MSc Finance & Investments

Understanding what drives the valuation of companies is essential not only from an investor’s perspective but also in one’s role as a manager, security analyst or merger advisor. The goal of this course is to provide students with the knowledge and skills necessary for performing discounted cashflow valuation of firms from first principles. The course will also touch upon multiples-based valuation techniques.   

The first sessions of the course will focus on the adjustments necessary for identifying value relevant cashflows from reported earnings and other available accounting information. In the following sessions we will discuss how to identify the drivers of growth (as well as the limits to growth) so as to make economically meaningful forecasts. This will be followed by an estimation of the cost of capital for firms which involves among other things, the estimation of firms’ business and financial risk. Finally, we will learn how to incorporate these inputs into valuation models appropriate to the firm-specific context (for example the cost of capital approach or the adjusted present value approach) to come up with an estimate of firm value. 

To provide hands on experience, in the workshops we will apply the theories discussed each week to estimate different valuation inputs to complete a real-world valuation exercise by the end of the course. 

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Taught by Dr A. Rajamani and Dr M. Paaso. 

This course deals with financial decision-making from the perspective of an investor. We focus on the fundamental principles of risk and return, diversification, asset allocation, and efficient markets. Students will develop their knowledge on financial market structures, equity and fixed income securities, investment strategies, behavioral finance, anomalies, and the limits to arbitrage. The course furthers students’ understanding of Modern Portfolio Theory, the Capital Asset Pricing Model, the Arbitrage Pricing Theory, market efficiency, and stock return predictability by discussing recent insights from academic research. Furthermore, the course covers fixed income markets and the term structure of interest rates. Although the main goal of the course is to cover the academic foundations for the broad field of investments (and lay the groundwork for more applied courses in the remainder of the MScFI), the course will also discuss practical applications as well as the implications of the theories covered. 

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Taught by Prof Dr M. van Dijk.

This course introduces a set of analytical tools to solve practical problems in finance using Microsoft Excel. The objective is to bridge the gap between theory and practice by understanding the foundations of financial models, implementing these models in Excel with real-world data, and using the outcomes to support financial decision making. The course helps students to gain the financial knowledge and modeling skills needed to succeed in the financial industry that is increasingly relying on quantitative models. Topics covered in the course include portfolio optimization techniques, performance evaluation methods, option pricing models, and risk management models. The course builds on the introduction to financial markets and portfolio theory given in the Investments course and prepares students for more advanced elective courses in investment management, derivatives, and risk management.  

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Taught by Dr M. Cosemans. 

Over the last decades, companies and investors have been increasingly challenged by risks due to unpredictable movements in stock prices, commodity prices, exchange rates, and interest rates. Financial markets have responded to this increase in volatility by developing a wide range of financial instruments known as derivatives, as well as strategies combining these products with traditional financial securities like stocks and bonds. As a result, derivatives markets have rapidly increased in volume and size and have become one of the most exciting areas in finance. However, the global financial crisis in 2007-2008 has made clear that derivatives can also create new risks when their design and limitations are poorly understood by market participants.

This goal of this course is to help students navigating the complex and esoteric world of derivatives. It covers the essentials of key derivatives instruments, such as forwards, futures, swaps, and options. You will learn how these products work, how they are used for hedging and speculation, how they are priced using fundamental no-arbitrage principles, and how to exploit any mispricing using arbitrage strategies. You will apply this theoretical knowledge to solve practical assignments and case studies. The course fosters a deep analytical and conceptual understanding of derivatives and enhances your problem-solving skills.

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Taught by Dr M.M.J.E. Cosemans.

This course is intended to enhance the M&A preparedness of students in their future roles as employees, M&A advisors, or stakeholders by providing an overview of topics relating to M&A. The course will combine theory with practical insights from invited guest speakers. The theoretical content will be focused on the institutional settings that underlie M&A transactions and their implications for various deal-related choices. We will use findings from extant academic literature to highlight stylized facts about M&A and case studies to analyze specific deals.
The course will cover the following broad themes: (i) drivers of mergers and takeovers and sources of value creation from M&A, (ii) considerations underlying deal structuring, payment and financing choices, and (iii) valuation and risk management in the context of M&A.

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Taught by Dr A. Rajamani.

From very humble beginnings in the 1980s, Private Equity has become a very large Asset Class. Although fundraising has levelled off in 2019 and 2020 from an all-time record in 2018, still, at the end of 2020 over $2 trillion of “dry powder” globally is looking to be invested by PE funds.

This course aims to give students a solid introduction to the world of Private Equity (including Venture Capital and Buyouts). It focuses on the following (along with practical insight from prior transactions) main areas of knowledge that underpin the PE environment:

• “Organizational” topics related to PE funds & investing;
• Cash flow analysis & modeling (we will be using a PE/LBO model for that);
• Review of corporate valuation methods;
• PE investment process (a complete cycle from a purchase idea to a completion of acquisition; and from putting the asset up for sale through to a complete exit) - we will follow a “live” (recently completed) transaction;
• PE transaction structuring;
•  Negotiation of a Term Sheet/Letter of Intent and Share Purchase Agreement (SPA);
•  Finalization of the transaction price (Locked Box and Completion Accounts mechanisms);
•  Practical key lessons from prior transactions, i.e. practical experience;

With the exception of item 1 (above), where some theory and “informational” delivery (deliberately kept to a modest minimum) is scheduled, this course focuses on practical aspects and transaction based learning.

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Taught by A. Grezsczak MBA.

Understanding and analyzing business value is a key competitive advantage in decision making in M&A, private equity as well as fundamental for any other corporate investment decision. A sound business valuation requires, amongst others:

• Understanding of the valuation context;
• Insights in different standards of value;
• Analysis of the company, the competitive position and its strategy;
• Conduct historical financial and value creation analysis;
• Forecast of future financial performance; and
• A valuation method/approach that fits the valuation context and standard of value.

In this course we discuss various (advanced) approaches to measure and analyze business value and value creation both from an academic and practitioners perspective. We will expand on the students basic theoretical knowledge on business valuation and value creation analysis and take this one step deeper. This course is highly relevant for students that pursue a career in M&A, private equity and/or valuation advisory.

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Taught by H. Haanappel. 

FinTech covers digital innovation and technology-enabled business model innovation in the financial services. FinTech is rapidly evolving across the globe and represents an existential challenge for major parts of the industry.

This course provides an introductory overview of innovations that are central to FinTech in the areas of payment, capital raising, investment, and credit. Specifically, the main focus is on blockchain technology and its specific issues and applications. However, other important innovations covered include crowdfunding, robo-advising, social trading, peer-to-peer lending, mobile money, and central bank digital currency. The course also explores threats and opportunities that these technologies pose to incumbent firms and discuss the way that FinTech interacts with law enforcement and regulation issues. Furthermore, the course features a number of guest speakers from industry.

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Taught by Dr T. Lambert.

In this course the focus is on financial topics related to real estate investment and financing (corporate real estate, commercial real estate and residential). The course provides a theoretical framework to study these topics; ample empirical facts and actual practices of agents in Real estate and finance markets will show business relevancy.

This course prepares students to understand the risks and rewards associated with investing in and financing Real estate. There are three main topics:

»        Market analysis.

»        Real estate valuation, and most importantly,

»        Real estate finance.

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Taught by Dr P. Neuteboom.

This course provides insight in the sustainability challenges and the link to finance. The main task of the financial system is to allocate funding to its most productive use. Traditional finance focuses on financial return and regards the financial sector as separate from the society of which it is part and the environment in which it is embedded. By contrast, sustainable finance considers financial, social, and environmental returns in combination and shows how finance can accelerate the transition to a low-carbon, inclusive economy.

The course reviews evidence that environmental, social, and governance (ESG) factors matter and explains in detail how to incorporate these in company business models and strategies, equity investing, bond investing, and bank lending. The course examines the financial instruments and techniques that can be applied in the context of evolving climate policies (and other sustainability policies). The tools will be applied in a group assignment on the valuation of a company based on ESG factors.

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Taught by Prof. D. Schoenmaker.

Economic theory treats people as if they were making rational choices. Yet, in practice, investors and managers do not always make rational decisions. In fact, a lot of CEOs admit that major business decisions come “straight from the gut”. And such judgement about money and investment plans are often clouded by biases and emotions. In the course of Behavioral Finance, we investigate how these behavioral biases impact our financial decisions, and how we can avoid the most common pitfalls. 

Behavioral finance is the application of psychology to financial behavior of practitioners. It has gained prominence in academia. Daniel Kahneman and Richard Thaler were awarded the 2002 and 2017 Nobel Prize in Economics respectively for their contributions in the field. It is also appreciated by practitioners. Financial institutions such as Goldman Sachs, Merrill Lynch, ABN Amro, and Robeco all run funds employing behavioral strategies. 

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Taught by Dr L. He.

In the last phase of your study, it is important to apply the knowledge and skills you have developed by doing an internship. There is an option to do an internship as part of your MSc in Finance & Investments by choosing the Internship Elective in Block 5. During the Internship Elective, the students will be working independently at a well-established company (or other organization) where they will be involved in the financial activities, projects, and decisions that the firm is engaging in. More importantly, students will actively have to work on a project within the company that is of a solid academic level where the students can demonstrate and apply their knowledge in the field of finance in a real project. While working at this company, the students have to write a report in which they explain the contents of their work and translate the knowledge and skills obtained in the MScFI program into the working field. The students are responsible for finding their own internship company.

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This elective examines the business of banks, and other financial institutions. We will analyze how banks carry out their business, what risks they are subject to, and how these risks can be managed. Besides commercial banks, we will also study how investment banks operate and how new developments in fintech interact with traditional banking. A central focus of the course is also on financial innovation (such as credit derivatives and securitization) and how they are used by financial institutions. Finally, we study financial crises and how regulation can mitigate the risk of failures in the financial system.

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Taught by Prof. W. Wagner.

The objective of this course is to provide students with a state-of-the-art understanding of the valuation of small and mid-cap public and private firms, and the economics of contracts as it applies to entrepreneurship and new venture finance. Entrepreneurship concerns the undertaking of new business ventures. We will analyse the unique financial issues relating to entrepreneurial firms and to develop a set of skills that has wide applications for such situations. Specific topics will include: start- up ventures; financial management of rapidly growing firms; deal structuring; valuation; initial public offerings; the decision to harvest; and leveraged / management buyouts. We will discuss the various sources of capital for entrepreneurial firms. These sources include venture capital, commercial banks and crowd funding. The decisions of firms at various phases of their life cycle will be examined and the advantages and disadvantages of various sources of financing will be compared. Analytical tools will be introduced and utilized. Financial analysis, various valuation methods, negotiations,

and deal structuring are examined in the context of entrepreneurial firms. This course is aimed at students who plan to start, acquire, finance or work for entrepreneurial, fast-growing businesses. It will also be useful for students who plan to join venture capital / private equity firms and investment banks. The course aims at instructing the student in how “real world” professional investors and corporate managers operate to create wealth from entrepreneurial activity.

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Taught by Prof. Dr P.G.J. Roosenboom.

This course teaches a general management perspective on financial distress. Participants acquire the skills and knowledge to understand and manage financial distress risks. The course should appeal to participants who want to work as finance executives within a corporation, consultants, investment bankers, private equity, or venture capital investors. As financial distress is relevant for every area of finance, this course is also suited for participants who simply want to extend their finance knowledge in the area of financial distress.

The first part of the course discusses features of the legal environment for financially distressed firms. The second part discusses financial distress costs. The third part shows how bargaining and corporate finance theory can be used to understand the incentives of different stakeholders and how to achieve an optimal restructuring outcome. The fourth part introduces ways to estimate default risks as well as investments in financially distressed securities. The course is highly interactive and employs a variety of didactic formats, including lectures, case studies, and a bargaining simulation game.

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Taught by Dr C.H.O. Schmitt.

It is a data-driven world with an extreme competition for analytical talent, according to research by McKinsey Global Institute and McKinsey Analytics in 2017. In this course, I will discuss two main techniques to deal with structured data and unstructured data at entry level: 1) textual analysis and 2) machine learning. It aims to introduce a set of analytical tools for understanding and examining real-time data examples in R. Students need to complete empirical assignments in R to enhance the knowledge and skills learned in the course.

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Taught by Dr M. Luo.

This course has been designed to help students understand important and topical dilemma’s financial market participants face in real live and how academic insights can be used to solve these problems. The course builds on Financial Modeling course in which basic financial models have been discussed and implemented in MS Excel. The main features of the course are the following: (1) introduction to topical dilemma’s in the financial industry such as differentiating between alternative philosophies in setting up investment portfolios and the implementation of sustainability, (2) the use of both classical studies and latest insights from the stream of literature on empirical asset pricing to solve these problems, and (3) Problem-Based Learning.

This course will cover topical and relevant topics in the financial industry that are put forward by authoritative financial institutions. The lecturers will rely on their networks in the financial industry and interview decisionmakers to understand the problems they face. This will facilitate students to understand real problems like gauging the value added of active managers; evaluating the performance of investment portfolios; understanding the economic rationale behind investment strategies and anomalies in financial markets; and the
dilemmas investors face when incorporating sustainability in their investment portfolios.

Through the course, both classical studies and the latest academic insights will be used to solve these problems. Developing a skillset to solve such problems will help students to better understand the nuances of the methods used, and facilitate placement of students at authoritative investment institutions.

The course aims at students that want to further develop their financial modeling skills and obtain deeper understanding of topical dilemmas in the financial industry. Although assignments need to be solved using MS Excel there are no specific requirements other than strong motivation.

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Taught by Dr. J. Huij.

The objective of this course is to help students bridge the gap between fundamental investment theories and modern investment practice. We will consider empirical evidence for the efficient market hypothesis as well as market imperfections and their implications for portfolio management. This will involve mastering the tools of optimal portfolio construction and performance evaluation along with careful discussions of market anomalies and the behavioral biases from which they may arise. We will also learn about two key players in the investment management industry, mutual funds and hedge funds, and each topic will be put in the context of its use by both professional money managers and individual investors. The course will include presentations of classic papers, analysis of real financial data using statistical software, and a group project to apply investment management concepts.

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Taught by Dr. L. Emery.

Financial risk management is of the utmost importance for institutional investors, both from the regulatory and fiduciary perspective. In this course, the Vestia case is discussed in-depth as it is a prime example that highlights the importance of an effective risk management strategy. Vestia is a The Hague and Rotterdam-based social housing corporation, and it turned out to be one of the largest public sector scandals in the history of the Netherlands. In 2011, Vestia suffered very large losses on its interest rate derivatives portfolio and experienced serious liquidity problems in the aftermath.

In this course, the theoretical concepts are discussed in order for the students the fully understand the flaws in the risk management strategy of Vestia. The main sources of financial risk are discussed, such as: market risk, liquidity risk, credit risk and operational risk. Approaches to quantify each of these risks (e.g. duration, VaR, ES, etc.) as well as the various approaches to manage these risks are explored. The course explores the market for fixed income securities which were at the center of the Vestia case, and these are instruments with direct exposure towards market risk (interest rate risk) and credit risk.

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Taught by Dr. J. Koëter.