Shaping Leaders, Driving Results

Investment Management Concentration

Overview

The concentration in Investment Management (IM) is designed to prepare students for leadership positions on both the buy and sell sides of securities markets, including:

  • Security analysis and portfolio management,
  • Capital markets,
  • Sales and trading, and
  • Private wealth management

IM courses and workshops are structured to give students a thorough preparation for the Chartered Financial Analyst (CFA) program. Many students choose to apply to the Applied Investment Management course. In this course, students manage real portfolios of financial assets.

> Printer-friendly Investment Management Concentration PDF

Alumni Leaders in this Industry

  • Lee Ainslie - Principal: Maverick Capital
  • Dwight Anderson - Principal: Ospraie
  • Donna Dean - Chief Information Officer: Rockefeller Foundation
  • Braxton Glasgow - Executive Vice President: Kenmar Funds
  • Richard Jenrette - Founder (retired): Donaldson, Lufkin, and Jenrette
  • Sallie Krawcheck - President of Global Wealth & Investment Management: Bank of America
  • Bill Reynolds - Director (retired): T. Rowe Price
  • Julian Robertson - Founder: Tiger Funds

Finance and Accounting Courses Required for IM Concentrators

  • Investments (required in first year) Investments

    The objective of this course is to undertake a rigorous study of the theory and empirical evidence relevant to investment management. It will introduce you to the characteristics of various financial securities and discuss the risks and rewards associated with them. Topics covered include optimal portfolio selection and asset allocation, the theory of asset pricing models, market efficiency, behavioral finance, the mutual fund and hedge fund industry, as well as techniques for evaluating investment management performance. Much of the course is devoted to common stocks, but other investments, especially fixed-income securities and derivatives, will be included. The course does not cover individual security selection and valuation. The course is fairly quantitative. Students who master the course material will acquire the analytical tools and theoretical concepts necessary for making good investment decisions and understanding the paradigms by which financial securities are valued.

  • Quantitative Methods in Finance (required in first year)

    The objective of this course is to undertake a rigorous study of the theory and empirical evidence relevant to investment management. It will introduce you to the characteristics of various financial securities and discuss the risks and rewards associated with them. Topics covered include optimal portfolio selection and asset allocation, the theory of asset pricing models, market efficiency, behavioral finance, the mutual fund and hedge fund industry, as well as techniques for evaluating investment management performance. Much of the course is devoted to common stocks, but other investments, especially fixed-income securities and derivatives, will be included. The course does not cover individual security selection and valuation.

    The course is fairly quantitative. Students who master the course material will acquire the analytical tools and theoretical concepts necessary for making good investment decisions and understanding the paradigms by which financial securities are valued.

  • Portfolio Management (required in first year)

    This course covers the basics of portfolio management of financial assets. Particular attention is paid to the process of developing an appropriate investor policy statement; using investment theory to construct an efficient portfolio, and the methods for monitoring and rebalancing the portfolio. The course also covers the ethics required of investment professionals. This course covers much of the material required for the portfolio management section of the CFA exam. Past or concurrent enrollment in the Investments course is highly recommended.

  • Derivative Securities

    The course provides an introduction to the primary instruments of the derivative securities market. Emphasis will be placed on real-world applications of theoretical (or conceptual) material discussed in class. After developing the ideas of static and dynamic arbitrage, the course ends with five lectures applying the basic concepts to different business settings, from capital budgeting to risk management. The course is particularly important for anyone going into finance, but stress will be given to topics that are of relevance for general managers. Topics covered include no-arbitrage-based pricing; binomial option pricing; the Black-Scholes model; practical issues with Black-Scholes model; the pricing of futures and forwards; hedging with derivatives; portfolio insurance; equity and debt as options; real options.

  • Fixed Income

    The objectives of this course are to: describe important fixed income securities and markets, and develop tools for valuing fixed income securities and managing interest rate risk. The course will cover traditional bonds, the term structure concepts as well as more recently developed fixed income derivatives. The course is rigorous and quantitative. Students are expected to understand and apply quantitative methods. Examples illustrate important real-world applications of the theory.

  • Advanced Derivative Securities

    This course builds on the topics from Introductory Derivatives. Emphasis will be placed on real-world applications of theoretical (or conceptual) material developed in class. Although the pricing of derivative securities and the applications of such securities to portfolio and risk management is mathematical by nature, most of the math in the course is algebra-based. Certain concepts in the course draw on the mathematical principles of calculus, but calculus is not a requirement for the course There will be several topics covered, including duration- based fixed income portfolio management; fixed income pricing and risk management using interest rate futures; fixed income pricing and risk management using swaps, pricing and risk management using interest-dependent financial claims with option features; the use of exchange-traded options in asset allocation; practical LP-based option portfolio selection; the use of option pricing theory to price corporate debt; and real options.

    The course will incorporate both lectures and student discussions to cover the various topics. Students will also prepare several applications-based projects as a basis for class discussion.

    Students interested in portfolio management, derivatives trading, commercial banking, investment banking and industry finance are encouraged to take this course.

    or
    Advanced Fixed Income

    This course builds on the materials covered in Fixed Income. The objective of this course is to introduce relatively advanced techniques in fixed income valuation such as risk-neutral pricing. It covers the use of interest rate models in pricing interest rate derivatives such as caps, floors, collars, convertibles and swaptions. Simple illustrations of mortgage backed securities such as collateralized debt obligations (CDO) and their pricing techniques will also be studied.

    (both are recommended)
  • Alternative Investments

    This course is designed to be an important component of the Investment Management (IM) concentration curriculum. However, the course is open to students who are not IM concentrators. Students will be exposed to a variety of alternative investments and related strategies, from the institutional investor, issuer, and broker/dealer perspective. Asset classes and strategies expected to be covered include: venture capital, private equity, commodities, structured credit vehicles (including CDOs and CMBS), and selective hedge fund and fund-of-fund strategies. In addition, students will explore current regulatory issues impacting alternative investments. The "seminar" format of the course will be a combination of real-time capital markets updates, lectures on the defined topics, student case presentations, guest speakers from both the institutional investor community and financial services industry, and a team-oriented investment management consulting project.

    or
    Risk Management

    This course aims at developing a theoretical and practical framework for the management of financial risk. The primary focus will be on financial institutions such as banks, securities firms, hedge funds and other portfolio managers. While the main topic will be market risk, additional risk topics will include financial operations, liquidity and asset/liability management. The course is important for anyone interested in financial management either at a financial intermediary or in corporate treasury.

    (both are recommended)
  • Current Topics in Fixed Income

    The class covers current topics and investment strategies in each of the major bond market segments (i.e., US Treasuries, corporate issues, mortgaged-backed, high yield, global, etc).

    or
    Hedge Fund Strategies

    This course will cover the operational details of specific hedge fund strategies such as convertible arbitrage and long/short equity strategies. The course is lead by Mark Yusko president and CIO of Morgan Creek Capital a $9 billion hedge fund investment group based here in Chapel Hill. Each class will focus on a specific strategy and will include guest lectures by leading managers following that strategy. This class is open to all second year students by approval and first year students pursuing careers in the alternative investment management area. Past or concurrent enrollment in the Investments course is highly recommended.

    (both are recommended)

Other Suggested Electives

  • Applied Investment Management

    Investment management is the process of investing in financial securities for the preservation and growth of wealth. The emphasis of this course will be on the decisions that must be made by, and/or for, the ultimate investor, and the analytic tools and empirical evidence that can help inform such decisions. The objective of this course is two-fold: first, to provide financial analysts with the analytical skills needed to aid such investors; and second, to help individual investors utilize and evaluate the services offered by analysts.

    Traditionally, investment courses have tended to focus on the investment process of institutional investors building portfolios of securities. The dramatic change in computational and communication costs over the last decade makes such techniques accessible to a larger set of investors today. In addition, there is a worldwide trend to give individuals more control over the investment of funds to cover retirement expenses. The combination of these two trends makes it imperative that individuals understand how to make investment decisions rationally.

    The practical application of the principles and the techniques of Investment Management will be covered by the operations of Kenan-Flagler Financial Planners (KFFP). Each student in the course will be one of the financial planners (analyst) in KFFP. The instructor will function as the research department. Each student will complete a financial plan for a client (investor).

    Topics covered include: 1) the behavior of security prices; 2) objectives for short-term and long-term investing; 3) diversification; 4) constructing optimal portfolios; 5) modeling and estimating risk-reward tradeoffs; 6) active versus passive strategies; 7) evaluating the performance of managed portfolios; and 8) valuation models.

    Various concepts and approaches are subjected to real-world data. Descriptive and institutional materials in the textbook are left for students to read on their own. We will aim to provide students with a lasting conceptual framework in which to review the investment process and to analyze future ideas and changes in the investment environment.

    (highly recommended)
  • Financial Statement Analysis

    Financial Statement Analysis seeks to provide you with an applied perspective on analyzing financial statements. By the end of the course, the successful student will be well on their way to mastering several skills:

    1. Earnings management. You’ll understand how and why managers can move earnings up and down using accounting discretion, and how you can detect and adjust for this.
    2. Profitability analysis. You’ll know how to decompose a firm’s overall profitability into its key elements, so that you can tell whether the firm is really making money or losing money; where this is happening; and why it is happening.
    3. Statement analysis. You’ll learn how to pull apart and understand a firm’s financial statements + footnotes so that its major business economics are more clearly visible.
    4. Credit analysis & predicting financial distress. You’ll be able to evaluate how close a firm is to being in financial distress, and how creditworthy it is.

    FSA is designed to be particularly useful for finance-oriented first year students preparing for summer internships. The course is also valuable to second years looking at consulting, corporate finance, entrepreneurship, general management, investments, and marketing careers. The course complements, not repeats, material in related courses such as Financial Accounting, Taxes in Finance, Topics in Advanced Financial Reporting, and Complex Deals.

    (highly recommended)
  • Global Financial Markets

    This course develops the foundations for financial decisions in a global economic environment. It concentrates on four areas: markets, tools, corporations, and investment. The course analyzes the functioning of international financial markets and institutions and addresses the management of foreign exchange exposure in international corporations. The course continues by considering the valuation of international investments and the opportunities for international corporations in global debt and equity financing, e.g. in emerging markets. Finally, the course concludes with the benefits of global diversification in investment strategies.

  • Topics in Advanced Financial Reporting

    This course will show students how to account for stock options, income taxes, pensions, leases, derivatives, financial instruments, and asset securitizations. The focus will be on enabling students to extract information from financial statement disclosures, including footnotes, for purposes of equity valuation and financial statement analysis. Many of the topics covered in the course relate to accounting standards that have been both controversial (e.g., the pension and stock option standards) and are currently being reconsidered by the FASB and their international counterpart, the IASB (e.g., asset securitizations). The course will draw on current deliberations by accounting standard setters, and will help students understand the political landscape of standards setting in relation to prominent and controversial events in the financial markets, such as the mortgage market collapse. The course is highly recommended for students concentrating in corporate finance or investments, and complements several electives in accounting and finance including equity valuation and financial statement analysis. The course covers several accounting topics that are also on the CFA exam.

  • Complex Deals

    This course develops sophisticated users of financial information. The ability of students to read and utilize information in corporate financial statements and to understand the economic essence of important classes of complex business transactions will dramatically increase. The course applies insights from financial economic theory to explore important issues of corporate governance, organizational design, risk management and managerial incentives and behavior. Many fascinating deals and transactions will be examined, focusing on understanding the economic underpinning of a transaction and its accounting representation in the firm's financial statements. The course approach strips away all unnecessary bookkeeping to focus on grasping the transformation of economic events into accounting information. The material encompasses many recent developments in the world, including cutting edge research findings not yet reflected in existing textbooks, recent accounting scandals or international developments.

    The course will benefit a number of constituencies, including bankers, strategy consultants and deal makers who must understand the economic and accounting implications of varying a deal's structure or make valuation estimates using accounting information; investors and analysts who rely on financial information to guide investment decisions; and corporate managers who must achieve financial reporting objectives, or use financial statement information in formulating strategies and discerning the strategies and situations of competitors.

    The course format involves a mixture of lecture and case discussion. Grades will be determined on the basis of four exams spread evenly over the course.

  • Applied Corporate Finance

    The objective of this course is to learn how to resolve real corporate finance problems with the help of analysis, theory and judgment and in the context of a corporation's business strategy. Topics include valuation, capital structure, dividends, share repurchases, raising capital, financing and applications of options in Corporate Finance. This is a case study-based course, and students will form study groups to examine and analyze case studies for each topic covered in the course.

  • Fundamental Principles of Corporate Finance

    Fundamental Principles of Corporate Finance is a more advanced course in corporate finance theory and policy. The aim of the course is to rigorously analyze the major issues affecting the financial policy of a modern corporation, such as the choice of its capital structure, dividend policy, share issuance and repurchase and corporate governance system. We will critically discuss costs and benefits of the strategies available to a firm’s top management to address these issues effectively. The course will also examine private equity and venture capital, and the process of raising capital through IPOs and SEOs. The course will conclude with a discussion of the role of corporate financial risk management. Classroom presentation will be mainly theoretical, but will illustrate the main concepts with examples drawn from the real world. Exposition will be analytical, and a working knowledge of basic mathematics and statistics is assumed.

    Prerequisites: BA 280A, BA 280B

    *This course is limited to first-year students

  • Mergers and Acquisitions

    Mergers, Acquisitions and Corporate Restructuring have a dramatic impact on most corporations. Many managers will either directly or indirectly face the challenges brought on by these changes in corporate structure. These mergers that induce change provide an opportunity for gaining insight into key corporate issues.

    The objective of this course is to learn the financial techniques to analyze the valuation and structuring of corporate mergers and acquisitions, with an application of financial theory to solve a set of case studies in strategic decision areas. Students will form study groups to examine and analyze assigned cases for class discussions.

  • Private Equity

    This course will examine all sources of private capital available to those wishing to buy a business, refinance a business or start a business. We will start by looking at where these funds originate, the criteria that the source of funds have for the fund managers who capitalize business. Then we will examine the type of funds available: private equity, mezzanine debt, hybrid funds, workout funds, venture capital, etc. We will examine how each decide the type of investments they fund, the method for getting these funds for your project, the right type of funding for your venture, the returns each source of capital expects, how much capital in each fund is available world-wide and how to negotiate the best deal.

    We will start with a discussion of where funds come from, the institutional fund market, the role of the gatekeepers, the funds themselves and the current trends of each. This course is for students going to work for Venture Capital., Private Equity, Hedge Funds, Distressed Debt, or Mezzanine Debt funds, Investment Banking, Consulting, or for students who wish to start, buy or grow a business.

  • Real Estate Capital Markets

    Real Estate Capital Markets focuses on the techniques used to analyze, finance and structure commercial real estate transactions. This course also examines the role of capital markets in facilitating development and investment in commercial real estate. Topics include an overview of the real estate space and capital markets and valuation; investment analysis for real estate equity investment, including financial structure, taxation and valuation using real-option methodology; primary and secondary commercial mortgage markets (CMBS); and analysis of publicly traded real estate investment trusts (REITs). The course provides a decision-making framework that gives students an in-depth and intuitive understanding of real estate finance, real estate investment and the operation of real estate capital markets.

    Prerequisites: Finance 214

    *This course is limited to second-year Real Estate Concentrations or by permission of instructor. *This course is not computer-supported.

  • Taxes in Finance

    Part of being financially savvy is having an understanding of how taxation affects business decisions, e.g., forming a corporation and raising capital, operating the firm, distributing cash to shareholders through dividends and share repurchases, expanding through acquisition, and divesting lines of business. Taxes have a direct impact on cash flow and often divert 30% to 40% of the firm's pretax cash flow to the government, making the government the single largest stakeholder in many firms. Having an understanding of taxation and how firms plan accordingly is important for just about any career path you choose, whether you will be a an investment banker, venture capitalist, consultant, money manager, CFO, treasurer, controller, taking over a family-owned business, or as an entrepreneur setting up a new business. Taxes are everywhere and it pays to have some understanding of them.

    A recurring theme will be linking the tax strategies that we learn with concepts from corporate finance, financial accounting, business law, and economics. We make extensive use of real transactions to illustrate the impact of tax structure on earnings and cash flow. I think you will find that people who understand the tax consequences and trade-offs of decisions have a distinct advantage in the marketplace.

    Specific topics include:

    1. Tax planning fundamentals
    2. Taxation of corporate operations and financing
    3. Tax information in the financial statements
    4. Taxation of mergers and acquisitions
    5. Taxation of divestitures
    6. International taxation
    7. High wealth tax planning
  • Financing Deals and M&A

> Year One Curriculum detail

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