Finance One Year MBA Major Field Meetings


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  • According to Michelle Rogers, there are almost identical numbers of students who major in finance, marketing, and management and strategy
  • Interesting new developments in market making and trading systems with the growing importance of electronic communications networks (ECNS) such as Instinet, Island and Archipelago.
  • Practicum: The goal of the practicum is to give students the opportunity to analyze in depth and solve a real-world problem, which may be one suggested by a practitioner. The practicum will be offered in the Spring. Students may work in groups, under the direction of a faculty adviser. The project will culminate at the end of the quarter with a project presentation. The write-up for the project will require a statement of the problem, a description of the intellectual context, including a literature review, and a solution to the problem. Grading of the practicum will be based on the depth, analytic sophistication, and persuasiveness of the solution. Target Audience Investment Management/Trading Investment Banking Fast Track CFOs
  • NOTE: There are more courses than these – see Finance Dept. web page for full list of offerings
  • On the department website we offer some suggestions of courses which are particularly relevant for various career paths. For instance, for a career in money management we suggest the following courses. For other career paths you can find recommended course lists on the department website
  • On the department website we offer some suggestions of courses which are particularly relevant for various career paths. For instance, for a career in money management we suggest the following courses. For other career paths you can find recommended course lists on the department website
  • Finance One Year MBA Major Field Meetings

    1. 1. Finance One Year MBA Major Field Meetings July 11, 2005 Annette Vissing-Jorgensen
    2. 2. <ul><li>This is NOT a marketing school! </li></ul>
    3. 5. <ul><li>You can use the Alumni Network to find Kellogg grads: </li></ul><ul><li> </li></ul><ul><li>160 at Merrill Lynch </li></ul><ul><li>118 at Morgan Stanley </li></ul><ul><li>94 at Lehman Brothers </li></ul><ul><li>73 at Citigroup </li></ul><ul><li>63 at Goldman, Sachs & Co. </li></ul><ul><li>59 at JP Morgan Chase </li></ul><ul><li>45 at HSBC </li></ul><ul><li>38 at Deutsche Bank </li></ul>
    4. 6. Outline of Today’s Talk <ul><li>Two Branches of Finance </li></ul><ul><ul><li>Capital Markets / Investments </li></ul></ul><ul><ul><li>Corporate Finance </li></ul></ul><ul><ul><li>Careers Within Each Branch </li></ul></ul><ul><li>Major Requirements </li></ul><ul><ul><li>Finance Major </li></ul></ul><ul><ul><li>Analytical Finance Major </li></ul></ul><ul><li>Classes </li></ul>
    5. 7. Capital Markets/Investments <ul><li>Perspective: The investor’s portfolio </li></ul><ul><li>Key issues: </li></ul><ul><ul><li>Expected rates of return </li></ul></ul><ul><ul><ul><li>Beta and the Capital Asset Pricing Model </li></ul></ul></ul><ul><ul><ul><li>Multi-factor models </li></ul></ul></ul><ul><ul><li>Measuring risk </li></ul></ul><ul><ul><ul><li>Variances and covariances </li></ul></ul></ul><ul><ul><ul><li>Short-run risk, long-run risk </li></ul></ul></ul><ul><ul><li>Security Pricing (stock, bonds, derivatives) </li></ul></ul>
    6. 8. Corporate Finance <ul><li>Perspective: The firm </li></ul><ul><li>Which projects to pick? </li></ul><ul><ul><li>Capital Budgeting: Valuing investment projects </li></ul></ul><ul><ul><li>Net present value, real options </li></ul></ul><ul><li>How to finance them? </li></ul><ul><ul><li>Capital structure: Debt versus equity </li></ul></ul><ul><ul><li>Risk Management </li></ul></ul><ul><li>What to do with the profits? </li></ul><ul><ul><li>Dividend policy: Dividends/share repurchases/retained earnings </li></ul></ul>
    7. 9. Careers <ul><li>Capital Markets </li></ul><ul><li>Money Management (buy side) </li></ul><ul><ul><li>Pension funds </li></ul></ul><ul><ul><li>Mutual funds </li></ul></ul><ul><ul><li>Hedge funds </li></ul></ul><ul><li>Research, Sales and Trading (sell side) </li></ul><ul><ul><li>Security analysis </li></ul></ul><ul><ul><li>Design securities to manage risks </li></ul></ul><ul><ul><li>Market making </li></ul></ul><ul><li>Corporate Finance </li></ul><ul><li>Management </li></ul><ul><ul><li>Finance Department </li></ul></ul><ul><ul><li>General Management </li></ul></ul><ul><li>Investment/commercial banking </li></ul><ul><ul><li>Raising Capital </li></ul></ul><ul><ul><li>Mergers and Acquisitions </li></ul></ul><ul><ul><li>Corporate Clients </li></ul></ul><ul><li>Consulting </li></ul><ul><ul><li>Strategic </li></ul></ul><ul><ul><li>Valuation </li></ul></ul><ul><ul><li>Managerial performance evaluation/compensation </li></ul></ul>
    8. 10. Finance @ Kellogg
    9. 11. Major Requirements <ul><li>Finance Major </li></ul><ul><li>Analytical Finance Major </li></ul><ul><li>Both majors build on knowledge from FIN 440 (Turbo) </li></ul>
    10. 12. Finance Major <ul><li>FIN 440 (Turbo) (or Finance I & Finance II) </li></ul><ul><li>One capital market course from list “F” </li></ul><ul><li>2 additional courses </li></ul>
    11. 13. Analytical Finance Major <ul><li>FIN 440 (Turbo) (or Finance I & Finance II) </li></ul><ul><li>Derivative Markets I </li></ul><ul><li>3 courses from List “A” </li></ul><ul><li>Practicum </li></ul>
    12. 14. Classes <ul><li>Capital Markets </li></ul><ul><ul><li>Derivative Markets I F (A) </li></ul></ul><ul><ul><li>Derivative Markets II F A </li></ul></ul><ul><ul><li>Investments F A </li></ul></ul><ul><ul><li>Fixed Income Securities F A </li></ul></ul><ul><ul><li>International Finance F </li></ul></ul><ul><ul><li>Money Markets & the Fed F </li></ul></ul><ul><ul><li>Emerging Markets </li></ul></ul><ul><ul><li>Securitization </li></ul></ul><ul><li>Corporate Finance </li></ul><ul><ul><li>Financial Decisions A </li></ul></ul><ul><ul><li>Fin. Strategy & Taxes A </li></ul></ul><ul><ul><li>Entrepreneurial Finance </li></ul></ul><ul><ul><li>Venture Capital and Private Equity Investing </li></ul></ul><ul><ul><li>Real Options </li></ul></ul><ul><ul><li>Investment Banking </li></ul></ul><ul><ul><li>Corporate Restructuring </li></ul></ul><ul><ul><li>Mergers and Acquisitions </li></ul></ul><ul><ul><li>Security Analysis </li></ul></ul>
    13. 15. Practicum in Analytical Finance FINC-925 <ul><li>The focus of the course this year will be “Value Investing.” </li></ul><ul><li>First half: (a) formal lectures, (b) in class valuation discussions, (c) presentations by leading value investors. </li></ul><ul><li>Second half: Students will (i) design strategies for efficiently searching for value investing strategies, and (ii) identify an interesting value investing opportunity, in groups. </li></ul><ul><li>The course uses large data bases of returns data. You will learn to use STATA to analyze strategies. </li></ul><ul><li>Each group will make a final presentation on (i) and (ii). A couple of leading value investors to be present during the final presentation. </li></ul><ul><li> teaching/practicum/2005/index.htm </li></ul>
    14. 16. Notice <ul><li>Flexibility: </li></ul><ul><ul><li>You can target your courses to your career plans </li></ul></ul><ul><li>It’s not all math! </li></ul><ul><ul><li>Cases do appear… </li></ul></ul><ul><li>New course in the works for Winter 2006 (Hochberg): </li></ul><ul><li>``Cases in Venture Investing and Management’’ </li></ul><ul><ul><li>Evaluating business opportunities and assessing VC investments </li></ul></ul><ul><ul><li>Based on a series of cases </li></ul></ul><ul><ul><li>Will revolve around presentations by the venture capitalists and entrepreneurs involved in the cases!!! </li></ul></ul><ul><ul><li>5/5 ratings when taught at Cornell </li></ul></ul>
    15. 17. Course Recommendations by Career:
    16. 18. More Information: Finance Department Web Page <ul><li>Course recommendations by career </li></ul><ul><li>Course offerings, descriptions </li></ul><ul><li>Some course page links (see also Professors’ own web pages for links) </li></ul><ul><li>Professors </li></ul><ul><ul><ul><li>Email addresses </li></ul></ul></ul><ul><ul><ul><li>Biographical information </li></ul></ul></ul><ul><ul><ul><li>Research interests </li></ul></ul></ul>
    17. 19. Questions ?
    18. 20. Financial Decisions FINC-442 <ul><li>Uses case studies to enhance the student's understanding of managerial financial decision making, specifically investment and financing decisions. </li></ul><ul><li>Topics include short- and long-term financing, capital structure and dividend decisions, cost of capital, capital budgeting, firm valuation, financial and operational restructuring, and mergers and acquisitions . </li></ul><ul><li>The course is sufficiently general so as to be of interest to all students. It provides students with the opportunity to apply the concepts and theories developed in other finance courses. </li></ul><ul><li>At its most fundamental level, the course attempts to improve problem-solving skills: problem definition, gathering and organizing the relevant information, developing feasible alternative courses of action, evaluating alternative choices, and recommending and defending the best course of action. </li></ul>
    19. 21. Entrepreneurial Finance FINC-446 <ul><li>This course teaches students how to become an entrepreneur by focusing on financial aspects. </li></ul><ul><li>Topics include pro forma development and review, business valuation models, cash flow analysis and raising capital from private investors, venture capitalists and banks. </li></ul><ul><li>The course is taught using the case method process (&quot;real life&quot; case studies). Periodically, technical notes will be used and guests invited to augment subjects addressed. This is not a quantitative analysis course. Rather, it focuses on marketing, sales, management and strategic planning. </li></ul>
    20. 22. International Finance INTL-470 <ul><li>Managing an international business or one exposed to global competition requires an understanding of international financial instruments, markets and institutions. This course seeks to provide students with a working knowledge of these issues. </li></ul><ul><li>Topics include the nature of foreign exchange risk; the determination of exchange rates and interest rates ; the management of foreign exchange risk with forwards, options and swaps; exchange rate forecasting; the anatomy of currency speculative attacks ; and the dynamics of the balance of payments with a focus on understanding international capital flows, country debt and exchange rate fluctuations. </li></ul>
    21. 23. Investments FINC-460 <ul><li>This course is a comprehensive study of investment theory from the perspective of plan sponsors and portfolio managers. </li></ul><ul><li>Emphasis is on optimal portfolio construction and portfolio performance evaluation using modern portfolio theory and asset-pricing models. </li></ul><ul><li>Topics include equity valuation , benchmark tracking , transactions costs , term structure of interest rates and bonds, use of derivatives in index fund management and hedge fund strategies. </li></ul>
    22. 24. Money Markets and the Fed FINC-451 <ul><li>This course covers two aspects of money markets : financial institutions , and financial instruments . </li></ul><ul><li>In the first half of the course, the linkages between the financial system and the macro-economy are studied including interest rate determination, the role of the Federal Reserve and the conduct of monetary policy. </li></ul><ul><li>The second half of the course provides an overview of the instruments of the money market: Federal Funds, Commercial Paper, Treasury Bills, etc. Basic valuation and hedging techniques in short term futures and swaps are also covered. </li></ul>
    23. 25. Derivatives Markets I, FINC-465 <ul><li>This course covers the use and pricing of forwards and futures, swaps and options. </li></ul><ul><li>Specific topics include strategies for speculation and risk management , no-arbitrage pricing for forward contracts, the binomial and Black-Scholes option pricing models and applications of pricing models in other contexts. </li></ul>
    24. 26. Have fun!
    25. 27. Finance I FINC 430 <ul><li>Introduction to the concepts and techniques necessary to analyze and implement optimal investment decisions. </li></ul><ul><li>Topics include </li></ul><ul><ul><li>basic discounting techniques </li></ul></ul><ul><ul><li>stock and bond valuation </li></ul></ul><ul><ul><li>capital budgeting under certainty and uncertainty </li></ul></ul><ul><ul><li>asset pricing models </li></ul></ul><ul><ul><li>market efficiency </li></ul></ul>
    26. 28. FIN II FINC 441 The role of the financial manager Valuations and investment decisions Dividend decisions Financing decisions Risk Management and Hedging Return rate should be appropriate Cash flows appropriately computed How much? What form? Identify costs and benefits of each financing instrument Choose the optimal mix Identify which risks should be hedged Find the appropriate instruments
    27. 29. Options for First Years <ul><li>Option 1: Take Required Classes </li></ul><ul><ul><li>Finance I and Finance II </li></ul></ul><ul><ul><li>or Finance I/II (Turbo) (condensate Fin I and Fin II in one class) </li></ul></ul><ul><li>Option 2: </li></ul><ul><ul><li>Waive Finance I. Take Finance II. </li></ul></ul><ul><li>Option 3: </li></ul><ul><ul><li>Waive Finance I and Finance II </li></ul></ul>