Center for Financial Markets
Prerequisite Courses
FM 490 Math for Financial Markets
This course reviews precalculus and calculus. Topics include algebra, logarithms, analytic geometry, functions, matrices, differentiation, integration, and partial derivatives. Students do problems in class to reinforce theory and examples. Quizzes, homework and a written final exam. This course is also offered as an iCourse.
FM 491 Statistics for Financial Markets
This course provides an introduction to the basic concepts of probability and statistics, including data presentation, probability theory, discrete random variables, expected value, variance, correlation, the normal distribution, estimation, confidence intervals, hypothesis testing and simple linear regressions. This course is offered as an i Course.
FM 492 Intro. to C/C++ Programming for Financial Markets
This course presents the ANSI C++ programming language. Students will study program design, including functions, arrays and strings, pointers, dynamic memory management, data structures and the Standard Template Library. Object-oriented design will be discussed, including the design and use of classes, overloading, inheritance and polymorphism. The focus will be to understand OOP concepts as they are applied to financial markets.
MBA 510: Financial and Managerial Accounting
This course is an introduction to the basic financial and managerial accounting topics: GAAP, the major financial statements, accrual accounting, financial reporting alternatives, financial statement analysis, cost behavior, cost systems, short- and long-term decision-making, and product costing.
Requisite Courses
FM 500 Global Financial Markets
This course will enable the student to understand the basics of financial markets and how they function in the global arena. The student will learn how the equities market, the bond market, the money market, the foreign exchange market and the derivatives markets are set up and operate. We will focus on the instruments, the players, the jargon, the details of the trade, and the institutional framework for each market. We cover both OTC and exchange-traded markets, and explore the dramatic transformation of these markets. The student will learn how each of these markets operates in the US, but will also learn how practices differ in Europe, Asia and Latin America.
FM 502 Global Market Economics
This course provides the foundation necessary to analyze the impact of economic developments on financial markets and trading strategies. Topics include fiscal and monetary policy; interest rates; central banks; commercial banks' international trade and currency markets; economic statistics including inflation, GDP and unemployment, supply and demand analysis, Keynesian and classical economics; business cycles; business structures and decision making; and economic forecasting. Students write an economic analysis of a current market issue.
FM 503 Introduction to Investments
This course focuses on the theoretical basis of finance. The fundamentals of interest rates, present value, and portfolio theory are explored. Included will be a discussion of the ways in which basic cash market instruments and derivative products affect investment return. The topics include intertemporal choice, utility bond theory, the capital asset pricing model, and the dividend discount model. The mathematics of bond pricing and the components of return are discussed. The theories of the yield curve are reviewed. Highlights include the separation theorem and the Modigliani-Miller propositions. (Prerequisites: A pass in the Diagnostic Math Exam and at least simultaneous registration in either FM 507 and FM 508 or both.)
FM 505 Futures and Futures Markets
This course provides a comprehensive study of futures and futures markets from a variety of perspectives - theoretical, operational, evolutionary, domestic and global. Students who successfully complete this course will have an understanding of the theory of futures contract pricing, a working knowledge of how these instruments are used for pricing and risk management, and a familiarity with the breadth and diversity of the global futures markets (i.e., the products traded on them, their economic role, the issues faced by market participants and possible developments in the years ahead). Following a discussion of theoretical and operational issues in the first three classes, the remaining classes focus on uses of futures contracts in the principal product groups (i.e.; agricultural/metals/energy, short-term interest rates, long-term interest rates, stock indices and foreign currency.)
FM 506 Options and Options Theory
This class presents both a practical and theoretical approach to options markets. Included is an in-depth examination of the most important option pricing models and the factors that determine option prices. Also studied is the role of options in controlling risk, the relationship between an option and its underlying instrument, and the relationship of options to futures and warrants. This course explains the different roles played by investors/ hedgers, speculators and market makers, the different strategies each employs, and the different view each has of risk. The course surveys the international markets for trading options, both on and off exchanges. (Prerequisites: FM 507 and FM 508.)
FM 507 Quantitative Methods in Financial Markets
This course explains and puts to use the different mathematical techniques for understanding the financial markets. The focus of the course is on the quantitative tools necessary to understand investment theory, portfolio analysis, and the modeling of options and other derivative securities. The course concentrates on some specific areas in differential and integral calculus that are important for asset pricing and risk management. (Prerequisite: FM 490 if required.)
FM 508 Statistical Analysis in Financial Markets
This course is a survey of statistical methods and concepts that prepares students for quantitative courses in the FM program. The course focuses on statistical inference and forecasting methodologies including regression and time series analysis. The course makes extensive use of Excel in solving statistical problems as well as an introduction to using @Risk for Monte Carlo simulation.
FM 520 Equity Valuation
This course covers the various models available for equity valuation. It includes discussions of the dividend discount model, Porter analysis, DuPont decomposition of ROE, sustainable growth rates, earnings quality and accounting fraud, and relative valuation measures such as price/earnings and price/sales. The major deliverable for this course is a comprehensive analysis of a public company, modeled after the well-known Merck case study. Also required is a complete analysis of a convertible bond. (Prerequisite: FM 503 and FM 523.)
FM 521 Global Investment Strategy
This course provides an integrated framework describing the investment process in global markets. It starts with explanations of what drives the foreign exchange markets and the forecasting techniques to predict currency moves. Discussions include the benefits of international diversification, and studies in global equity markets, emerging markets stocks and bonds, and the global bond markets. (Prerequisites: FM 503 and 508.)
FM 522 Portfolio Management and Mutual Funds
This course will allow the student the opportunity to add the practical business knowledge of portfolio management to their previous theoretical background. Topics include: mutual fund and hedge fund history, structure and objectives; portfolio management policies for individual and institutional investors; asset allocation; portfolio construction, optimization, revision; and trading; equity portfolio management strategies; fixed income portfolio management strategies; risk measurement, hedging, and derivatives use in funds; performance measurement and attribution; industry analysis and sector funds. (Prerequisites: FM 503 and 508.)
FM 523 Financial Statement and Security Analysis
This course develops financial analysis skills from the view of an outsider using a corporation's publicly available financial statements. Students will use financial ratios and qualitative techniques as a means to analyze a company's profitability, cash flow, liquidity, and capital structure (trends). Other techniques such as common-size statements, trend analysis, decomposition and use of the comprehensive DuPont and Z-score models are used as a basis to teach analytical thought processes necessary to make projections for a company based on its historical financial statements. Non-traditional ratio analysis for an industry, adjustment of financial statements to reflect accounting choices and off-balance sheet items, and forecasting future operating results by business segment are also covered. The student will also learn and work with alternative valuation models including the dividend discount model and the growth model to value a company. Finally, the student will learn about unique industry issues as the case study approach covers three companies in different industries. The use of spreadsheets as an analytical tool will be emphasized including use of a graphing template to compare a company's ratios to industry ratios. (Prerequisite: MBA 510 or Consent of Instructor)
FM 524 Hedge Funds
This course explores hedge funds and how they differ from regulated mutual funds. Topics covered include hedge fund business models and legal structures, performance and fee calculations, and risk management techniques. Further, students practice alternative trading strategies such as distressed investing, event driven trading, convertible bond, fixed income and merger arbitrage, and relative value equity hedged, and market neutral strategies. (Prerequisite: FM 503 or MSF 541.)
FM 525 Real Estate Investment Analysis
This course will introduce students to real estate ownership and financing. The importance of legal issues will be discussed, including zoning, types of ownership, taxes and development regulations. The course may include several case studies to enhance students' skills in evaluating the economics of proposed real estate development projects. As a part of these studies, students will analyze compound interest, mortgage loans, amortization and internal rates of return to support their investment decisions. Finally, students will understand the importance of capital markets and institutional investment in real estate, including mortgage-backed securities, conduit loans and Real Estate Investment Trusts (REITs). (Prerequisite: FM 503.)
FM 530 Visual Basic and Databases for Financial Markets
The course is designed to provide students with a comprehensive knowledge of the VB.NET programming environment that includes object oriented design using the .NET Framework. It will also cover relational database design, SQL, XML and the Unified Modeling Language. These tools will be used to create financial models using real time and historical market data. Students will develop financial applications using advanced Visual Basic tools. (Prerequisite: FM 506.)
FM 532 Equity and Equity Derivatives Modeling
This course focuses on the fundamental and statistical techniques for modeling equity securities, equity options, and equity index futures and options. Students deepen skills in the analysis of price behavior, the valuation of options and the links between financial markets and fundamental economic factor. The course features extensive, hands-on use of Excel, Visual Basic for Applications (VBA) and databases. (Prerequisite: FM 506)
FM 533 Term Structure and Interest Rate Derivatives Modeling
This course focuses on techniques for modeling fixed income instruments and interest rate-sensitive derivative products. Students deepen skills in the analysis of option embedded bonds using OAS models, mean reversion, path dependent securities using multinomial models, swaps principal component analysis and mortgage backed securities. This course also covers term structure theory and several spot rate models. This course is built around a series of laboratory studies. (Prerequisite: FM 506)
FM 538 Advanced OOP for Financial Markets
After reviewing C++ programming techniques and object oriented design, students will learn to use Visual C++.NET to build advanced financial applications and automated trading systems. Topics include multithreading, sockets, APIs, synchronization and the Unified Modeling Language. Substantial amounts of homework will be assigned and students will be expected to design and develop an original term project combining, into a C++ application, topics in quantitative finance and trading strategy presented in other courses. (Prerequisites: FM 530 and FM 492 or equivalent.)
FM 543 Market Analysis
Technical analysis is based on the assumption that markets are neither efficient nor random and that valuable information can be found in the study of price movements and changes in volume and open interest. This course will study different charting techniques (candlestick, point and figure, close-to-close, etc.) as well as interpretive methodologies, such as moving averages, market indicators, oscillators, and patterns. If history does repeat itself, it is important to recognize when it is happening. (Prerequisites: FM 505 and FM 506.)
FM 544 Equity Trading Strategies
This course will provide students with an opportunity to learn the latest Equity Trading Strategies used by large banks, brokerages and hedge funds. The instructor will present strategies on equity option trading, pairs trading, program and basket trading, risk arbitrage trading, structured product trading, and dispersion trading (time permitting). Equity trading theory and practical examples will be discussed. Students will be required to structure and adapt equity trading positions based on a range of actual and theoretical market conditions. In addition, students will collaborate with each other and the course instructor to analyze and evaluate the implementation of the above-mentioned strategies. (Prerequisites: FM 503, FM 505 and FM 506.)
FM 545 Advanced Options Trading Strategies
This advanced trading course provides students with an opportunity to develop and manage market positions utilizing commodities, currency and fixed income futures and options. Students will research these markets, then design, implement and manage market positions based on both current and simulated market data. Students will access market information and implement their positions using FINCAD. Along with the instructor and classmates, students will track their results and assess trading decisions. (Prerequisite: Both FM 505 and FM 506, or MSF 551.)
FM 546 Fixed Income Trading Strategies
This course will present basic trading concepts related to fixed income instruments. Also covered will be the analysis of repos and fixed income derivatives, such as forwards and futures, options and spreads. Trading strategies will be discussed, including yield curve strategies, basis trading, and various types of spread trading using many different instrument types. Students will make trading decisions and modify their portfolios in order to familiarize themselves with the instruments and techniques introduced. Swaps, Swaptions, Caps and Floors will be introduced, time permitting. (Prerequisite: Both FM 505 and FM 506, or MSF 551)
FM 591 Special Topics
This course examines the process of new product development in capital markets through a series of case studies and presentations by industry representatives. Due to the nature of the course, the actual topics studied will vary over time. Topics may include securitized assets, portfolio insurance, investments in developing countries, and institutional investments through derivative products.
FM 592 Enterprise Formation and Finance
This course covers the financing and formation process of private companies from product concept and angel investors to the Initial Public Offering. All of the players are discussed, including venture capitalists, entrepreneurs, investment bankers, institutional investors and buyout firms. Students will discuss business models; construct staffing and compensation schemes; practice valuation analysis; compare and contrast alternative financial sources; structure business plans; review the types of securities to offer; examine private placement processes; analyze negotiation strategies; and review the implications of financing terms and the role of venture capital and private equity investment in institutional portfolios.
FM 597 Independent Study
This course involves directed research arranged on an ad-hoc basis between a student and a full-time faculty member willing to sponsor the work. Eligible activities must include a substantial academic component and result in a work product, such as a paper or report that can be evaluated for its quality under traditional academic standards. The student and the sponsoring professor must have regular contact during the quarter for which credit is given to evaluate progress. Practical projects, tied to the industry, are welcomed, but the practical, work aspects must be tied to a body of theory and be linked by a work product as described. Credit may vary, depending on the nature of the activity, but may not exceed the number of quarter-hours associated with a regular course. (Prerequisite: Instructor's consent)
