DEPARTMENT OF FINANCE
Professors: Sanjiv Das (Department Chair), Atulya Sarin, Hersh Shefrin (Mario L. Belotti Professor), Meir Statman (Glenn Klimek Professor)
Associate Professors: George Chacko, Robert Hendershott, Hoje Jo
Assistant Professor: Carrie Pan
Finance is at the center of well-managed businesses, from high-technology companies to mutual fund companies. Development of knowledge and managerial skills in the corporate and investment settings are the major goals of the finance program. Graduates with a degree in finance pursue careers as corporate financial officers, traders, investment managers, financial analysts, financial planners, investment bankers, stockbrokers, regulators, and other specialties. Corporate finance officers manage the assets and value of corporations. They examine which new products and investments will be profitable, analyze the most cost-effective ways to produce them, and determine where to get the money needed to fund new ventures. Personal financial planners and stockbrokers help people make wise investments by selecting good stocks and assembling efficient portfolios. Students in finance also learn how to understand and analyze information from capital markets, engage in mergers and acquisitions, and undertake investments in new ventures, real estate, and international markets.
REQUIREMENTS FOR THE MAJOR
In addition to fulfilling University Core Curriculum and Leavey School of Business requirements for the Bachelor of Science in Commerce degree, students majoring in finance must complete the following departmental requirements:
- FNCE 124 and 125
- Three upper-division finance electives
UPPER-DIVISION COURSES
121. Financial Management
Introduction to the basic concepts of financial risk and return, the valuation of uncertain future cash flows, working capital and fixed asset management, and cost of capital. Topics include time value of money, financial analysis and forecasting, valuing corporate securities (stocks and bonds), cash management, capital budgeting, short- and long-term financing, and dividend policy. Prerequisites: OMIS 40, ACTG 11 and 12 and proficiency with spreadsheets. (5 units)
121S. Financial Management
Introduction to the basic concepts of financial risk and return, the valuation of uncertain future cash flows, working capital and fixed asset management, and cost of capital. Topics include time value of money, financial analysis and forecasting, valuing corporate securities (stocks and bonds), cash management, capital budgeting, short- and long-term financing, and dividend policy. Prerequisites: Restricted to students in the Leavey Scholars Program. OMIS 40, ACTG 11 and 12, and proficiency with spreadsheets. (5 units)
124. Investments
Introduction to the nature and functions of securities markets and financial instruments. The formulation of investment goals and policies, trading strategies, and portfolio management. Emphasis on security analysis and valuation. Prerequisite: FNCE 121 or 121S. (5 units)
125. Corporate Financial Policy
In-depth examination of the interrelationships between corporate investment and financing decisions and their impact on a firm’s pattern of cash flows, return, and risk. Special emphasis on the development of analytical techniques and skills for analyzing performance reflected in financial statements. Case studies are used. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
126. Money and Capital Markets
Role and function of financial institutions, financial flows, interest rate structures, money, and capital markets. Emphasis on the implications for the formulation of business financial policy. This course is intended as a thorough introduction to the various markets that comprise a fair and efficient financial system. The financial system in capitalistic economies consists of various interacting markets, each with well-defined institutions and agents. This course explores the ideas and mechanisms by which value is created by financial markets, the roles of players in the system, the flow of information and the design features that manage incentive problems in a practical manner. Traditional courses in money and banking tend to be institutionally focused; in contrast, this course is market-focused. Common themes and concepts will be developed by the exploration of a new market in each class. Students will survey various markets with a view to a complete understanding and technical mastery of the role of the market, its players, traded securities, and risks. Prerequisites: FNCE 121 or 121S, and 124.(5 units)
128. Real Estate Finance
Exploration of the real estate market, including investments in residential and commercial real estate by individuals, partnerships, and trusts. Emphasis is on the valuation and cash flow analysis of these projects and an understanding of financing alternatives. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
130. Ethics in Finance
Exploration of the ethical dimension of financial markets. Topics include insider trading, moral hazard, agency, adverse selection, and financial market regulations concerning disclosure, price manipulation, suitability, trading interruptions, margin requirements, and short-sale restrictions. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
135. Applied Portfolio Management
This course is designed to provide a highly rigorous and analytic framework for applied work in investments and portfolio management. Students who master the course material will acquire the analytical tools and financial theory necessary to make rational investment decisions and understand the paradigms by which investment portfolios are managed. The coursework involves an analysis of contemporary theories and techniques in portfolio management available to professional portfolio managers. Significant literature that emphasizes the role of the modern portfolio manager in achieving diversification and client investment goals is reviewed and evaluated. Prerequisites: FNCE 121 or 121S, 124, and OMIS 40 and 41. (5 units)
141. New Venture Finance
This class describes the financing environment for young companies and how the private equities market functions. Students will learn how investment funds are structured, investment contracts are written, and the economics of different private equity models work. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
151. International Finance
Examination of the functioning of the international monetary system, foreign exchange markets, and the financial problems of business firms operating internationally. Topics covered include hedging exchange rates, balance of payments, international investment and financing, financial markets, banking, and financial management. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
163. Investment Practice
The practice of portfolio management using a portion of the University’s endowment fund to acquire real-life investment experience. Various investment objectives will be explored, including derivatives to protect current positions, fixed income, and equity investments. Course meets over three quarters. Students must earn 6 units in order for the course to count toward major. Prerequisites: FNCE 121 or 121S, 124, and instructor approval. (2 units)
170. Business Valuation
Practical valuation tools for valuing a company and its securities. Valuation techniques covered include discounted cash-flow analysis, estimated cost of capital (cost of equity, cost of debt, and weighted average cost of capital), market multiples, free-cash flow, and pro-forma models. Prerequisites: FNCE 121 or 121S, and 124. (5 units)
180. Open Book Management
Open book management is a system that places finance and accounting at the center of management processes for decision making and monitoring. The course uses simulation techniques to teach students how to create a corporate culture around the principles of open book management, particularly the treatment of agency conflicts and the use of effective business processes. Prerequisites: FNCE 121 or 121S, 124 and 125. (5 units)
198. Internship/Practicum
Opportunity for selected upper-division students to work in companies and nonprofit organizations. Prerequisites: Finance major, junior or senior standing, successful completion of FNCE 121 or 121S, and permission of instructor and chair required one week prior to registration. Anything less than 5 units will not count toward major requirements. (1–5 units)
199. Directed Reading/ Directed Research
Independent projects undertaken by upper-division students with a faculty sponsor. Independent studies are normally permitted only under special circumstances. Prerequisites: Declared finance major, junior or senior standing, and written proposal must be approved by instructor and chair one week prior to registration. (1–5 units)
