Curriculum

The financial statement analysis component will provide students with a detailed discussion of the key accounting principles used in constructing the income statement, the balance sheet and the statement of cash flows, as well as covering financial ratio analysis. The emphasis will be on using this information to interpret and make adjustments to reported financial figures for use in financial analysis of companies. Topics include, but are not limited to a discussion of international financial reporting standards (IFRS) vs U.S. GAAP; a discussion of how the major components of the three financial statements are determined, including a discussion of the various accounting choices that are available to a reporting entity; estimation and interpretation of key financial ratios that can be used to assess a company’s financial health; and, a review of earnings quality issues that arise from various accounting choices. The core focus of the course is on ratio analysis, including the adjustments that an analyst must make to financial statements to data presented for inventories, fixed assets, deferred taxes, bonds, and leases.

The corporate finance component of MFIN 821 will introduce students to the basics of corporate finance including a “brief” review of financial statement analysis, and a detailed discussion of financial forecasting, the cost of capital, and capital budgeting. The emphasis will be on using this information to examine company decisions, and assess their future growth prospects and risks.

Whether we like it or not, as individuals and managers we evolve within various markets, and are subject to their rules. But how do world events shape our markets, decisions, and outcome predictions? This is the question we will address in our first theme, "Understanding Markets".

These markets are themselves part of the economy as a whole – Canadian and global. This economy goes through booms and busts over time – the business cycle – and these fluctuations have an important impact on prices, national output, unemployment, and indeed affect our daily lives. In our second theme, "Understanding the Economy", we will learn the tools necessary to understand business cycles and governments’ policy responses; and to form educated opinions about what we read on the subject in the news.

But beyond understanding markets and the economy, today’s managers face a myriad of economic issues when formulating strategies. Should we enter this market? Should we exit that one? What price should we charge? How much should we produce? Should we try and “deter” entry by a rival, or should we “accommodate”? In some markets – monopolistic markets – our ability to affect outcomes is strong. How can we use this market power to our advantage? Other markets are characterized by the fact that our actions affect, and are affected by, rivals’ actions and require a whole new set of tools – game theoretic tools. How can we use game theory to analyze these situations? These and other fundamental questions are addressed in our third theme, "Decision-Making in Market Environments".

The primary pedagogical objectives of the course are for students a) to familiarize themselves with important economic concepts, and b) to learn to use them as “tools” for efficient decision-making in business and other environments.

This course is an intensive program on financial modeling. During the course, participants will learn to create well-designed, functional and dynamic financial models. The course material includes model design, logic, construction, financial concepts, best practices and accounting treatment. Course topics include building financial statements, creating depreciation and tax schedules, forecasting and modelling working capital and capital structure, and creating discounted cash flow analysis.

This course will provide students with a brief review of the key principles of risk and return, modern portfolio theory, and market efficiency, which are critical inputs into both the corporate finance decision-making framework (through their impact on the cost of capital) and equity analysis (through their impact on the equity discount rate). Topics will include among others: risk and return; modern portfolio theory; capital market equilibrium models (including CAPM); fundamental economic, industry, and company analysis. Equity analysis will include a detailed and application-focused discussion of valuation models including the dividend discount model, free cash models and relative valuation approaches.

In addition to class assignments that will involve the analysis of real-world companies, students will also prepare a thorough analysis of an actual company to give them an opportunity to apply the concepts learned during the course to a real-life situation, and to assist in preparing them for the Toronto CFA Investment Research Challenge Competition.

This course will provide students a comprehensive overview of the fixed income markets, the main debt instruments traded, types of issuers and investors, and practices in the industry. Our main focus is on the cash debt markets, with coverage of derivatives to enhance analytic tools in the subject, and on risk-management. Our goal is to bridge the gap between theory and practice by illustrating how models and theories inform best trading and risk management practices in the fixed-income space.

Course Goals:

1. Linking bond theory with practice – use of market simulations and ‘mini’ cases in class to demonstrate and apply theory to real market instruments
2. Building knowledge of current fixed income markets and issues
3. Building bond portfolios – ability to incorporate yield curve, credit, capital structure and other variables into a comprehensive approach to fixed income portfolio management
4. Understanding of bond mathematics, bond pricing and relative value of product across the credit spectrum

This course will extend the principles of portfolio theory introduced in MFIN 823. Portfolio theory will be extended to cover topics including practical estimation of models; multiple factor equilibrium models; investment planning; asset allocation decisions; alternative asset classes and performance measurement. Application of these topics to both individual and institutional portfolios will be discussed. The class will take a “hands-on” approach with students having the opportunity to work with financial data, apply various estimation techniques, and evaluate portfolio performance.

Strong technical skills, a solid understanding of asset classes and financial instruments, and a deep grasp of how capital markets function are table stakes for a successful career in finance. In the hyper-competitive finance industry however, these attributes only get you a seat at a very, very long table. (And this is before you factor in the potential for innovative financial technology to replace a range of technical roles in the not too distant future.) Your ability to convey your knowledge and ideas to colleagues, clients and senior leaders in a compelling way that motivates them to take action is critical to your long-term success in the business.

This course is designed to help you develop and improve the communication skills that will set you apart from others and drive your career success.

Learning Outcomes:

1. Understand the importance of effective communication skills as a key differentiator in the careers of successful financial professionals.
2. Effectively deliver a strong personal branding statement that resonates in the financial industry.
3. Knowledgeably discuss topical socio-political and economic issues and their relevance to the performance of capital markets
4. Understand and effectively apply the principles of persuasion to the day-to-day activities of financial professionals (buy/sell recommendations, valuations, projections, etc).
5. Understand how to effectively present financial ideas using slides/PowerPoint.
6. Understand personal strengths and weaknesses as a presenter using video analysis and feedback, and develop a personalized improvement plan.

This course provides a comprehensive overview of derivatives and the markets in which they are traded. We implement the manufacturing process underpinning linear as well as non-linear instruments and, in this process, uncover the key relationships employed by market participants to value them. Furthermore, we explore how derivatives are used by financial institutions, as well as by non-financial firms, to manage unwanted risk exposures and/or to enhance investment yields. The course covers plain-vanilla derivatives (e.g. futures, forwards, FRAs, swaps, and options) as well as more recent innovations, such as exotic options and credit derivatives. We also explore best practices in enterprise-wide market and credit risk management, as well as recent developments in the regulatory environment surrounding the derivatives marketplace.