FIN 620 at the University of Maryland Global Campus is a three-credit graduate course on the long-term financial needs of an organization and the role of capital markets. UMGC lists FIN 610 as its prerequisite.
The catalog sets out a broad field: the financial environment, options and futures, long-term financing, capital budgeting, capital structure, dividend and share repurchase policy, and investment banking and restructuring.
The course is challenging because the topics pull in different directions. More debt can lower the cost of capital yet raise risk; a dividend rewards owners yet drains cash for growth. Strong answers weigh the trade-off and say which side wins for the firm in the case, rather than reciting definitions.
Course at a Glance
| Item | Details |
|---|---|
| University | University of Maryland Global Campus (UMGC) |
| Course code | FIN 620 |
| Credits | 3 |
| Level | Graduate |
| Prerequisite | FIN 610 |
| Focus | Long-term funding, capital structure, payout policy, special situations |
What FIN 620 Covers
| Topic in the catalog | Plain-language meaning |
|---|---|
| Options and futures instruments | Contracts used to manage or transfer price risk |
| Long-term funding sources | Term loans, derivatives, debt and equity securities and leasing compared |
| Capital budgeting decision process | Choosing projects that justify the funding raised |
| Capital structure and leverage | The mix of debt and equity and its effect on risk and return |
| Dividend and repurchase policy | How much cash to return to owners and in what form |
| Preferred stock and issuance | Alternate policies on issuing preferred shares |
| Mergers, buyouts and divestitures | Special situations that may create value |
Key Concepts with Worked Examples
Financial Leverage
Borrowing raises the return to shareholders when the return on assets exceeds the cost of debt, and magnifies losses when it does not.
Example: A firm earns $200,000 on $1,000,000 of assets, a 20 percent return. If $400,000 is financed with 8 percent debt, interest is $32,000, profit before tax is $168,000 and equity is $600,000, so the pre-tax return on equity rises to 28 percent. If operating profit fell to $20,000, the same debt would leave a loss of $12,000 on $600,000 of equity, a return of negative 2 percent.
Payout Policy: Dividends Versus Repurchases
Both return cash to owners. Dividends are visible and tend to be sticky; repurchases are flexible and change the share count. Cases usually ask you to link the choice to growth opportunities and cash stability.
Value Creation in Special Situations
A merger, buyout or divestiture only creates value if the combined or separated parts are worth more than the whole they replace. Say where the extra value comes from, such as cost savings or better use of capital, and what the price paid assumes.
Typical Assignments and How to Approach Them
UMGC's public course page does not list assessments, so this table describes the general shape of work in a long-term finance course. Follow your syllabus for the specifics.
| Assignment type | What it tests | Approach |
|---|---|---|
| Financing choice case | Comparing debt, equity and leasing | Set out cost, risk and flexibility for each source |
| Capital structure analysis | Trade-offs of leverage | Show the effect on returns in good and bad years |
| Dividend policy paper | Linking policy to the firm's situation | Use the firm's growth and cash needs as evidence |
| Merger or restructuring review | Value logic and risk | Identify the source of value and what could erode it |
Choosing Between Funding Sources
Many FIN 620 cases come down to comparing ways to fund the same need. A simple grid keeps the comparison honest. The entries below are general tendencies, not rules for every firm.
| Source | Usually offers | Usually costs |
|---|---|---|
| Term loan | Lower stated cost, interest deductible | Fixed obligations, covenants |
| Bonds | Long maturity, wide investor base | Issue costs, fixed payments |
| Equity | No required payment | Higher required return, dilution |
| Leasing | Use of assets without large outlay | Ongoing payments, less ownership |
| Preferred stock | Hybrid features | Dividends not deductible |
After the grid, connect it to the firm: how stable are its cash flows, how fast is it growing, and how much control do owners want to keep? That connection is usually what the rubric rewards.
A Second Example: Dividend or Repurchase
Suppose a firm has $10 million of spare cash, 5 million shares priced at $40, and no better use for the money. A $2 per share dividend uses the full $10 million and leaves the share count at 5 million. A repurchase at $40 retires 250,000 shares, leaving 4.75 million.
In a simple world the shareholder is no worse off either way. The case discussion starts when you add real features: tax treatment, whether the firm wants to commit to a regular payment, signals about future earnings and whether management believes the shares are cheap.
Where Students Get Stuck
- Listing instead of choosing. A recommendation needs a reason tied to the firm in the case.
- Ignoring taxes. Interest is usually deductible and dividends are not, which changes the comparison.
- Derivatives vocabulary. Separate who holds the right and who holds the obligation before calculating payoffs.
- Theory without data. Apply the capital structure ideas to the case figures.
Study Tips for FIN 620
- Make a one-page comparison table of funding sources: cost, risk, control, flexibility.
- Practice one leverage calculation in both a strong and a weak year.
- Re-read FIN 610 notes on the cost of capital before the capital structure unit.
- Write the recommendation sentence first, then build the support.
How We Help with FIN 620
Send the case, figures and rubric. A finance writer can prepare a worked answer with the steps shown, or review your draft and explain where the reasoning is thin. See also our finance assignment help guide.
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Frequently Asked Questions
UMGC lists FIN 610 as the prerequisite.
Yes. The catalog lists options and futures instruments, and derivatives among the long-term funding sources analyzed.
It covers dividend and share repurchase policy and evaluates alternate policies, including capital structure and the issuance of preferred stock.
The description includes mergers, leveraged buyouts and divestitures as special situations that may create value.
There is quantitative work, but the main skill is judging which financing choice suits a given firm and explaining it.
Yes. Send the draft and prompt and we give written feedback on structure, reasoning and calculations.