for STAT 621 and thus prepare for the
placement exam are encouraged to enroll in STAT 608, a preparatory course for the placement
examination, which will be held before Pre-Term. Students who intend to sit for the placement
exam are encouraged though not required to participate in the preparatory course. Registration
for this course will take place during Pre-Term registration.
Regression Analysis for Business (STAT 613) SYLLABUS 126
Syllabus STAT 613 Overview

This course provides the fundamental methods of statistical analysis, the art and science if
extracting information from data. The course will begin with a focus on the basic elements of
exploratory data analysis, probability theory and statistic inference. With this as a foundation, it
will proceed to explore the use of the key statistical methodology known as regression analysis for
solving business problems. These methods and their application will reappear in many other
MBA classes and are part of the basic tool kit expected of all MBAs in their careers.
Source Material
REQUIRED
Class Notes. These can be downloaded directly from the STAT 613 Canvas e-room.
They will be published in weekly installments.
JMP 11 (software), SAS Institute, downloadable from http://upenn.onthehub.com.

Stine and Foster, Statistics for Business, Addison Wesley.
OPTIONAL (on reserve at Lippincott Library)
Sall, Creighton, Lehman, JMP Start Statistics, 5th edition, SAS Institute.
Freedman, Pisani and Purves, Statistics, 4th edition, Norton.
Keller, Statistics for Management and Economics, 8th edition, South-Western
Cengage Learning.
Ellenberg, How Not To Be Wrong: The Power of Mathematical Thinking. 2014,

Penguin Press. (Not on Reserve).
The fundamental material for the class is contained in the Class Notes, which will be discussed
and elaborated in the class lectures. The Stine and Foster (SF) textbook elaborates on most (but
not all) of the Class Notes. Links to the relevant readings in SF appear throughout the Class Notes.
For those who would like further background materials, we recommend Sall, Creighton and
Lehman (SHL), Freedman, Pisani and Purves (FPP) and Keller (K). SHL is an example-rich guide
to statistical analysis with the statistics package JMP. FPP is a highly verbal and conceptual book
an excellent introduction both for poets who are unfamiliar with technical readings and for
quants who would like a better sense of the reasoning behind statistics. K is in the style of a
traditional reference manual and explains details and provides many formulas for statistical
procedures that are not covered in class.
JMP is the computer package well use extensively for statistical calculations and graphics. In
particular, an essential component of STAT 613 will be project work requiring substantial use of
JMP. Although JMP is merely a tool and not the central point of the course, it is sufficiently useful
that you will need it.
Class Preparation
As soon as possible, you should obtain and install JMP. Before each class, you should review the
material from the previous class and you should skim the Class Notes that will be covered. This is
a course that builds upon itself and it is crucial to not fall behind. The classes focus on critical
interpretation of results and analysis of assumptions. We use JMP to carry out the computations,
although the software itself is not the main focus of the course.
You should also read the relevant sections of the SF textbook as annotated throughout the Notes
and shown in this syllabus. We strongly recommend that you review the exercises that conclude
each chapter. The exercises in each chapter of the SF textbook begin with matching, true/false,
and conceptual questions. You should routinely skim these exercises in every chapter; they review
notation and basic properties of the methods covered in class. In addition, the course outline
identifies specific additional you do it exercises that require data analysis or computation that
is related to examples and topics of lectures. These exercises will not be evaluated but are useful
for review.
Attendance
Attendance is an important aspect of the Wharton commitment. Wharton students are admitted in
part because of the experiences they bring to the community that they can add to class discussions.
Without attending, learning as a collaborative process cannot exist. Accordingly, absences are only
appropriate in cases of personal emergency. In addition, late arrival is disruptive to the learning
environment and promptness is expected. Please make note of the start of the term and the time of
deliverables and exams as you make travel plans. In case of illness, we require a letter of confirmation from Student Health Services. If you find yourself in a conflict due to your career search or
recruiting activity, you should work with the MBA Career Management Office to find a resolution.
Absences due to recruiting are not excused. Employers are prohibited from requiring recruitingrelated activities (e.g., interviews, events or travel) that conflict with a students academic commitments. An employers inflexibility on this issue is a violation of Whartons recruiting policies.
Exercises, Quizzes and Exams

There will be weekly exercises as indicated in the course syllabus. These exercises will not be
collected, but they are essential for the learning process and you should treat them as a requirement. The textbook supplies brief answers to these questions and office hours are available for
further questions.
There will be six in-class quizzes throughout the course. Quizzes will take place on Wednesdays,
see the Canvas calendar.
There will be a two-hour midterm and a two-hour final exam.
Learning Team Project

A project will be assigned to each learning team during the course. It will entail the
statistical analysis of a data for a business application that your team will describe in four
installments. It will be possible to complete these installments before the listed due dates,
and you are encouraged to submit them early.
This project must reflect the work of only your learning team. You are strictly forbidden
from discussing this project with anyone outside your learning team.
Teaching Assistants (TAs)

TAs for STAT 613 will hold office hours throughout the course. Times and locations will be posted
in the STAT 613 Canvas e-room.
Classroom ExpectationsConcert Rules

Class starts and ends on time.
Sit according to the seating chart (posted online in Canvas).

Late entry or reentry only under exceptional circumstances.
Name tents displayed.
Phones, laptops and other electronic devices turned off. We do permit the use of tablets
(e.g., an iPad) for taking notes in class.
Grading
Grades for the course will be based on a weighted average of the following components with the
stated weights:
Final Examination
Midterm Examination
In-class Quizzes (6)
Project
Concert rules, including attendance
35%
25%
15%
20%
5%
Attendance is mandatory. One unexcused absence is allowed during the semester without penalty;
beyond that, each unexcused absence will lower your attendance grade by one point.
Regression Analysis for Business (STAT 613) COURSE OUTLINE 129
Course Outline STAT 613KEY

SF refers to Stine and Foster, Statistics for Business, Addison Wesley.
Session 1: Course Overview, Variation
Key Topics:
Reading (SF):
Exercises:
Histogram, boxplot, mean, median, interquartile range, standard deviation,

skewness, logarithm
Ch 4, SIA p.142
4.55-56, 59; 1-4, p. 147
Session 2: Probability models
Key Topics:
Reading (SF):
Exercises:
Independence, random variable, distribution, expected value, SD and variance

7, 9
7.45, 47; 9.35, 37, 43, 49; 4M (p. 217)
Session 3: Normal models
Key Topics:
Reading (SF):
Exercises:
Continuous random variable, quantiles (Empirical Rule), quantile plot,

log-normal
12
12.39, 41, 43, 49; 4M (p. 286)
Session 4: Association
Key Topics:
Reading (SF):
Exercises:
Contingency table, mosaic plot, chi-squared, Simpsons paradox, lurking variable

5
5.39, 43, 45, 53
Session 5: Conditional probability
Key Topics:
Reading (SF):
Exercises:
Dependence, Bayes rule

8
8.39, 45, 47, 49
Session 6: Sampling distributions
Key Topics:
Reading (SF):
QUIZ
Simple random sample, iid, Central Limit Theorem

13, 14.1, SIA p. 296
Session 7: Confidence intervals
Key Topics:
Reading (SF):
Exercises:
Inference, t-distribution, confidence level, margin of error

15
15.39, 43, 49, 51; Submit Project Installment 1
Null and alternative hypotheses, Type I and II errors, -level, p-value,

break-even analysis
16
16.39, 43, 45, 47
Session 8: Hypothesis testing
Key Topics:
Reading (SF):
Exercises:
QUIZ
Session 9: Comparing two samples
Key Topics:
Reading (SF):
Exercises:
Confounding, two-sample t-test, confidence interval for difference

18
18.29, 31
Session 10: Comparing dependent samples
Key Topics:
Reading (SF):
QUIZ
Experimental design, paired sampling, covariance

6,18
Session 11: Fitting lines to data
Key Topics:
Reading (SF):
Exercises:
Slope and intercept, fitted values and residuals, r-squared

19
19.39, 41, 43, 47
REVIEW LECTURE
Key Topics:
Variation, inference, testing
PROJECT INSTALLMENT 2
Submit Project Installment 2

MIDTERM EXAM
Session 12: Fitting curves to data
Key Topics:
Reading (SF):
Exercises:
Transformations (logarithm, reciprocal), elasticity

20
20.31, 33, 35
Session 13: Simple regression model
Key Topics:
Reading (SF):
Parameters, assumptions, basic diagnostics

21.1-2
Session 14: Inference for the Simple Regression Model
Key Topics:
Reading (SF):
Exercises:
Tests, confidence intervals, prediction intervals

21.3-4
21.39, 41, 43, 47
Session 15: Remedies for common problems
Key Topics:
Reading (SF):
Exercises:
Nonlinearity, dependence, heteroscedasticity, outliers

22
22.37, 39, 45; 4M (p. 572)
Session 16: Multiple regression
Key Topics:
Reading (SF):
QUIZ
Scatterplot matrix, marginal and partial slope, path diagram

23.1-2
Session 17: Multiple regression model
Key Topics:
Reading (SF):
Exercises:
R2, F-statistic, model profile, diagnostic plots

23.3-5
23.39, 41, 43, 47
Session 18: Collinearity in multiple regression
Key Topics:
Reading (SF):
Exercises:
QUIZ
Variance inflation factor

24
24.33, 35, 37, 41; Submit Project Installment 3
Session 19: Using categorical variables in regression
Key Topics:
Reading (SF):
Exercises:
Dummy variable, partial F-test, model profile

25.1-4
25.39, 41, 43, 47
Session 20: More categorical predictors
Reading (SF):
QUIZ
25.5
Session 21: Review: building a regression model
Key Topics:
Reading (SF):
Stepwise regression, data mining

SIA p. 736
Session 22: Forecasting with regression models
Key Topics:
Reading (SF):
Exercises:
Lagged variable, autoregression, Durbin-Watson, seasonality

27.2-3
27.33, 35, 39
Session 23: Final Review Lecture

PROJECT INSTALLMENT 4
Submit Project Installment 4

FINAL EXAMINATION
Accelerated Regression Analysis for Business (STAT 621) SYLLABUS 132
Syllabus STAT 621 Overview

The course assumes that you are familiar with the material covered in the first half of STAT 613
which is basic probability and inferential statistics. With this as a foundation, the course critically
explores the use of the key statistical methodology known as regression analysis for solving business problems. These methods and their application will reappear in many other MBA classes and
are part of the basic tool kit expected of all MBAs in their careers.
Source Material
REQUIRED
Class Notes. These can be downloaded directly from the STAT 621 Canvas e-room.
JMP 11 (software), SAS Institute, downloadable from upenn.onthehub.com
Stine and Foster, Statistics for Business, Addison Wesley.
OPTIONAL (ON RESERVE AT LIPPINCOTT LIBRARY)
Sall, Creighton, Lehman, JMP Start Statistics, 5th edition, SAS Institute.
Freedman, Pisani and Purves, Statistics, 4th edition, Norton.
Keller, Statistics for Management and Economics, 8th edition, South-Western Cengage
Learning.
The fundamental material for the class is contained in the Class Notes, which will be discussed
and elaborated in the class lectures. The Stine and Foster (SF) textbook elaborates on most (but
not all) of the Class Notes. Links to the relevant readings in SF appear throughout the Class Notes.
For those who would like further background materials, we recommend Sall, Creighton and
Lehman (SHL), Freedman, Pisani and Purves (FPP) and Keller (K). SHL is an example-rich guide
to statistical analysis with the statistics package JMP. FPP is a highly verbal and conceptual book
an excellent introduction both for poets who are unfamiliar with technical readings and for
quants who would like a better sense of the reasoning behind statistics. K is in the style of a
traditional reference manual and explains details and provides many formulas for statistical
procedures that are not covered in class.
JMP is the computer package well use extensively for statistical calculations and graphics. In
particular, an essential component of STAT 621 will be project work requiring substantial use of
JMP. Although JMP is merely a tool and not the central point of the course, it is sufficiently useful
that you will need it.
Class Preparation
As soon as possible, you should obtain and install JMP. Before each class, you should review the
material from the previous class and you should skim the Class Notes that will be covered. This is
a course that builds upon itself and it is crucial to not fall behind. The classes focus on critical
interpretation of results and analysis of assumptions. We use JMP to carry out the computations,
although the software itself is not the main focus of the course.
You should also read the relevant sections of the SF textbook as annotated throughout the Notes
and shown in this syllabus. We strongly recommend that you review the exercises that conclude
each chapter. The exercises in each chapter of the SF textbook begin with matching, true/false, and
conceptual questions. You should routinely skim these exercises in every chapter; they review notation and basic properties of the methods covered in class. In addition, the course outline identifies
specific additional you do it exercises that require data analysis or computation that is related to
examples and topics of lectures. These exercises will not be evaluated but are useful for review.
Attendance
Attendance is an important aspect of the Wharton commitment. Wharton students are admitted
in part because of the experiences they bring to the community that they can add to class discussions. Without attending, learning as a collaborative process cannot exist. Accordingly, absences
are only appropriate in cases of personal emergency. In addition, late arrival is disruptive to the
learning environment and promptness is expected. Please make note of the start of the term and
the time of deliverables and exams as you make travel plans. In case of illness, we require a letter
of confirmation from Student Health Services. If you find yourself in a conflict due to your career
search or recruiting activity, you should work with the MBA Career Management Office to find a
resolution. Absences due to recruiting are not excused. Employers are prohibited from requiring
recruiting-related activities (e.g., interviews, events or travel) that conflict with a students
academic commitments. An employers inflexibility on this issue is a violation of Whartons
recruiting policies.
Exercises, Quizzes and Exam

There will be weekly exercises as indicated in the course syllabus. These exercises will not be
collected, but they are essential for the learning process and you should treat them as a requirement. The textbook supplies brief answers to these questions and office hours are available for
further questions.
There will be four 10 minute in-class quizzes. Quizzes will take place on Mondays.
There will be a two-hour final exam.
Learning Team Project

A project will be assigned to each learning team during the course. It will entail the statistical
analysis of data for a business application that your team will describe in two installments.
This project must reflect the work of only your learning team. You are strictly forbidden from
discussing this project with anyone outside your learning team.
Teaching Assistants (TAs)

TAs for STAT 621 will hold office hours throughout the course. Times and locations will be posted
in the 621 Canvas e-room.
Classroom Expectations Concert Rules

Class starts and ends on time.
Sit according to the seating chart.
Late entry or reentry only under exceptional circumstances.
Name tents displayed.
Phones, laptops and other electronic devices turned off. We do permit the use of tablets
(e.g., an iPad) for taking notes in class.
Grading
Grades for the course will be based on the following components
Final Examination
In-class Quizzes (4)
Project
Concert rules, including attendance
50%
20% (5% each)
25% (10% and 15%)
5%
Attendance is mandatory. One unexcused absence is allowed during the quarter without penalty;
beyond that, each unexcused absence removes a percentage point from your total grade.
Accelerated Regression Analysis for Business (STAT 621) COURSE OUTLINE 135
Course Outline STAT 621KEY

SF refers to Stine and Foster, Statistics for Business, Addison Wesley.
Session 1: Course Overview
Key Topics:
Reading (SF):
Review of the key ideas from inferential statistics to be used regression

Chapters 1-18
Session 2: Fitting lines to data
Key Topics:
Reading (SF):
Exercises:
Slope and intercept, fitted values and residuals, r-squared

19
19.39, 41, 43, 47
Session 3: Fitting curves to data
Key Topics:
Reading (SF):
Exercises:
Transformations (logarithm, reciprocal), elasticity

20
20.31, 33, 35
Session 4: Simple regression model
Key Topics:
Reading (SF):
Parameters, assumptions, basic diagnostics

21.1-2
Session 5: Inference for the Simple Regression Model
Key Topics:
Reading (SF):
Exercises:
Tests, confidence intervals, prediction intervals

21.3-4
21.39, 41, 43, 47
Session 6: Remedies for common problems
Key Topics:
Reading (SF):
Exercises:
Nonlinearity, dependence, heteroscedasticity, outliers

22
22.37, 39, 45; 4M (p. 572)
Session 7: Multiple regression
Key Topics:
Reading (SF):
Scatterplot matrix, marginal and partial slope, path diagram

23.1-2
Session 8: Multiple regression model
Key Topics:
Reading (SF):
Exercises:
R2, F-statistic, model profile, diagnostic plots

23.3-5
23.39, 41, 43, 47
Accelerated Regression Analysis for Business (STAT 621) COURSE OUTLINE 136
Session 9: Collinearity in multiple regression
Key Topics:
Reading (SF):
Exercises:
Variance inflation factor

24
24.33, 35, 37, 41
Session 10: Using categorical variables in regression
Key Topics:
Reading (SF):
Exercises:
Dummy variable, partial F-test, model profile

25.1-4
25.39, 41, 43, 47
Session 11: More categorical predictors
Reading (SF):
25.5
Session 12: Review: building a regression model
Key Topics:
Reading (SF):
FINAL EXAMINATION
Stepwise regression, data mining

SIA p. 736

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Wharton MBA Class of 2017

Table of Contents (cont.)

Not Everyone Waives

Sometimes Waivers Make Sense

Submit credentials verifying that you meet the waiver requirements;

Prep Coursework for ACCT, FNCE, and STAT

Should You Waive?

Making room in your schedule for more elective coursework

Monday, June 1 results will be returned by Monday, June 15

We encourage you to submit your credentials as soon as possible in order to determine if

All waiver exams must be completed by Tuesday, August 4, 2015.

There are no make-up waiver exams.

What should you do?

Waiver and Placement Exam Schedule 2015 (subject to change)

5:00 - 7:00 p.m.

8:30 - 11:30 a.m.

Macroeconomics and the

2:30 - 4:30 p.m.*

Microeconomics for Managers: Foundations

8:30 - 10:00 a.m.

Microeconomics for Managers: Advanced Applications

10:15 - 11: 30 a.m.

Managing the Productive Core of the Firm:

12:00 - 2:00 p.m.

Regression Analysis for Managers

12:00 - 2:00 p.m.

Accounting (ACCT 611/612/613) DESCRIPTION 9

Accounting (ACCT 611/612/613)

the recording of economic transactions in the accounting records

the basic financial statements which summarize a firms economic transactions

the fundamental concepts needed to prepare and understand published financial

Accounting (ACCT 611/612/613) DESCRIPTION 10

how to use accounting statements and disclosures to reconstruct the underlying

The Accounting Waiver and Placement Process

DEADLINE: See Introduction to this Waiver Guide.

Accounting (ACCT 611/612/613) DESCRIPTION 11

WAIVING OR PLACING BY EXAM

Accounting (ACCT 611/612/613) DESCRIPTION 12

ACCT 604: Financial Accounting Review Course

ACCT 603: Financial AccountingBasic Course

Taken NO Previous Financial

Take ACCT 603

Take ACCT 603

Taken ONE Previous Financial

Take ACCT 604

Take ACCT 604 or 608

Taken MORE THAN ONE Previous

Take ACCT 608

Take ACCT 608

Fundamentals of Financial Accounting (ACCT 611) SYLLABUS 13

Syllabus (ACCT 611) Fundamentals of Financial Accountingi

Fundamentals of Financial Accounting (ACCT 611) SYLLABUS 14

Midterm & Final Exams

Fundamentals of Financial Accounting (ACCT 611) SYLLABUS 15

Class Participation and Conduct

Fundamentals of Financial Accounting (ACCT 611) SYLLABUS 16