Also, I recommend to look at the description of the Analytical Finance and Finance Major
 
 

• Banking (Commercial and Investment)
• Required Financial Decisions.
• Mergers and acquisitions. Banks (historically investment but more often commercial) assist their clients in purchasing other firms or divisions of other firms as well as selling off divisions or the whole firm when others can manage it more efficiently.
• Capital raising. Banks help firms raise capital (debt capital in the form of bonds or bank loans), equity, or more frequently in the form of new securities. The banks have been very active in the field of security design. How do you build a security that creates a cheaper form of capital for the firm. These are based on violations of the M&M assumptions.
• Risk management. Banks are a major seller of derivative securities. Insurance firms sell insurance. Both are forms of managing risk. Both also give their clients advice on how to manage risk.
• Primary Classes.
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).
• Taxes and Financial Strategy (447). This class will not teach you tax law, but the structure of tax laws (current and past, international and U.S.). The purpose is to allow you to intelligently make capital budgeting and financing decisions which trade off the tax and non-tax advantages of different ways of investing and financing. This is a Finance III class.
• Corporate Restructuring (448) This class examines how firms restructure. This includes both distress restructuring (bankruptcy or close) and non-distress restructuring (mergers). The class looks at the effect on project choice, as well as the role of different financing sources in the restructuring process. This is a Finance III class.
• Security Analysis (463). This classes shows you how to use accounting statements to see what is going on inside the firm. Since much of your information about firms (unless you are working for them), will come from these sources - it is important to know how they are constructed.
• Investment Banking (461). This is an institutional class. Professor Roberson has been an investment banker, so he is good at explaining the mechanics of how things are actually done.
• Mergers and Acquisitions (444). This is a class that is taught across finance and accounting. Thus it will focus on both the accounting and finance dimension of mergers and acquisitions. In recent years it has been taught joint with a law professor (I think), and so probably includes legal dimensions also.
• Real Options (924). The course begins with the valuation methods you know (DCF and multiples). It then builds on this intuition to develop a real options approach to valuation. Real options is not a substitute for DCF, but in some circumstances a more accurate version. Through the use of several numerical examples - beginning with the simple and moving to the more complicated - you will develop an understanding of both the intuition behind real options valuation methods as well as a familiarity with the computation tools used to value these options. Derivative I (465) is a prerequisite.
• Additional Classes
• Derivative II (467). This is advanced Futures and Options. At other places, it might be called Financial Engineering. In this class, you will learn more advanced pricing techniques and will also learn how to program up many of the models in Excel. The objective of this class is so that you can talk to the rockets scientists (and unlike the rocket scientists to your clients as well) and someday be their boss.

• Brand Management
• Required Financial Decisions.
• Valuation of new product development or marketing campaign. This is a capital budgeting exercise. So you will want to understand how to estimate the expected cashflows and how to calculate the cost of capital.
• Primary Classes.
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.
• Additional Classes
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).

 
• Consulting (Strategic/Valuation/Compensation). See also General Management.
• Required Financial Decisions.
• Project choice. Strategic consulting is about figuring out what businesses firm's should be in. This entails valuing a business under the clients management and under the alternative (buyer's/seller's) management. This is a capital budgeting/project valuation exercise.
• Financial/Valuation Consulting. These firm's have arisen over the last few years. They help firms design compensation plans which connect manager's wealth/pay to variables which shareholders care about (cashflow, earnings, stock price).
• Primary Classes.
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).
• Real options (924). The course begins with the valuation methods you know (DCF and multiples). It then builds on this intuition to develop a real options approach to valuation. Real options is not a substitute for DCF, but in some circumstances a more accurate version. Through the use of several numerical examples - beginning with the simple and moving to the more complicated - you will develop an understanding of both the intuition behind real options valuation methods as well as a familiarity with the computation tools used to value these options. Futures and Options (465) is a prerequisite.
• Taxes and Financial Strategy (447). This class will not teach you tax law, but the structure of tax laws (current and past, international and U.S.). The purpose is to allow you to intelligently make capital budgeting and financing decisions which trade off the tax and non-tax advantages of different ways of investing and financing.
• Corporate Restructuring (448) This class examines how firms restructure. This includes both distress restructuring (bankruptcy or close) and non-distress restructuring (mergers). The class looks at the effect on project choice, as well as the role of different financing sources in the restructuring process. This is a Finance III class.
• Additional Classes.
• Security Analysis (463). This classes shows you how to use accounting statements to see what is going on inside the firm. Since much of your information about firms (unless you are working for them), will come from these sources - it is important to know how they are constructed.
• International Financial Decisions (472). This is financial decisions (cases) in an international setting.
• Mergers and Acquisitions (444). This is a class that is taught across finance and accounting. Thus it will focus on both the accounting and finance dimension of mergers and acquisitions. In recent years it has been taught joint with a law professor (I think), and so probably includes legal dimensions also.

 
• General Management.
• Required Financial Decisions.
• Project choice. This entails small decisions from plant expansion, product expansion, and maintenance, to larger decisions such as which divisions the firm should divest itself of and which businesses the firm should purchase (mergers and acquisitions).
• Financing. The firm will need to raise capital and allocate its risk in a way to maximize the firm's value. The general manager (and especially the CFO/treasurer) will need to decide how best to finance the firm.
• Primary Classes.
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).
• Taxes and Financial Strategy (447). This class will not teach you tax law, but the structure of tax laws (current and past, international and U.S.). The purpose is to allow you to intelligently make capital budgeting and financing decisions which trade off the tax and non-tax advantages of different ways of investing and financing.
• Security Analysis (463). This classes shows you how to use accounting statements to see what is going on inside the firm. Since accounting statements are how you will communicate with the financial markets, it is important to know how they are constructed.
• International Financial Decisions (472). This is financial decisions (cases) in an international setting.
• Additional Classes
• Investment Banking (461). This is an institutional class. Professor Roberson has been an investment banker, so he is good at explaining the mechanics of how things are actually done.
• Mergers and Acquisitions (444). This is a class that is taught across finance and accounting. Thus it will focus on both the accounting and finance dimension of mergers and acquisitions. In recent years it has been taught joint with a law professor (I think), and so probably includes legal dimensions also.
• Real options (924). The course begins with the valuation methods you know (DCF and multiples). It then builds on this intuition to develop a real options approach to valuation. Real options is not a substitute for DCF, but in some circumstances a more accurate version. Through the use of several numerical examples - beginning with the simple and moving to the more complicated - you will develop an understanding of both the intuition behind real options valuation methods as well as a familiarity with the computation tools used to value these options. Derivative I (465) is a prerequisite.

 
• Money Management. This is a buy side job -- i.e. purchasing securities. Your investments can be in fixed income (bonds), equities, currencies, or derivatives. As you consider the class, notice that the assets they focus on differ.
• Required Financial Decisions
• Purchasing under valued securities. The reason you will be good at this is you will be able to figure out which assets are under valued and which are over valued, and trade/invest accordingly. This is what makes markets efficient.
• Measuring Risk and Return. Part of the job is to assess the clients tolerance/preference to bear different forms of risk and build a portfolio accordingly.
• Primary Classes.
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).
• Derivative II (467). This is advanced Futures and Options. At other places, it might be called Financial Engineering. In this class, you will learn more advanced pricing techniques and will also learn how to program up many of the models in Excel. The objective of this class is so that you can talk to the rockets scientists (and unlike the rocket scientists to your clients as well) and someday be their boss.
• Investments (460). This class teaches you what finance knows about measuring risk and thus predicting expected returns. It will start with the Capital Asset Pricing Model (CAPM) and discuss both its theoretical derivation (briefly I think) as well as empirical tests of CAPM. There are empirical problems with CAPM. The class will discuss how to interpret these as well as alternative asset pricing models. Even though CAPM has empirical problems, since many investment managers are judged by a benchmark which may be based on CAPM.
• Investment Portfolio Management (462). I think this is an equity course. It focuses on how institutional constraints influence the optimal portfolio decision. Professor Breen has been managing money for awhile, so he has a lot of experience. This course has been taught by Professor Breen in past years, and I believe he is not teaching it in the 1999-2000 year.
• Money Markets (451). This class looks at the fixed income market and consider how interest rates and monetary policy are determined.
• Fixed Income Securities (464).
• International Finance (470). This course will discuss the determination of exchange rates (for currencies), as well as how currency risk is measured and managed.

 
• Additional Classes
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.

• Sales and Trading/Private Client Services (PCS). This is the sell side job -- i.e. your are manufacturing and selling securities. Your investments can be in fixed income (bonds), equities, currencies, or derivatives. As you consider the class, notice that the assets they focus on differ. Some clients will want risk/return tradeoffs that do not 'exist', and thus you will need to manufacture new securities. Much of this security design is driven by accounting, regulation (especially cross border), and taxes.
• Required Financial Decisions
• Purchasing under valued securities. The reason you will be good at this is you will be able to figure out which assets are under valued and which are over valued, and trade/invest accordingly. This is what makes markets efficient.
• Measuring Risk and Return. Part of the job is to assess the clients tolerance/preference to bear different forms of risk and build a portfolio accordingly.
• Custom Design Securities for Clients. If the client wants a specific risk exposure (bet?), with a given regulatory, accounting, and tax treatment, you may need to create from simpler building blocks.
• Primary Classes.
• Derivative I (465). This class will teach you how to price options, futures, and swaps (and probably many other derivative securities). You should take two major lessons from this class. First you will learn the models which are used to price derivatives. This use to be rocket science but is now becoming more like discounted cashflow (all well educated finance people will know this). Even more important, you will obtain an intuitive feel for when the models work (the assumptions are true or at least close to true) and when the models are likely to fail (the assumptions are not close to true).
• Derivative II (467). This is advanced Futures and Options. At other places, it might be called Financial Engineering. In this class, you will learn more advanced pricing techniques and will also learn how to program up many of the models in Excel. The objective of this class is so that you can talk to the rockets scientists (and unlike the rocket scientists to your clients as well) and someday be their boss.
• Investments (460). This class teaches you what finance knows about measuring risk and thus predicting expected returns. It will start with the Capital Asset Pricing Model (CAPM) and discuss both its theoretical deprivation (briefly I think) as well as empirical tests of CAPM. There are empirical problems with CAPM. The class will discuss how to interpret these as well as alternative asset pricing models. Even though CAPM has empirical problems, since many investment managers are judged by a benchmark which may be based on CAPM.
• Investment Portfolio Management (462). I think this is an equity course. It focuses on how institutional constraints influence the optimal portfolio decision. Professor Breen has been managing money for awhile, so he has a lot of experience.
• Money Markets (451). This class looks at the fixed income market and consider how interest rates and monetary policy are determined.
• Fixed Income Securities (464).
• International Finance (470). This course will discuss the determination of exchange rates (for currencies), as well as how currency risk is measured and managed.
• Additional Classes
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.
• Taxes and Financial Strategy (447). This class will not teach you tax law, but the structure of tax laws (current and past, international and U.S.). The purpose is to allow you to understand the way in which tax law distinguishes between economically similar transactions and thus presents you with an opportunity to make money and help you clients design tax advantaged investments or financing methods.

 
• Start Own Business/ Venture Capital (see also General Management suggestions)
• Required Financial Decisions
• Which Business To Be In. Valuing the prospects of your business proposal is a capital budgeting decision. Given this is a new firm (no history) and maybe in a new industry (little history), your expected cashflows will be guesses, at best.
• Funding the Business. The biggest difference between how you finance your firm, and what we discussed in Finance II, as your business will probably not have access to public markets initially. Thus you will fund yourself from alternative private sources (family and friends, banks, suppliers, and/or venture capitalists).
• Primary Classes.
• Entrepreneurial Finance (446). This class is specifically designed for those of you interested in starting your own business -- now or later.
• Financial Decisions (442). This is Finance II with cases. All this class will do is apply the concepts you have learned to between 16 and 20 cases. However, as you saw with the UST and the GM case, you will learn an enormous amount in the process of applying the theory to a real situation. This is a great class. I also recommend you carefully pick your group prior to signing up. It will make an enormous difference in your experience and how much you learn from the class.

If you have questions about this web page, send them to Paola-Sapienza@northwestern.edu