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.
For more information on workshops and colloquia in the academic area of finance,
please
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Elective Courses
209B Investments
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. *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.
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.
244 Multinational Finance
Focuses on financial issues facing multinational corporations, the most important of which is the management of foreign exchange risk. Other topics covered are investments and financing decisions in international capital markets.
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.
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 will include: Real Estate as an Economic Good, The Bundle of Property Rights, The Transaction Process in Real Estate and Liquidity, 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 the Future of Real Estate. Course will feature a hands-on approach to analysis of real estate deal 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, Private Equity and Public Equity and how these markets affect real estate investment. The key elements of discussion include (1) Real Estate as an Investment: What are the fundamental drivers of real estate as an investment asset class? Who are the key players in the investment of real estate, and what role do they play in the capital structure? How do different types of investment opportunities (development, investment, product type) command different capital solutions as a result of risk/return analysis. (2) Supply and Demand of Real Estate: Why do different sectors of real estate (i.e. commercial vs. multi-family) perform differently, and what factors that drive capital to a specific product type? (3) The Purchase and Sale of Real Estate: Fundamental asset underwriting valuation strategies and partnership organization scenarios (debt and equity participation, joint ventures, general partnerships, etc.). (4) Debt and Equity: This includes debt sources (Commercial Mortgage Backed Securities, Banks, Private Funds etc.) and equity sources (Pension Funds, Private Equity Funds, REITs, etc.) that are the major sources of investment capital within the real estate industry. Each of these sources has differing structures that will affect overall returns. Identifying these requirements and reconciling their differences is a critical component of structuring a successful real estate investment.
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 Developer community. The role of developer has taken on a special mystique associated with its purported higher risks and rewards and “cowboy” image. In fact, developers and development deals come in all shapes and sizes – from the independent residential rehabilitation contractor who acquires deteriorated properties in order to bring them up to higher habitability standards; to the large publicly-listed office REIT that sees new class A product development as just one of its functions in the creation of value; and to everything in between. 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, obtaining an option on the site, and finding equity partners and lenders at the beginning; 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 mortgage-backed securities (MBS) market and the market for structured real estate debt. These markets have developed only over the last 20-30 years but have become immensely important for both residential and commercial real estate, having the effect of enhancing the availability and reducing the cost of debt capital. Without important developments in financial theory and the evolution of a complex array of institutions supporting these debt products, this market never would have come about. It is the purpose of this course to provide advanced graduate students in real estate and finance, who have a potential interest in becoming professionals in the field, with a solid understanding of these theoretical and institutional developments. After a brief historical introduction, the first part of the course will focus on the technical analysis of mortgages and mortgage products, including the estimation of prices, yields, and various other measures of investment performance. The heart of the course will be an in-depth examination of operations of both the residential and commercial mortgage-backed securities markets (RMBS, CMBS). This will be followed by evaluations of the "buy side", the investors in MBS products, and the evolving structured finance market, including mezzanine financing, collateralized debt obligations (CDO's), and related vehicles. A final set of lectures will speculate on the future and examine professional opportunities in this marketplace. Several guest lecturers will be brought in at various points in the course from both industry and academia to 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. Most formal education in real estate has revolved around “The Deal”. However, while understanding and being able to shape optimal deal structures is essential, in the end the real estate professional must ultimately be concerned with management of the real estate enterprise itself. This enterprise ranges from the individual who acquires and manages a few small residential properties to the largest publicly-listed commercial property REIT or institutional real estate investor such as a public pension fund. The ultimate goal is to grow and prosper, but what that means and how to get there may be ambiguous. This course is intended to explore the various aspects of decision making as they relate to management and leadership of the real estate enterprise that is directly focused upon strategic objectives. Topics covered include: What is your Ultimate Goal? - Making and Following an Effective Business Plan; Alternative Legal Structures; Tax Issues; The Family-Owned Firm and Succession; Going Public – Liquidity vs. Reporting and the World of Sarbannes-Oxley; Corporate Ethics – Form vs. Substance; Optimal Capital Structure; Diversification Issues – Geographic, by Property Type, by Product Type; by Stage in Development Cycle; Core Competencies vs. Non-Core Activities; Alternative Organizational Structures; Technology and Innovation – How Much is Enough? How much is too much?; The Future of the Real Estate Enterprise. 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
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 of 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.
248 Corporate Valuation
(formerly titled Creating Wealth)
Combination of lectures and cases designed to confront students with real-world problems. Expands concepts covered in the introductory corporate finance course and focuses on estimating the value of firms and projects in diverse settings.
249 Derivatives
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.
290 International Real Estate
A practical course in the conduct and examination of real estate feasibility studies. These are the core documents used in the industry for real estate decision making in development and investing. The course is augmented by guest lecturers who have conducted or who have been the recipients of such studies for projects in Asia, Central and South America and Europe.
Both market demand analysis techniques and real estate financial analysis are covered in this comprehensive course taught by the Director of the Program in Real Estate Management who has more than 30 years of experience researching and writing feasibility studies.
290 Topics in Corporate Finance
tba
290 Risk Management
This course examines modern techniques for measuring and managing financial risks. Financial risks include market risk (i.e., equity, fixed income, currency, and commodity), credit risk, and operational risk. The course will show how the risk of loss can be described by a probability distribution of returns and summarized with value at risk (VAR). This topic is essential for professionals involved in investment management, trading, hedge funds, and corporate treasury departments.
For more information, students can refer to the web site
http://www.merage.uci.edu/~jorion/varseminar/
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
This course covers the concepts, techniques, instruments and institutions involved in private equity investment. The course addresses the various segments of private equity, including entrepreneurial finance, venture capital funds, corporate venture capital and leveraged buyouts. Particular attention will be given to the technology sector and to buyouts, sectors which comprise the majority of private equity investing.
The course is structured along five themes: venture capital contracts, valuation, deal processing and dynamics, structure of the private equity market; and harvesting. These themes cover the different stages of investment in a venture firm: from early rounds to the exit stage where the value of the investment is realised. The course contrasts buyout and venture transactions. It also covers the structure, strategy and performance of the private equity firm.
The objectives of the course are to:
§ Provide an understanding of the private equity financing process and the interaction between entrepreneurs and private equity investors – including value-added services.
§ Employ corporate finance principles (such as contingent claims and contracting theory) for the analytical valuation of new ventures and buyouts.
§ Build familiarity with the structure and key institutional features of the global private equity industry.
§ Discuss turnaround private equity transactions.
290 Wealth Management
tba
290 Behavioral Finance
Recent events and academic research suggest that psychological biases cause misvaluation in financial markets, and investment mistakes by managers. This course covers the sources of misvaluation, 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.
290 Mergers and Acquisitions-Finance
Mergers and acquisitions are an increasingly prevalent phenomenon that very few managers have experience with. Yet buying and selling a company today is as likely to be a minefield as a goldmine unless you have command of the process. This course is designed to build familiarity with the merger & acquisition process from start to finish. To better understand the M&A process, the course will address the strategic and financial criterion by which to evaluate a potential deal; how to identify and find appropriate acquisition candidates; how to evaluate acquisition candidates; how to negotiate the deal; and finding appropriate funding options for the deal. The course will highlight common hurdles and pitfalls and how to avoid them. Lastly, the course will highlight strategies for successfully integrating the companies and how to extract organizational efficiencies and strategic synergies following the deal.