Pamplin College of Business

Finance, Insurance, and Business Law

FIBL departmentwww.cob.vt.edu/finance/
E-mail: fin@vt.edu

Vijay Singal, Head
Suntrust Professor of Finance: G.E. Morgan
Suntrust Professor of Banking: J.M. Pinkerton
J. Gray Ferguson Professor of Finance: V. Singal
R. B. Pamplin Professor of Finance: A.J. Keown;
G.B. Kadlec
R.V. and A.F. Oliver Professor of Investment Management: R. Kumar
Professors: J.S. Hiller; D.M. Patterson; M.I. Schneller; D.K. Shome; G.R. Thompson
Associate Professors: R.S. Billingsley; V.A. Bonomo; J.C. Easterwood; A. Mozumdar
Assistant Professor: H. Gulen; B. Remmers; S. Mansi, M. Cliff
Instructors: D.S. Haga, Jr.; S.D. Smith
Career Advisor: R.S. Billingsley (231-7374)

Overview

    Finance is a specialty that deals with the allocation of resources on the corporate, institutional and personal levels. Money is the life blood of the economic system and the flow of money through corporations, capital markets, and financial institutions is the sustaining force of the U.S. and global economy. Thus, finance professionals are integral to how that life blood gets pumped through the system, how it nourishes the health of the system, and how the economy sustains and perpetuates the standard of living that we enjoy. A degree in finance will prepare you for careers in a wide variety of sectors of the economy. Traditionally, three separate but related fields within finance are identified: 1) corporate financial management or “business finance” which focuses on the internal decisions of companies to raise funds and invest in corporate assets; 2) investment management which focuses on the purchase and sale of stocks and bonds or their derivatives by individuals and institutions; and 3) financial services management, which focuses on the management and regulation of institutions and the role that financial institutions play in the economy.

    The distinctions among the three fields are beginning to blur with deregulation and the globalization of businesses. For example, the use of derivative contracts by a corporation to hedge their foreign exchange and product price risks might require a financial institution (a bank) to understand and deliver derivatives and the need for the corporate treasurer to value the derivative instrument as well as to assess its appropriate use by the corporation. Similarly, corporations might consider investing their assets in the securities of other companies or in fixed income assets.

    The Undergraduate Program in Finance, Insurance, and Business Law is designed to suit the requirements of students intending to have specialized careers in various aspects of financial management such as investment management, corporate financial management, financial services management, and financial accounting. The program offers expertise in accounting and finance, essential for being a successful financial professional. This program includes computer-based courses and international electives that expose the students to the use of technology and to the operations of international financial systems. The students learn the application of various theoretical models in financial decision making and in analytical approaches to problem solving in the realm of finance. The program maintains a strong focus on case-oriented course work that will let students apply their knowledge to realistic situations and strengthen their oral and written communication skills.

    The curriculum offers courses in finance, insurance, and business law, but a major only in finance.

Requirements

    Students electing this major will take a series of commonly required courses required by the college and the university.

    In addition, Finance majors graduating in 2007 or later are required to take the following eight courses in their Junior and Senior years:

    FIN 4134: Commercial Bank Management
    FIN 4144: International Financial Management
    FIN 4154: Real Estate Finance
    FIN 4224 Fixed Income Securities: Analysis and Management
    FIN 4234: Venture Capital and Investment Banking
    FIN 4244: Asset Valuation and Corporate Governance
    FIN 4254: Bank Management and Financial Services
    FIN 4264: Managing Risk with Derivatives
    FIN 4274: Equity Securities: Analysis and Management
    ACIS 3116: Financial Accounting II
    ACIS 3215: Cost Accounting

    Students select different combinations of elective courses to fulfill the requirements of one or more of the five tracks offered. The five tracks are: General Finance, Investment Management, Corporate Financial Management, Financial Services Management, and Financial Accounting.

Requirements for specific tracks:

General Finance Track:
Select 12 Semester Hours from the Elective courses. At least 6 hours must be Finance courses with at least one being an in-major WI approved course.
Investment Management Track:
Select FIN 4224, FIN 4264, FIN 4274, and FIN 4144. FIN 4104 must be taken instead of FIN 4274 until FIN 4274 becomes a WI approved course.
Corporate Financial Management Track:
Select FIN 4234, FIN 4244, FIN 4264, and FIN 4144. FIN 4104 must be taken instead of FIN 4244 until FIN 4244 becomes a WI approved course.
Financial Accounting Track:
Select ACIS 3116, ACIS 3215 and two Finance courses from the elective courses with at least one being an in-major WI approved course.
Financial Services Management:
Select FIN 4254, FIN 4264, and FIN 4144. Select either FIN 4224 or FIN 4234. FIN 4104 must be taken instead of FIN 4254 until FIN 4254 becomes a WI approved course.

Undergraduate Course Descriptions (FIN)

2954: BUSINESS STUDY ABROAD
This course provides students with an international business experience. It is only offered as part of a program outside of the United States. Students will learn from the structured educational experience developed by the faculty leader. Pre: Instructor's consent and the completion of 30 SH with a minimum GPA of 3.0 or departmental consent. Variable credit course.

3055-3056: LEGAL ENVIRONMENT OF BUSINESS
Examines the legal environment in which businesses operate, specifically addressing both private law involving the relationships between individual businesses and public law involving the legal relationship between businesses and society. Junior standing required. (3H,3C) I,II,III.

3064: LEGAL ENVIRONMENT OF BUSINESS FOR ACCOUNTANTS
Examines the legal environment in which businesses operate, specifically addressing both private law involving the relationships between individual businesses, and public law involving the legal relationship between businesses and society. The course is geared specifically for accounting students who will take the CPA exam. Junior standing required. Pre: 3055. (3H,3C) II.

3104: INTRODUCTION TO FINANCE
Overview of financial decision-making process focusing on the creation of wealth. Topics covered include the time value of money, how stocks and bonds are valued, financial decision-making within a firm, an overview of financial markets, and investment banking. The course is designed for finance and non-finance majors. Junior standing required. Pre: ACIS 2115 or ACIS 2004. (3H,3C)
I,II,III,IV.

3114: INTERMEDIATE FINANCIAL MANAGEMENT
Analysis of the concepts critical to the financial manager in a contemporary environment--risk valuation, cost of capital, capital structure, long-term finance, as well as topics of special interest like mergers, leasing, and
multinational finance. Junior standing required. Pre: 3104. (3H,3C) I,II,III.

3134: FINANCE CONCEPTS AND SKILLS
Key concepts and computational skills in finance. Time value of money, risk and return, and the basics of capital investment, security valuation and interest rate determination. Junior standing required. Pre: ACIS 2115 or ACIS 2004.
Co: ACIS 2504. (3H,3C)

3144: INVESTMENTS: DEBT, EQUITY AND DERIVATIVES
Risk, return and portfolio theory, knowledge of financial securities and markets. Introduction to mutual funds, financial securities and markets, portfolio analysis, market efficiency and performance evaluation, bond valuation, term structure of interest rates, interest rate risk, security analysis and stock valuation, options, Black-Scholes option pricing model, and futures. Must have a grade of C or better in prerequisite of FIN 3134, and Junior standing required. Pre: 3134. (3H,3C)

3154: CORPORATE FINANCE
Types of financial management decisions that firms make, the environment in which decisions are made, the available choices and decision criteria, and valuation consequences of these choices. Determination of a firm's optimal debt- equity ratio, estimation of cost of capital, evaluation of capital investments, divided policy, and sources of financing. Must have a grade of C or better in prerequisite of FIN 3134, and Junior standing required. Pre: 3134.
(3H,3C)

3164: CAREERS IN FINANCE
Career opportunities and job search strategies in the finance field with ties to the finance courses that best help the student identify a career in his/her selected field. Junior standing required. Pass/Fail only. (1H,1C)

3204: RISK AND INSURANCE
Surveys the concept of risk as it applies to the nuclear family and as a socio-economic force in society. Risk management techniques utilizing social and proprietary insurance to neutralize the effect of risks inherent in daily life: termination or suspension of earnings, liability exposures, and potential losses of real and personal property values. Junior standing required. (3H,3C) I,II,III.

3304: SURVEY OF INVESTMENTS
Examines the basic principles and concepts in investing with emphasis on investment decisions of the individual investor. Coverage of the financial environment, financial instruments, risk and return, portfolio management and performance evaluation. Not available for credit for business majors. Junior standing required. (3H,3C) I,II.

3954: STUDY ABROAD
Variable credit course.

4004: WILLS, TRUSTS, AND ESTATES
Examines the control of assets through the creation and use of trusts, and the control of property through estate planning. The course emphasizes financial planning through estate management both personally and as a part of a business plan. Pre: 3055. (3H,3C)

4014: INTERNET, ELECTRONIC AND ONLINE LAW
Study of the international legal environment and regulation of the electronic world, including electronic commerce, computer and media communication issues, and speech over the Internet. Webpage design, copyright, electronic payment, electronic contract, encryption, and privacy are some issues to be examined. Topics will be updated continually to reflect the newest developments of the law as applied to the electronic world of commerce. Pre: Junior/Senior standing or consent of instructor. (3H,3C)

4104: ADVANCED FINANCIAL MANAGEMENT
Finance 4104 applies the case method to selected areas of financial decision making within the corporation. Emphasis is placed on isolating key financial issues and designing creative and reasonable recommendations for action. Pre: 3114. (3H,3C) I,II.

4114: INVESTMENT ANALYSIS AND EQUITY MARKETS
Examines the role and functioning of equity markets. Specific topics include security valuation, portfolio theory, efficient market hypothesis, asset allocation and portfolio management, mutual fund performances, evaluation and selection, stock options, and futures contracts. Pre: 3104. (3H,3C) I,II.

4124: INTEREST RATES AND DEBT MARKETS
Analysis of fixed income securities. The course covers topics in the foundations, term structure, and risk structure of interest rates, government and corporate bond markets, valuation, managing bond risk, asset backed securities, and the management of debt funds. Pre: 3104. (3H,3C) I,II.

4134: COMMERCIAL BANK MANAGEMENT
Emphasis on the major issues facing managers of financial institutions focusing primarily on commercial banks. Topics include asset, liability, and capital management, the regulatory environment, and special topics. Pre: 3104. (3H,3C) I,II.

4144: INTERNATIONAL FINANCIAL MANAGEMENT
Explores the environmental challenges facing the financial manager of a multinational corporation and the tools and techniques developed to meet such challenges. Pre: 3104. (3H,3C) II.

4154: REAL ESTATE FINANCE
This course introduces the fundamentals of both real estate financing and investment. Conventional mortgages as well as more creative financing methods will be analyzed. The secondary market for mortgages and relevant institutional factors also will be examined. Investment analysis of real estate will be viewed in a capital budgeting framework; appropriate tax law will be discussed as it affects real estate cashflows. Pre: 3104. (3H,3C) II.

4164: FINANCIAL DERIVATIVES I
Examines the use of financial derivatives in managing the risk of decisions in financial markets. Overview of financial derivatives. Option principles, pricing and strategies. Review of pricing spot assets. Futures and forward contract principles, pricing and strategies. Pre: 3114 or 4114. (3H,3C) I,II.

4174: FINANCIAL DERIVATIVES II
Continuation of 4164 with coverage of advanced strategies involving options on futures, currency derivatives, interest rate derivatives including swaps, options, forward rate agreements, structured notes and mortgage-backed securities. Advanced equity derivatives. Risk management of corporations and dealers. Pre: 4164. (3H,3C) II.

4184: INVESTMENT BANKING
Study of the operation and practices of investment banks involved with the raising of capital for private and public enterprises and the restructuring of private enterprises and government entities with investment banks and universal banks. The course will emphasize both the U.S. industry, and the rapidly evolving global industry. In addition to examining several different transactions, the course will examine competition and regulation issues. Time will also be spent covering the nature of conflicts of interest and ethical dilemmas that are inherent in investment banking. Topics will be updated periodically to reflect recent trends and innovations within the industry. Pre: 3114. (3H,3C)

4224: FIXED INCOME SECURITIES: ANALYSIS AND MANAGEMENT
Analysis of fixed income securities, including corporate bonds, U.S. Treasury notes and bonds, municipal bonds, money market securities, and home mortgages. The analysis include interest rate risk, credit risk, bond valuation theory, and the valuation of embedded options in the bond contract. Theories of the term structure of interest rates are presented. Must have a grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4234: VENTURE CAPITAL AND INVESTMENT BANKING
Explores the venture capital cycles of fund-raising, investing in portfolio firms, and exiting the investment. Focuses on the role of investment banking in the exiting of investments by taking the portfolio firms public through initial public offerings. Includes a conceptual component and an applied component in which the case method is used. Must have a grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4244: ASSET VALUATION AND CORPORATE GOVERNANCE
The effect of corporate governance on asset-valuation. Case oriented course focusing on the valuation of non-financial assets such as projects, business units, private and public firms. Topics include method of comparables, discounted cash flow methods and the real options approach to valuation. Examines the external and internal governance mechanisms for preserving and enhancing the value of a firm. Must have a grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4254: BANK MANAGEMENT AND FINANCIAL SERVICES
The functions of financial service providers and the risks inherent in the provision of banking and other financial services. Regulatory background and issues. Case oriented course. Must have a grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4264: MANAGING RISK WITH DERIVATIVES
The types, payoff, and pricing of derivative securities and contracts and their application in managing financial risks faced by corporations. Topics include options, forwards, futures and swaps; managing foreign currency risk, interest rate risk, stock price risk, and commodity price risk; and risk management techniques. Must have a grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4274: EQUITY SECURITIES: ANALYSIS AND MANAGEMENT
Advanced valuation and analysis of equity securities with case applications. Critical analysis of advanced equity asset pricing models. Analysis of advanced equity portfolio management techniques, equity portfolio performance measurement, and equity portfolio performance attribution analysis. Identification and analysis of market anomalies and recent developments in equity analysis. Must have grade of C or better in prerequisites of FIN 3144 and 3154. Pre: 3144, 3154. (3H,3C)

4614: ADVANCED TOPICS IN FINANCE
Study of advanced topics in finance. This course will consist of timely, in-depth analyses of advanced, contemporary topics of interest in corporate finance, investments, or capital markets. The course may be taken twice with different topics. Junior/senior standing and the consent of the instructor is required. Pre: 3104. (3H,3C)

4974: INDEPENDENT STUDY
Variable credit course.

4984: SPECIAL STUDY
Variable credit course.

4994: UNDERGRADUATE RESEARCH
Variable credit course.

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