This class provides students with a structure for thinking about financial markets and the pricing of financial securities. The financial securities we study and price include stocks, bonds, futures, and options.
The class teaches how to address investment problems in a systematic manner using case studies. They are used to examine issues in the selection and implementation of investment strategies. In the process, the class examines current academic work about financial markets and their applications to investing.
This course aims at developing key concepts in investment theory from the perspective of a portfolio manager rather than an individual investor. The goal of this class is to provide students with a structure for thinking about investment theory and show how to address practical investment problems in a systematic manner. Instead of focusing on pure theoretical models, the emphasis is given on the empirical facts observed in asset prices in worldwide capital markets, understanding whether they manifest new dimension of systematic risk, and how to design smart portfolios to take advantage of multiple sources of systematic risk.
- Capital allocation and optimal portfolio selection
- Diversification, risk, and various models linking risks with returns (such as: the CAPM, the Fama-French 3-Factor Model ("value" and "size" investing), "momentum investing" and the Carhart's 4-Factor Model, and Ross' multifactor APT to account for multiple sources of systematic risk)
- Risk-adjusted returns, measures of fund performance, and various trading strategies used by Hedge Funds
- Market efficiency (including empirical anomalies and behavioral finance)
Other Topics (Time Permitting):
- Impact of borrowing constraint and transaction costs and illiquidity
- Risk management issues (such as portfolio insurance)
- Bond valuation and the term structure of interest rates
- The Black-Scholes/Merton option pricing model
Students interested in this course are expected to have sound knowledge of Statistics and Regression Analysis. This is a quantitative course in which we discuss many cases, but case studies will require ability to do statistical analysis similar to what might be applied in practice. The course develops an applied analytical framework of financial investments.
**This course was formerly known as FINC-936-0**Asset Management Practicum IV is a continuation of Asset Management Practicum I, II, and III. Students in Asset Management IV will be responsible for using the analyses of students in Asset Management Practicum I, plus their own analyses, to determine portfolio positions, trading strategies, and asset allocations for the student-managed portfolio. Note: This course may not be dropped after the first week of the quarter.
Recommended prerequisite: FINC 431 Finance II
**This course was formerly known as FINC-933-0**
Students enrolled in this sequence of courses will manage a portion of the Kellogg School's endowment. The courses will combine investment theory with exposure to leading practitioners. Students will rotate across roles of industry analysts, hedge fund fund-of-funds managers, traders, quantitative analysts, and portfolio managers. Students must take three of the four AMP courses: FINC-456, FINC-457, FINC-458, or FINC-459.
Recommended prerequisite: FINC 431 Finance II
Co-requisites: Over the three-quarter sequence students must take three quarter credits in additional asset management-related courses from the list below.1. One of FINC 442, FINC 444, FINC 463, or FINC 477 - must be taken during or before the first quarter of the practicum. 2. FINC 950 Capital Markets 3. One course from the Additional Courses list
- ACCT-451 (Financial Reporting and Analysis)
- ACCT-452 (Financial Reporting and Analysis II)
- FINC-442 (Financial Decisions)
- FINC-444 (Advanced Topics in Finance)
- FINC-447 (Financial Strategy and Tax Planning)
- FINC-451 (Money Markets and the Fed)
- FINC-460 (Investments)**
- FINC-462 (Portfolio Management)
- FINC-463 (Security Analysis)
- FINC-464 (Fixed Income Securities)
- FINC-465 (Derivative Markets I)
- FINC-467 (Derivative Markets II)
- FINC-477 (Global Entrepreneurial Finance)**
- FINC-936 (Asset Management Practicum IV)
- FINC-941 (Macroeconomic Policy and Global Capital Markets)
- FINC-950 (Capital Markets)
Finance I (FINC-430-0)
Finance 1 answers managers’ and investors’ most fundamental finance question: how should a project or an asset be valued? Managers must determine the value of building a factory, entering a new market, or purchasing an entire firm when deciding in which projects to invest. Similarly, individuals must assess the value of financial securities to decide how to invest their wealth. Using a combination of lectures and business cases, Finance 1 teaches the discounted cash flow and multiples methods to value projects or assets. These valuation tools lay the foundation for all work in capital markets and corporate finance.
Prerequisite: Business Analytics I (DECS-430-5)
Corequisite/Prerequisite: Accounting for Decision Making (ACCT-430) and Business Analytics II (DECS 431-0)