Finance
Professors: Sanjiv R. Das, Hoje Jo, Atulya Sarin, Hersh M. Shefrin, Meir Statman
Associate Professors: Ye Cai, George Chacko, Robert J. Hendershott, Seoyoung Kim, Carrie Pan (Chair)
Assistant Professors: Samuel Lee
Glen Klimek Professor: Meir Statman
Mario L. Belotti Professor: Hersh M. Shefrin
William and Janice Terry Professor: Sanjiv R. Das
Gerald and Bonita Wilkinson Professor: Hoje Jo
Lecturer: Michael Dana, Wendy Ku
Adjunct Lecturer: Joseph Ori, Manish Tewari
Professors of Practice: Donald Davis, James Kelley
FNCE 2452/3000 Financial Management
This course provides an introduction to finance. It addresses the theory and practice of financial management, the generation and allocation of financial resources. The main objective is to provide a foundation in the basic concepts of finance, including the time value of money, cash and working capital management, the role of financial markets, portfolio theory, asset pricing, and the risk-return tradeoff, and to expand awareness of institutions and practices in business and finance. Prerequisites: ACTG 3000 (4 units)
FNCE 2453/3453. Corporate Finance
Deals with the basic and advanced concepts of corporate finance, particularly the role of the financial manager and the goal of financial management. For this purpose, the course focuses on agency conflicts and corporate governance, capital structure, payout policy, financial distress, options (real and executive), derivatives/hedging, and international issues. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000. (3 units)
FNCE 2455/3455. Investments and Capital Markets
Explores investment securities and markets; reviews valuation tools; analysis of stocks, bonds, and derivatives. Introduces constructing portfolios and controlling investment risks. Focuses on learning how to value assets given forecasts of future cash flows. Concentrates on the
risk characteristics of different asset classes. Covers four broad areas: (a) bonds and other fixed income securities, (b) risk/return relationships, portfolio diversification, and equity factor models, (c) performance evaluation and security analysis, and (d) currencies, international interest rates, and derivatives. Combines the theoretical underpinnings of finance with real-world examples. Before taking the course, students should understand time value of money (discounting), capital budgeting, and evaluation of two-stock portfolios. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000. (3 units)
FNCE 3457. International Financial Management
Studies financial issues specific to firms operating internationally. Examines the global financial environment, agency problems and corporate governance, international financial markets, exchange rate behavior, and corporate hedging decisions using currency options, currency futures, forward & cross-currency interest rate swaps by the multinational corporation (MNC) and understanding international parity relations. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3459. Financial Markets and Institutions
Studies financial service companies such as commercial banks, investment banks, and insurance companies from the perspective of a corporate issuer. Reviews valuation tools. Emphasizes the analysis of a corporation's funding alternatives under regulatory constraints, interest rate risk management, and the relation between financial institutions and financial markets. Other topics may include evolution of financial intermediaries and current developments in financial regulation. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3460. Mergers, Acquisitions, and Corporate Restructuring
Examines corporate governance and corporate restructurings. Emphasizes how corporate ownership, control, and organizational structures affect firm value. Other topics include valuing merger candidates, agency theory, and takeover regulation. Places a heavy emphasis on case projects and/or class presentations. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3462. Behavioral Finance
Explores behavioral paradigms as they relate to investments. Considers psychological biases that might affect investment behavior and examines empirical evidence that investors are subject to these biases. Explores the possibility that investor behavior affects asset prices. For example, do stocks held by a limited number of investors sell for less than stocks held by many investors? Before taking this course, students should have a solid understanding of the time value of money (discounting), capital budgeting, and the evaluation of multi-stock portfolios. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (4 units)
FNCE 3464. Real Estate Finance
Focuses on the risks, practices, and problems particular to financing and investing in real property. Teaches the concepts and techniques necessary to analyze financial decisions embedded in property development and investment. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (4 units)
FNCE 3474. Derivative Securities
Explores business risk management using futures and options. Considers the institutional features of futures and option pricing. Covers managing financial risks such as foreign currency positions, general interest rate risk management, and includes estimation of option related metrics such as hedge ratios. Exotic options are also covered as well as the mathematics of option pricing. This class offers a full introduction to derivatives trading and pricing. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 2480/3480. Emerging Company Finance
Covers financial topics most relevant to newly formed companies, with an emphasis on Silicon Valley-style startups that target large markets and raise outside capital. Includes topics on: (1) valuation, which is the course's primary theme, underlying all of the topics covered, (2) evaluating business opportunities, which focuses on the underlying economic principles that differentiate large opportunities from small opportunities, (3) funding business opportunities, which covers both identifying a company's needs and acquiring the capital to finance those needs, and (4) discussing how successful entrepreneurial ventures "exit.". Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3482. Business Valuation
Discusses implementing finance theory for valuation problems. Provides practical valuation tools for valuing a company and its securities. Covers valuation techniques including discounted cash-flow analysis, estimated cost of capital, market multiples, free-cash flow, and pro forma models. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3484. Financial Engineering
Examines the design, valuation, and risk management of derivative securities (futures, options, etc.), including structured products. Includes topics on arbitrage theory, futures, equity options, bond options, credit derivatives, swaps, and currency derivatives. Mathematical modeling of derivatives, including implementation and applications in investments, corporate finance, and risk management. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3486. Behavioral Corporate Finance and Risk Management
Identifies the key psychological obstacles to value maximizing behavior, along with steps that managers can take to mitigate their effects. Given that behavioral traps represent one of the most important obstacles to successfully implementing skills taught in traditional corporate finance courses, understanding these traps is absolutely essential. Teaches how to put the traditional tools of corporate finance to the best use and mitigate the effects of psychological obstacles that reduce value. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3488. Financial Instruments and Markets
Covers the basics of financial instruments and the markets in which these instruments trade. Consists of two sections: fixed income securities and derivative securities. Uses case studies to introduce advanced securities and institutional features of their markets in which these securities trade. Develops a framework for analyzing new financial instruments including decomposing a security into simpler pieces, analyzing (pricing, hedging, etc.) each piece separately, and putting the pieces back together for a unified analysis. Explores the security design process, and the role and motivation of financial intermediaries, including commercial banks, investment banks, insurance companies, and hedge funds. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3489. Mathematical Finance
This course will comprise an immersion into the mathematics and models of modern finance, with an emphasis on conceptual and mathematical understanding, as well as building and implementing models. It will be technology dependent since computers are essential to solving problems in this field. Prerequisites: FNCE 451 or FNCE 2452 or FNCE 3452 or FNCE 3000 (3 units)
FNCE 3490. Machine Learning
This course introduces aspiring data scientists to quantitative techniques and algorithms that are based on numerical and textual data, and to theoretical models of big systems or optimization that are currently being used widely in business. The course will prepare participants for more rigorous analysis of large data sets as well as introduce machine learning models and data analytics for business intelligence. Prerequisites: ECON 3400 or ECON 3000 and OMIS 3350 or OMIS 3200. (4 units)
FNCE 3491. Investments
Investment knowledge is important to investment professionals, such as portfolio managers and financial advisers. They must know how to evaluate and select stocks, bonds, options and other securities, and how to guide investors to fitting portfolios and good investment behavior. Investment knowledge is also important to all of us as individual investors. The world of investment is changing rapidly as investment responsibilities and power move into the hands of individuals. The typical retirement plan is now a 401(k) type defined contribution savings plan where individuals make investments decisions and live by their outcomes. This course is centered on evidence-based knowledge of investments and investment behavior. It presents side by side standard and behavioral investment theory, evidence, and practice. These include analysis of wants and cognitive and emotional shortcuts and errors, portfolios, life-cycles of saving and spending, asset pricing, and market efficiency. These also include analysis of financial markets, such as stock exchanges, and securities, such as stocks, bonds, options, and futures. Prerequisites: FNCE 3000 or FNCE 3452 or FNCE 2452. (4 units)
FNCE 3727/MKTG 3713 Business Model Frameworks
Covers different types of business opportunities available to lifestyle, opportunistic, and innovating entrepreneurs, distinguished in general categories that encompass virtually all business ideas. In each case, develop a framework for an entrepreneur to use to identify an opportunity potential; understand and take the appropriate first steps toward building the business; and evaluate the early trajectory of the business to maximize learning and decide whether the opportunity is worth continuing. Prerequisite: None. (2 units)
FNCE 3728. Alternative Investments 1 | Partnerships and Venture Capital
This is the first in a series of two courses that cover alternative investments. Alternative investments contrast to widely-held investments like stocks, bonds, and mutual funds. This course covers how these investments are generally structured along with a closer study of a particular category, venture capital. Prerequisite: FNCE 3000. (2 units)
FNCE 3806. Analytics in Finance
This course covers key issues in panel data analysis, with an emphasis on their applications in empirical research, especially empirical corporate finance. The course aims to introduce various econometric methods for analyzing panel data and develop core techniques to identify causal relations in the data. We will begin with the standard linear regressions, and extend to pooled, fixed effect, and random effect regression models, instrumental variables, differences-in-differences, selection models, and regression discontinuity. Students will be exposed to a broad range of applications in finance through reading academic papers and conducting their own empirical analysis. (3 units)
FNCE 3807. Intro to FinTech
FinTech has rapidly become a prevalent part of our vernacular, and an understanding of the evolution of traditional finance methods is an important part of a Finance majors arsenal. This course covers the evolution of traditional finance methods -- namely, the disruptions and innovations that have transformed: (i) how we access capital; (ii) how we allocate or invest capital; (iii) how we settle or transfer capital; and (iv) how we monitor and maintain the integrity of financial institutions and transactions. Prerequisite(s): FNCE 2452/3452/3000 (Financial Management) or FNCE 2700 (Finance Bootcamp). (3 units)