Finance is the general study of how people and institutions allocate economic capital over time. It includes a discussion of issues related to corporate finance, such as how securities are issued, what motivates firms to choose debt or equity and the initial public offerings process. The perspective of modern corporate finance is that only shareholder value matters — everything else is of subsidiary importance. The institutional aspect of finance deals with the banking and financial services industries and how credit decisions are made and risks are managed within these organizations. Investment theory is an important area within finance. Here one is interested in how to optimally accumulate wealth by choosing portfolios of assets or derivatives whose payouts are related in complex ways to their underlying assets. The investments area also includes the study of actual prices within financial markets using econometric models.
MBA Core Class
Bonds and Fixed Income
Introduction to the Real Estate Process
Real Estate Capital Markets
The Real Estate Development Process
Mortgage-Backed Securities and Structured Debt
Seminar in Management of the Real Estate Enterprise
Applied Real Estate Security Analysis and Portfolio Management
Electronic Trading [ITM Course]
International Real Estate
Applied Real Estate Security Analysis and Portfolio Management
Venture Capital and Private Equity
Mergers and Acquisitions-Finance
Visiting & Affiliated Faculty and Researchers
Finance Research Colloquia
Please see upcoming colloquia here.
Please see past colloquia here.
209A Managerial Finance
Introduces students to financial theory and concepts. The main topics covered are time value of money, valuation of stocks and bonds, capital budgeting, portfolio theory, capital structure choice. Prerequisites: 201A, 203A, 204A.
This course examines financial theory and empirical evidence useful for making investment decisions. Topics include: portfolio theory, equilibrium models of security prices (including the capital asset pricing model and the arbitrage pricing theory), the empirical behavior of security prices, market efficiency, and fixed income markets. The course involves several projects, including applications to real-world problems such as portfolio selection and investment management. Prerequisites: 201A, 203A, 204A, 209A. *Please note that this course is a prerequisite to all finance electives (except real estate).
242 Portfolio Management
This advanced course describes how to manage investment portfolios. It covers fundamental topics, such as the valuation of equities, fixed-income instruments, and financial derivatives. The course then explains the theory and practice of asset allocation, security selection, and performance measurement. Prerequisites: 201A, 203A, 204A, 209A, 209B.
243 Bonds and Fixed Income
Fixed income instruments are those where the borrower promises to make a stream of payments to the investor. Bond markets are as large as equity markets, but are amenable to more rigorous analysis. This course covers major sectors of the bond markets, including treasuries, corporate bonds, and mortgage-backed securities. It will discuss pricing and risk management methods. The course will also show how to implement strategies for investing in fixed-income portfolios. Prerequisite: 201A, 203A, 204A, 209A, 209B.
244 Multinational Finance
This course is the study of multinational finance. We will examine the history of the world’s foreign exchange markets, the macroeconomics of foreign exchange, major parity conditions, hedging of currency exposure and international investment. The goal of this course is to give students a basic understanding of foreign exchange market. While we will attempt to cover all of the topics in the set agenda, the pace of the course will be modified to suit the interest of the students. Prerequisite: 201A, 203A, 204A, 209A, 209B.
245 Financial Institutions
Focuses on financial intermediaries such as banking and brokerage. Explains the risks faced by institutions and the integration through electronic markets. Covers issues such as online trading, global capital markets, securitization, deposit insurance and bank regulations. Prerequisite: 201A, 203A, 204A, 209A, 209B.
246A Introduction to the Real Estate Process
An introductory survey course intended to provide a foundation for understanding the workings and players in the real estate market. Topics include: real estate as an economic good, the bundle of property rights, liquidity and the transaction process in real estate, valuation of real estate interests, highest and best use, feasibility analysis, tax considerations in real estate investment, optimal leveraging strategies, institutional real estate investment and portfolio considerations, securitized and structured real estate interests, investment performance of alternative property classes, the role of the developer, public sector involvement in the real estate market, corporate real estate asset management, and current policy issues. Course features a hands-on approach to analysis of real estate investment opportunities and case presentations by several members of the real estate professional community.
246C Real Estate Capital Markets
Prerequisite: 246A (Introduction to the Real Estate Process) or permission of instructor. The primary goal of this course is to develop a working understanding of the four segments of real estate capital markets -- public debt, private debt, public equity and private equity -- and how these markets affect real estate investment. The key elements of discussion include the fundamental drivers of real estate as an investment asset class, the key players and the roles they play, how different types of investment opportunities command different capital solutions as a result of their risk/return characteristics, why different product types (e.g. commercial vs. multi-family) perform differently and the implications of this for capital structuring, asset underwriting and valuation strategies and partnership organization scenarios (debt and equity participation, joint ventures, general partnerships, etc.), understanding alternative debt sources (commercial mortgage backed securities, banks, private funds, etc.) and equity sources (pension funds, private equity, REITs, etc.).
246D The Real Estate Development Process
Prerequisite: 246A (Introduction to the Real Estate Process) or permission of instructor. The supply side of the real estate market is served by the development community. This course is intended to introduce the student to the nature and composition of the development community and to familiarize him/her with the development process -- from planning, evaluating project feasibility, securing the site, and obtaining financing; through the approval process and construction; and finally to lease-up, property and asset management, and ultimate disposition. Emphasis is placed on the role of the developer in identifying and implementing a real estate project within a framework of conflicting interests, values and goals, and a market which doesn't always behave as expected. Special attention will be paid to structuring of the deal and risk management. Lectures will be supplemented by a number of guest lecturers representing different roles in the development process. The students will have an opportunity to work in teams with a client in putting together a feasibility analysis and optimal deal structure for an actual development project.
246E Mortgage-Backed Securities and Structured Debt
Prerequisite: 246A (Introduction to the Real Estate Process) and 243 (Bonds and Fixed income) or permission of instructor. This course focuses on the theory and operation of the residential and commercial mortgage-backed securities (RMBS, CMBS) markets and the market for structured real estate debt, which have emerged as important components of the capital markets for real estate in the last 20-30 years. Its purpose is to provide a solid theoretical and applied understanding of these products and markets. Topics include a brief historical introduction; technical analysis including the estimation of prices, yields, convexity, and various other measures of investment performance; creating and structuring security issues; legal, regulatory, and institutional issues; mezzanine and other structured finance products; derivative products (CDO’s, CDS’s, options, futures, etc.); and current political, economic, and policy issues. Several guest lecturers will provide an in-depth perspective on selected topics.
246F Seminar in Management of the Real Estate Enterprise
Prerequisite: 246A (Introduction to the Real Estate Process) and four additional electives in real estate or related areas (minimum 2 in real estate), or permission of instructor. A capstone seminar intended to build upon the previous foundational curriculum and to explore the various aspects of decision making as they relate to management and leadership of the real estate enterprise in the context of strategic objectives. Topics include goal setting, making and following an effective business plan, alternative legal structures, tax issues, the closely-held firm and succession, going public and regulatory reporting, corporate ethics – form and substance, optimal capital structure, managing growth, diversification, assessing core competencies, technology and innovation. Each session shall focus on a particular topic and shall be hosted by a guest speaker from the professional community who is an expert resource person on that topic.
246G Applied Real Estate Security Analysis and Portfolio Management
Prerequisite: 246A (Introduction to the Real Estate Process) or permission of instructor. Publicly-traded securities, in the form of shares in Real Estate Investment Trusts (REITs), have become an increasingly important part of the overall real estate equity capital market. The objective of this course is to prepare students to value and efficiently manage a diversified portfolio composed of such interests. The class will provide an understanding of the public REIT market and its place in modern investment strategies, present methods for analyzing and valuing companies, and introduce basic concepts for constructing and managing an investment portfolio. By the conclusion of this class, students should have acquired the requisite skills to be able to actively manage a diversified portfolio of REIT shares. The course will be enriched through the involvement of professionals from the investment and REIT analyst community.
248 Corporate Valuation
This course is designed to re-enforce and expand on concepts covered in the introductory finance course. There will be a combination of lectures and cases designed to confront students with a variety of real-world problems. These situations were chosen to enhance students’ understanding of the value (& limitations) of finance theory. The principal focus of the course is on estimating the value of firms and/or projects in diverse settings. The course also provides ample opportunity to enhance and develop students’ problem solving and communications skills. Knowledge about Corporate Valuation is essential for students with an interest in Corporate Finance, Investment Banking, and Financial Consulting. It is also important for students with an interest in Investments. Prerequisite: Mgmt. 209A, 209B.
Derivatives are new financial instruments whose value “derives” from that of underlying assets. Derivatives markets have become huge, reaching $100 trillion in face value. Derivatives, which include forward contracts, futures, swaps and options, have become essential instruments to manage financial risks. In addition, derivatives theory has led to significant advances in understanding topics such as real options, corporate financial strategy, and the valuation of executive stock options. Prerequisite: Mgmt. 201A, 203A, 204A, 209A, 209B.
246B International Real Estate
Real estate as an asset class has become an increasingly global investment vehicle, precipitated by such factors as the need to diversify portfolios, yield differentials, favorable tax treatment, reduced barriers to cross-border investing, growth opportunities in emerging economies, new investment vehicles (e.g. J-REITs in Japan, ETF’s in the U.S.), and greater familiarity and comfort with international property markets. This course tracks this phenomenon, examines the forces that are driving it, and uses our understanding of these forces to examine and predict the future of international real estate investing. The course is applied and hands-on, with a number of guest speakers, both domestic and off-shore, providing insight into various aspects of international real estate investing. Students undertake a strategic investment exercise for a major international investor considering alternative opportunities in the marketplace.
290 Risk Management
This course examines modern techniques for managing financial risks. Financial risks are generally classified into market risks, due to movement in financial prices or volatilities, credit risks, due to fact that counterparties are unwilling or unable to fulfill their contractual obligations, liquidity risks, when transactions cannot be conducted at prevailing market prices, perhaps due to cash flow constraints, and operational risks, which arise from human or technical problems. The course will cover measurement techniques for different types of financial risks (equity, fixed income, currency, commodity) and instruments. It will cover tools such as duration, portfolio beta, factor sensitivities, portfolio distribution analysis, and value at risk (VAR). It will also discuss how risk measurement tools can be used for active management of the risk/return profile of financial institutions. For more information, students can refer to the web site http://www.merage.uci.edu/~jorion/varseminar Prerequisite: 209A, 209B.
290 Applied Real Estate Security Analysis and Portfolio Management
Publicly-traded securities, in the form of shares in Real Estate Investment Trusts (REITs), have become an increasingly important part of the overall real estate equity capital market. The objective of this course is to prepare students to value and efficiently manage a diversified portfolio composed of such interests. The class will provide an understanding of the public REIT market and its place in modern investment strategies, present methods for analyzing and valuing companies, and introduce basic concepts for constructing and managing an investment portfolio. At the conclusion of this class, interested (and qualified) students will have the opportunity to actively manage a portfolio of REIT stocks funded through the contributions of supporters of the real estate program at UCI. The course will be supported through the generous involvement a senior portfolio manager of a large REIT-based hedge fund and a team of REIT analysts and mangers from Green Street Advisors of Newport Beach, the preeminent research and advisory services firm specializing in publicly-traded real estate securities.
290 Venture Capital and Private Equity
The learning objectives focus on the role of private equity in the economy, the structure of the industry, and the related challenges that shape the evolution of the industry. The course is designed to integrate case studies and a course project that further develop theory and concepts learned in class with real-world application, deal structuring, and valuation techniques that also include a technology-based learning component. Course Structure: 1. Fund structure and fund raising (early and later stage) 2. Identifying opportunities and making investments 3. Financing growth and exiting transactions 4. Special situations such as venture lending and turnaround transactions. The students will have the opportunity to interact with private equity professionals and entrepreneurs to learn about topical issues. The course is recommended for students interested in private equity/venture capital and investing, managers of entrepreneurial companies, investment banking, or other intermediaries that work with private equity/venture capital firms and the companies that they fund. Prerequisite: 209B
290 Wealth Management
This course is designed to give students an overview of the real world considerations that are needed to connect all the singular functional areas that comprise personal and business wealth management such as: basic and advanced estate planning, investment management; tax management; life, liability and property/casualty insurance; medical and long term care coverage; retirement and philanthropy considerations. Learning how to approach managing wealth via a unified approach will allow the student to better understand how an individual and/or a family can have greater success at the accumulation, management, preservation and distribution of wealth during the various life stages. Classes include lectures, class discussion, guest speakers, and a multi-part case study.
290 Topics in Corporate Finance
290 Behavioral Finance
Recent events and academic research suggest that psychological biases cause misevaluation in financial markets, and investment mistakes by managers. This course covers the sources of misevaluation, how investors can exploit market inefficiency in their portfolio decisions, how managers should address market inefficiency in corporate financing and investment decisions, and how managers can deal with their own biases to avoid making mistakes. The course has a quantitative component that includes factor models, portfolio theory, risk-adjusted discounting, evaluation of statistical evidence, and regression analysis. The course primarily involves lecture and discussion, which will be applied to real-world examples and evidence. Prerequisite: 209B.
290 Mergers and Acquisitions-Finance
The course focuses on mastering mergers and acquisitions (“M&A”) concepts and techniques that will enable participants to practically apply them in related fields such as investment banking, consulting, and corporate development. We will study drivers of success in M&A with heavy attention on transactional review, where valuation analysis plays a key role along with other core concepts such as strategy, capital structure and financing, dilution, and risk management. An important part of the course includes developing ideas for a successful M&A transaction, designing a deal, and presenting a proposal (“Pitch Book”). We will review the framework for doing so and will apply it in several case studies. The main focus of the course is finance although we will rely on contributions from critical areas such as strategy, accounting, legal, organizational behavior, and negotiations. Prerequisite: 209A, 209B.
290 Valuation and Financial Modeling
Merage Course Description: This course builds on the foundational skills from 231A/B course to analyze accounting information, build forecasts of coherent spreadsheets of proforma financial statements, and use them to value equity securities and make investment decisions. Topics may include valuation of merger and acquisition targets, leverage buyouts and distressed assets. Overall, the course is intended to provide students with a strong theoretical and applied understanding of the key equity valuation and stock selection approaches and tools used by securities analysts, investment/portfolio managers, accountants, and consultants.
291 Ph.D. Sem-FIN
A special topics course.
291 Information, Psychology, and Social Processes
291 Advanced Topics in Corporate Finance
The course helps students understand and develop their skills in analyzing, firms’ investment and financing decisions. It covers research topics in corporate finance to illustrate basic principles and to give students practice developing these skills. It examines a variety of topics, such as optimal debt and equity financing, managerial and firm reputation and investment decisions, motives for financial signaling, conflicts of interest and informational differences between managers, debt holders and equity-holders; the takeover process; the use of capital structure and compensation to strategically position the firm in product markets; and the significance of imperfect rationality for corporate policy. The style is a mixture of lecture and discussion.
291 Advanced Topics in Investments
The goal of this course is to give critical perspectives on the some of the most challenging problems related to investments, the problems that are most relevant for both academics and the applied world. It covers a variety of topics such as the basic asset pricing test framework, the common methodologies used in empirical asset pricing tests, empirical equity market regularities, and new directions in empirical finance. The idea of the course is not to go through in detail all of the assigned reading. It will be assumed that students have read each of the articles. The classroom discussion will be broad and will not necessarily focus on any technical details in the readings. We are more interested in extracting the big picture and what it means for the future of finance research.
291 Behavioral Finance
Building upon traditional theories of investment choices and asset market equilibrium, this course examines how the psychology of investors and managers affects financing and investment choices. It reviews evidence from psychology that may be relevant for finance, relevant evidence from financial markets, and recent approaches to modeling how imperfect rationality affects financial markets. It covers recent research on how psychology influences the preferences and information processing of investors; how imperfect rationality and arbitrage interact to determine equilibrium asset prices; how firms can take advantage of market inefficiencies; and how psychological bias affects the behavior of managers. Our emphasis will be on approaches that reflect evidence or insight from the explicit study of human psychology. The course provides a preparation to take advantage of the rich set of opportunities for future research in this field.
291 Finance Research Methodology
This course offers a survey of recent advances in finance research methodologies. In particular, we will discuss the pros and cons of the different approaches and the motivations behind their model designs.
297V Information, Psychology, and Social Processes
In the marketplace for ideas, which succeed and which fail? A growing field of research studies how ideas and information spread between individuals, and how populations of ideas evolve. This course reviews recent research in this area and applications to business. A few examples give a hint of the range of applications of these ideas: viral marketing, information cascades and herd behavior in consumer behavior and in corporate strategy, the spread of behaviors across firms through social networks such as interlocking boards of directors, and what determines the success of innovative business methods.