Postgraduate Courses

Valuation of cash flow streams (PV of cash flow streams, annuities, and perpetuities); valuation of bonds; valuation of stocks using dividend discount model; capital budgeting decisions (NPV, IRR, payback); capital structure; limits to the use of debt (trade-off models); estimation of cost of debt and equity; WACC; terminal value.

Corporate governance examines how corporations induce their managers to maximize shareholder value through incentives and monitoring institutions. Incentive plans, such as compensation packages, serve to align managerial and shareholder interests. Monitoring institutions, such as the board of directors and auditors, serve to oversee management and increase transparency, accountability, and credibility. In addition to these internal governance mechanisms, corporations are also disciplined by external factors such as product-market competition, laws and regulation, and the market for corporate control. This course analyzes how good corporate governance can mitigate incentive and information problems, nurture great leaders, and foster great companies. Through numerous cases and examples, we also show how bad governance can worsen these problems, lead managers to cheat, and cause companies to fall.

Valuation of projects (advanced capital budgeting); estimating cost of capital; risk assessment of projects; decision tree analysis; real option valuation of projects; warrants and convertibles; leasing; dividend policy.

Practical and theoretical issues in risk management from the corporate end-user's perspective; benefits and optimal strategies of risk management; current cases which have been debated in the media.

This course covers the private equity business from a practitioner's perspective and is oriented around the life cycle of an investment. There will be a focus on how the industry operates in Asia and throughout the course, participants will examine situations from the perspective of various stakeholders involved. Topics will include: 1. Overview of the private equity industry in Asia 2. Identifying investment opportunities and valuation 3. Structuring and negotiating term sheets 4. Understanding risks and the due diligence process 5. Monitoring, managing and exiting portfolio investments

An introduction to the analysis of structured securities. Catalogues the world of cash- and derivative-based structured products. Reviews the essential methods used by rating agencies in appraising the credit of cash structures: ABS, MBS and CDOs. Hands-on exercise on the assignment of credit ratings.

The purpose of this course aims to give participants an insight to the practical approach to this broad field of study. The course will assume knowledge of basic modeling techniques and financial accounting. It is about developing a thought process, not about learning facts or specific techniques. At the end of the course one would expect students to have a greater ability to look at a company through publicly available information and to make a relative judgment as to the strengths and weakness of that company and its position within a market. Students will be encouraged to think in terms of a "SWOT" analysis as a framework for most situations.

This course is tailored for individuals who are currently working in or are contemplating to work in a family business, either as a family member or a non-family executive. The material covered also gives greater understanding of the dynamics of family business for current or future private and investment bankers, family office professionals, accountants, lawyers and other service professionals working closely with families of wealth in the region. Graded P or F.

An introduction to fundamental concepts in investment analysis. The first part covers risk and return tradeoff, portfolio diversification, and modern portfolio theory including the capital asset pricing model and arbitrage pricing theory. The second part covers basic analytical tools used in analyzing fixed income securities. Topics include interest rates and yield curve mathematics, duration and convexity.

The course covers the complete investment process including: constructing investment objectives, outlining investment policies; choosing asset allocations; monitoring investments; and measuring performance. Practical issues relating to investment style, active management, and passive management are discussed. Advanced techniques in portfolio construction such as the Black-Litterman model and multi-factor models are studied.

This course puts together a collection of industry cases, projects and academic papers on Sustainable Investing, also known as ESG Investing. It is an investment approach that integrates three additional factors - environment (E), social (S) and governance (G), into security analysis and portfolio allocation. As the industry successfully adopts these factors into their double bottom line financial analysis, only a handful of courses - such as this one - would tackle the subject. This course will discuss the market terminology, practices, usages and dollar impact of ESG factors. The main focus is on the identification, measurement and the materiality of ESG indicators. The students will learn that financial analysis with ESG integration provides the basis for a more informed investment decision. Discussion on existing academic papers will shed light on the cost and benefits of sustainable investing. This course will empower the students with cutting edge information, tools and solid research on the subject.

Basic characteristics of derivatives instruments such as forwards, futures, options, and swaps. Topics include pricing of futures and forward contracts, forward-spot basis risk, option strategies, put-call parity and introduction to the Black-Scholes model. The development and use of interest rate and currency swaps are also discussed.

Advanced techniques in option pricing and derivatives risk management. Topics include the binomial model, risk-neutral valuation, extension of the Black-Scholes pricing model and option Greeks. The course will also include discussion and analysis of options on futures, interest rate options such as caps and floors, and some popular OTC projects such as equity linked notes and principal guaranteed funds.

This course is designed to educate students on the various financial institutions (banks, securities firms, asset managers, alternatives, insurance companies and pension funds) and help them better understand how these institutions interact with the financial markets. This course will help students become more familiar with financial terminology, providing a sound basis for understanding the intersection of financial system and the economy. Students will also gain an appreciation for the various business models and how those models motivate decision making. We examine the role, objectives and function of financial regulation, the evolving role of central banking and monetary policy and the implications and consequences for financial institutions and markets. Throughout the course we link prevalent economic theories to market realities. Topics covered include the structure and function of the financial system, the role and the types of financial institutions and financial intermediation, the goals of financial and banking regulations, the organization of central banks and the role of monetary policy. The course is practical, solidly grounded in the reality of the markets and will include many real life examples, case studies and market news.

Foreign direct investment; China's banking system; trade and trade finance; infrastructure finance; raising funds from the stock markets.

The course is an overview of China's financial markets, their latest development, and future trends. Topics include: History of China Financial Markets, Structure of China Financial Markets, Regulation and Regulatory Bodies, Foreign Exchange and Monetary Policy, the Peoples Bank of China, Banking Industry, Securities and Bonds Market, Development of the Stock and Bond Market, Development of the Insurance Industry, Private Equity Funds, and the Real Estate Industry.

Key valuation techniques including discounted cash flow approach and valuation by multiples. Understanding of how firms manage and create value through restructuring assets, liabilities and organizational design.

Includes techniques in fixed-income portfolio management and introduction of fixed-income derivatives. Topics include term-structure theories, yield-curve fitting techniques and yield curve trading strategies, portfolio performance evaluation, floating rate securities, forward rate agreements, bond and interest rate futures, and interest rate swaps.

Basic valuation approaches including dividend discount model, free cash flows model, and valuation by multiples; measures of company performance and value added; valuation in special situations such as emerging markets, closely held companies, mergers, and divestitures.

This course is designed to develop an in-depth understanding of the choices open to companies in terms of debt financing, and to provide students with an introduction to the domestic and international debt financial markets.

Topics include: (1) An overview of the venture capital and private equity markets in Asia; (2) Deal structuring; (3) Valuation techniques; (4) Due diligence and post-investment management; (5) Understanding the terms in term sheets; (6) Negotiating term sheets; (7) Going public, trade sale and other exit strategies. Real-world examples from throughout Asia will be used to illustrate these topics.

The course is designed to provide students with an overview of how supply equals demand in real-world financial markets. After taking this course , students would be able to appreciate the frictions existing in actual financial markets - bid-ask spreads, trade impact on price, brokerage commissions, quantity limitations, time delays, market manipulation, etc. - and be able to devise trading strategies that minimize these frictions.

This course examines how individuals' attitudes and behavior affect their financial decisions and financial markets. Topics include: review of psychological foundations, imperfect markets and limited arbitrage, market anomalies, and trading strategies.

Brief overview of financial intermediaries and their functions. Measures of interest rate risk: periodic (re-pricing) gap, duration gap. Management of interest rate risk using appropriate composition of assets and liabilities, futures, options, caps, floors, collars, swaps. Market risk: value at risk measures. Management of credit risk, off-balance sheet risk, liquidity risk, capital adequacy. Deposit insurance. With selected case studies.

Alternative investments are the fastest growing sector of the financial industry, and probably the least understood, including by several market professionals. Although the range of sophistication in people associated with alternative investments varies substantially, it is more and more common to use them in investment strategies, either as direct investments or through funds of funds or structured products. The purpose of this course is to give participants a good understanding and workable knowledge of the techniques that should be part of the tool kit of anyone investing in, analyzing and/or advising private and institutional clients on the inclusion of alternative investments - and more specifically hedge funds - in their portfolios. Furthermore, this course will enable the participants to absorb the analytical arguments in the technical publications - the in-house research notes of financial institutions and in practitioner oriented journal - that deal with alternative investments and to apply them.

Focuses on the design, analysis, and implementation of financial strategies aimed at repositioning and revitalizing companies. Corporate value creation by restructuring a company or by undergoing a business combination.

This course will provide students with a basic understanding for the commonly traded financial derivatives and bonds instruments in the financial markets. Detailed explanations on the hedging, pricing and risk management methodologies will be included. Illustrative case studies of some real products will be provided.

This course teaches fixed-income derivatives and related topics. It begins with the interbank forward rate agreements and exchange traded interest rate and bond futures. It then covers the standard interest rate swaps followed by a variety of nonstandard swaps and swap derivatives. The next topic to be covered is fixed-income options and nonstandard floating rate notes that aim for managing interest rate risk. The last part of the course deals with fixed income instruments that have exposure in equity, commodity, inflation, currency, and so on. Both economic intuition and quantitative skills are emphasized.

The course will cover practical applications of derivative pricing and hedging, focusing on equity-linked structures. The emphasis of the course will be on building intuition with regard to option pricing and hedging, using Excel-based pricing models and real world applications. A solid foundation in option pricing theory as provided by the prerequisite courses is assumed, as is familiarity with Excel and VBA.

This course aims to give participants an insight into finance in action, focusing on the equity market. The emphasis will be on real life market problems. Led by a market practitioner, it will look at, amongst other things, how a trading floor works and the different forces and factors that lead to a market behaving in the way that it does. Students will apply knowledge gained in other courses in practical situations with a distinction on where theory differs from practice, and an emphasis on the needs of market practitioners.

The goal of the course is to introduce to students recent developments in real estate markets, especially in Asia, and the basic knowledge for real estate investment. Students will learn basic concepts and skills for mortgage financing analysis and for real estate investment valuation and return analysis. Students will also be exposed to recent developments in real estate debt and equity markets.

The course covers foreign exchange cash and derivatives markets and instruments - spot, outright forwards, swaps, and futures. It also addresses arbitrage in currency and capital markets, and international parity conditions, dealings with forex risk in corporate finance and efficient portfolio construction, and creating and back-testing foreign exchange forecasting models.

The objectives of this course firstly is to introduce students to emerging markets by using a map; maps help us to understand the influences of civilizations, cultures and religions in how emerging markets develop; secondly, is to treat emerging markets like a human body. What can we use to take the temperature, pulse and blood pressure of an emerging market to tell if it is healthy or sick; thirdly, is to use actual experience, real markets and live research to discover more about some of the most important emerging markets right now: Indonesia, China and India. We focus on excessive leverage which is always the main cause of financial crises.

This course will introduce the basic concepts of Islamic banking and finance; differentiate Islamic financial system and conventional financial system; introduce some fundamental Islamic financial products and explain the theories and concepts of the Islamic financial products.

The course is designed to investigate how firms evolve from an entrepreneurial idea to eventually becoming a family business. The course consists of two sessions focused on entrepreneurial finance, one session on the transformation from entrepreneurial to family business, and five sessions on aspects of family business. The course objective is to understand how the uniqueness of family firms arises from a set of key assets and constraints which are similar across firms, countries, and cultures.

The course is to provide students with a holistic and balanced practical and theoretical view of Project Finance. It will also address the challenges when establishing the project's financial model. Students will learn how to assess different risks and their corresponding mitigants, in order to make such transactions feasible.

This course introduces several risk management models designed to allow risk managers of financial institutions to measure and manage various sources of financial risk including market risk, interest rate risk, and default risk, among others. Emphasis is on the development of 'hands-on' experience which includes the calibration of models and discussion of the data issues faced in the application of these models. This course is intended for all students considering a career in quantitative risk management, whether in the insurance, banking, or non-financial sector.

This is a course about financial modeling. The goal is to make financial models that produce useful answers to economic questions. Selected topics which lend themselves to financial modeling will be covered, such as (but not limited to) loan amortization schedules; valuation and private equity; equity derivatives; mutual fund performance and style analysis; fixed income derivatives, and optimal portfolio selection.

The course teaches programming in R, a free, open-source statistical programming language. Topics covered include data structures, control structures, functions/functional programming, input/output, graphics, simulation and writing web-based applications. Code, examples, and R packages used will at times be related to quantitative finance. Students are expected to have basic proficiency in R programming by the end of the course.

This course uses a computational approach to address problems commonly encountered in the quantitative finance industry. Computation is used to elucidate theories from classical finance (e.g. anomalies literature, Fama-French portfolios), stylized facts of asset returns, Black-Scholes theory, Brinson attribution, and risk capital. Theories are tied into (a) front office quant applications such as quantitative trading and dynamic hedging and (b) middle office and risk management applications such as performance attribution, credit scoring, and portfolio credit risk modeling. Mathematical techniques used include Monte Carlo simulation, panel regression, linear and logistic regression, quantiles, p and t statistics. Computations will be done in R.

The goal of this course is to develop the tools and skills necessary to perform industry analysis for credit/equity analysis. There are three key areas that will be covered: Company and Industry Analysis, Financial Analysis and Valuation. These three broad areas will be applied to three broad industrial sectors: China/Hong Kong property, the Asian consumer sector and the Asian banking sector. The course will provide a good balance between developing a theoretical understanding of basic principles and tools and providing hands on practice in using and developing financial information and modelling tools for putting principles into practice. Lectures will involve introducing and explaining concepts and then utilizing the Bloomberg terminals to see and use concrete real life examples. Graded P or F.

This course enables students to learn more about financial market information and analytics through the use of a tool commonly used by practicing financial professionals, a Thomson Reuters data terminal. It begins with a basic overview of the tool, followed by four core modules on data, screen design, graphics, and analysis tools for various financial instruments. Terminal integration and data retrieval with Excel will be shown. Extra topics of interest to be covered, as time permits. Students will be allowed to take the Thomson Reuters Certification Examination upon completion of the course. For students in the MSc in Investment Management/Financial Analysis program only. Graded P or F.

The course is to provide participating students to gain hands-on experience in securities research and portfolio management. Students will manage HKUST Student-Managed Investment Fund (SMIF), and make investment decision to invest into the Hong Kong listed companies. Students will be assigned to cover different economic sectors, and submit research reports on the sectors and companies, and participate in the stock selection process.

The course is to provide participating students to gain hands-on experience in securities research and portfolio management. Students will manage HKUST Student-Managed Investment Fund (SMIF), and make investment decision to invest into the Hong Kong listed companies. Students will be assigned to cover different economic sectors, and submit research reports on the sectors and companies, and participate in the stock selection process. Students who wish to gain a year-long experience in managing SMIF may choose to take FINA 5980 in Fall Term and then continue to take FINA 5990 in Spring Term.

Current developments in finance. Topics selected by the instructor.

Study of selected financial issues under the supervision of a faculty member. (Special permission from the Associate Dean is required for MBA students to take this course.)

Master's thesis research supervised by a faculty member. A successful defense of the thesis leads to the grade Pass. No course credit is assigned.

Current research topics in corporate finance, investments, financial markets and institutions, derivative securities, and empirical research in financial economics.

Papers presented by faculty, students and visitors. Mandatory for all PhD students. May be repeated for credit. Graded P or F.

Original and independent doctoral thesis research. A successful defense of the thesis leads to the grade Pass. No course credit is assigned.