[04/07/2025]
You should read chapter 05 (term structure), but the homework is not due this weekend for this chapter. (It is due the following weekend.) This is an in-person weekend, so this would be too much work to ask for.
[04/07/2025]
Clarifications. [1] We only record homeworks handed in. If you answer half the questions, you will still receive a check. Homeworks also make almost no difference in the final grade (as will this Friday’s mini exam). They exist primarily to keep you on track. You can easily get an A+ in this course without handing in a single homework. They really will be looked at only if you are between, say, a B and a B-, and I see that you never handed in homeworks, I will probably lean more towards the B-. [2] The course is geared towards 10h/week of work, just like a standard MBA course. If it exceeds 12h/week in one week, please alert me. [3] If you know everything, and homeworks are just busywork, skip them. However, you can then not complain that you didn’t know what you should have known.
[04/09/2025]
Entertaining Reading: Please read the 5 pages in New_Heritage_Doll_Case.txt. Don’t spent a lot of time on this. No analysis required. It’s just to get you oriented about what we will start working on on Friday.
[04/11/2025]
Small correction for what I wrote on the board, 1/dr = df. I meant 1/(1+dr) = df. Example: if the annualized discount rate over 3 years is 5% per year, the 3-year holding rate of return is 15.8%. The discount factor is then 0.8638. The usefulness of the latter is that you think of every $1 in 3 years being worth $0.8638 today.
[04/11/2025]
Maybe this example helps a little. Goldman Sachs promises 3.75% for a 5-year CD. You could invest your money there. Your project (or I) tells you that you will earn 1% in the first year, 2% in the second year, 3% in the third year, 4% in the fourth year, and 5% in the fifth year. That’s all that’s given. The rest is calculated.
  • At the end of year 1, for every $100 invested at time 0, you will have $100 * (1+r1) = $101
  • At the end of year 2, for every $100 invested at time 0, you will have $100 * (1+r1) * (1+r2) = $103.02
  • At the end of year 3, for every $100 invested at time 0, you will have $100 * (1+r1) * (1+r2) * (1+r3) = $106.11
  • At the end of year 4, for every $100 invested at time 0, you will have $100 * (1+r1) * (1+r2) * (1+r3) * (1+r4) = $110.36
  • At the end of year 5, for every $100 invested at time 0, you will have $100 * (1+r1) * (1+r2) * (1+r3) * (1+r4) * (1+r5) = $115.87
  • We compounded our rates of return. But really, what we got was that we received $115.87 for every $100 invested after 5 years.
  • If we want to know your annualized rate of return, it is the solution to (1+x)^5 = $115.87/$100, so x= ($115.87/$100)^(1/5) - 1 = 2.99%.
  • Without calculating this, does it look like you have a good project? It gives you 2.99%, while GS gives you 3.75%.
  • For an NPV analysis, we want to use the opportunity cost of capital, here the Goldman Sachs rate. NPV = -$100 + $115.87/(1+3.75%)^5. This is indeed negative, because your project is a lousy investment.
  • Always think of the discount rate in the PV formula as your “opportunity of cost of capital”, i.e. what else you could have put your money in. Here, our opportunity cost was Goldman-Sachs.
[04/11/2025]
I am working on getting a hold of the EMBA leadership to clarify time expectations. No matter what, we decided to kill the project. This takes class time commitment down by 20 hours. I will also replace in-class extra applications with teaching the slides instead. This takes time commitment down by about 8 hours. We should now be closer to 8 hours a week for the median student, though novices probably need 10 hours and experts probably need 6 hours. I will try to keep my eyes open where I can reduce time on specific topics, too.
[04/11/2025]
You should use the New_Heritage_Doll_Template.xlsx.
[04/14/2025]
The syllabus is being updated to reflect student demands and test results. I will write a long email soon. Scratch the plan. I want you to review the first 4 chapters, mini-exam, and case this week. (Problem: syllabus.space is still not fully fixed. We are working on it, but the rabbi who developed it is on religious holiday. Couldn’t have happened at a worse time!)

The best study plan is always:

  1. read the chapter in the textbook very cursorily, not in detail. Get an understanding where this is all going.
  2. grab the slides; watch the video for the chapter
  3. now read the chapter in the textbook in great detail again, do all the in-chapter questions. soon, practice on syllabus.space. write down where you experienced difficulties and communicate with the TA, me, and Caitlin.
  4. if you wish, you can do the EOC homeworks and get feedback by emailing them to the TA. this is entirely optional. the questions with solutions covr what you need to know.
  5. come to class prepared. use the resources we provide to help you if you are struggling. Finance is tough. Worse, your course format is really tough — it requires enormous self-discipline. You cannot take 3-4 courses this quarter. I now understand that you had 3 required courses in the first 3 weeks, but this is over now.

I now plan to break the course material into “minimum to scrape by for a grade sake” (on exams) and “standard MBA level” (not on exams). It will be up to you what level you want to pursue.

[04/12/2025]
The solution for the Make My Doll Clothing is in mmd.xlsx below. Please work the solution for Design Your Own Doll.
[04/14/2025]
I have posted solutions at midterm-emba480-2025.pdf. For your practice pleasure, I have added xmidterm-emba480-2025.pdf — a test similar to the midterm that you need to learn how to answer cold (well, with a calculator, of course).
[04/14/2025]
The updated syllabus is now available. This week, I want you to review the first 4 chapters, mini-exam, and case this week, as well as read the revised syllabus. Next week it’s on to Chapter 6.
[04/15/2025]
If you got a score of 30 or more on the mini exam, please help your fellow students in your study group (and thereby me, too) catch up. If you got a score below 20, really use this week to catch up. Don’t think this is spring break.
[04/16/2025]
https://syllabus.space (direct class url is working again!). Please tell me asap if you encounter difficulties or problems. ASAP!
[04/17/2025]
Many little fixes to syllabus. Tomas will hold small-group (2-4 people) tutoring sessions for 1 hour per week, too. Please send him an email if you did poorly on the exam and need help, and/or if you spent 20 hours/week during the first two weeks on finance, and you want to sign up for tutoring. You should not be running with your head into a wall.

And I have also come to the conclusion that the EMBA program blundered in assigning too many courses to you for the first 5 weeks of this quarter. The expectations were simply unreasonable. I apologize on our program’s behalf. Gonzalo, David, and I will be working to fix this going forward, too.

[04/18/2025]
Midterm Format: Open book, open notes, open calculator, but not open Internet. Any printed or written notes you want to bring. No web browsing, chatGPT, chatting, etc.
[04/19/2025]
If you had a below median score on the midterm and you continue to be challenged and confused after reviewing the assigned material for more than 10 hours per week, then please contact Tomas to arrange for free small-group tutoring (2-4 students) for 1 hour per week. Use this to ask questions where you seem to be running your head into a wall (which is not the point).
[04/25/2025]
There is a special place in hell for whoever invented interest rate conventions. Here is another APR and EIR summary. Roughly speaking, APR means quoted; EIR means compounding in the USA. In other places like Europe, who knows what they mean. Alas, in the USA, we also use APR in the context of mortagegs to include points, when it’s then supposed to include points, and thence this really only makes sense with compounding. More of the mess is described here. For the exam, pick the most reasonable interpretation in the context (bank, APR: just a quote), and say that this is what you interpret it to be. Be clear that you understand the general confusion, that you would ask in the real world for clarification, and that you know how to work the money both ways.
[04/25/2025]
I have brought syllabus.space back up. In order to get a good practice midterm working on it (me working on it, too), I had to do surgery inside the web-app, too. Thus, there is a chance that I may have broken something. If you see really strange solutions (i.e., answers that seem wrong), please email me ASAP an image (png) of the entire webpage, so that I can see your error.
[04/29/2025]
I have put up a practice midterm on syllabus.space.
Note: if you get a timeout (not a complete fail), it is almost surely not my site, but an Internet hop along the away. (The same happens on occasion with amazon, netflix, google, etc. The Internet is not highly reliable but it is resilient.) In such cases, always try to resubmit your answers by hitting refresh again, rather than going back. (More information: The way the syllabus.space webapp is designed, either it is completely down [e.g., some hardware, like the entire computer or something along the network has crashed] or it is almost foolproof and up and running. The webapp itself cannot be flaky, because it’s what is called mostly “stateless.”)
[04/29/2025]
The slack channel is emba-monthly-finance-support, maybe direct URL https://app.slack.com/client/E01827RH821 .
[05/01/2025]
Some thoughts about one plus formulas
[05/07/2025]
Thanks, Caitlin: See session2-qa.pdf, to be covered on Friday.