»MS in Finance

This course will review breakeven points, economies of scale under perfect and imperfect competition, supply and demand relationships, business cycles, credit cycles, nominal versus real exchange rates, currency regimes, and international trade. Furthermore, the course will cover currency cross-rates and the arbitrage relationship between spot and forward exchange rates. Students will then develop an understanding of triangular arbitrage opportunities, international parity conditions, and how flows in the balance of payment accounts affect currency exchange rates. In addition to studying the effects of monetary and fiscal policy on exchange rates, the course will cover the objectives of capital controls and the effectiveness of currency interventions. Additional topics include studying the links between economic growth and equity, as well as fixed income investments, along with the roles of demographics, immigration, and labor force participation. Comparisons between classical growth theory, neoclassical growth theory, and endogenous growth theory will also be studied, along with government regulation. The challenge posed by using economics to develop capital market forecasts will be examined, with applications involving the interpretation of the yield curve. The course will also study the effects of currency movements on portfolio risk and return, while discussing currency management strategies and hedging policies.

This course will review the general principles of revenue recognition, expense recognition, non-recurring items, and how to compute basic as well as diluted earnings per share. In addition, the course will review the financial reporting of intangible assets and goodwill while demonstrating the preparation of cash flow statements using income statements and balance sheet data. Furthermore, the course will review the difference between cash flow statements prepared under International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (US GAAP). The financial reporting of leases from the perspectives of lessors and lessees will be covered, along with the financial reporting of defined contribution, defined benefit, and stock-based compensation plans, as well as the creation of deferred tax liabilities. Students will then develop an understanding of how to report investments in financial assets, associates, joint ventures, business combinations, and special purpose entities. Foreign currency transaction exposure and the translation of a subsidiary’s balance sheet and income statement into the parent’s will be covered, along with the effective tax rate of multinational companies. The course will also detail differences in financial reporting for financial institutions and methods to assess corporate risk.

This course will review the main functions of the financial system and describe financial intermediaries, compare market orders with limit orders, primary versus secondary markets, as well as trading in quoted-driven, order-driven, and brokered markets. The course will also review index construction and market efficiency, along with the implications of each form of market efficiency for fundamental analysis and technical analysis. Different equity valuation models will be studied for both common and non-callable, non-convertible preferred stocks. Methodologies include the discounted dividend valuation, the Gordon growth model, present value of growth opportunities, and H-model. Compare the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) along with adjustments to net income, EBIT, EBITDA, cash flow from operations (CFO) to compute FCFF and FCFE. The course will also cover the overvaluation and undervaluation of stocks based on free cash flow models as well as multiples. Students will learn to interpret price-earnings ratios based on forecasted fundamentals and explain the importance of terminal values in discounted cash flow (DCF) models. In addition, the course will contrast valuation methods for public versus private companies. Finally, the course will require students to understand the role of equity investments in the broader context of an investor’s portfolio and the tradeoff between passive versus active investment strategies.

This course will review the ownership and compensation structures involved in alternative investments, along with their past performance and expected returns. Alternative investments include private equity, private debt, real estate and infrastructure, natural resources, hedge funds, and digital assets. For commodities, the course will then emphasize the relationship between spot and futures prices along with markets in contango and backwardation. The use of net asset value per share in publicly traded real estate securities will also be covered, along with the valuation of REITS. In addition, the classification of hedge fund strategies will be studied along with their risk exposures and hedge fund manager compensation. Finally, the course will emphasize the appropriate allocations of alternative investments in multi-asset portfolios and the importance of liquidity to benchmarking performance.

This course will develop an understanding of the expected effect of dividends and stock splits on equity prices and financial ratios, along with the information (signals) conveyed by dividend initiations, increases, decreases, and omissions. The agency costs of different payout policies, including share repurchases financed by cash versus debt, and their tax implications, will also be covered. Methods to compute the expected cost of debt and equity will be compared along with their combination to form the Weighted Average Cost of Capital (WACC) and their dependence on capital structure. Additional topics include the use of EBITDA ratios for valuation and understanding the valuation impact of restructurings.

The course focuses on institutional features, pricing, and risk management in fixed income markets. Major topics include features and risks of fixed income securities, bond sectors and yield spreads, arbitrage-free valuation of fixed income securities, forward rates and term structure theories, interest rate risk, and valuation of bonds with embedded options. Additional topics include asset-backed securities, immunization, and portfolio management.

The course focuses on institutional features, pricing, and risk management in derivative markets. Major topics include features of forward, futures, swaps, and options markets, pricing and valuation of these derivatives, and option payoffs and strategies. Additional topics include the use of binomial models to value derivatives, the introduction to the Black-Scholes-Merton model, and option sensitivities and hedging.

This course will review the major asset classes that investors consider when forming portfolios,as well as risk aversion and its implications for portfolio selection. The selection of an optimal portfolio conditional on investor utility (or risk aversion) and the Capital Allocation Line (CAL) will be studied by incorporating the mean, variance, and covariance (or correlation) of asset returns. Systematic risk, portfolio diversification, the efficient frontier, as well as the Capital Asset Pricing Model (CAPM), will also be covered in conjunction with the Security Market Line (SML) and portfolio performance measures such as the Sharpe ratio, Treynor ratio, and Jensen’s alpha. The course will then study how common behavioral biases can impact investor decisions. The course will then cover exchange-traded funds and multifactor expected return models such as arbitrage pricing theory. Risk management based on value-at-risk and scenario risk measures. The linkages between asset returns and business cycles will be studied with an emphasis on the role of default-free interest rates, the timing of cash flows, and risk premiums. In addition, the course will examine the value of active management and global portfolio management along with investment constraints related to liquidity, time horizons, and regulatory considerations. The formulation of an investment policy statement (IPS) will also be emphasized, along with performance measurement and attribution, as well as the importance of proper benchmarking. Performance-based fees will also be examined in conjunction with the errors involved in hiring investment managers.

This course will discuss challenges to ethical behavior in the finance industry and how ethical standards compare with legal standards. The course will then describe a framework for ethical decision making and the structure of the CFA Institute Professional Conduct Program. Students are expected to be able to identify the six components of the Code of Ethics and the seven Standards of Professional Conduct as well as to recommend practices and procedures designed to prevent violations.

Introduce the global investment performance standards along with the benefits of compliance and importance of independent verification. Furthermore, the course will cover the purpose of the Asset Manager Code and its six general principles of conduct.  Specifics related to composite return calculations, including methods for asset-weighting portfolio returns, will be emphasized as well as the meaning of “discretionary” in portfolio management.