Module Descriptions

Module 1 - Corporate Finance, Financial Statement Analysis and Statistics (6 Credits)

The first module introduces selected topics in financial management, financial statement analysis, and statistics. Topics include financing of current operation, long-term financing, capital structure decisions, capital budgeting, cost of capital, valuation principles, corporate governance, statistical analysis, dividend policy, and risk analysis. The module will also cover selected topics in financial statement analysis.

Learning Outcomes:

At the end of the program, students will be able to:
  • Apply the basic concepts in corporate finance: Capital budgeting techniques such as the net present value (NPV), internal rate of return (IRR), adjusted net present value model (ANPV), and the profitability index (PI) are covered in this module.
  • Perform bond valuation and equity valuation.
  • Discuss corporate governance and how it impacts the firm.
  • Apply the concepts of dividend policy and capital structure.
  • Describe trade offs of financing projects with debt or equity.
  • Analyze financial statements and their applications to finance.
  • Use financial databases as CRSP, Compustat, Global Insight, Bloomberg, and others.
  • Apply statistical analysis: standard deviation, variance, covariance, and correlation coefficients.
  • Apply the Capital Asset Pricing Model (CAPM), factor models, and the Arbitrage Pricing Theory (APT).
  • Use regression analysis in corporate finance.
  • Use Excel including statistical functions and regression analysis.

Module 2 - Investments, Portfolio Theory, and Money and Capital Markets (6 Credits)

Module 2 provides a solid foundation in the investment field. Topics include the analysis and understanding of security markets, the economy, industries, companies, and the analysis and valuation of corporate securities. Additional topics include quantitative concepts, portfolio analysis, asset pricing theory model, performance measurement, efficient market hypothesis, portfolio management process, and discusses the application of derivative securities. The theory of interest rates as well as the role of the Federal Reserve System and the U.S. Treasury is studied in this module.

Learning Outcomes:

At the end of the program, students will be able to:
  • Discuss the risk return tradeoff of securities and apply it to various investment strategies.
  • Do risk analysis, including the estimation of portfolio variance.
  • Discuss the term structure of interest rates and their empirical implications.
  • Describe various bond yields, rates, embedded options and features of bonds.
  • Describe the convex property of bonds. Duration, convexity, and the immunization of bonds are covered in this module.
  • Discuss investment banking, stock markets, electronic trading, and the regulatory environment.
  • Perform fundamental stock analysis and technical analysis.
  • Apply concepts of market efficiency, including weak form efficiency, semi-strong form efficiency, strong form efficiency, and behavioral finance.
  • Make further applications of the efficiency frontier and the CAPM and APT Models.
  • Discuss the concepts of risk management including the basics of options, futures, and swaps.

Module 3 - Fixed Income Analysis and Quantitative Methods (6 Credits)

Module 3 is intended to provide both quantitative and analytical tools necessary for sound financial decision-making and an analysis of fixed-income securities and financial derivatives. In the first part, the course will provide a sampling of the mathematical and statistical models used for theoretical, empirical and applied finance. Such models permit a deeper and easier understanding of most types of financial problems. In the second part, the course covers various types of fixed income securities and financial derivatives. We will start with an overview of the government bond market. Interest rate risk, duration and convexity, and the term structure of interest rates are topics to be covered. Through cases, we will learn how lack of adequate reporting and control can lead to disaster when institutions actively manage their bond. The module will examine how credit risk is incorporated into the pricing of corporate bonds and innovations in this market. The mortgage backed securities market and the peculiar risks associated with these securities will also be covered.

Learning Outcomes:

At the end of the program, students will be able to:
  • Apply calculus to various financial models and hedging considerations.
  • Use the analytics and the scientific method in financial models
  • Apply data to test research or modeling questions in finance.
  • Use Excel to gather and manipulate data from the Wharton databases.
  • Apply portfolio and matrix mathematics to solve for the variance of a portfolio.
  • Use probability theory for risk analysis and decision making.
  • Apply mathematical principles of the binomial option pricing model and the Black and Scholes model.
  • Demonstrate increased sophistication related to the derivatives market. Included will be the delta, gamma, lambda theta, and rho of an option.
  • Demonstrate increased sophistication with mathematics of bonds, including the duration, convexity, and negative convexity of bonds.
  • Describe the statistical properties of the mortgage backed securities market.

Module 4 - International Finance and Current Issues in Finance (6 Credits)

Module 4 covers issues in finance related to an international framework. Much of the information covered in this module contrasts the U.S. systems with other international economies. Topics include trends in international business and investments, international monetary systems, international diversification, balance of payments accounting, foreign exchange rate determination and forecasting; foreign exchange risk and exposure management, currency derivatives, international capital budgeting, cost of capital and international equity and bond markets. In addition, the module will serve to introduce current issues in the financial markets.

Learning Outcomes:

At the end of the program, students will be able to:
  • Discuss international trade based on comparative advantage as well as the functioning of the International Monetary Fund and World Bank.
  • Discuss how exchange rates are determined and what factors influence them.
  • Demonstrate increased sophistication in discussing corporate governance and alternative governance systems.
  • Compare USGAAP to World Standards, U.S. listing standards, international standards, Sarbanes-Oxley and their implications for multi-nationals.
  • Discuss international parity relationships, purchase power parity (PPT), interest rate parity (IRPT) and the international Fisher effect, (IFE).
  • Analyze multinational operations, international tax treatments, tax havens, international off shore facilities, and international dividend remittances.
  • Discuss foreign currency options markets, foreign currency speculation, and currency option pricing models.
  • Discuss international equity markets, foreign bond markets, euro bonds, and cross listing on exchanges.
  • Discuss direct investment, international capital structure, the cost of capital, and international capital budgeting.
  • Discuss multinational cash management, foreign exchange exposure, country risk analysis, political and economic risk.

Module 5 - Risk Management and Corporate Diversification (6 Credits)

Module 5 covers topics in risk management and corporate diversification strategies. Topics covered in the risk management portion of the module will include risk management and insurance, financial risk management versus operational risk management, overview of financial hedging with futures, forwards, swaps, and options. The corporate diversification portion of the module will cover an introduction to mergers and acquisitions, the takeover process, legal and regulatory process, valuation of mergers and acquisitions, corporate restructurings and control, alliances, joint-ventures and LBOs, takeover defenses and due diligence.

Learning Outcomes:

At the end of the program, students will be able to:
  • Demonstrate an understanding of the theories of corporate risk management and the relationship between risk management and firm value.
  • Discuss the difference between financial risk management and operational risk management.
  • Describe the use of financial hedging instruments: futures, forwards, options and swaps.
  • Apply the mathematics of derivatives to complex hedging, speculation, and arbitrage strategies.
  • Discuss the M&A; process, including the takeover process and the legal and regulatory process.
  • Describe the theories of merger and describe techniques of corporate restructuring and control, including M&A; strategies: alliances, joint-ventures and LBOs.
  • Discuss takeover defenses, due diligence, implementation and management guides for M&As.;

Module 6 - Seminar in Finance (3 Credits)
Research Project (3 Credits)