Improspectives

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MOOC Review: Wharton’s An Introduction to Corporate Finance

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I recently completed a four-course sequence from the University of Pennsylvania’s Wharton School which included courses on operations management, marketing, financial accounting, and corporate finance. I’m happy to say the courses were fulfilling and have provided substantial support to my professional career.

I fully expected An Introduction to Corporate Finance, taught by Professor Franklin Allen, to be a challenge. In many ways, MBA-level corporate finance is equivalent to organic chemistry for chemistry and biology majors, dynamics for mechanical engineers, and quantum physics for physics majors. It’s the course that separates students with a firm grasp of foundational material from those who don’t.

That’s not to say that someone who wants to be a marketer isn’t qualified if they don’t ace corporate finance, but anyone who wants to be taken seriously as an elite-level financial analyst must do well in this course and its successors.

Course Overview

This six-week MOOC took participants through the mid-term exam of the on-campus course FNCE 611. There were five problem sets worth a total of 25% of the grade, a business case worth 25%, and a final exam worth 50%. MOOC students had to earn 60% of available points to receive a certificate, based on our best results from three attempts on each problem set, the case, and final. At least, that’s the way things ended up (more on that later).

Each week added skills to our analytical toolbox, starting with determining the object function for corporations, calculating present values, valuing stocks and bonds, using net present value to analyze cash flows, measuring risk, pricing assets, and applying the Capital Asset Pricing Model (CAPM).

I’m familiar with net present value and bond calculations from my work with Excel, but I gained a deeper understanding of the mathematical mechanisms underlying those basic methods from Professor Allen’s explanations. I must admit that I struggle with geometric explanations of indifference curves, production, possibility curves, and other concepts. I knew the course would start with those topics, so I buckled down and did my best with them. The rest of the material came…I won’t say easily, but the insights I gained from that first week helped quite a bit.

Production Notes

One of the alleged benefits of MOOCs is that it allows instructors to move away from the “sage on the stage” paradigm, where the professor lectures from a podium, often with the help of visual aids. In An Introduction to Corporate Finance, Professor Allen allowed the University of Pennsylvania to record his classroom lectures. The reason for this choice is quite simple: his lectures consist of meticulously prepared and explained motivational examples that he works through in detail. I’m not certain how he could have provided the same content without essentially rerecording his lectures in a different format.

As I mentioned earlier, we had to earn 60% of the available points to pass and had multiple, untimed attempts at the weekly assignments, case, and final exam. When the course launched, those terms were 70% or more to pass and a single attempt at each graded activity. I don’t mind admitting that my eyes started crossing and uncrossing when I realized what I expected to be the e-learning equivalent of a harder-than-normal Wednesday New York Times crossword puzzle had turned into a serious academic endeavor. I imagine a significant push-back against these requirements led to their relaxation, but it did water down what might have been a significantly more rigorous test of our abilities.

My commentary might make it sound like Professor Allen is a demanding, unfriendly presenter, but that’s not the case. He adopted a matter-of-fact delivery with an emphasis on clarity, but whenever a student raised a hand or asked a question, he looked at them, smiled, nodded his head, and said “Yes?” His manner indicated the query was welcome because, as he noted in the first lecture, it was likely the questioner wasn’t the only person in the room who needed a point clarified.

He also shone when discussing student life and the history of the Wharton School. In particular, his eyes lit up when discussing the Wharton Olympics, a now-discontinued competition where student teams, each with a faculty participant, ran relay races, threw paper balls into trash cans, and performed other bits of office-related skill in a day that must have been a welcome break from the rigors of the coursework.

I’ve no doubt Professor Allen demands great work from his pupils, but I’m equally certain he wants them to succeed.

Conclusions

Based on my experience in An Introduction to Corporate Finance, I’m not sure I have the skill set and temperament to do this sort of work on a high level. Perhaps I’ve psyched myself out after a poor showing in my undergraduate microeconomics class at Syracuse, but some concepts just haven’t stuck. That’s not to say I didn’t benefit greatly from Professor Allen’s course. I certainly did, and believe I could make a solid run at passing the on-campus version of this class. I’ll go into more depth on why that’s the case in my final, summary post on the Wharton MOOCs.

In the end, An Introduction to Corporate Finance turned out to be a highly challenging and eminently rewarding course. To my knowledge it hasn’t been offered since I took it in Fall/Winter 2013, but I hope it will be soon.

I’ll wrap up my discussion of the Wharton MOOCs with a final post on my overall impressions of the courses and how they represent the school in the online learning milieu.

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