Business and Investment Essentials

Summer at Stern program has been discontinued. Please do not contact me regarding this program.

Overview

Course code: MULT-UB.0275.60

Please note that I do not administer this course. Therefore, for all administrative issues such as registration, permission codes, and whether this course will count towards university credit, please contact university.programs@nyu.edu.

This course is for rising high school juniors and seniors.

The course teaches you important business and financial skills critical in your personal and professional life. It covers the trade-off between consumption and savings, the time value of money, and the trade-off between risk and return, the basics of capital markets, and the basics of financial statements. All concepts are taught via practical examples using in-class simulations and make heavy use of Excel.

This course covers five critical areas listed below. It also teaches life lessons about understanding how and why career choices affect financial outcomes. Since all of the topics below are taught using hands-on examples using Excel, you will leave the course with a very good understanding of how to use Excel in Business, Finance, Economics, and Statistics. Many assignments use an advanced online system to give you instant feedback as you work through the homework assignments.

Personal finance: Time value of money, personal financial planning, and borrowing, the risk versus return trade-off in investments in stocks and bonds, pricing in competitive financial markets
Understanding businesses and building business plans and models: Income statements and margins, Balance sheets and funding needs, projecting size, growth, margins, net asset intensity, and risk
Capital markets: Public offerings, financial reporting, basic valuation ratios
Basic statistics: Mean, median, mode, variance, standard deviation, covariance, correlation
Economics and market design: Double auction markets, sealed-bid auctions, private value versus common value auctions, public goods auctions, moral hazard, and adverse selection. This topic is taught via in-class market simulations rather than traditional theory.

Prerequisites

As a high school student, summer must be fun and educational. You will find the course fun if you like working with numbers; otherwise, you will struggle with this course. If you liked algebra in school, you would enjoy this course. However, the course does NOT require advanced algebra, calculus, geometry, or trigonometry.

Grading

Students will be evaluated as follows:

Class participation: 30%
Weekly assignments: 30%
Final exam: 40%

Penalty for missing classes and unapproved use of devices in class

Paper and pencil

Please bring paper and pen/pencil to take notes in class.

Unapproved device usage

Most of us are now addicted to devices, which impedes learning. You are allowed to use devices only when I ask you to use your computer in class. Otherwise, ALL device use is strictly prohibited, unless you have a qualified disability which allows you to use devices in class. Students using devices when not approved will be asked to leave the classroom. Each time you are asked to leave the class, you will be marked absent. This is very painful, awkward, and disruptive, and I hope I never have to do this, but I will not hesitate to enforce this policy.

Reasons for requiring attendance

Attendance is required for several reasons. First, you incorrectly assume you can catch up on a missed class by watching a recording (if available). Videos do not engage your brain as much as a live class. Second, less than 20% of you watch the recording (if available). You are then lost in class, which provides the wrong signals to me as an instructor. Third, your absence hurts class discussions. Fourth, you miss out on feedback if you do not work through the questions I pose in class. Fifth, I lose the feedback since there are fewer questions.

Attendance policy enforced after the add/drop period

The attendance policy below will be in effect only after the add/drop period.

Attendance sheet

After entering the class, please mark yourself present on the OneDrive sheet within the first 20 minutes (link posted on Brightspace after the add/drop period). You will be marked absent if you are more than 20 minutes late, unless it is due to factors beyond your control (traffic, subway delays, or interviews running late). You will also be marked absent if you leave the class early unless you have my permission or get it afterward. You will get an F in the course if you are caught cheating on the attendance sheet.

Mark yourself excused on the attendance sheet for excused absences

Without mandatory attendance, attendance is often below 50%. Therefore, though I dislike doing this, I penalize absences. If you anticipate being absent for good reasons, please email me well in advance. Please enter Excused on the attendance sheet described below to avoid the penalty if approved. You must update it; I will not mark you excused. If you miss a class due to emergencies and cannot tell me in advance, do not panic. Take care of the emergency first, and then email me. I will permit you to change the Absent to Excused. But if you miss a class without a valid reason, there is a penalty, as stated below.

Penalty for missing classes

For sections meeting in 150-190 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY missed session unless you were explicitly excused via email. Thus, if you miss two class sessions, you will lose two grades, and so on.

For sections meeting in 75-80 minute sessions, you will lose one grade (A to A-, A- to B+, B+ to B, B to B-, and so on) for EVERY TWO missed sessions unless you were explicitly excused via email. Thus, if you miss four class sessions, you will lose two grades, and so on.

Seating and name tags

Please sit in the same seat in every class and display your name tags. For Zoom classes, you must keep your video on AT ALL TIMES. You must also have a good working headset or mic, as it is extremely rude to be inaudible and force me to ask you to repeat yourself.

Almaris Assignments

When and how to access the tests: After the first week of class, you can view the online assignments at https://www.almaris.com/assess/ using your official NYU email (no aliases) and the most recent password emailed to you by Almaris. The Almaris password is different from NYU or Stern passwords.
Support: Almaris staff will reply to your emails only if they pertain to technical issues with the Almaris system, not deadline extensions. Please contact Stern IT for technical issues with your network.
Password retrieval: To retrieve the password, use your full email with the domain name as it appears in Brightspace. The domain name could be @nyu.edu for some of you, while it could be @stern.nyu.edu for others. I do not control this mess.
Length: Some assignments are short; others are long. Please manage your time.
Deadlines: Almaris tests list the deadlines. I may update the deadlines as the course progresses.
NO EXTENSIONS will be granted for any reason except medical or family emergencies. If you have religious or personal conflicts, please submit the assignments early. The related materials are covered well in advance of the assignments. Please do not email me to request extensions unless you have a medical or family emergency.
Late: Assignments are marked LATE if you do not meet or exceed the passing score described below before the deadline. There is no additional penalty for lateness other than a low score.
Passing score: Assignments have a passing score of 100% or less.
- Passing score 100%: I set the passing score to 100% on an assignment if I want you to ace it. In reality, there is no passing score. Whatever score you get on your last attempt is your final score. You are graded on accuracy but not the number of attempts. There is a difference between passing a test and getting full credit. If you get 80/100 on your final attempt, you pass, but you do not score 100.
- Passing score less than 100%: I set the passing score to less than 100% on an assignment if I do not require you to ace it. Any score above that score is rounded up to 100%. For example, if the passing score is 90%, and you get 93%, your score is rounded up to 100%. I do the rounding up in a separate spreadsheet. You will see only the raw score online.
Free to you and NYU: Almaris is not affiliated with Stern in any way. It is offering these tests to Stern at no charge.
Data privacy and no marketing: Your data is not shared with any third party. It is not used for any promotion or marketing.
No data retention: Your data is not retained. It is deleted in approximately two weeks after the end of the course.

Almaris Exams

Please log in to Almaris as soon as you receive these instructions via email. You will see inactive links to your exams and instructions.
Unless communicated to you differently in class, the midterm exam covers topics covered until the midterm, and the final exam covers the entire course.
The instructions at the top of the login screen will tell you how many parts the exam has and their weights.
Please report any problems such as wrong deadlines or missing parts of the exam to me immediately.
Log in to Almaris right before your exam. Refresh your screen to see active links for the exam.
Your final score on each part of the exam will be max(score1, score2 - 7, score3 - 14, score4 - 21, score5 - 28).
You must answer all questions without help from another student or anyone else. Any such communication will be construed as cheating. If the exam is online, email your questions to the TA AND me. Whichever one of us reads the message first will respond. If the exam is held in class, you can ask the proctor.
If the exam is online, please keep your email open during the exam and check it periodically. Any updates/corrections will be sent via email.
Manage your time. Extra time will NOT be allowed.
If you want us to grade your incomplete or incorrect spreadsheet manually, submit it within FIVE MINUTES of the end of the exam. Do not email it; look for Assignment on NYU Brightspace. If you submit the spreadsheet for manual grading, you will be considered to have used up your five attempts. Therefore, your maximum score on that spreadsheet can only be 72/100 due to the penalty for multiple attempts.

Important computer tips for the final

DO NOT WORK ON A SPREADSHEET WITHIN A BROWSER. Save the spreadsheet to your computer, work on it, and save it periodically. If you navigate away from the spreadsheet in a browser, ALL YOUR WORK WILL BE LOST.
Organize your computer files and designate a directory to save your exam files.
Restart your computer before the exam to minimize problems.
Bring an external mouse with a scroll wheel to speed up test-taking. Do not waste time using the trackpad or the internal mouse.
Maximize screen space by hiding the Excel ribbon and browser menus. The more the screen you see, the faster and more accurate you are.
Bring a computer with as big a screen as possible.
Do not use an unfamiliar computer.

NYU Stern Policies

Please read the NYU Stern Policies for this course.

Help and Office

Me: dgode@stern.nyu.edu, 212-998-0021, Office: KMC 10-86.
Teaching assistant: Please check NYU Brightspace.

Administrative and System Requirements

Videotaping

Classes are normally not videotaped, except for EMBA classes. If the class is videotaped, the link is posted to Brightspace by NYU Stern IT within a day.

Registered Students Only

Only registered students can attend classes. I cannot override this NYU Stern rule. We do not allow unregistered students to "audit" a class.

Albert and NYU Brightspace

You must be in Albert and NYU Brightspace before starting the first class. If you register late, there might be a delay of a day before you appear in these systems. If you cannot access these systems after a day, please contact the relevant REGISTRAR. I cannot add you to these systems regardless of what someone in IT tells you.

Computer Requirements

You need to bring a computer to every class. If you have any technical questions, please contact Stern IT at (212-998-0180) or servicedesk@stern.nyu.edu, or NYU IT at +1 (212) 998-3333 or askit@nyu.edu. I cannot help you with your computer issues.

Excel 365 Desktop Version Required

The desktop version of Excel 365 is required. Excel Online and Google Sheets are NOT OK. Read this page regarding Excel 365 Desktop access for NYU students.

Materials

I use my materials. Therefore, no textbook is required, and you need not purchase anything.

Schedule

Schedule
Class	Topic
1.	Personal finance: Time value Why is there a time value of money How does the current cash balance grow at a compounded rate into the future Computing the future value of current cash flows using a compound rate Computing the present value of future cash flows using a discount rate What is the difference between the Annual Percentage Rate and the Annual Percentage Yield? Why do banks and credit card companies quote one versus the other Excel functions to implement the above
2.	Personal finance: Borrowing money What are the good reasons for borrowing money? What are some of the bad reasons for borrowing money? How can one avoid having unbearable debt by ensuring that the borrowing is only for investment, not consumption? Why is making a budget important for staying within one's means? What are the elements of a budget? How does it aid in planning personal finances? How do the following loans work? How should one avoid being ripped off by them? Credit cards (and how they differ from debit cards) Student loans Store loans Car loans Mortgages How does one prepare a table showing when and how much will a loan be paid off? Excel functions to implement the above
3.	Personal finance: Risk versus return of various investments How do stocks differ from bonds? Which one is riskier? Why? What are bonds? What do face value, coupon rate, maturity mean? What is the difference between coupon rate versus yields? What is the difference between face value versus price? How does one build an amortization table for a bond? What are common shares? How do they differ from preferred shares? What does expected return mean? For stocks, what is the difference between capital gains and dividend yields? For bonds, what is the difference between capital gains and interest yield? How is risk measured? What is the difference between default risk and inflation risk? Why is there a connection between risk and expected return? What kind of risk is rewarded with a higher return? What kind of risk does not matter? Systematic risk versus unsystematic risk Why is it hard to make money in financial markets? How do expectations affect prices?
4.	Capital markets: Public offerings and secondary markets, Who runs a company? What do boards of directors, CEO, CFO, and COO do? What are initial public offerings? What are secondary offerings? What do investment bankers do? How do companies report their financial results to investors? What is an annual report? What is a 10K? What is a 10Q? What is a prospectus? Why are financial reports audited? Who audits them? Who sets the rules that financial reports must comply with? Economics of incentives: Unobservable actions and private information Moral hazard and unobservable actions: How companies use incentive plans to overcome moral hazard, how does auditing reduce moral hazard Adverse selection and private information: What role do investment bankers play in mitigating adverse selection?
5.	Basic statistics Population versus sample Mean and median Variance and standard deviation Covariance and correlation Excel functions
6.	Business plans and models: Understanding how businesses make money What is the difference between income flows versus cash flows? Why are some cash flows never income flows? Why do some cash flows differ in timing from income flows? What do terms such as margins, gross profit, EBITDA, EBIT, and net income mean?
7.	Business plans and models: Understanding why businesses need money How does the time lag between spending cash and receiving cash drive the need for money? What are different types of assets and liabilities? How do businesses raise money? What is the difference between raising money from lenders versus shareholders? Business plans and models: Size, growth, and margins What are the benefits and challenges of running a big business? What are economies of scale and economies of scope? What are the challenges of growing a business? How do pricing power, operating efficiencies, and buying power affect margins?
8.	Business plans and models: Assets needed and liabilities available How does the difference between revenues and receipts give rise to receivables and advances? How does the difference between expenses and payments give rise to prepayments and payables?
9.	Business plans and models: Free cash flow generation How do net assets affect cash flow generated and funding needed? What do terms such as working capital, fixed capital, and invested capital mean? Business plans and models: Business risk and the uncertainty of cash flows What drives business risk? How does business risk affect borrowing capacity?
10.	Business plans and models: Financial risk, leverage, liquidity Why do some businesses have more debt than others? How does leverage amplify risk? How does liquidity mitigate risk?
11.	Market design and economics The critical role of markets in allocating resources Demand and supply in action: In-class simulations of market mechanisms below: Open outcry Double auctions Sealed bid auctions Private value versus common value: Winner's curse Public goods and the failure of markets
12.	Exam

Business and Investments [CANCELLED]