==April 14, 2025 UPDATED==

https://www.ivo-welch.info/teaching/emba/ (for latest updates)

Tentative Syllabus

MGMTEX 408-2: Financial Policy for Managers - EMBA Spring 2025 Schedule Monthly Section

This course is not trying to turn you into a financial analyst. It is only trying to help you understand the most elementary finance — the kind that you will need when you are interacting with a capital budgeting process, a strategy committee, a corporate board, an (investment) bank, or a merger&acquisition situation.

The monthly session version is a very difficult format. It requires great self-discipline and commitment.

Instructor

Ivo Welch, J. Fred Weston Professor, Office C.524.

Office Hours:

• Presence Weeks: Friday dinner and typically Saturday lunch.
• Online Weeks: Fri 14:30-15:30, plus overflow. (ID: 968 5274 5502. Passcode: 632724.)

In lieu of office hours during presence weeks, I will attend Friday dinners and Saturday lunch (if not possible, then dinner). Please take the opportunity to sit with me and ask me anything you wish. I much prefer these kinds of personal interactions to online contact. You can ask me any questions that you would ask me during office hours otherwise, and then some.¹

Methods

Common sense. Our class works bottom up: from simple (often numerical) examples to complex real-world applications. You have to retain a healthy skepticism. You should not believe that the world is just like the model, and if you don’t understand your own model, then you won’t know where you can use it and where not. (This is why the “recipe” approach for dummies doesn’t work well for us.). Reality is not what finance profs wish reality were. (Others may pretend that they have better explanations, but they don’t — I’ve seen ‘em all.) Theory is easy, practice is hard. Yet without having and understanding your own conceptual model, you have no chance of understanding reality at all.

There is a lot of arithmetic in finance, but no higher math; and the arithmetic is not the hard part, anyway. The hard part is the “way of thinking” and figuring out which tools to apply where and how. Finance is both an art and a science.

HBS can teach finance via cases, because they have two semesters worth of finance core. We only have one. We have to cover in 10 weeks what they cover in 20 weeks. And HBS has a far more competitive environment, with an expectation of at least twice as many hours per week in prep time for students compared to our’s. Fortunately, cases are inefficient for finance-insights-per-hour-of-work, so if we economize, we can cover most of it. However, doing this mean and lean often drops the broader perspective. If there is any doubt of the wide relevance of anything taught in this course, please email the TA or email me. We don’t teach niche material.

Prerequisites

I try to keep the course self-contained, and thus will assume only minimal background. I will briefly cover the following topics again, but the material is easier for students already familiar with the following subjects:

• Basic Economics: risk aversion.

• Basic Statistics: means, variances, correlations, T-statistics, (OLS) regressions.

• Basic Accounting (simul-taught): net income, cash flows, accruals.

I also expect a self-directed ability and willingness to pick up further readings, e.g., in accounting or statistics, when needed.

Course Sites

The main course website is at https://ivo-welch.info/teaching/emba/. There is a direct link from the otherwise ignored Bruinlearn (course id = 208527) to my own website. (Bruinlearn doesn’t have all the facilities I need.) There is a self-test website at https://syllabus.space, which provides e-quizzes that can be used for practice of the material. The numbers in equizzes are changing on refresh, so the quizzes can be taken many times.

• https://ivo-welch.info/teaching/emba/
• https://finemba404-2025-welch-ucla.syllabus.space (“emba”)

Please check my course website at least once every 48 hours. If there is something important, it will be highlighted at the top of my class site on https://ivo-welch.info/teaching/emba/. You are not assumed to be responsible for having read postings from 3 hours ago, but you are expected to be aware of postings from 49 hours ago.

IMPORTANT: My website requires no authentication. You can bookmark it and just look at the front page for updates once a day. This is much simpler than bruinlearn. Email alerts could easily land in your spam folder.

Teaching Assistant

Tomas Balbontin Cura (email: tomas.balbontin.cura.2026@anderson.ucla.edu).

Office Hours:

• Presence Weeks: Friday 17:30-19:30. Saturday 17:00-19:00. Location TBA.
• Online Weeks: Wed 17:00-18:00, plus overflow. (ID: 844 476 8382. Passcode: 579931.)

The class representative (Caitlin) will collect questions that gave you difficulties for which you want to see solutions. Tomas will hold a zoom session where he will solve the problems with you.

Emails

Both the TA and the instructor are available by emails. However, please do not expect instant responses, but allow for 24-48 hours. Email can be unreliable (spam filters), so if you do not hear back within 48 hours, please try again.

Always start with “EMBA 408: “ in the header. We will try to whitelist this phrase in our spam filters.

Emails are most effective when they are concise. (For multiple, unrelated questions, please send multiple emails, each concise.) Be clear at the end of each email what your “ask” is, so the response is more likely to give you the information you need. We will also try to be concise in our responses. If your question and the answer are not to be shared, please make clear it’s confidential. Otherwise, we may share the Q&A with the entire class.

Email Sequencing: Please ask the TA first for help if you have trouble understanding material. The TA will try his/her best to help. It is always good for you to get the perspective of someone else, because the instructor has already tried his best attempt at explaining, so another perspective and way of explaining could be a lot more useful.

After the TA has tried but could not answer your question(s), either, please email me and cc the TA. (We need to cc the TA so that he is informed, too.)

Class Schedule

UCLA Anderson instruction begins March 31, ends June 6.

Week	Date	Topic
1	03/27-04/05	Ch 02-03: NPV, Terminal Values, Loans
2	04/07-04/09	Ch 04-05: Capital Budgeting, Treasuries, Term Structures
\rcc *	04/11	Introduction, Q&A, Mini-Exam, Project Start
3	04/14-04/19	Ch 06-07: Risk (long), Asset Classes (short)
4	04/21-04/26	Ch 08-09: Portfolios, Benchmarking
5	04/28-05/03	Ch 10: CAPM, Market and Catchup
6	05/05-05/10	Ch 11-12: Imperfect and Efficient Markets
\rcc *	05/09	Q&A, Midterm, Some Ch13
7	05/12-05/17	Ch 13-14: Pitfalls (long), Financial Statements
8	05/19-05/24	Ch 15-16: Comparables, Financial Ratios
9	05/26-05/28	Ch 17-19: Capital Structure
\rcc *	05/30	Q&A, Possibly Final
10	06/02-06/07	Ch 21: Pro Formas

Optional Material

Optional material still entails mandatory basic watching and reading. However, it will not appear on the exams and thus requires no problem-solving work. You must know it exists, though, so that you can recognize the problem if you run into it later in real life.

• Chapter 17: You should understand debt-equity payoff tables under risk aversion, but there will be no exam questions on the subject.

  Not optional: You of course had to understand earlier how debt-equity payoff tables work under risk-neutrality (Ch 6); and you must understand that the same insights also hold under risk aversion. You must understand that debt and equity both become riskier with more leverage, but that the firm does not.

• Chapter 17: You should understand clientele intuition, but there will be no exam questions on the subject.

• Chapter 18: WACC and APV with taxes are very important in large and profitable companies. You must have a basic understanding, but there will be no exam questions on the subject.

• Chapter 19: There will be no questions on dividends and payout policy.

• Chapter 21: There will be no questions on pro-formas, because it happens after our last physical meeting.

Note that this optional material is never optional in regular MBA finance courses, because it is so important. However, I respect that not all EMBA students want the same level of exposure to finance, so this is only for interested students.

In-Person Classes

Date	Time
Apr 11-12	Fri 16:00-17:30, Sat 13:30-17:00
May 9-10	Fri 16:00-17:30, Sat 13:30-17:00
May 30-31	Fri 16:00-17:30, Sat 13:30-17:00

• Room: A301.

• Please put up name cards without reminder. Please do not cruise the web, email, or messages during class. I know it’s very tempting.

• For the May sessions, please keep a list of questions about the videos and ask me during class. This is what Q&As are primarily for. (I may have a few extra slides where I ask you questions if you don’t have enough questions for me.)

• Tentative Final: June 13-15, but possibly (by vote) May 31, 15:30-17:00 if overwhelmingly voted so.

Readings and Pace

The textbook is free online on https://corpfin.ivo-welch.info/. This is convenient if you prefer reading on an iPad. It also makes it easier to carry along the text while traveling. You are also welcome to consult other books, like Berk\&DeMarzo. It is quite good, too — some students prefer chocolate, others vanilla.

You can mark up unprotected pdf files with many programs, such as Goodnotes, Collanotes, Apple Preview, Notability and others. You can also keep your notes, copy it to other computers, share it with your friends and study colleagues, etc. They are your’s. (This is not possible with proprietary platforms.)

We have 10 weeks of instructions and 20 chapters in the textbook. This is a clear pace: roughly two chapters per week, as outlined above. It does not hurt to read ahead. It hurts to fall behind.

Practice Questions

My exams are largely like practice questions.

For questions with answers and feedback, you can work the in-chapter questions and syllabus.space.

Due to student demand, there are no mandatory homeworks. The EOC questions exist only to help give you milestones without immediate solutions, and to help you prepare for midterm and final. Their content is identical to the in-chapter questions and the syllabus.space questions, so you don’t need them. However, if you are not comfortable with answering questions along the lines of in-chapter, end-of-chapter, and syllabus.space questions, you will not do well on the exams.

If you do want to do the EOC questions (which have no answers) and receive feedback where you did right and where you did wrong (equivalent to a test), you can hand them in. You can hand in any subset of the questions. We provide markup services, telling you what’s wrong and what’s right. Please submit such EOC questions for review by email to the special-purpose email tbalbontin@g.ucla.edu, with a subject that contains the chapter number(s), e.g., “Subject: EMBA 408: Ch 05-06”. (You can send a photograph. Please be clear in your handwriting.)

You are of course permitted to work together with other students on the homeworks (and even use AI), but please don’t cheat yourself by skipping or not understanding questions and answers. You will perform worse than your peers on the exam if you do.

The syllabus.space website is designed for unstructured self-testing. These are “e-quizzes” (not homeworks to be handed in) and they are not graded.

Class Project

The class project has been cancelled due to time limitations.

Grading

Component	Weight
Mini Exam (Ch2-5)	0 - 5
Midterm (Ch2-12)	30 - 40
Final (Ch2-19)	40 - 60
Homework (just hand-ins)	0 - 2
Discretion	0 - 10

Most of the grade will be the midterm and the final. The TA grades the exams, not the instructor. (I couldn’t play favorites if I wanted to!) If either the midterm or the final performance was lower, it is deemphasized. Thus, the weighting could tilt more or less towards either. However, it is exam-based.

The exams themselves consist of short questions, just like they are in the textbook and in the syllabus.space self-test site. They are never intended to be tricky or unexpected. I have posted some old exams from similar (but not identical) classes. The textbook, the lecture notes, the homeworks, and the equizzes (on syllabus.space) all exist primarily to prepare you for the midterm and final. In turn, the midterm and final exist primarily to measure your understanding of this material.

Regrading Policy: We want to be as accurate and fair as possible, but not systematically hand out more points to nitpickers. Ergo, we only regrade full exams, not individual questions. This means that grades can go up or down. (We also make copies of some exams to prevent tampering.)

Miscellaneous

Learning Etiquette

The following is a statement that I usually have to post when teaching younger students. I expect this not to be needed in a class for executives, but I am including it for reference anyway.

• This is not primarily a TED talk. It’s not supposed to be fun. It’s supposed to educate you.

• Your education is your job, not mine. You have to do the learning. I can only help you learn. This is not only my job but also my passion. This is what I want to do — it’s why I am here.

• I am not a “service” provider. Anderson is not Taco Bell. We are not selling degrees. You are not our client. You are our product. We want to be proud of what we taught you and what you learned.

• Finance is the hardest course at Anderson. By virtue of combining quantitative with qualitative concepts, mastering the bridge from quant theory to applications is difficult. Moreover, you have chosen the most difficult format to take this course in. It requires serious self-discipline to keep on track.

• The university requires this course to require 120 hours of work time. This means at least 10 hours per week. I may be able to push it down for the median student to 8 hours. For students not comfortable with quantitative material, it will still be more like 10 hours per week. Expect it to be roughly as follows:

Weekly Work	Weekly Hours
Videos/Slides	1-2 hours
Reading (60 pages)	3 hours
Homeworks	5 hours

• This much time commitment is also dictated by the absolute minimum amount of finance a student in every MBA program must learn. This course is at the lower end of time-commitment and difficulty level compared to its peers at Anderson and other universities.

Humor and Political Correctness

I have a very strange of humor. I can be very politically incorrect, although I have already dialed this back greatly in recent years.

I don’t believe in trigger warnings and microaggressions. We are adults, not delicate flowers. Our parents and grandparents experienced real discrimination. We can surely survive bad words and insults (and I have probably experienced a lot worse than anyone in this class ever has). In my class, don’t be fearful: it’s ok to misspeak or to be occasionally offensive. However, it is never ok to be mean, malicious, or intentionally discriminating. (This applies both to students and to me.)

I can take it as good as I can dish it out. You are encouraged to poke fun at me, too, as I may at you. Of course, again, it’s never ok to be mean. If I go beyond the pale, it’s unintentional, so please let me or the TA know. I will never hold this against you. In fact, you will be doing me a favor by letting me know, so I can learn and improve.

Help Each Other

• ==Expect glitches.== This is the first time I am teaching this kind of hybrid version of an introductory finance course.

• Please help me improve this class. It is the first time I have taught this. The videos are my first attempts.

• Please keep a log of what videos (and potentially where) were not clear and in need of improvement. Please email me this log at the end of the course.

• Any other comments will be appreciated, too. You are learning from me, I am learning from you. In general, anywhere in your career: Not expressing criticism out of politeness is never a kindness, but the opposite. Just try to phrase it nicely, helpfully, and constructively. (Some bosses can’t take even this; and if this is the kind of boss you have, then you are likely better off working elsewhere.)