PLEASE NOTE THAT SOME CHANGES COULD BE MADE TO THIS OUTLINE

BEFORE SEPTEMBER 23, 2020

Carleton University
Department of Economics

ECON 3050 A - Introduction to Financial Economics

2020 Fall
Instructor: Professor F. Demers
Office: Loeb Building B854
Phone: 613-520-2600 ext 3775
E-mail: [email protected]
Office Hours: Thursday 1:00pm-2:00pm and by appointment
TA: TBA
_________________________________________________________________________________
Lectures: Tuesday 2:35am-5:25pm.

Prerequisites: ECON1001 and ECON1002 each with a grade of C- or higher, ECON 1402 (or equivalent)
with a grade of C- or higher, and BUSI 1002 or BUSI 1005 with a grade of C- or higher. Precludes additional
credit for BUSI 2504, ECON 2504 (no longer offered), BUSI 2505, ECON 2505 (no longer offered).

Students who believe they have taken a similar background course or courses from another university must
provide appropriate documentation to the Department of Economics Undergraduate Administrator, Amanda
Wright. A grade of C- or higher is required to qualify for ECON 4051 and ECON 4052 and 4057.

DEF(erred final grade) status at the end of this course precludes (continued) registration in any other course
for which the former is a prerequisite.

PLEASE NOTE:

This course will be delivered entirely ON-LINE. Lectures will be recorded live on BigBlueButton. The
recording of each lecture will also be available on CuLearn. Students are strongly encouraged to attend
the live lecture in order to fully participate and be able to ask questions during the lecture through the CHAT
BOX option on BigBlueButton (BBB). In addition, students will be able to ask questions by e-mailing me or
during office hours through BBB. Some material for the lectures may be provided through asynchronous
recordings, in which case they will also be made available on CuLearn.

CuLearn and e-mail:

This course will make intensive use of CuLearn. I will post PowerPoint slides, assignments, problem sets,
answer keys, lecture notes, additional readings etc. on CuLearn. It is each student’s responsibility to check
this website for posted material. I will also send the class announcements by e-mail using CuLearn. So,
please check your e-mail frequently. If you do not have a CuLearn account, please visit:
www.carleton.ca/culearn

Course Description:

The objectives of this course are as follows:

a) To introduce some of the basic theories underlying modern financial economics.

b) To provide an overview of some of the basic tools needed to address concepts such as the time value of
money, valuation, asset pricing, portfolio theory, the risk-return trade-off, the cost of capital, and some
elements of corporate finance.

Continued on next page

Professor F. Demers 2 ECON 3050 A (Fall 2020)

Required Text:

Jonathan Berk, Peter Demarzo, Jarrad Harford, David Strangeland and Andras Marosi, Fundamentals of
Corporate Finance: Third Canadian Edition, Don Mills, Ontario: Pearson Canada, 2020. (abbreviated as
BDHSM)

Additional readings or material may be assigned during the term.

Adjustments may be made to the following outline during the course of the term depending on time
constraints.

COURSE OUTLINE (Tentative, time permitting)

I. Introduction and Principles of Financial Statement Analysis

BDHSM Chapters 1 and 2.

II. Valuing Cash Flows, Interest Rates and the Time-Value of Money

BDHSM Chapters 3 – 6.

III. Valuing Stocks and the Discounted Free Cash Flow Model

BDHSM Chapter 7

IV. Investment Decision Rules: Net Present Value and the Internal Rate of Return Rule

BDHSM Chapter 8

V. Risk and Return in Capital Markets

BDHSM Chapter 10

VI. Systematic Risk, Market Portfolio, the CAPM and the Equity Premium

BDHSM Chapter 11

VII. Determining the Cost of Capital

BDHSM Chapter 12

Grading:

Mid-term examination (October 20) 35%

2 assignments (10% each) (Dates to be announced) 20%
Final examination (scheduled by the University) 45%

Students who miss the midterm exam for a valid reason (documented appropriately) will have the associated
weight added to that of the final exam. Should the final exam be missed for any reason, the student must
arrange for the possibility of a deferred examination through the Registrar’s Office. If granted by the
Registrar’s Office, this exam will take place during the time designated in the Calendar. Special final exams
(or mid-terms) will not be given. The final exam will cover the entire course material but more weight will be
given to topics covered after the mid-term.
Professor F. Demers 3 ECON 3050 A (Fall 2020)

Standing in a course is determined by the course instructor subject to the approval of the Faculty Dean. This
means that grades submitted by the instructor may be subject to revision. No grades are final until they have
been approved by the Dean. Application to write a deferred final examination must be made at the
Registrar’s Office. No course grades are final until approved by the Faculty Dean.

Assignments: Two assignments will be given to complement the lectures and will be marked for credit. It is
strongly recommended that students do them carefully in order to improve their understanding of classroom
material. Late assignments will not be graded, but provided the student has a valid reason (documented
appropriately), the weight of the assignment will be added to that of the final exam.

Please also note: "Student or professor materials created for this course (including presentations and posted
notes, labs, case studies, assignments and exams) remain the intellectual property of the author(s). They are
intended for personal use and may not be reproduced or redistributed without prior written consent of the
author(s).”

Re-marking:

Any request for the remarking of exams or assignments must be submitted in writing within two weeks of that
assignment or exam first being returned to the class. The request should contain a detailed explanation of why
you feel you should receive a higher mark. Please note that remarking will apply to the entire assignment or
exam, and not just to the contentious question. As a result, the revised mark may be higher than, lower than or
the same as the original mark.

Plagiarism:

Please be aware that plagiarism is a serious offence at Carleton and should be recognized and avoided. For
further information on how to do so, please see “Pammett on Plagiarism and Paraphrasing” at
www.carleton.ca/economics/courses/writing-preliminaries.

Requests for Academic Accommodation:

You may need special arrangements to meet your academic obligations during the term. For an
accommodation request, the processes are as follows:

Pregnancy obligation:
Please contact your instructor with any requests for academic accommodation during the first two weeks
of class, or as soon as possible after the need for accommodation is known to exist. For more details, visit
the Equity Services website: carleton.ca/equity/wp-content/uploads/Student-Guide-to-Academic-
Accommodation.pdf

Religious obligation:

Please contact your instructor with any requests for academic accommodation during the first two weeks
of class, or as soon as possible after the need for accommodation is known to exist. For more details, visit
the Equity Services website: carleton.ca/equity/wp-content/uploads/Student-Guide-to-Academic-
Accommodation.pdf

Academic Accommodations for Students with Disabilities:

If you have a documented disability requiring academic accommodations in this course, please contact the
Paul Menton Centre for Students with Disabilities (PMC) at 613-520-6608 or [email protected] for a
formal evaluation or contact your PMC coordinator to send your instructor your Letter of
Accommodation at the beginning of the term. You must also contact the PMC no later than two weeks
before the first in-class scheduled test or exam requiring accommodation (if applicable). After requesting
accommodation from PMC, meet with your instructor as soon as possible to ensure accommodation
Professor F. Demers 4 ECON 3050 A (Fall 2020)

arrangements are made. For more details, visit the Paul Menton Centre website carleton.ca/pmc

Survivors of Sexual Violence:

As a community, Carleton University is committed to maintaining a positive learning, working and living
environment where sexual violence will not be tolerated, and is survivors are supported through academic
accommodations as per Carleton's Sexual Violence Policy. For more information about the services
available at the university and to obtain information about sexual violence and/or support, visit:
carleton.ca/sexual-violence-support

Accommodation for Student Activities:

Carleton University recognizes the substantial benefits, both to the individual student and for the
university, that result from a student participating in activities beyond the classroom experience.
Reasonable accommodation must be provided to students who compete or perform at the national or
international level. Please contact your instructor with any requests for academic accommodation during
the first two weeks of class, or as soon as possible after the need for accommodation is known to exist.
For more details, see the policy.