Santa Clara University

Course Descriptions

FINANCE (FNCE)

Professors: Sanjiv R. Das (Chair), Atulya Sarin, Hersh M. Shefrin, Meir Statman
Associate Professors: George Chacko, Robert J. Hendershott, Hoje Jo
Assistant Professor: Carrie Pan
Lecturer: John Fay

Note: The following course is required of all MBA students. Please see Waiver Rules.

FNCE 451. Financial Management
Introduction to the basic concepts and tools of finance. Review of balance sheet and income statement categories. Emphasis on the time value of money, present value calculations, the opportunity cost of capital, the valuation of simple securities, and evaluating investment opportunities in a capital budgeting system. Prerequisites: ACTG 300 and OMIS 353. (3 units)

Note: The following course is required of all MBA students, and is a prerequisite for all finance electives.

FNCE 455. Investments
Study of investment securities and markets. Review of valuation tools. Analysis of stocks, bonds, and derivatives. Construction of portfolios and the control of investment risks. The overarching theme is to learn how to value assets given forecasts of future cash flows. The course also concentrates on the risk characteristics of different asset classes. The course is divided into four modules. The first module focuses on bonds and other fixed income securities. The second module deals with risk/return relationships, portfolio diversification, and equity factor models. The third module of the course briefly reviews performance evaluation and security analysis. The final module of the course introduces currencies, international interest rates, and derivatives. This course 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. In other words, we assume all students have successfully completed FNCE 451. Prerequisite: FNCE 451. (3 units)

Note: The following courses are offered as electives and/or part of a concentration.

FNCE 457. International Financial Management
A study of the financial issues specific to firms operating internationally. Review of valuation tools. Emphasis on the sources of capital available to multinational firms, analyzing foreign investment opportunities, and currency risk management. Other topics may include international working capital management and import/export financing. Prerequisite: FNCE 455. (3 units)

FNCE 459. Financial Markets and Institutions
A study of financial service companies such as commercial banks, investment banks, and insurance companies. Review of valuation tools. Emphasis on the evolution of financial intermediaries, analyzing financial service firms’ investment opportunities under regulatory constraints, interest rate risk management, and the relation between financial institutions and financial markets. Other topics may include the political economy of financial regulation. Prerequisite: FNCE 455. (3 units)

FNCE 460. Mergers, Acquisitions, and Corporate Restructuring
A study of corporate governance and corporate restructurings. Emphasis on how corporate ownership, control, and organizational structures affect firm value. Other topics may include valuing merger candidates, agency theory, and takeover regulation. This course generally places a heavy emphasis on case projects and/or class presentations. Prerequisite: FNCE 455. (3 units)

FNCE 462. Behavioral Investments
The goal of this course is to explore behavioral paradigms as they relate to investments. We consider psychological biases that might affect investment behavior. We also examine empirical evidence that investors, are in fact, subject to these biases. Students explore 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. (3 units)

FNCE 464. Real Estate Finance
This course focuses on the risks, practices, and problems that are particular to financing and investing in real property. Students learn the concepts and techniques necessary to analyze the financial decisions embedded in property development and investment. Prerequisite: FNCE 455. (3 units)

FNCE 474. Risk Management with Derivative Securities
Business risk management using futures, options, and swaps. Considers the institutional features of futures and option trading first, then introduces the theory of futures and option pricing. These tools are applied to the problems of hedging and cross-hedging commodity inventories in agriculture, metals, and other physical commodities. Covers managing financial risks such as foreign currency positions, general interest rate risk management, and the problem of portfolio immunization. Includes econometric estimation of hedge ratios. Prerequisite: FNCE 455. (3 units)

FNCE 480. Emerging Company Finance
This course covers the financial topics most relevant to newly formed companies, with an emphasis on Silicon Valley-style startups that target large markets and raise outside capital. Topics include: (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. (3 units)

FNCE 482. Business Valuation
An applications course that discusses the implementation of finance theory to valuation problems. This course provides practical valuation tools for valuing a company and its securities. Valuation techniques covered include discounted cash-flow analysis, estimated cost of capital, market multiples, free-cash flow, and pro forma models. Prerequisite: FNCE 455. (3 units)

FNCE 484. Financial Engineering
The design, valuation, and risk management of derivative securities (futures, options, etc.), including structured products. Topics include arbitrage theory, futures, equity options, bond options, credit derivatives, swaps, and currency derivatives. Students will undertake mathematical modeling of derivatives, including implementation and applications in investments, corporate finance, and risk management. Prerequisite: FNCE 455. (3 units)

FNCE 696. Experimental Course
Covers special topics; offered on an occasional basis. (3 units)

FNCE. 854. Financial Management and Investment Analysis
Introduction to the basic concepts and tools of finance. Review of balance sheet and income statement categories. Emphasis on the time value of money, present value calculations, the opportunity cost of capital, the valuation of simple securities, and evaluating investment opportunities in a capital budgeting system. Proceeds to a study of investment securities and markets. Review of valuation tools. Analysis of stocks, bonds, and derivatives. Construction of portfolios and the control of investment risks. Open only to WAMBA program students. (6 units)