Santa Clara University

Leavey School of Business

Course Descriptions

FINANCE (FNCE)

Professors: Sanjiv R. Das, Hoje Jo, Atulya Sarin, Hersh M. Shefrin, Meir Statman
Associate Professors: George Chacko (Chair), Robert J. Hendershott
Assistant Professors: Ye Cai, Seoyoung Kim, Carrie Pan
Glen Klimek Professor: Meir Statman
Mario L. Belotti Professor: Hersh M. Shefrin
William and Janice Terry Professor: Sanjiv R. Das
Gerald and Bonita Wilkinson Professor
: Hoje Jo
Dean’s Executive Professor: Steven Wade
Professors of Practice: Donald Davis, John Fay

FNCE 2452/3452. Financial Management
This course provides an introduction to finance. It addresses the theory and practice of financial management, the generation and allocation of financial resources. The main objective is to provide a foundation in the basic concepts of finance, including the time value of money, cash and working capital management, the role of financial markets, portfolio theory, asset pricing, and the risk-return tradeoff, and to expand awareness of institutions and practices in business and finance. Prerequisites: ACTG 3100 and OMIS 3350. (4 units).

FNCE 2453/3453. Corporate Finance
Deals with the basic and advanced concepts of corporate finance, particularly the role of the financial manager and the goal of financial management. For this purpose, the course focuses on agency conflicts and corporate governance, capital structure, payout policy, financial distress, options (real and executive), derivatives/hedging, and international issues. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (3 units)

FNCE 2455/3455. Investments
Explores investment securities and markets; reviews valuation tools; analysis of stocks, bonds, and derivatives. Introduces constructing portfolios and controlling investment risks. Focuses on learning how to value assets given forecasts of future cash flows. Concentrates on the risk characteristics of different asset classes. Covers four broad areas: (a) bonds and other fixed income securities, (b) risk/return relationships, portfolio diversification, and equity factor models, (c) performance evaluation and security analysis, and (d) currencies, international interest rates, and derivatives. Combines the theoretical underpinnings of finance with real-world examples. Before taking the course, students should understand time value of money (discounting), capital budgeting, and evaluation of two-stock portfolios. Prerequisites: ECON 401 or ECON 3400 and FNCE 451 or FNCE 2452 or FNCE 3452. (3 units)

FNCE 3457. International Financial Management
Studies financial issues specific to firms operating internationally. Examines the global financial environment, agency problems and corporate governance, international financial markets, exchange rate behavior, and corporate hedging decisions using currency options, currency futures, forward & cross-currency interest rate swaps by the multinational corporation (MNC) and understanding international parity relations. Prerequisite: FNCE 2453 or FNCE 3453 or FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3459. Financial Markets and Institutions
Studies financial service companies such as commercial banks, investment banks, and insurance companies from the perspective of a corporate issuer. Reviews valuation tools. Emphasizes the analysis of a corporation’s funding alternatives under regulatory constraints, interest rate risk management, and the relation between financial institutions and financial markets. Other topics may include evolution of financial intermediaries and current developments in financial regulation. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3460. Mergers, Acquisitions, and Corporate Restructuring
Examines corporate governance and corporate restructurings. Emphasizes how corporate ownership, control, and organizational structures affect firm value. Other topics include valuing merger candidates, agency theory, and takeover regulation. Places a heavy emphasis on case projects and/or class presentations. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3462. Behavioral Investments
Explores behavioral paradigms as they relate to investments. Considers psychological biases that might affect investment behavior and examines empirical evidence that investors are subject to these biases. Explores the possibility that investor behavior affects asset prices. For example, do stocks held by a limited number of investors sell for less than stocks held by many investors? Before taking this course, students should have a solid understanding of the time value of money (discounting), capital budgeting, and the evaluation of multi-stock portfolios. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3464. Real Estate Finance
Focuses on the risks, practices, and problems particular to financing and investing in real property. Teaches the concepts and techniques necessary to analyze financial decisions embedded in property development and investment. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3474. Risk Management with Derivative Securities
Explores business risk management using futures and options. Considers the institutional features of futures and option pricing. Covers managing financial risks such as foreign currency positions, general interest rate risk management, and includes estimation of option related metrics such as hedge ratios. Exotic options are also covered as well as the mathematics of option pricing. This class offers a full introduction to derivatives trading and pricing. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 2480/3480. Emerging Company Finance
Covers financial topics most relevant to newly formed companies, with an emphasis on Silicon Valley-style startups that target large markets and raise outside capital. Includes topics on: (1) valuation, which is the course’s primary theme, underlying all of the topics covered, (2) evaluating business opportunities, which focuses on the underlying economic principles that differentiate large opportunities from small opportunities, (3) funding business opportunities, which covers both identifying a company’s needs and acquiring the capital to finance those needs, and (4) discussing how successful entrepreneurial ventures “exit.” Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3482. Business Valuation
Discusses implementing finance theory for valuation problems. Provides practical valuation tools for valuing a company and its securities. Covers valuation techniques including discounted cash-flow analysis, estimated cost of capital, market multiples, free-cash flow, and pro forma models. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3484. Financial Engineering
Examines the design, valuation, and risk management of derivative securities (futures, options, etc.), including structured products. Includes topics on arbitrage theory, futures, equity options, bond options, credit derivatives, swaps, and currency derivatives. Mathematical modeling of derivatives, including implementation and applications in investments, corporate finance, and risk management. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3486. Behavioral Corporate Finance
Identifies the key psychological obstacles to value maximizing behavior, along with steps that managers can take to mitigate their effects. Given that behavioral traps represent one of the most important obstacles to successfully implementing skills taught in traditional corporate finance courses, understanding these traps is absolutely essential. Teaches how to put the traditional tools of corporate finance to the best use, and mitigate the effects of psychological obstacles that reduce value. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3488. Financial Instruments and Markets
Covers the basics of financial instruments and the markets in which these instruments trade. Consists of two sections: fixed income securities and derivative securities. Uses case studies to introduce advanced securities and institutional features of their markets in which these securities trade. Develops a framework for analyzing new financial instruments including decomposing a security into simpler pieces, analyzing (pricing, hedging, etc.) each piece separately, and putting the pieces back together for a unified analysis. Explores the security design process, and the role and motivation of financial intermediaries, including commercial banks, investment banks, insurance companies, and hedge funds. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (3 units)

FNCE 3489. Mathematical Finance
This course will comprise an immersion into the mathematics and models of modern finance, with an emphasis on conceptual and mathematical understanding, as well as building and implementing models. It will be technology dependent since computers are essential to solving problems in this field. (3 units)

FNCE 3490. Data Science and Business Analytics
This course introduces aspiring data scientists to quantitative techniques and algorithms that are based on numerical and textual data, and to theoretical models of big systems or optimization that are currently being used widely in business. The course will prepare participants for more rigorous analysis of large data sets as well as introduce machine learning models and data analytics for business intelligence. Prerequisites: ECON 3400 and OMIS 3350. (3 units)

FNCE 3696. Experimental Course
Covers special topics; offered on an occasional basis. (3 units)

FNCE 3703. Managing to IPO
Analyzes the challenges facing companies from first-round financing to initial public offering (or major liquidity event) in designing their planning and control systems. Focuses on the firm’s operation, organization structure, financial and nonfinancial systems, and reward systems. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3704. Internet Finance
Explores how the Internet will impact development of financial institutions such as banks and brokerages. Covers the basic theory of financial intermediation as it applies to online financial service firms. Discusses the impact of a migration to online financial services and the competitive changes created. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3705. Raising Capital in Silicon Valley
Covers the practical side of raising capital in Silicon Valley. Directly targets entrepreneurs (and other curious parties) and includes a brief history of venture capital in Silicon Valley. Focuses intently on funding sources in Silicon Valley, exit strategies and why they matter from day one, contacting investors, the “two-pager,” what investors need from a business plan, valuing your company (idea), and presenting to investors. Prerequisite: None. (1 unit)

FNCE 3706. Valuation of Private Companies
Familiarizes students with the techniques used to value private businesses for different purposes, including funding, mergers and acquisition, value enhancement strategies, etc. Specifically, emphasizes fundamental analysis, relative valuation techniques, and using real option techniques. Features a hands-on approach where the participants prepare a valuation report that employs these different techniques. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3708. Market-Neutral Investing
Teaches market-neutral stock market investing. Market-neutral investing strategies are designed to make money regardless of the broad market’s movements whereas most equity investment strategies involve diversifying to eliminate unsystematic risk while enjoying the stock market’s long-term upward trend. This can reduce short-term risk but introduces special challenges. Outlines each market-neutral investment strategy, explains the advantages and risks, and uses real examples. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3709. Acquisition Integration: Managing for Value
Explores several corporate acquisition strategies and focuses on the practical steps managers can take to lead effectively, and to manage for consistent growth during these periods of high stakes and high visibility. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3710. Default Risk Modeling
Introduces students to the practice of modern credit-risk modeling. Default risk is a relatively modern area of finance. In the past, it comprised fundamental analysis of firms by rating agencies. It has evolved into a highly technical and quantitative discipline that requires focused training. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3711. Mathematics of Option Valuation
Introduces students to the mathematical tools for analysis and valuation. Teaches basic options models and implements them on spreadsheets so that students are comfortable with using options in common financial applications. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3712. Monte Carlo Simulation Techniques in Finance
Teaches simulation techniques in modern finance. This has become a well-accepted approach to valuing securities and also is used for risk management. Features hands-on examples how to undertake analyses of complex scenarios in a simple way by using simulation models on spreadsheets. Prerequisite: FNCE 451 or FNCE 2452 or FNCE 3452. (1 unit)

FNCE 3714. Private Equity
Covers the history of the broad asset class, private equity, and the role it plays in an institutional portfolio. Pays particular attention to the structure and economics of private equity partnerships. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (1 unit)

FNCE 3715. Venture Capital
Analyzes private equity funds that invest in high-growth, generally high-tech, start-up companies. Examines the particulars of venture partnerships, the past performance of venture capital as an asset class, and how venture partnerships invest their capital. Prerequisites: FNCE 455 or FNCE 2455 or FNCE 3455 and FNCE 714. (2 unit)

FNCE 3716. Growth Capital
Evaluates private equity funds that invest in more mature companies. Focuses on the particulars of growth capital/buyout partnerships, the past performance of growth capital as an asset class, and how growth capital partnerships invest their capital with an emphasis on the role of leverage. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (1 unit)

FNCE 3718. Venture Capital Due Diligence
Provides a broad overview of the Due Diligence process. Due diligence is the process by which potential investors identify and explore the critical aspects of a young company, and attempt to quantify both the risks and the advantages of making an investment. The state of the market, management expertise within the firm, technology risk, and legal concerns are just a few of the factors investors include in their due diligence analyses. Once an investor is educated about a company’s risk and potential rewards, the terms of the investment must be negotiated, including valuation, preferences, and control features. Requires groups of students to study particular opportunities and present their findings and thoughts to the class. Prerequisite: FNCE 480 or FNCE 2480 or FNCE 3480 or instructor approval. (2 units)

FNCE 3723. Early Stage Company Building and Valuations
A two unit course covering Building early stage companies and Valuation Variations in these companies would be offered. This course is beneficial to students who are entrepreneurs, employees of start up companies or the ones who have a dream to start a company someday or to anyone who is interested in learning about the early years in start-up companies. The goal of this course is to provide a focused exposure to specialty topics in an early stage company growing revenues from 0 to $20M. The course will look at the pitfalls, lessons to be learnt, team building techniques at different stages of growth, early market identification, product definition, pricing issues, etc. Students will go through the mechanics of valuation and funding at various stages in the Start-up life cycle. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (2 units)

FNCE 3724. Carbon Markets and Climate Risk
A one unit course that provides a working knowledge of carbon markets and climate risk management, including compliance cap-and-trade programs and offset markets, and the mechanisms used to finance greenhouse gas emission reduction projects in the United States and around the world. The course has a practical focus and will use real-world case studies to highlight different market and regulatory approaches, project types and analysis tools. Prerequisite: FNCE 455 or FNCE 2455 or FNCE 3455. (1 unit)

FNCE 3725. Introduction to Data Analytics
This course is a first introduction to broad emerging paradigms in data science, machine learning, big data, analytics, and corresponding business implications. A broad overview of the field will be provided, and an introduction to various statistical tools used in data analytics. Case studies may be used. Class discussion will be important. An introduction to various data sets will also be undertaken. Prerequisite: ECON 401 or ECON 2401 or ECON 3400. (1 unit)

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