Furfine studies the functioning of interbank markets, commercial mortgage securitization, real estate finance, and various topics in strategic financial planning. He has published in scholarly journals including the Review of Corporate Finance Studies, the Journal of Business, the Journal of Monetary Economics and the Journal of Money, Credit, and Banking. He currently serves as an Associate Chair of the Finance Department, Associate Editor of the Journal of Money, Credit, and Banking and Treasurer of the Midwest Finance Association. Prior to joining the Kellogg School faculty, he was an economic advisor in the economic research department at the Federal Reserve Bank of Chicago. He previously served as a senior economist at the Bank for International Settlements in Basel, Switzerland where he contributed to the revision of international bank capital standards. Before that, he was an economist at the Board of Governors of the Federal Reserve System, where he served on international work groups responsible for analyzing various payment system issues. Furfine teaches corporate finance, multiple courses on real estate finance, strategic financial planning, and has written twenty case studies covering a wide range of topics in real estate finance and financial planning. He is the author of Practical Finance for Property Investment, a book designed for investors and students interested in learning what finance theory implies about property investment. He received a PhD in economics from Stanford University.
Commercial real estate finance; securitization; commercial and residential mortgages; bank capital requirements; interbank markets; financial planning
Real estate finance; corporate finance; financial planning
This course is a hands-on, problem-solving-based introduction to the questions, concepts, analytical tools, and financial instruments useful for financial planning. We teach financial planning from the perspective of the life-cycle model of consumption, where individuals wish to smooth consumption over their lifetimes, while at the same time achieve a set of financial goals. From this perspective, we address the most pressing questions any financial plan will face. The first question is how do individual preferences impact the optimal level of consumption and savings over the lifecycle. This leads naturally to an understanding of "rules-of-thumb" regarding any individual's progress towards successful implementation of a financial plan and in particular, whether an individual's savings are consistent with the individual's goals. The second question is whether an individual has identified, measured, and managed the risks faced by all financial plans. This provides guidance on what risks one should bear and which risks should be hedged or insured against. The third question is whether the wealth one amasses will be sufficient to accomplish one's long-term goals. We address this in an environment where not only are investment rates of return random, but so too are the lengths of realized planning horizons (lifetimes). The fourth question is how particular financial instruments (e.g. annuities, insurance, reverse mortgages) can be used to address the uncertainty surrounding planning horizons. Finally, we identify the common "pitfalls" observed in financial planning as well as the practical challenges to getting help with achieving one's financial goals. The course is designed for students with or without a financial industry background, who may be interested in pursuing careers in wealth management, or who simply wish to gain appreciation for the real-world practical difficulties one faces in accomplishing one's lifetime financial goals.
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)