Finance (FNCE)

FNCE 100 Corporate Finance

This course provides an introduction to the theory, the methods, and the concerns of corporate finance. The concepts developed in FNCE 100 form the foundation for all elective finance courses. The main topics include: 1) the time value of money and capital budgeting techniques; 2) uncertainty and the trade-off between risk and return; 3) security market efficiency; 4) optimal capital structure, and 5) dividend policy decisions. During the Fall semester there are honors sections of FNCE 100 offered. The seats in the honors sections are awarded through an application process. Please go to: https://fnce.wharton.upenn.edu/programs/course-applications for additional information.

One-term course offered either term

Prerequisites: ECON 010 or ECON 001 or ECON 002, MATH 104, or MATH 110, ACCT 101 and STAT 101. Acct 101 and Stat 101 may be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 101 Monetary Economics and the Global Economy

FNCE 101 is an intermediate-level course in macroeconomics and the global economy, including topics in monetary and international economics. The goal is to provide a unified framework for understanding macroeconomic events and policy, which govern the global economic environment of business. The course analyzes the determinants and behavior of employment, production, demand and profits; inflation, interest rates, asset prices, and wages; exchange rates and international flows of goods and assets; including the interaction of the real economy with monetary policy and the financial system. The analysis is applied to current events, both in the US and abroad. HONORS FNCE 101 is only offered in the Fall semester. Registration for this class is through an application process. Please go to: https:fnce.wharton.upenn.edu/programs-course-applications, This course presents the analysis of macroeconomic theory with a current events perspective. The material in the class concentrates on lecture notes, which are the primary learning source, and readings from a course packet of articles drawn from journals, magazines, newspapers, and other economic publications. The material covered will include: (1) Economic Statistics, GDP, Price Indices,Productivity and the nature of the business cycle, (2) The government budget and Social Security, (3) Monetary policy, The Fed and other Central Banks,(4) Interest rates - indexed bonds and ther term structure (5) Aggregate Demand and the determination of income and interest rate, (6) Money and Inflation - the Velocity Approach, (7) Reaction of Financial Markets to economic data,(8) Inflation, inflationary expectations and the Phillips Curve,(9) Supply-side shocks and macro-dynamics, (10) International Balance of Payments, the current account and capital flows, (11) Determination of Exchange Rates, exchange rate systems, purchasing power and interest rate parity.

One-term course offered either term

Prerequisites: ECON 010 or ECON 001 and ECON 002 and MATH 104 or MATH 110. Students cannot receive credit for both FNCE 101 and ECON 102. WHARTON STUDENTS ARE REQUIRED TO TAKE FNCE 101

Activity: Lecture

1 Course Unit

FNCE 203 Advanced Corporate Finance

The objective of this course is to study the major decision-making areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decision-making ability in these areas. This course serves as an extension of FNCE 100 (FNCE 611). Some are as of financial management not covered in FNCE 100 are covered in FNCE 203. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning and working capital management, and some other selected topics. Other areas that are covered in FNCE 100 are covered more in depth and more rigorously in FNCE 203. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy. During the Spring semester, Professor Opp does not allow students to take this course pass/fail.

One-term course offered either term

Also Offered As: FNCE 726

Prerequisites: FNCE 100, (FNCE 611), STAT 101, and STAT 102.

Activity: Lecture

1 Course Unit

Notes: Professor Opp's sections may not be taken Pass/Fail.

FNCE 205 Investment Management

This course studies the concepts and evidence relevant to the management of investment portfolios. Topics include diversification, asset allocation, portfolio optimization, factor models, the relation between risk and return, trading, passive (e.g., index-fund) and active (e.g., hedge-fund, long-short) strategies, mutual funds, performance evaluation, long-horizon investing and simulation. The course deals very little with individual security valuation and discretionary investing (i.e., "equity research" or "stock picking").

One-term course offered either term

Prerequisites: The prequisites for Undergraduates are FNCE 100, and STAT 101, 102 (STAT 102 may be taken concurrently with this course. Given that investment management requires one to analyze and deal effectively with uncertainty, a good grounding in statistics is essential, and familarity with statistics should extend through multiple regression, covariance, and correlation.

Activity: Lecture

1 Course Unit

FNCE 206 Financial Derivatives

This course covers one of the most exciting yet fundamental areas in finance: derivative securities. In the modern financial architecture, financial derivatives can be the most challenging and exotic securities traded by institutional specialists, while at the same time, they can also be the basic securities commonly traded by retail investors such as S&P Index Options, Beyond trading, the basic ideas of financial derivatives serve as building blocks to understand a much broader class of financial problems, such as complex asset portfolos, strategic corporate decisions, and stages in venture capital investing. The golobal derivatives market is one of the most fast-growing markets, with over $600 trillion notional value in total. It is important as ever to understand both the strategic opportunities offered by these derivative instruments and risks they imply. The main objective of this course is to help students gain the intuition and skills on (1) pricing and hedging of derivative securities, and (2) using them for investment and risk management. In terms of metholologies, we apply the non-arbitrage principle and the law of one price to dynamic models through three different approaches: the binomial tree model, the Black-Scholes-Merton option pricing model, and the simulation-based risk neutral pricing approach. We discuss a wide range of applications, including the use of derivatives in asset management, the valuation of corporate securities such as stocks and corporate bonds with embedded options, interest rate derivatives, credit derivatives, as well as crude oil derivatives. In addition to theoretical disucssions, we also emphasize practical considerations of implementing strategies using derivatives as tools, especially when no-arbitrage conditions do not hold.

One-term course offered either term

Also Offered As: FNCE 717

Prerequisites: The following introductory Finance and Statistics courses are recommended but not required. FNCE 101 and STAT 102 are recommended and can be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 207 Corporate Valuation

The focus of this course is on the valuation of companies. The course covers current conceptual and theoretical valuation frameworks and translates those frameworks into practical approaches for valuing companies. The relevant accounting topics and the appropriate finance theory are integrated to show how to implement the valuation frameworks discussed on a step-by-step basis. The course teaches how to develop the required information for valuing companies from financial statements and other information sources in a real-world setting. Topics covered in depth include discounted cash flow techniques and price multiples. In addition, the course covers other valuation techniques such as leveraged buyout analysis.

Taught by: Professor Holthausen in the fall and Professor Glode in the spring. Professor Glode course may not be taken Pass Fail, it must be taken for a grade.

One-term course offered either term

Prerequisites: FNCE 100, (FNCE 611) ACCT 101, AND STAT 101, 111 OR EQUIVALENT ACCT 201 RECOMMENDED

Activity: Lecture

1 Course Unit

FNCE 208 International Corporate Finance

Analyzes financial problems corporations face that result from operating in an international environment. Major topics include managing exchange risk through hedging and financing, measuring exchange rate exposure, calculating the cost of capital for foreign operations, assessment of sovereign risks, capital budgeting from a project and parent perspective, and international taxation.

Also Offered As: FNCE 731

Prerequisites: A thorough knowledge of FNCE 100 (FNCE 611) is assumed.

Activity: Lecture

1 Course Unit

FNCE 209 Real Estate Investment: Analysis and Financing

This course provides a broad introduction to real estate with a focus on investment and financing issues. Project evaluation, financing strategies, investment decision making and real estate capital markets are covered. No prior knowledge of the industry is required, but students are expected to rapidly acquire a working knowledge of real estate markets. Classes are conducted in a standard lecture format with discussion required. The course contains cases that help students evaluate the impact of more complex financing and capital market tools used in real estate. There are case studies and two midterms, depending on instructor.

Taught by: Ferreira, Handbury, Harari, Keys, Sinai, Wong

One-term course offered either term

Also Offered As: FNCE 721, REAL 209, REAL 721

Prerequisite: FNCE 100

Activity: Lecture

1 Course Unit

FNCE 219 International Financial Markets

This course focuses on international financial markets and exchange rates. Topics include pricing in the foreign currency and Eurocurrency markets, use of forward exchange for hedging, short-term returns and market efficiency in the international money markets, foreign currency options, international capital asset pricing, pricing of foreign currency bonds, currency swaps, Eurocurrency syndicated loans, foreign currency financing and exposure management.

One-term course offered either term

Prerequisites: FNCE 100, (FNCE 611), FNCE 101,(FNCE 613) STAT 101.

Activity: Lecture

1 Course Unit

FNCE 220 International Banking

This course focuses on international financial institutions, especially the activities of global, systemically important banks. We will examine how current and historical events are reshaping the industry and highlight the basic analytics of managing a bank's exposure to liquidity, credit, market and reputational risk. Most classes will begin with discussion of a current event related to course topics. Three team projects will be assigned that will give you deeper exposure to analytic techniques related to the course. Throughout the semester, we will discuss public policy issues facing the international financial system.

Taught by: Professor Richard Herring

Course usually offered in spring term

Prerequisites: FNCE 100, FNCE 101, one of which may be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 230 Urban Fiscal Policy

The purpose of this course is to examine the financing of governments in the urban economy. Topics to be covered include the causes and consequences of the urban fiscal crisis, the design of optimal tax and spending policies for local governments, funding of public infrastructures and the workings of the municipal bond market, privatization of government services, and public financial systems for emerging economies. Applications include analyses of recent fiscal crises, local services and taxes as important determinants of real estate prices, the infrastructure crisis, financing and the provision of public education, and fiscal constitutions for new democracies using South Africa as an example.

Taught by: Robert Inman

Course usually offered in fall term

Also Offered As: BEPP 230, BEPP 899, REAL 230

Prerequisites: FNCE 101 and ECON 001

Activity: Lecture

1 Course Unit

FNCE 235 Fixed Income Securities

This course covers fixed income securities (including fixed income derivatives) and provides an introduction to the markets in which they are traded, as well as to the tools that are used to value these securities and to assess and manage their risk. Quantitative models play a key role in the valuation and risk management of these securities. As a result, although every effort will be made to introduce the various pricing models and techniques as intuitively as possible and the technical requirements are limited to basic calculus and statistics, the class is by its nature quantitative and will require a steady amount of work. In addition, some computer proficiency will be required for the assignments, although familiarity with a spreadsheet program (such as Microsoft Excel) will suffice.

One-term course offered either term

Prerequisites: FNCE 100 and STAT 101 or STAT 102 or STAT 111

Activity: Lecture

1 Course Unit

FNCE 238 Capital Markets

The objective of this course is to give you a broad understanding of the framework and evolution of U.S. capital markets, the instruments that are traded, the mechanisms that facilitate their trading and issuance, and the motivations of issuers and investors across different asset classes. The course will highlight the problems that capital market participants are seeking to solve, which you can use in your post-Wharton careers to evaluate future market innovations. We will consider design, issuance, and pricing of financial instruments, the arbitrage strategies which keep their prices in-line with one another,and the associated economic and financial stability issues. We will draw from events in the aftermath of the recent financial crisis, which illustrate financing innovations and associated risks, as well as policy responses that can change the nature of these markets.

One-term course offered either term

Prerequisites: FNCE 100,(FNCE 611)

Activity: Lecture

1 Course Unit

FNCE 239 Behavioral Finance

There is an abundance of evidence suggesting that the standard economic paradigm - rational agents in an efficient market - does not adequately describe behavior in financial markets. In this course, we will survey the evidence and use psychology to guide alternative theories of financial markets. Along the way, we will address the standard argument that smart, profit-seeing agents can correct any distortions caused by irrational investors. Further, we will examine more closely the preferences and trading decisions of individual investors. We will argue that their systematic biases can aggregate into observed market inefficiencies. The second half of the course extends the analysis to corporate decision making. We then explore the evidence for both views in the context of capital structure, investment, dividend, and merger decisions.

Course usually offered in spring term

Prerequisites: FNCE 100, FNCE 101. Recommended: FNCE 205 and FNCE 203

Activity: Lecture

1 Course Unit

FNCE 250 Venture Capital and the Finance of Innovation

This course covers the finance of technological innovation, with a focus on the valuation tools useful in the venture capital industry. These tools include the "venture capital method," comparables analysis, discounted cash flow analysis, contingent-claims analysis. The primary audience for this course is finance majors interested in careers in venture capital or in R&D-intensive companies in health care or information technology.

Course usually offered in fall term

Prerequisites: FNCE 100 (FNCE 611) and FNCE 101 (FNCE 613); (FNCE 101 and FNCE 613 may be taken concurrently)

Activity: Lecture

1 Course Unit

FNCE 251 The Finance of Buyouts and Acquisitions

The course focuses on financial tools, techniques, and best practices used in buyouts (financial buyers) and acquisitions (strategic buyers). While it will touch upon various strategic, organizational, and general management issues, the main lens for studying these transactions will be a financial one. It will explore how different buyers approach the process of finding, evaluating, and analyzing opportunities in the corporate-control market; how they structure deals and how deal structure affects both value creation and value division; how they add value after transaction completion; and how they realize their ultimate objectives (such as enhanced market position or a profitable exit). The course is divided into two broad modules. The first module covers mergers and acquisitions, and the second one studies buyouts by private equity partnerships. During the spring semester this course cannot be taken pass/fail.

Prerequisites: FNCE 100 (FNCE 611), FNCE 101 (FNCE 613), Co-Requisite FNCE 203 (FNCE 726) Advanced Corporate Finance or FNCE 207 (FNCE 728) Corporate Valuation.

Activity: Lecture

1 Course Unit

Notes: Lectures, cases, and guest speakers. Grading: Class participation, two students projects, two exams.

FNCE 256 Finance Energy

The objective of this course is to provide students with detailed knowledge of corporate structures, valuation methods, project finance, risk management practices, corporate governance issues, and geo-political risks in the energy industry. In general, this course seeks to provide students with an overall context for understanding energy issues and risks, and how these might affect financing and investment decisions for both providers of energy and end-users of energy.

Taught by: Professor Erik Gilje

Course usually offered in spring term

Prerequisites: FNCE 203, Advanced Corporate Finance or FNCE 207, Corporate Valuation. Students that receive permission to enroll without the prerequisites are expected to review the relevant topics as necessary to meet the requirements of the class.

Activity: Lecture

1 Course Unit

FNCE 383 Strategic Equity Finance

This course combines lectures and cases, and will go through actual situations where companies need to make strategic decisions on raising equity capital. We will address different phases of a company's life cycle. Through these cases, from the decision-makers perspective, we will explore the different paths that can be taken and consider issues such as investor activism, governance and regulatory and valuation impact. FNCE 383 is a half semester course offered in Q3 during the spring semester.

Taught by: Professor David Musto and Professor David Erickson

Course usually offered in spring term

Prerequisite: FNCE 100 - Corporate Finance

Activity: Seminar

0.5 Course Units

FNCE 385 ASP - Fin-Tech

The course exposes students to this fast-growing and exciting intersection between finance (Fin) and technology (Tech) while emphasizing the role data and analytics play. The course is structured around three main FinTech areas: (i) Lending/Banking services, (ii) Clearing (iii) Trading. It provides specific coverage and examples of developments from(1) peer-to-peer lending, (2) blockchain and distributed ledgers, (3) networks and their use in trading, and (4) algo trading and its use of non-standard inputs. In each of these areas, we start by analyzing the marketplace, and the incumbents, and the business case and strategies of the incoming technology-based players, while understanding the role data and analytics play in driving the technology-based services. The course is built around a large number of examples and cases, guest lectures, student presentations, and group projects. Student are thus expected to work in teams and demonstrate a high level of independent learning and initiative.

Also Offered As: FNCE 885

Prerequisites: A thorough knowledge of FNCE 100 is assumed.

Activity: Lecture

0.5 Course Units

FNCE 386 ASP - Hedge Funds

This course will cover critical aspects and characteristics of hedge funds and the hedge fund industry. It will look at the legal foundations and structures of hedge funds including the primary regulations in the U.S. and abroad that are most relevant for hedge funds. It will also present the major hedge fund strategies, describe operation, control, administration, due diligence and valuation issues. Performance evaluation and investing in hedge funds from the investor's perspective will be discussed as will be issues of potential changes in regulation, risk management, and the use of leverage. The format of the course will mix lectures with presentations from industry participants, hedge fund managers, those who invest in hedge funds, those who advise them and provide services to them, and those who regulate them. Those who want to launch a hedge fund, join an existing one, invest in one, or provide services to one will want to register for this course.

Taught by: Professor Scott Richard

Course usually offered in fall term

Prerequisite: FNCE 100

Activity: Lecture

0.5 Course Units

FNCE 387 ASP - Shareholder Activism

The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation thrugh active engagement. Assignments require students to develop/practice skills on fundamental analysis.

Taught by: Professor Bilge Yilmaz and Kevin Kaiser

Course usually offered in spring term

Activity: Lecture

1 Course Unit

FNCE 397 Finance In The Middle East & North Africa

This is a Wharton Global Modular Course on finance in the Middle East and North Africa. Its objective is to bring students, academics and industry experts together to study financial markets, practice, and institutions in this region.

Taught by: Professor Bulent Gultekin, Finance Department and Professor Michael J.T. McMillen, Penn Law School

Also Offered As: FNCE 897

Activity: Lecture

0.5 Course Units

Notes: Course Format - This course will be taught through cases and lectures. Guest Lecturers - Distinguished practitioners will lecture and conduct case discussions. Our guest lecturers will bring their experience and insights to the classroom.

FNCE 399 Supervised Study in Finance

Integrates the work of the various courses and familiarizes the student with the tools and techniques of research.

Prerequisites: Senior standing, 3.4 grade point average. Must be supervised by a Standing Faculty member in the Finance Department.

Activity: Independent Study

1 Course Unit

FNCE 611 Corporate Finance

This course serves as an introduction to business finance (corporate financial management and investments) for both non-majors and majors preparing for upper-level course work. The primary objective is to provide the framework, concepts, and tools for analyzing financial decisions based on fundamental principles of modern financial theory. The approach is rigorous and analytical. Topics covered include discounted cash flow techniques; corporate capital budgeting and valuation; investment decisions under uncertainty; capital asset pricing; options; and market efficiency. The course will also analyze corporate financial policy, including capital structure, cost of capital, dividend policy, and related issues. Additional topics will differ according to individual instructors.

Also Offered As: FNCE 100

Prerequisites: ACCT 611, 612, 613; MGEC 612, 611; STAT 613, 621 prerequisite or concurrent.

Activity: Lecture

1 Course Unit

FNCE 612 Accelerated Corp Finance

This course is intended for students with prior knowledge of finance or with strong analytical backgrounds. Together with the pre-term preparation course (FNCE604) the foundation for subsequent courses in corporate finance, corporate valuation, investments, and financial derivatives. Its purpose is to develop a framework for analyzing a firm's investment and financial decisions. This course will start where FNCE604 ends. More precisely, it will provide an introduction to capital budgeting techniques under uncertainty, asset valuation, the operation and efficiency of capital markets, the optimal capital structure and dividend policy of the firm and options. In short, it will cover all the topics of a typical semester-long finance introductory class in six weeks. This course assumes that students are familiar with the material covered in FNCE 604. As a result, it is only available to those students who successfully passed the Finance Placement Exam at the end of the pre-term. This course is not suitable for students new to finance and with limited analytical backgrounds. This course is hard. The pace is fast and it requires a major investment of time and effort outside class.

Activity: Lecture

0.5 Course Units

Notes: Q-1 Half Semester course

FNCE 613 Macroeconomics and the Global Economic Environment

This course is required for all students except those who, having prior training in macroeconomics, money and banking, and stabilization policy at an intermediate or advanced level, can obtain a waiver by passing an examination. The purpose of FNCE 613 is to train the student to think systematically about the current state of the economy and macroeconomic policy, and to be able to evaluate the economic environment within which business and financial decisions are made. The course emphasizes the use of economic theory to understand the workings of financial markets and the operation and impact of government policies. Specifically, the course studies the determinants of the level of national income, employment, investment, interest rates, the supply of money, inflation, exchange rates, and the formulation and operation of stabilization policies.

Activity: Lecture

1 Course Unit

FNCE 614 Corporate Finance ( Half CU)

This course serves as an introduction to corporate investments for non-majors. The primary objective is to provide a framework, concepts, and tools for analyzing financial decisions based on fundamental principles of modern financial theory. The approach is rigorous and analytical. Topics covered include discounted cash flow techniques, corporate capital budgeting and valuation, investment decisions under uncertainty, and capital asset pricing. This course will not cover the following topics included in FNCE 611, the full semester Corporate Finance course: market efficiency, corporate financial policy (including capital structure, cost of capital, dividend policy, and related issues), and options. Please Note: This course will not count towards the Finance Major. Format: Primarily lecture. Grading based on problem sets, one or two cases, and a final exam.

Prerequisites: ACCT 611, 612, 613; MGEC 612, 611; STAT 613, 621; prerequisite or concurrent.

Activity: Lecture

0.5 Course Units

FNCE 615 Macroeconomics and The Global Economic Environment (Half CU)

FNCE 615 Introduction To Macroeconomics and The Global Economic Environment (Half Cu) is intended for non-finance majors. It is a half-semester course in macroeconomics, with an emphasis on current events and policy applications. The goal of this course is to provide the foundation needed to recognize and understand broad economic and financial movements in the global economy. Key topics include national income accounting, production and economic growth, employment, business cycles, monetary and fiscal policy, and international finance. By the end of this course, students will be able to evaluate and discuss the global economic environment in which business and financial decisions are made. PLEASE NOTE: This course will not count towards a Finance Major

Prerequisite: FNCE 611 or FNCE 612

Activity: Lecture

0.5 Course Units

FNCE 717 Financial Derivatives

This course covers one of the most exciting yet fundamental areas in finance: derivative securities. In the modern financial architecture, financial derivatives can be the most challenging and exotic securities traded by institutional specialists, while at the same time, they can also be the basic securities commonly traded by retail investors such as S&P Index Options, Beyond trading, the basic ideas of financial derivatives serve as building blocks to understand a much broader class of financial problems, such as complex asset portfolos, strategic corporate decisions, and stages in venture capital investing. The golobal derivatives market is one of the most fast-growing markets, with over $600 trillion notional value in total. It is important as ever to understand both the strategic opportunities offered by these derivative instruments and risks they imply. The main objective of this course is to help students gain the intuition and skills on (1) pricing and hedging of derivative securities, and (2) using them for investment and risk management. In terms of metholologies, we apply the non-arbitrage principle and the law of one price to dynamic models through three different approaches: the binomial tree model, the Black-Scholes-Merton option pricing model, and the simulation-based risk neutral pricing approach. We discuss a wide range of applications, including the use of derivatives in asset management, the valuation of corporate securities such as stocks and corporate bonds with embedded options, interest rate derivatives, credit derivatives, as well as crude oil derivatives. In addition to theoretical disucssions, we also emphasize practical considerations of implementing strategies using derivatives as tools, especially when no-arbitrage conditions do not hold.

One-term course offered either term

Also Offered As: FNCE 206

Prerequisites: The following introductory Finance and Statistics courses are recommended but not required. FNCE 611 or FNCE 612; STAT 613, FNCE 613 may be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 719 International Financial Markets

FNCE 719 is a course on international financial markets and exchange rates. Topics include pricing in the foreign currency and Eurocurrency markets, use of forward exchange for hedging, short-term returns and market efficiency in the international money markets, foreign currency options, international capital asset pricing, pricing of foreign currency bonds, currency swaps, Eurocurrency syndicated loans, foreign currency financing and exposure management.

One-term course offered either term

Prerequisites: FNCE 611 or FNCE 612; FNCE 613 may be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 720 Investment Management

This course studies the concepts and evidence relevant to the management of investment portfolios. Topics include diversification, asset allocation, portfolio optimization, factor models, the relation between risk and return, trading, passive (e.g., index-fund) and active (e.g., hedge-fund, long-short) strategies, mutual funds, perfermance evaluation, long-horizon investing and simulation. The course deals very little with individual security valuation and discretionary investing (i.e., "equity research" or "stock picking").

One-term course offered either term

Prerequisites: The prerequisites for MBA students are FNCE 611 or FNCE 612; and STAT 613 or STAT 621 Given that investment management requires one to analyze and deal effectively with uncertainty, a good grounding in statistics is essential, and familarity with statistics should extend through multiple regression, covariance, and correlation.

Activity: Lecture

1 Course Unit

FNCE 725 Fixed Income Securities

This course covers fixed income securities (including fixed income derivatives) and provides an introduction to the markets in which they are traded, as well as to the tools that are used to value these securities and to assess and manage their risk. Quantitative models play a key role in the valuation and risk management of these securities. As a result, although every effort will be made to introduce the various pricing models and techniques as intuitively as possible and the technical requirements are limited to basic calculus and statistics, the class is by its nature quantitative and will require a steady amount of work. In addition, some computer proficiency will be required for the assignments, although familiarity with a spreadsheet program (such as Microsoft Excel) will suffice.

Course usually offered in fall term

Prerequisites: FNCE 611 or FNCE 612 and STAT 613 or STAT 621

Activity: Lecture

1 Course Unit

FNCE 726 Advanced Corporate Finance

The objective of this course is to study the major decision-making areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decision-making ability in these areas. This course serves as an extension of FNCE 611. Some areas of financial management not covered in FNCE 611 are covered in FNCE 726. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning, and working capital management, and some other selected topics. Other areas that are covered in FNCE 611 are covered more in depth and more rigorously in FNCE 726. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy.

One-term course offered either term

Also Offered As: FNCE 203

Prerequisites: FNCE 611 or FNCE 612; and FNCE 613.

Activity: Lecture

1 Course Unit

Notes: Professor Opp's sections cannot be taken Pass/Fail

FNCE 728 Corporate Valuation

The focus of this course is on the valuation of companies. The course covers current conceptual and theoretical valuation frameworks and translates those frameworks into practical approaches for valuing companies. The relevant accounting topics and the appropriate finance theory are integrated to show how to implement the valuation frameworks discussed on a step-by-step basis. The course teaches how to develop the required information for valuing companies from financial statements and other information sources in a real-world setting. Topics covered in depth include discounted cash flow techniques and price multiples. In addition, the course covers other valuation techniques such as leveraged buyout analysis.

Taught by: Professor Glode in the spring semester

One-term course offered either term

Prerequisites: Minimum of normal first-year courses in accounting, economics, statistics, and FNCE 611 or 612; FNCE 613 (further coursework in financial accounting such as ACCT 742 is very useful).

Activity: Lecture

1 Course Unit

Notes: Professor Glode's sections may not be taken Pass/Fail

FNCE 730 Urban Fiscal Policy

The purpose of this course is to examine the financing of governments in the urban economy. Topics to be covered include the causes and consequences of the urban fiscal crisis, the design of optimal tax and spending policies for local governments, funding of public infrastructures and the workings of the municipal bond market, privatization of government services, and public financial systems for emerging economies. Applications include analyses of recent fiscal crises, local services and taxes as important determinants of real estate prices, the infrastructure crisis, financing and the provision of public education, and fiscal constitutions for new democracies using South Africa as an example.

Taught by: Dr. Robert Inman

Course usually offered in fall term

Also Offered As: BEPP 773, REAL 730

Prerequisites: MGEC 621, FNCE 611

Activity: Lecture

1 Course Unit

Notes: Lectures. There is a mid-term and final exam.

FNCE 731 International Corporate Finance

This course analyzes financial problems corporations face that result from operating in an international environment. Major topics covered are corporate strategy and the decision to invest abroad, international portfolio diversification, managing exchange risk, taxation issues, cost of capital and financial structure in the multinational firm, and sources of financing. Departmental Website: https://fnce.wharton.upenn.edu/ Registration: Registration for MBA electives is handled through the MBA Course Auction. For questions about core courses or MBA electives that don't appear in the course auction please contact the MBA Program Office. Non-MBAs interested in graduate classes must work throught the academic department and the MBA Program Office.

Also Offered As: FNCE 208

Prerequisite: FNCE 611 or 612 - A thorough knowledge of Corporate Finance is assumed

Activity: Lecture

1 Course Unit

FNCE 732 International Banking

This course focuses on international financial institutions, especially the activities of global, systemically important banks. We will examine how current and historical events are reshaping the industry and highlight the basic analytics of managing a bank's exposure to liquidity, credit, market and reputational risk. Most classes will begin with discussion of a current event related to course topics. Three team projects will be assigned that will give you deeper exposure to analytic techniques related to the course. Throughout the semester, we will discuss public policy issues facing the international financial system.

Taught by: Professor Richard Herring

Course usually offered in spring term

Prerequisites: FNCE 611 or 612; FNCE 613. One, but not both, can be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 738 Capital Markets

The objective of this course is to give you a broad understanding of the instruments traded in modern financial markets, the mechanisms that facilitate their trading and issuance, as well as, the motivations of issuers and investors across different asset classes. The course will balance functional and institutional perspectives by highlighting the problems capital markets participants are seeking to solve, as well as, the existing assets and markets which have arisen to accomplish these goals. We will consider design, issuance, and pricing of financial instruments, the arbitrage strategies which keep their prices in-line with one another,and the associated economic and financial stability issues. The course is taught in lecture format, and illustrates key concepts by drawing on a collection of case studies and visits from industry experts.

One-term course offered either term

Also Offered As: FNCE 238

Prerequisites: FNCE 611 or 612; and FNCE 613

Activity: Lecture

1 Course Unit

FNCE 739 Behavioral Finance

There is an abundance of evidence suggesting that the standard economic paradigm - rational agents in an efficient market - does not adequately describe behavior in financial markets. In this course, we will survey the evidence and use psychology to guide alternative theories of financial markets. Along the way, we will address the standard argument that smart, profit-seeing agents can correct any distortions caused by irrational investors. Further, we will examine more closely the preferences and trading decisions of individual investors. We will argue that their systematic biases can aggregate into observed market inefficiencies. The second half of the course extends the analysis to corporate decision making. We then explore the evidence for both views in the context of capital structure, investment, dividend, and merger decisions.

Course usually offered in spring term

Prerequisites: FNCE 611 or 612; and FNCE 613. Recommended: FNCE 720 and FNCE 726.

Activity: Lecture

1 Course Unit

FNCE 750 Venture Capital and the Finance of Innovation

This course covers the finance of technological innovation, with a focus on the valuation tools useful in the venture capital industry. These tools include the "venture capital method," comparables analysis, discounted cash flow analysis, contingent-claims analysis. The primary audience for this course is finance majors interested in careers in venture capital or in R&D-intensive companies in health care or information technology.

Course usually offered in spring term

Prerequisites: FNCE 611 and FNCE 613 - FNCE 613 may be taken concurrently

Activity: Lecture

1 Course Unit

FNCE 751 The Finance of Buyouts and Acquisitions

The focus of this course is on buying (or acquiring controlling stakes in) firms. The main topics to be covered are mergers and friendly acquisitions, hostile takeovers and buyouts. Using case studies, the course surveys the drivers of success in the transactions. While issues regarding motive and strategy will be discussed, financial theory would be the main lens used to view these control acquiring transactions. This will allow students to (1) evaluate transactions through valuation approaches and (2) structure deals employing financial innovation as a response to legal framework and economic frictions. This course should be of interest to students interested in pursuing careers as private equity investors, advisors in investment banking and corporate managers that deal with these issues. This course assumes familiarity with valuation analysis. During the spring semester students are not permitted to take this course pass fail.

Prerequisites: Pre-Requisites FNCE 611 and FNCE 613 (Or 612) - C0-Requisites FNCE 726 or FNCE 728 may be taken concurrently.

Activity: Lecture

1 Course Unit

FNCE 754 Impact Investing

This course explores Impact Investing, a discipline that seeks to generate social benefits as well as financial returns. From tiny beginnings, the Impact Investment space has expanded and now commands significant attention from policymakers, wealthy and public-spirited individuals, academia and, not least, the world's largest asset managers and philanthropic foundations. Evangelists believe it may be the key to freeing the world from poverty. Skeptics think it will remain confined to the boutique. Regardless, Impact Investing is becoming a distinct career specialization for finance professionals despite the diverse skillset each must have and the uncertainty of the new field's growth.

Taught by: Christopher Geczy, Ph.D.

Prerequisites: Prerequisites This course has no specific prerequisites, but given its wide-ranging subject matter, students will benefit from completion of any of the following Wharton courses: FNCE 613 Macroeconomics and the Global Economic Environment; FNCE 720 Investment Management; FNCE 738 Capital Markets; and FNCE 895 Private Equity. Coursework or practical experience in microeconomics,development economics, international philanthropy, Non-Governmental Organizations, financial risk management and political risk analysis will also be useful.

Activity: Lecture

1 Course Unit

FNCE 756 Finance Energy

The objective of this course is to provide students with detailed knowledge of corporate structures, valuation methods, project finance, risk management practices, corporate governance issues, and geo-political risks in the energy industry. In general, this course seeks to provide students with an overall context for understanding energy issues and risks, and how these might affect financing and investment decisions for both providers of energy and end-users of energy.

Taught by: Professor Erik Giljie

One-term course offered either term

Prerequisites: The prerequisites for the course are FNCE 726 Advanced Corporate Finance or FNCE 728 Corporate Valuation. Students who receive permission to enroll without the prerequisites are expected to review the relevant topics as necessary to meet the requirements of the class.

Activity: Lecture

1 Course Unit

FNCE 883 Strategic Equity Finance

This course combines lectures and cases, and will go through actual situations where companies need to make strategic decisions on raising equity capital. We will address different phases of a comany's life cycle. Through these cases, from the decision-makers perspective, we will explore the different paths that can be taken and consider issues such as investor activism, governance and regulatory and valuation impact. FNCE 883 is a half semester course offered in Q3 of the spring semester.

Taught by: Professor David Musto and Professor David Erickson

Course usually offered in spring term

Prerequisite: FNCE 611 - Corporate Finance

Activity: Lecture

0.5 Course Units

FNCE 884 ASP - Advanced Topics in Private Equity

This course will address a variety of applied topics in private equity (PE), with a focus on growth and later-stage buyout transactions (venture capital is not explicitly addressed in this course), and a primarily U.S.-centric view that should be largely applicable in other markets. In addition, the course will focus on the transaction stage of PE investing i.e., the art of the deal and mostly leave aside deal sourcing, portfolio management and investor relations. The goal of this course is to educate students about the substance, process and mechanics of PE investing, through the lens of the investment professionals, counterparties and advisors that drive transactions to completion. Course topics will address the entire deal process, and will include the following: Commercial Diligence (incl. financial modeling); Debt Financing; Accounting Diligence; Sales & Purchase Agreements; Comps Analysis; and Other Advisory Work. Throughout the course, students will learn about each element of the deal process through in-class lectures, while concurrently apply those learnings to a real-time mock deal, and preparing dealmaterials that mirror a real private equity transaction. The in-class lectures will cover both conceptual frameworks and real-world examples.

Taught by: Professor Bilge Yilmaz (yilmaz@wharton.upenn.edu) and Fellow David Bard

Prerequisites: Successful completion of core finance requirements, FNCE 611 and FNCE 613, as well as FNCE 726 or FNCE 751; special permission can also be requested based on relevant professional experience.

Activity: Lecture

1 Course Unit

FNCE 885 Fin-Tech

The course exposes students to this fast-growing and exciting intersection between finance (Fin) and technology (Tech) while emphasizing the role data and analytics play. The course is structured around three main FinTech areas: (i) Lending/Banking services, (ii) Clearing (iii) Trading. It provides specific coverage and examples of developments from(1) peer-to-peer lending, (2) blockchain and distributed ledgers, (3) networks and their use in trading, and (4) algo trading and its use of non-standard inputs. In each of these areas, we start by analyzing the marketplace, and the incumbents, and the business case and strategies of the incoming technology-based players, while understanding the role data and analytics play in driving the technology-based services. The course is built arund a large number of examples and cases, guest lectures, student presentations, and group projects. Student are thus expected to work in teams and demonstrate a high level of independent learning and initiative.

Also Offered As: FNCE 385

Prerequisite: A thorough knowledge of FNCE 611 is assumed

Activity: Lecture

0.5 Course Units

FNCE 886 ASP - Hedge Funds

This course will cover critical aspects and characteristics of hedge funds and the hedge fund industry. It will look at the legal foundations and structures of hedge funds including the primary regulations in the U.S. and abroad that are most relevant for hedge funds. It will also present the major hedge fund strategies, describe operation, control, administration, due diligence and valuation issues. Performance evaluation and investing in hedge funds from the investor's perspective will be discussed as will be issues of potential changes in regulation, risk management, and the use of leverage. The format of the course will mix lectures with presentations from industry participants, hedge fund managers, those who invest in hedge funds, those who advise them and provide services to them, and those who regulate them. Those who want to launch a hedge fund, join an existing one, invest in one, or provide services to one will want to register for this course.

Taught by: Professor Scott Richard

Prerequisite: FNCE 611 or FNCE 612

Activity: Lecture

0.5 Course Units

FNCE 887 ASP - Shareholder Activism

The aim of the course is to provide an introduction to shareholder activism. The course makes use of lectures and case studies. The lectures expose the students to the institutional and empirical facts as well as approaches followed by leading shareholder activists. The case studies are designed to provide students an experience on identifying potential opportunity for value creation thrugh active engagement. Assignments require students to develop/practice skills on fundamental analysis.

Taught by: Professor Bilge Yilmaz and Kevin Kaiser

Activity: Lecture

1 Course Unit

FNCE 893 Global Monetary and Financial Stability Policy

This course aims to provide the future global manager and financial analyst with the knowledge on policies set by central banks, regulators and governments toreach the goals of price and financial stability as well as support of growth and employment. The core of the course connects between the formal and actual goals that central banks follow and the related economic analysis on which the goals and the policies are set. We will explain the economic rationale for the policy prescriptions to reach the goals and how these are implemented using institutional framework in the US, the European Central Bank (ECB), Israel and remarks on other countries. We use data, current events and events of the 2007-2013 financial crisis as a basis for discussion and assignments. All these are aimed at understanding how and why the Federal Reserve of the US (the Fed), The bank of Israel (BOI) and the European Central Bank (ECB) set their policies and how that is related to academic research on these issues.

Taught by: Professor Zvi Eckstein; Dean and Professor, Th Arison School of Business And the Tiomkin School of Economics. Herzliya, Israel

Prerequisites: FNCE 611 or 612; FNCE 613; STAT 613.

Activity: Lecture

0.5 Course Units

Notes: Requirements; Final examinations (60%-passing grade is required); three out of four assignments done by teams of 3-4 students (30%); active participation in class discussion (10%)

FNCE 895 Private Equity.

This course will be a survey of the private equity asset class. Its objective is to provide an understanding of the concepts, agents, and institutions involved in the late stage corporate private equity market in the U.S. and around the globe. It will examine the buyout market and the activities of buyout funds from the differing perspectives of private equity investors, private equity fund sponsors, and managers of the portfolio companies. The course will be taught almost entirely with cases. Distinguished Wharton alumni in the private equity industry will be our guest speakers for many of the cases based on transactions they concluded. While this course is primarily intended for graduate students, admission may be granted to a limited number of interested undergraduate students. PLEASE NOTE: this course may be recorded for live or subsequent distribution, display, broadcast, or commercialization in any media, including video, audio, or electronic media. For additional information, see the course syllabus or contact the department.

Also Offered As: FNCE 395

Prerequisites: FNCE 726 and FNCE 751 or permission from the instructor.

Activity: Lecture

0.5 Course Units

FNCE 896 Finance in Europe

Also Offered As: WH 215

Activity: Lecture

0.5 Course Units

FNCE 897 Finance In The Middle East & North Africa

This is a Wharton Global Modular Course on finance in the Middle East and North Africa. Its objective is to bring students, academics and industry experts together to study financial markets, practice, and institutions in this region.

Taught by: Professor Bulent Gultekin, Finance Department and Professor Michael J.T. McMillen, Penn Law School

Also Offered As: FNCE 397, WH 214

Activity: Lecture

0.5 Course Units

Notes: Course Format - This course will be taught through cases and lectures. Guest Lecturers - Distinguished practitioners will lecture and conduct case discussions. Our guest lecturers will bring their experience and insights to the classroom.

FNCE 899 Independent Study Project in Finance

Independent Study Projects require extensive independent work and a considerable amount of writing. ISP in Finance are intended to give students the opportunity to study a particular topic in Finance in greater depth than is covered in the curriculum. The application for ISP's should outline a plan of study that requires at least as much work as a typical course in the Finance Department that meets twice a week. At a minimum, we need a description of the methodology you intend to employ, a bibliography and description of the data that you will use as well as a list of interim deliverables and dates to ensure that you complete the project within the semester. Applications for FNCE 899 ISP's will not be accepted after the THIRD WEEK OF THE SEMESTER. You must submit your Finance ISP request using the Finance Department's ISP form located at https://fnce.wharton.upenn.edu under the Course ISP section

Prerequisites: FNCE 899, ISP's must be supervised by a Standing Faculty member of the Finance Department.

Activity: Independent Study

1 Course Unit

FNCE 911 Financial Economics

The objective of this course is to undertake a rigorous study of the theoretical foundations of modern financial economics. The course will cover the central themes of modern finance including individual investment decisions under uncertainty, stochastic dominance, mean variance theory, capital market equilibrium and asset valuation, arbitrage pricing theory, option pricing, and incomplete markets, and the potential application of these themes. Upon completion of this course, students should acquire a clear understanding of the major theoretical results concerning individuals' consumption and portfolio decisions under uncertainty and their implications for the valuation of securities.

Course usually offered in fall term

Prerequisites: ECON 681 or ECON 701, Matrix Algebra, and Calculus

Activity: Lecture

1 Course Unit

FNCE 912 Corporate Finance and Financial Institutions

This course provides students with an overview of the basic contributions in the modern theory of corporate finance and financial institutions. The course is methodology oriented in that students are required to master necessary technical tools for each topic. The topics covered may include capital structure, distribution policy, financial intermediation, incomplete financial contracting, initial and seasoned public offerings, market for corporate control, product market corporate finance interactions, corporate reorganization and bankruptcy, financing in imperfect markets, security design under adverse selection and moral hazard, and some selected topics.

Course usually offered in spring term

Prerequisite: ECON 681 or ECON 701

Activity: Lecture

1 Course Unit

FNCE 921 Introduction to Empirical Methods in Finance

This course is an introduction to empirical methods commonly employed in finance. It provides the background for FNCE 934, Empirical Research in Finance. The course is organized around empirical papers with an emphasis on econometric methods. A heavy reliance will be placed on analysis of financial data.

Course usually offered in spring term

Prerequisites: FNCE 911 (can be taken concurrently), STAT 510 and 511 or equivalent.

Activity: Lecture

1 Course Unit

FNCE 922 Continuous-Time Financial Economics

This course covers some advanced material on the theory of financial markets developed over the last two decades. The emphasis is on dynamic asset pricing and consumption choices in a continuous time setting. The articles discussed include many classical papers in the field as well as some of the most recent developments. The lectures will emphasize the concepts and technical tools needed to understand the articles.

Course usually offered in fall term

Prerequisites: FNCE 911, ECON 701, ECON 703. (Graduate level knowledge of analysis and statistics is highly recommended but not required)

Activity: Lecture

1 Course Unit

FNCE 923 Financial Economics Under Imperfect Information

This course covers General equilibrium and rational expectations, foundations of the theory of information; learning from prices in rational expectations equilibrium models, moral hazard, adverse selection, and signalling Bidding theories.

Course not offered every year

Prerequisite: FNCE 922

Activity: Lecture

1 Course Unit

FNCE 924 Intertemporal Macroeconomics and Finance

This is a doctoral level course on macroeconomics, with special emphasis on intertemporal choice under uncertainty and topics related to finance. Topics include: optimal consumption and saving, the stochastic growth model, q-theory of investment, (incomplete) risk sharing and asset pricing. The course will cover and apply techniques, including dynamic programming, to solve dynamic optimization problems under uncertainty. Numerical solution methods are also discussed.

Course usually offered in spring term

Prerequisite: FNCE 911

Activity: Lecture

1 Course Unit

FNCE 925 Topics In Asset Pricing

This course will analyze several aspects of liquidity. Mostly, it will concentrate on liquidity as an asset's property of being traded quickly and at low cost, but the notion of availability of cash will also be studied. Particular attention will be devoted to exogenous transaction costs, asymmetric information and search frictions as determinants of asset liquidity and, consequently, price. We will also look at liquidity risk, institutional features arising as response to liquidity problems, and financing constraints. The course will concentrate on theoretical models, but the empirical literature will be referred to throughout.

Course not offered every year

Activity: Lecture

1 Course Unit

FNCE 926 Empirical Methods in Corporate Finance

The course will cover a variety of microeconometic models and methods including panel data models, program evaluation methods ?e.g. difference in differences, matching techniques, regression discontinuity design? instrumental variables, duration models, structural estimation ?e.g. simulated methods of moments?. The structure of the course consists of lectures, student presentations, and empirical exercises. I will utilize published studies in a variety of fields such as corporate finance, labor economics, and industrial organization to illustrate the various techniques. The goal of the course is to provide students with a working knowledge of various econometric techniques that they can apply in their own research. As such, the emphasis of the course is on applications, not theory.

Course usually offered in fall term

Prerequisites: STAT 521 - Students are required to have taken a graduate sequence in Econometrics, you should be comforable with econometrics at the level of William Green's "Econometric Analysis of Cross-Section and Panel Data".

Activity: Lecture

1 Course Unit

FNCE 927 Selected Topics in Empirical Corporate Finance

The general objective of the course is to teach and encourage students to explore interesting research questions in corporate finance. We will work toward this goal by introducing students to several advanced topics in empirical corporate finance and expose students to some current work. An emphasis will be put on the link between empirical and theoretical work, and how to think about research questions critically.

Course not offered every year

Prerequisites: While there are no official prerequisites, it would be very beneficial if you have taken the Financial Institutions (FNCE 912) and Empirical Methods in Corporate Finance (FNCE 926) Ph.D courses. You should be comfortable with the basic concepts covered in those courses.

Activity: Lecture

0.5 Course Units

FNCE 928 Methods In Finance Theory

This doctoral level course introduces students to game theory and continuous-time methods. Both techniques represent fundamental approaches to organizing, modeling and understanding complex financial phenomena. The game theory half will cover equilibrium concepts, moral hazard, signaling and screening. Highlights include rigorous formulations and analyses of the perfect Bayesian equilibrium concept and the principal-agent relationship. Both ideas are central to theories of corporate finance and financial markets - subjects that the students will be exposed to in the spring. The continuous-time methods half will cover basic stochastic calculus and applications to capital structure, Merton's consumption-portfolio, and problem and optimal contracts.

Taught by: PROFESSOR YIRAN JOHN ZHU

Course usually offered in spring term

Prerequisites: Some mathematical sophistication. A familiarity with the basic principles of microeconomics is useful but not required.

Activity: Lecture

1 Course Unit

FNCE 932 Corporate Finance

This course covers Advanced theory and empirical investigations; financial desisions of the firm, dividends, capital structure, mergers, and takeovers.

Course not offered every year

Prerequisites: FNCE 911, FNCE 921, or permission of instructor.

Activity: Lecture

1 Course Unit

FNCE 933 International Finance

This course provides an understanding of current academic research in the areas of international finance and international macroeconomics. Students will learn the tools for conducting research in this field.

Course not offered every year

Prerequisite: FNCE 911 (FNCE 922 recommended)

Activity: Lecture

1 Course Unit

FNCE 934 Empirical Methods In Asset Pricing

This course has three main objectives: The first object is to introduce students to the fundamental works and the frontier of research in dynamic asset pricing. We will cover recent models that have been proposed to shed light on intreguing and important empirical patterns in the cross section and in the time series. Topics include non-separable utilities, market incompleteness, learning, uncertainty, differences of opionions, ex-ante and ex-post asymmetric information, ambiguity and Knightian uncertainty. The second objective is to teach students how to think of asset pricing research under a bigger or richer framework. We shall focus on the interactions between asset pricing and other fields such as macroeconomics, corporate finance, financial institutions, and international finance. The goal of inventigating the joint dynamics is not only to better understand how asset prices are determined, but also (maybe more importantly) how would asset pricing dynamics affect other important economic vaiables such as investment, corporate payout and financing, unemployment, risk sharing, and international capital flows. Students will learn production-based asset pricing models, particularly the asset pricing models with investment-specific technology shocks, risk shocks, financial friction, searching frictions and information frictions. Of course, the advanced solution methods will focus too. The third objective is to introduce advanced empirical methods to analyze the data and the quantitative dynamic models. It includes how to estimate structural dynamic models, how evaluate structural models beyond goodness-of-fit tests, how confront the models predictions with empirical data by simulation and re-sampling techniques, and how to efficiently test models and explore new patterns using asset pricing and macro data.

Course usually offered in fall term

Prerequisites: FNCE 911 and FNCE 921

Activity: Lecture

1 Course Unit

FNCE 937 Applied Quantitative Methods in Finance

This is an advanced course in quantitative theory applied to macro and finance models. It is intended for doctoral students in finance, economics and related fields. The course focuses on four broad theoretical literatures: (i) firm investment and growth; (ii) corporate, household and sovereign debt; (iii) asset pricing in general equilibrium; and (iv) equilibrium macro models with a financial sector. My approach is to develop and discuss in detail a unified framework that is suited to address most topics, usually covering a few central topics and the core papers. We then discuss the more recent literature, highlighting how authors combine and expand upon the core ideas. This part of the course usually relies on regular student presentations.

Course usually offered in fall term

Prerequisite: FNCE 911

Activity: Lecture

1 Course Unit

FNCE 939 Behavioral Finance

There is an abundance of evidence suggesting that the standard economic paradigm-rational agents in an efficient market-does not adequately describe behavior in financial markets. In this course, we will survey the evidence and use psychology to guide alternative theories of financial markets with an eye towards identifying frontiers and opportunities for new research. Along the way, we will address the standard argument that arbitrage will eliminate any distortions caused by irrational investors. Further, we will examine more closely the preferences and trading decisions of individual investors. We will argue that their systematic biases can aggregate into observed market inefficiencies. The second half of the course extends the analysis to corporate decision making. We present the two themes of behavioral corporate finance: rational managers exploiting financial market inefficiencies and managerial decision-making biases. We then explore the evidence for both views in the context of capital structure, investment, dividend, and merger decisions. We emphasize the importance of differentiating the behavioral approach from information models and other more traditional methodology.

Course not offered every year

Prerequisite: FNCE 911

Activity: Lecture

1 Course Unit