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Finance

Finance covers a broad range of topics including corporate investments and financing decisions, security valuation, portfolio management, and the behavior of asset prices and investors. In addition to providing students with wide base of knowledge, Finance at Merage helps students develop new skills to unlock the potential of finance in the digital world. To support this broad objective, the members of the finance faculty are renowned for their expertise in investments, money management, behavioral finance, risk management and financial economic theory.

The Finance faculty is committed to excellence in teaching. The Finance Area offers courses in the undergraduate, MBA, Master of Finance (MFin) and PhD programs. These courses offer broad exposure to finance theory and reflect latest market practices and research findings. The School’s Bachelor of Arts in Business Administration includes basic courses in financial management and investments as well as elective courses. The Merage School’s MBA programs include the core course in financial management, which reflects the School’s digitally-driven focus, as well as elective courses. The School also offers the Master of Finance (MFin) degree that comprises a wide range of graduate finance courses. The PhD program offers an advanced, research oriented degree in financial economics and prepares students for successful academic careers.

Faculty

Nai-fu Chen

Nai-fu Chen
Professor Emeritus
Research Interests: Stability of currency and banking systems, Macroeconomic impact on investing, GDP growth, inflation, interest rates, credit risk and the financial market, Hedge funds: asset allocations and portfolio management

Lingyun Gu

Lingyun Gu
Lecturer

Mor Haziza

Mor Haziza
Lecturer
Research Interests: Financial Intermediation, Investors' Attention, Asset Pricing, Behavioral Finance

David Hirshleifer

David Hirshleifer
Distinguished Professor, Paul Merage Chair in Business Growth
Research Interests: Psychology, Social interactions, and Markets, Investments, Corporate finance, Risk management

Chong Huang

Chong Huang
Assistant Professor

Philippe Jorion

Philippe Jorion
Chancellor's Professor
Research Interests: Empirical research in investments, Managing financial risks, Global portfolio investments, Derivatives markets

Lecturer

Chet Lakhani
Lecturer

Cornelis Los

Cornelis Los
Professor
Research Interests: Financial Engineering, International Financial Markets, Financial Risk Analysis, Strategic Investing, Financial System Identification

John O'Brien

John O'Brien
Lecturer

Todd Richey

Todd Richey
Full-time Lecturer
Research Interests: Corporate Finance, Corporate Strategy, M&A, Leveraged Buyouts, Private Equity, Corporate Restructurings, Debt/Equity Securities

Christopher Schwarz

Christopher Schwarz
Associate Professor
Research Interests: Hedge Funds, Mutual Funds, Investments, Regulation and Money Management

Jinfei Sheng

Jinfei Sheng
Assistant Professor
Research Interests: Empirical Asset Pricing, Investments, Behavioral Finance, Textual Analysis, Financial Intermediation

Zheng Sun

Zheng Sun
Associate Professor
Research Interests: Empirical Asset Pricing, Investments, Market Microstructure, Banking

David C. Yang

David C. Yang
Assistant Professor
Research Interests: Investments, Asset Pricing, Behavioral Finance

Lu Zheng

Lu Zheng
Professor

 

Coursework

Undergraduate business classes may be found through the UCI course catalogue.

MBA Core Course Description

209A. Managerial Finance
The course introduces students to the key finance concepts and theories that apply generally in making financial decisions such as time value of money, risk and return trade off. It also covers main stream methodologies used by CFOs when making capital budgeting and capital structure decisions. Specifically, net present value and the discounted cash flow analysis are the main methodologies the course focuses on. Through a combination of lectures, cases, and in-class mini cases/exercises, the students learn how to apply these methodologies to businesses that operate in both traditional and technology-driven industries.

In a disruptive industry where technology is rapidly changing, the valuation models need to become more dynamic. Upon building a solid understanding of the fundamental methodologies, the course will survey extensions of the basic methodologies and alternative valuation models. It will also discuss how strategic issues interact with finance. Through these discussions, the students will form a dynamic view in project and corporate valuations.

MBA Elective Descriptions

209B. Investments
The overarching goal of this class is to develop a framework for making investment decisions. Example questions we will tackle: What is diversification? Can adding a volatile security reduce overall portfolio volatility? Why do most fund managers underperform indexes? And, what are potential ways to beat an index? We will study theory, empirical evidence, and business applications. Topics include: portfolio choice, asset pricing models, market efficiency and inefficiency.

Students will learn about the strengths and limitations of computer-based portfolio optimization, as the role of technology in the investment management business has become widespread. The course will examine how to use data to evaluate asset pricing models. Students will also explore how innovations and technologies based on modern finance ideas, such as index funds, smart beta, and other quantitative investment strategies, have disrupted traditional investment management. These innovations have enabled investment managers to manage large sums of money with less people, compared to the traditional "stock picker" approach.

244. Multinational Finance
This course provides comprehensive and systematic coverage of topics in multinational finance, enabling the leaders of tomorrow’s multinational enterprises to optimally make financial decisions in an international setting. We will examine the history of the world’s foreign exchange markets, the macroeconomics of foreign exchange rate, major parity conditions, and hedging of currency exposure. We will also discuss how currency exchange and risk management could be affected by the disruptive innovations, such as block chain. The scope and content of international finance have been fast evolving due to deregulation of financial markets, product innovations, and technological advancement. As capital markets of the world are becoming more integrated, an important goal of this course is to help students to understand the uncertainty of international finance and the interdependence of economies and markets over the world.

248. Corporate Valuation
This course focuses on estimating the value of firms and projects in diverse settings, paying special attention to the digitalization and globalization of the economy. Valuation is an essential aspect of most corporate and investment decisions such as financing policies, acquisitions, project development, security valuation and so on. The course will re-enforce and expand on concepts covered in the introductory finance course. It will discuss the main valuation methods and their applications in real world problems. These situations were chosen to enhance students’ understanding of the value and limitations of finance theory and implementation of the valuation methods.

The course will use a combination of lectures and cases designed to confront students with a variety of real-world problems. It will discuss the cost of capital for new technology, valuation of technology firms, and valuation of emerging market companies. The course also provides ample opportunity to enhance and develop students’ problem solving and communications skills. Such knowledge is essential for students with an interest in Corporate Finance, Investment Banking, Financial Consulting, as well as Investments.

249. Derivatives
Studies financial derivatives instruments, including forward contracts, futures, swaps, and options. Advanced applications of these instruments, including pricing and risk management, are emphasized.

253. Venture Capital & Private Equity & Finance of Innovation
Venture Capital (VC) and Private Equity (PE) constitute the so-called “alternative” asset class as opposed to conventional investments in stocks, bonds and commodities. Many start-ups and entrepreneurial firms require substantial capital. Bank loans and other conventional debt financings are unlikely due to high risk and uncertain prospects. Venture Capital and Private Equity organizations finance these high-risk but potentially high reward companies. In this course, through a combination of lectures and case studies, students learn how VCs and PE firms raise funds, evaluate the potential opportunities and make investment decisions.

Almost all start-ups initially have negative cash flows. Further, these digital platform based companies keep their profit margins intentionally low, so as to gain market share and/or disrupt existing players and markets. This further compounds the negative cash flows. Often cash flows remain negative year-in year-out. Traditional valuation models such as discounted cash flows (DCFs) do not properly address these issues and evaluate the true potential of these businesses. In this course, we will explore the types of models VC firms use to analyze and value these businesses. We will also explore the leveraged buyout (LBO) models and how PE firms use mezzanine financings and use of warrants to make deals and investment decisions.

290. FinTech and The Digital Economy
The purpose of this course is to provide working knowledge of the role of IT-enabled innovation in financial markets, more generally, to help students acquire an understanding of broad economic issues that are of wide applicability in many areas of FinTech. The course balances qualitative analysis and quantitative applications. You will gain experience in applying empirical tools through assignments and a mid-term report, as well as through a final project that requires you to apply the tools to the real world. Topics covered in the course include a wide range of FinTech phenomena (e.g., Bitcoin, Blockchain, Crowdfunding, Online lending, etc.), and their economic and social impacts. Overall, this course aims to equip students with the skills and knowledge required to help their professional careers in the digital age.

MFin Course Descriptions

211. ProSeminar
This course, Coordinated with the Merage Career Center, provides students with practical skills for success in the program and future careers in finance by teaching career planning, job search tactics and strategies, resume building, interviewing preparation, approaches to networking, salary negotiation, public speaking, and business writing skills.

203A. Financial Reporting
Involves the development, analysis, and interpretation of financial accounting information for external reporting purposes.

210. Foundations of Finance
This course teaches the foundations of finance. The course begins by teaching financial tools such as time value of money, capital budgeting techniques, and cash flow analysis. The course then examines the foundations of investment management. Theory and empirical evidence related to portfolio theory, market efficiency, asset pricing models, factor models, and option pricing theory.

240. Financial Research Methodology
This course bridges the gap between theoretical financial models and financial econometrics and empirics. The course will explore the strengths and weaknesses of empirical finance and econometrics, as well as implement many of the methods based on data the individual has drawn from the market.

241. 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 and operational risks, which arise from human or technical failures.
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.

249. Derivatives
Derivatives are new financial instruments whose value “derives” from the values of other, more basic, underlying assets such as stocks and bonds. The course will cover major derivative instruments including forward, futures, swaps and options. Derivatives are widely used for hedging, speculation, and arbitrage. The size of this market is several times larger than the global economy. The focus of the course is on understanding the instruments, how to use them, how to price them, and basic risk management principles. In particular, the course will show how to implement investment strategies with derivatives. Prerequisite:  MF 210

296. Capstone Course
Students work in teams on an applied finance project, one that is associated with an internship or experiential project. This project should be associated with the area of focus of the student’s electives, as it will illustrate the student’s knowledge and expertise, which students can reference when speaking to potential employers.

PhD Course Descriptions

291. PhD Sem-FIN
A special topics course. 

291-FN1. Advanced Topics in Corporate Finance (4 units)
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, debtholders 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-FN2. Advanced Topics in Investments (4 units)
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-FN3. Behavioral Finance (4 units)
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-FN4. Finance Research Methodology   (4 units)
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.

291-FN5. Current Topics in Finance (2 units)
Description: This course discusses recent advances in the finance literature. Participants are expected to: (1) Write summaries of papers covered in the class; (2) Present one paper; (3) Discuss one paper; (4) Develop a research proposal on an original research idea.

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.