MBA and Sloan Elective Courses: Finance
FINANCE 220. Finance
This course covers the foundations of corporate finance and uses these foundations to analyze many of the important financial decisions made within firms and other institutions. Some of the topics covered include the valuation of fixed-income securities and stocks, capital budgeting and the choice of investment projects, the optimal capital structure of the firm and how it is affected by taxes, the notion of market efficiency, the valuation of options and other derivative securities and the use of derivative securities in corporate finance. Not taught in 2009-10.
FINANCE 221. Finance for Non-MBAs
This course, intended for graduate students and advanced undergraduates, covers the foundations of finance with applications in corporate finance and investment management. It discusses many of the major financial decisions made by managers and investors, emphasizing the process of valuation. Topics include criteria for making investment decisions, risk and return, market efficiency, capital structure, and the valuation of derivative securities (e.g., options). The course also provides coverage of the major financial instruments issued by corporations including debt, equity, and convertible securities.
FINANCE 222. Finance—Advanced
This course covers the foundations of corporate finance and uses these foundations to analyze many of the important financial decisions made within firms and other institutions. Some of the topics covered include the valuation of fixed-income securities and stocks, capital budgeting and the choice of investment projects, the optimal capital structure of the firm and how it is affected by taxes, the notion of market efficiency, the valuation of options and other derivative securities and the use of derivative securities in corporate finance. Not taught in 2009-10.
FINANCE 223. International Financial Management
With a daily volume of more than $1.8tr the foreign exchange market is by far the largest financial market in the world. It is also one of the most important ones as it is impossible to avoid exchange rate risk in the global economy. We will examine various aspects of the foreign exchange market. First, we will examine the role of governments and central banks. We will then focus on the markets for spot exchange, currency forwards, options, swaps, international bonds, and international equities. For each of these markets, the valuation of instruments traded in these markets and, through cases, the application of these instruments to managing exposure to exchange rates, financing in international capital markets, and international capital budgeting. Not taught in 2009-10.
FINANCE 224. Finance-C
The focus of this course is the decision-making process of the corporate manager responsible for major financial decisions. Starting from theoretical foundations, we will analyze cases covering a wide range of topics such as capital structure, dividend policy, financial distress, private equity and venture capital, mergers/acquisitions, hostile takeovers and leveraged buyouts. These cases provide an opportunity to apply the newly acquired theoretical models and tools to real-life situations.
FINANCE 225. Finance-M
Most financial transactions of firms are market-based transactions where the firm interacts with investors in financial markets. The aim of this course is to provide you with an understanding of the workings of financial markets. We will build on the basic concepts you learned in Managerial Finance to explore how investors make decisions about risk and return, how financial markets reach equilibrium, how market imperfections create challenges for investors and corporations, how financial innovations can be used to address some of these challenges, and how failed financial innovation can sometimes create new challenges.
FINANCE 230. Finance—Accelerated
The main aim of this course is to enable students to apply the fundamental ideas of financial economics to problems in the area of corporate finance with all the complexities the real world entails. The main focus of this course is on the corporate financial manager and how he/she reaches decisions as to capital investments, dividends and financing of all sorts. We will cover many issues that are important to a modern financial manager including such topics as leveraged buyouts, hostile takeovers, private equity financing and venture capital, and financial distress and bankruptcy. The cases will be used to motivate our discussion of how to bridge the gap between rigorous finance theory and its application to practical problems in corporate finance.
FINANCE 317. Taxes and Business Strategy
This course develops a framework for (i) understanding the effects of taxes on business decisions and (ii) devising effective tax planning strategies. Compensation, investment, and financing policies are linked through the common fabric of the tax planning process. The course is divided into two parts. The first part develops several key concepts: the course adopts a contractual perspective and emphasize the importance of considering the tax positions of all parties to contracts, both at the time of contracting and in the future. In the second part, students apply these concepts to specific business decisions. Many details of the tax law are covered along the way. Not taught in 2009-10.
FINANCE 319. Private Equity Investing Seminar
This seminar focuses on private equity investing, including buyouts and venture capital. Private equity investing activity has grown significantly over the past decade. Private equity includes both established and early stage companies. The course extends and deepens the entrepreneurial finance area for those with an interest in private equity, venture capital and principal investing, taking a global view. This seminar meets with outstanding investors.
FINANCE 320. Debt Markets
This course will focus on debt financing, trading or investing in debt instruments and their derivatives, or other investments, including money-market instruments, government bonds, repurchase agreements, interest-rate swaps, mortgage-backed securities (MBS), corporate bonds, and credit derivatives. The course will emphasize institutional features of the markets, including trading, pricing, and hedging. There is a special focus on distressed debt.
FINANCE 321. Investment Management and Entrepreneurial Finance
Equity investment in companies, common stocks, early stage ventures, deals, partnerships, hedge funds, or other entrepreneurial opportunities will be immediately or eventually important for most MBAs. This investment course discusses many practical and conceptual factors influencing the analysis and value of companies and deals, including publicly listed and private equity investments, and on success of investment approaches. The focus of this course is on quoted and private equity investments and on entrepreneurial finance. The format of the class is primarily case discussions and lecture discussions led by the professor and principals who were involved in the case. This course enables MBA students to learn a broad investing skill-set and to study outstanding investors.
FINANCE 322. Financial Intermediaries and Capital Markets
This course focuses on financial markets, institutions, and instruments. It will consider when and how firms raise capital through the life cycle, beginning with the capital-raising decisions and transactions for young firms and then discussing the decisions facing older, listed firms. The course will concentrate mainly on the firm’s perspective while also considering the perspective of financial intermediaries. Issues to be considered in this course include the role of financial intermediaries like banks, the decision to go public, the pricing and role of investment banks in IPOs, bank debt, project finance, public debt, private placements, securitizations, convertibles, and markets for junk bonds.
FINANCE 323. International Financial Management
With a daily volume of more than $1.8tr the foreign exchange market is by far the largest financial market in the world. It is also one of the most important ones as it is impossible to avoid exchange rate risk in the global economy. We will examine various aspects of the foreign exchange market. First, we will examine the role of governments and central banks. We will then focus on the markets for spot exchange, currency forwards, options, swaps, international bonds, and international equities. For each of these markets, the valuation of instruments traded in these markets and, through cases, the application of these instruments to managing exposure to exchange rates, financing in international capital markets, and international capital budgeting. Not taught in 2009-10.
FINANCE 324. Corporate Finance
The main aim of this course is to enable you to apply the fundamental ideas of financial economics to the problems in the area of corporate finance with all the complexities the real world entails. The main focus of this course is on the corporate financial manager and how he/she reaches decisions as to capital investments, dividends and financing of all sorts. We will cover many issues that are important to a modern financial manager including such topics as leveraged buyouts, hostile takeovers, private equity financing and venture capital, and financial distress. Not taught in 2009-10.
FINANCE 325. Topics in Corporate Finance
Major topic areas include: capital structure, distribution policy, mergers and acquisitions, corporate restructuring, pricing of selected financial instruments, and financial contracting and security design under adverse selection and moral hazard. Not taught in 2009-10.
FINANCE 326. Derivative Securities
This course is an introduction to options, futures and other derivative securities. The goal is to learn a core set of principles that underlie the pricing and use of derivatives. These principles are explored in a series of real-world examples that will help us to build intuition and familiarity with a broad spectrum of markets and risk-management applications. In particular, we will cover the valuation and use, both for risk management and for speculation, of forwards, futures, swaps, and options, including the Black-Scholes option-pricing formula; delta-hedging; credit derivatives; financial risk management; and the role of derivatives in financial crises.
FINANCE 328. Portfolio Management
This course considers strategies that investors can employ to meet various alternative investment objectives. The primary emphasis is on the asset allocation decision and the overall management of the risk and return characteristics of a portfolio. The course will explore many of the more quantitative approaches to portfolio optimization and asset market equilibrium. The course addresses the full scope of the investment management problem by considering investment across all classes of securities (equities, fixed-income instruments, derivatives, etc.) in both domestic and foreign markets; the use of dynamic strategies to control risks and to achieve investment goals; and empirical studies of security returns and models of the determinants of asset prices. Please note that this course contains a significant amount of quantitative material. Topics are intended to be covered in a rigorous, scientific manner. Not taught in 2009-10.
FINANCE 329. Investment Seminar
Global Principal Investing is a seminar on selected topics in masterful investing in publicly traded and private equity/venture capital investments, with focus on the principal's point of view. We study hedge funds and meet with outstanding investors. The scope is global including emerging markets. The Seminar is taught by a founding director of one of the largest international investment fund.
FINANCE 330. Investment Management: Asset Allocation and Asset/Manager Selection
This course covers strategic and tactical asset allocation in investment portfolios as well as specific asset and manager selection. It will consider challenges that are unique to the various asset classes that comprise broad-based portfolios, including: public equities, fixed income securities, private equity (both buyout and venture capital), hedge funds, and real assets (real estate, energy, timber, and commodities). It will also consider challenges that are specific to various geographies (domestic versus developed international versus emerging markets) across the various asset classes. The portfolio optimization framework employed considers the perspective of different types of investors that vary along such dimensions as risk preference, liquidity preference/investment horizon, tax status, social objectives, and special asset-specific relationship, information or skill advantages.
FINANCE 334. Family Business
Family-controlled private and public companies are the dominant form of enterprise worldwide. Despite their prominence, teaching and research have traditionally focused on analyzing the widely-held model of the firm. The family business management and valuation course explores the unique challenges and opportunities faced by family firms. The course balances managerial perspectives with academic tools. It is multidisciplinary: it combines relevant frameworks from management with the fundamental ideas of financial economics. The course is intended for four main audiences: (1) Students who seek to consult or provide professional services to closely held firms or their owners (wealth management solutions, management consulting, etc). (2) Students who are interested in acquiring a private firm either directly (search funds, minority investments, etc) or indirectly (private equity, etc). (3) Students whose family owns a business. (4) Students who are considering working for a family firm. The main objectives of this course are three. First, to understand the unique challenges and characteristics of family firms. Second, to provide a coherent and consistent set of tools to evaluate the most relevant decisions faced by family firms. Third, to focus on decision-making.
FINANCE 335. Corporate Valuation, Governance, and Behavior
This course will develop a detailed knowledge of corporate valuation techniques, together with an understanding of the role such valuations play in a wide range of corporate financing decisions. First, the course will carefully consider different valuation techniques, the assumptions that underlie each of these methods, how they are applied in practice, how they are related to one another, and how to decide which method of valuation is appropriate for a given application. After developing these tools, they will then be applied to a wide range of corporate finance settings. Among the applications to be considered are mergers and acquisitions, international valuation, corporate governance, financial distress, agency conflicts, asymmetric information, and overvaluation. For all of these applications, this course will emphasize the central importance of valuation to understanding observed phenomena and to guiding optimal decision making, as well as the unique challenges to valuation posed by the particular application.
FINANCE 341. Modeling for Investment Management
This course will combine practical and up-to-date investment theory with modeling applications. Understanding beautiful theory, without the ability to apply it, is essentially useless. Conversely, creating state-of-the-art spreadsheets that apply incorrect theory is a waste of time. The focus here is to try to explicitly combine theory and application.
FINANCE 342. Financial Markets and the Macro Economy
This course addresses the interaction between financial markets and the macro economy. First, we will focus on the role and targets of the Federal Reserve Bank (Fed), the conduct of monetary policy, and the determination of interest rates. We further provide an overview of the instruments of the money market and their valuation, such as federal funds, commercial paper and treasury bills. We then discuss the role of financial institutions, the importance of regulation and the regulator's response to financial crises, followed by a detailed discussion of the major financial crises of the past century. The last part of the course will address the interaction between stock markets and the macro economy, including the counter-cyclical behavior of expected stock returns and how macroeconomic variables relate to the cross-section of stock returns.
FINANCE 346. Institutional Money Management
The object of this course is to study the money management industry from the perspective of the user—an investor who wants to invest money. This course will study the main components of the money management industry: mutual funds, hedge funds, private equity funds and venture capital funds. It will also examine important users of the industry such as non profits, endowments and defined benefit pension funds. The emphasis of the course will not be on how fund managers make money, but rather on how the industry is organized, how managerial skill is assessed, how compensation is determined, and how economic rents are divided between managers and investors. The course will explore how competitive market forces interact with managerial skill and other market frictions to give rise to the observed organization of the industry.
FINANCE 350. Corporate Financial Modeling
The course will take the perspective of a mid-level manager or decision-maker who is responsible for collecting, analyzing, and utilizing financial information in the context of a major transaction. The class will integrate theories presented throughout courses in the core, particularly accounting and finance. In addition to providing an important context for application of these theories, the seminar will also incorporate various methodologies that will enhance a manager?s ability to develop and review financial models. Students will work on a series of cases and build models that can be used for earnings and pro-forma financial statement forecasts, valuation, the assessment of financing needs, merger analysis, and LBO evaluation. Students will also gain experience presenting financial models and critically assessing them. By the conclusion of the course, students will develop the skills to construct complex financial models and the logical frameworks to utilize them for various organizational applications.
FINANCE 351. Advanced Corporate Financial Modeling
In this course students will engage in the development of corporate financial modeling cases and solutions. Students will also develop materials to aid others in building financial models, and serve as case leaders during lab workshops. Not taught in 09-10.
FINANCE 522. Financial Intermediaries and Capital Markets
This course focuses on financial markets, institutions, and instruments. It considers when and how firms raise capital through the life cycle, beginning with the capital-raising decisions and transactions for young firms and then discussing the decisions facing older, listed firms. The course will concentrate mainly on the firm's perspective while also considering the perspective of financial intermediaries. Issues to be considered in this course include the role of financial intermediaries like commercial banks and investment banks, the decision to go public, the pricing and role of investment banks in IPOs, bank debt, public debt, private placements, commercial paper, and markets for junk bonds. Not taught in 2009-10.
FINANCE 530. Financial Modeling
The course will take the perspective of a mid-level manager or decision-maker who is responsible for collecting, analyzing, and utilizing financial information in the context of a major transaction. The class will integrate theories presented throughout courses in the core, particularly accounting and finance. In addition to providing an important context for application of these theories, the seminar will also incorporate various methodologies that will enhance a manager's ability to develop and review financial models. Students will work on a series of cases and build models that can be used for earnings and pro-forma financial statement forecasts, valuation, the assessment of financing needs, merger analysis, and LBO evaluation. Students will also gain experience presenting financial models and critically assessing them. By the conclusion of the course, students will develop the skills to construct complex financial models and the logical frameworks to utilize them for various organizational applications. Not taught in 2009-10.
FINANCE 544. Government and Nonprofit Debt Financing
Government and Non-Profit Debt Financing is a one-half quarter course. This course is about interest rates and the issuance of debt instruments by Federal governments, by state and local governments, and by non-profits. With respect to non-profits, both bank loans and tax-exempt debt are considered. Finally, we will consider endowment payout rates for foundations. The course does not take up taxation and budgeting, topics found in a traditional public finance course. Rather, the focus is only on the debt administration aspect of such a course. Certain macro-finance concepts will be set forth at the outset. Not taught in 09-10.
FINANCE 587. Private Equity—Understanding the Deal
This course is an analytical review and simulation of a private equity transaction from the viewpoint of the private equity partnership. The course looks at all aspects of a "deal" and may be of interest to five groups of students: (i) students who may be interested in working in private equity as a career; (ii) students who plan to be employed by operating companies that are owned by private equity firms; (iii) students who may invest in private equity partnerships as a limited partner; (iv) students who find private equity to be an interesting part of the financial community in general (v) students who expect to participate in corporate business development or mergers and acquisitions.
FINANCE 592. Hedging with Options
Most senior corporate officers have now recognized that options and other financial derivatives are here to stay. These products do, however, provide special management challenges and a certain amount of discomfort. Too often, executives understand only the basic arithmetic of hedging and have been frustrated by seminars that focus on the mathematics of models rather than on their application. They can also feel limited in their understanding of the culture, language and motivations of hedgers, and of what it takes to manage them or even to communicate with them. Most important, executives can have a justifiable sense that their hedging operations expose them to unmanaged risks, some of which involve potential disasters while others pertain simply to poor performance. This course is a comprehensive immersion in the corporate use of options to hedge foreign exchange, interest rate and equity exposure. It is designed to upgrade students understanding of options concepts and of the hedging process, and then to expand and structure their perspective on the role of a manager of a hedging function. This includes exposure to the experiences, both successful and unsuccessful, of managers and executives around the world. Not taught in 2009-10.
FINANCE 595. Credit Risk
The credit crisis which began in mid-2007 brought to an end a period of around ten years of dramatic innovation and volume growth in many credit markets and in credit derivatives in particular. This period of growth also saw financial institutions of all types greatly increase their attention to credit sensitive instruments. It is too early to say when the crisis will end or how credit markets will be affected in the long run but it seems safe to say that many of the developments of the past ten or so years will still be with us. The objective of the course is to provide an introduction as well as an in-depth understanding of issues in credit risk, its modeling and analysis as well as credit related instruments such as default-prone debt and credit derivatives. The objective is to provide a balance between developing, on one hand, a sound conceptual framework and, on the other, market understanding and insight. Both are essential to the informed practitioner. Not taught in 2009-10.