DATE:	August 4, 2004
TO:	Finance Faculty
FROM:	Craig Holden
RE:	2004 Retreat Report on the Finance Undergraduate Program

Major Changes Approved in 03-04

· Simplified the Finance Track by getting rid of the “Option 1” and “Option 2” structure and replacing it with a single finance track and a permitted course substitution

· Allowed F303 or F304 with a grade of “B+” or better to substitute for F520 on the Financial Analysis Track

· Allowed F305 with a grade of “B+” or better to substitute for F540 on the Financial Analysis Track

· Granted an undergraduate Finance Major to MBA in Accounting students who complete F303 (or F304), F305, and the rest of the Financial Analysis Track;

· Proposed to relabel the (MBA in Accounting) “Financial Analysis Track” as a (MBA) “Finance Major.”

Action Item: Proposed Course, F228 Introduction to Investment Banking.

David Haeberle has done a dynamite job with the Investment Banking / Capital Markets Workshop. Specifically, 24 seniors were placed in full-time Investment Banking positions, included every workshop participant who ultimately decided to go the Investment Banking route! Also, 27 juniors were placed in Investment Banking internships! These numbers are more than double the Workshop placements prior to David's taking over. Admittedly, some of the credit is due to a turn-around in investment banking hiring in general.

Now David is saying that he could place more. In other words, he has run out of students to place, rather than running out of positions to fill. Given that KSB has ramped up the number of honor students, direct admits, and outstanding scholarship-supported students, it makes sense to encourage investment banking placements.

The proposed new course is F228 Introduction to Investment Banking (1.5 credit hours) -- see the proposed syllabus below. The idea is to provide very basic training and background on the investment banking industry to students early in their undergraduate years, as freshman and sophomores, so that they are well positioned to compete for internship recruiting in late Fall and early Spring of their Junior year. In other words, students would be fully prepared for internship recruiting even before the would normally participate in a Workshop course given current timing.

The course is designed for freshman and sophomore students in the Kelley School of Business, so it would be taken prior to or concurrently with I-Core. In rare, exceptional cases a student may be enrolled from outside the business school. That thoses case, this course is a prerequisite for F428 Investment Banking. This course is designed for those individuals interested in the investment banking business as a career, and for those who wish to familiarize themselves with the concepts, issues, and techniques of investment banking. The major component of this course will be to accumulate the skills necessary to accelerate the student’s ability to obtain employment and enhance a career in investment banking.

The course would be open to any KSB freshman and sophomore in order to encourage the exploration of the investment banking career opportunity. The existing restrictive application process would continue to apply for those who wished to take the next step and formally apply for the Workshop in their Junior year.

Other Developments

· Technolgy upgrades in the undergraduate building.

· Over the summer, instructor computer/video/projection systems where added to BU 325 and BU 327. For the first time, ALL regular-size classrooms in the undergraduate building have built-in computer /video/projection systems for the instructor. Only four small, seminar-size rooms (BU 108, BU 205, BU 427, and BU 429) do not. No finance classes are scheduled in any of these small rooms.

· Wireless connections have been added in nearly all classrooms. This means that any students with laptops in your class can connect to the internet at any time.

· A laptop connection has been added to the instructor’s workstation to many (but not all) classrooms. This would allow you to bring your laptop to class, plug it in, and project your laptop image on the front screen. Some instructors may find this convenient.

· WRDS. Our subscription to WRDS makes it easy for your students to access CRSP, Compustat, TAQ, or other financial data for course projects. In a browser, students just login to an account using a username and password that you created and then point and click to make their data choices. Data is delivered in a csv format that can be opened in a spreadsheet or in other formats.

· @RISK and Risk Optimizer. It is easy to incorporte @RISK 4.5 and RISK Opitmizer 1.0 into course projects. Both software packages are installed in all UITS labs on campuse and all KSB locations.

Trends

The graph below shows enrollments in undergraduate courses by year. In 01-02 and 02-3, there was a major increase in intermediate course enrollments as F305 was added and a decrease in finance elective enrollments as required credit hours were dropped from 12.0 to 9.0 credit hours. In 03-04, there was a major rebound in finance elective enrollments to an all-time record high as required credit hours were raised back up to 12.0 credit hours for those students taking A310. Non-KSB and real estate enrollments have each doubled in the past few years.

The next graph shows credit hours by year. Undergraduate finance credit hours have climbed steadily over the past four years. This is the primary driver behind the hiring of new finance faculty members over that time period.

THE FINANCE MAJOR

Required courses:

F303 Intermediate Investments (3.0 cr.) P: F370 or F304

F305 Intermediate Corporate Finance (3.0 cr.) P: F370 or F304

A310 Management Decisions and Financial Reporting (3.0 cr.) P: A201, A202

A324 Cost Accounting (1.5 cr.) P: A201, A202

Accounting electives: Choose one course from:

A327 Tax Analysis (1.5 cr.) P: A201, A202

A329 Taxes and Decision Making (3.0 cr.) P: A201, A202

A420 Financial Statement Analysis and Interpretation (1.5 cr.) P: A310 or A312

A422 Advanced Financial Accounting (3.0 cr.) P: A310 or A312

Finance electives: Choose 12.0 credit hours (with at least 6.0 credit hours at the 400-level) from:

· Corporate Finance Electives:

1. F307 Working Capital Management (3.0 cr.) P: F370 or F304

2. F402 Corp Financial Strategy and Governance (3.0 cr.) P: (F303 or F304) and F305

3. F408 Real Options and Strategic Capital Investment (3.0 cr.) P: (F303 or F304) and F305

· Investments electives:

4. F335 Security Trading and Market Making (3.0 cr.) P: F370 or F304

5. F420 Equity and Fixed Income Investments (3.0 cr.) P: (F303 or F304) and F305

6. F421 Derivative Securities and Corporate Risk Management (3.0 cr.) P: (F303 or F304) and F305

· International finance elective:

7. F494 International Finance (3.0 cr.) P: (F303 or F304) and F305

· Banking electives:

8. F446 Banking and Financial Intermediation (3.0 cr.) P: (F303 or F304) and F305

9. G345 Money, Banking, and Capital Markets (3.0 cr.) P: A100, A202, ECON E201, ECON E202

· Entrepreneurial elective:

10. F317 Venture Capital and Entrepreneurial Finance (3.0 cr.) P: F370 or F304

· Real Estate elective:

11. R305 Introduction to Real Estate Analysis (3.0 cr.) P: F370 or F304

· Experimental Courses:

12. F390 Experimental Courses (3.0 cr.) P: F370 or F304; Offered Infrequently

13. F470 Experimental Courses (3.0 cr.) P: (F303 or F304) and F305; Offered Infrequently

Note: You must earn a cumulative GPA of 2.0 or higher in finance major courses.

Permitted Substitutions

· Intermediate Accounting. You can substitute (A311 and A312) for (A310 and 3.0 credit hours of 400-level Finance Electives).

· Cost Accounting. You can substitute A325 for A324 and one Accounting Elective.

· Money, Banking, and Capital Markets. You can substitute ECON E305 for BUS G345.

See detailed, one-page course descriptions at: www.kelley.iu.edu/finance

THE FINANCE / REAL ESTATE MAJOR

Required courses:

F303 Intermediate Investments (3.0 cr.) P: F370 or F304

F305 Intermediate Corporate Finance (3.0 cr.) P: F370 or F304

A310 Intermediate Financial Accounting (3.0 cr.) P: A201, A202

L408 Real Estate Law (3.0 cr.) P: L201; Fall only

R305 Introduction to Real Estate Analysis (3.0 cr.) P: F370 or F304

R440 Real Estate Appraisals (3.0 cr.) P or C: R305; Fall only

R443 Real Estate Finance and Investment Analysis (3.0 cr.) P: R305 or instructor auth; Spring only

Real Estate electives: Choose 3.0 credit hours from:

A327 Tax Analysis (1.5 cr.) P: A201, A202

A329 Taxes and Decision Making (3.0 cr.) P: A201, A202

A420 Financial Statement Analysis and Interpretation (1.5 cr.) P: A310 or A312

F307 Working Capital Management (3.0 cr.) P: F370 or F304

F317 Venture Capital and Entrepreneurial Finance (3.0 cr.) P: F370 or F304

F335 Security Trading and Market Making (3.0 cr.) P: F370 or F304

F402 Corporate Financial Strategy and Governance (3.0 cr.) P: (F303 or F304) and F305

F408 Real Options and Strategic Capital Investment (3.0 cr.) P: (F303 or F304) and F305

F420 Equity and Fixed Income Investments (3.0 cr.) P: (F303 or F304) and F305

F421 Derivative Securities and Corporate Risk Management (3.0 cr.) P: (F303 or F304) and F305

F446 Banking and Financial Intermediation (3.0 cr.) P: (F303 or F304) and F305

F494 International Finance (3.0 cr.) P: (F303 or F304) and F305

L409 Law and the Environment (3.0 cr.)

Note: You must earn a cumulative GPA of 2.0 or higher in finance / real estate major courses.

THE INVESTMENT BANKING / CAPITAL MARKETS WORKSHOP

Contact Professor David Haeberle or visit www.kelley.iu.edu/ibw

· Purpose: To significantly improve student preparation and placement in IB positions and internships

· Limited to 30 students per year – apply in fall semester of your Junior year

· Admissions criteria: GPA, leadership potential, interest / knowledge of IB, communication skills

Courses and Activities:

F428 Investment Banking I (1.5 cr.) P: Consent of instructor

F429 Investment Banking II (1.5 cr.) P: F428 or consent of instructor

Field trips to visit investment banking firms in New York and Chicago

Speaker series featuring investment bankers from New York and Chicago

See detailed, one-page course descriptions at: www.kelley.iu.edu/finance

Summary of Major Changes in the Finance Undergraduate Program

· 03-04: Simplified the Finance Track by getting rid of the “Option 1” and “Option 2” structure and replacing it with a single finance track and a permitted course substitution; Allowed F303 (or F304) / F305 with a grade of “B+” or better to substitute for F520 / F540 on the Financial Analysis Track; Granted an undergraduate Finance Major to MBA in Accounting students who complete F303 (or F304), F305, and the rest of the Financial Analysis Track; Proposed to relabel the (MBA in Accounting) “Financial Analysis Track” as a (MBA) “Finance Major.”

· 02-03: Allowed the introductory real estate course to be either a prerequisite or a corequisite for another real estate course and made a correction to the list of concentration requirements.

· 01-02: Incorporated a new Intermediate Financial Accounting class designed for finance majors, which freed-up 3.0 credit hours for an additional finance elective.

· 00-01: Created two new elective courses: (1) Venture Capital and Entrepreneurial Finance and (2) Real Options and Strategic Capital Investment.

· 99-00: Created a new 6.0 credit hour “Finance Core”composed of: (1) Intermediate Investments and (2) Intermediate Corporate Finance. Implementation was delayed a year due to staffing needs.

· 98-99: Made Security Trading and Market Making permanent; Added a new accounting elective: Taxes and Decision Making.

· 97-98: Created an elite program in Investment Banking / Capital Markets, including two new half-semester courses, a speaker series, and trips to New York and Chicago; Made Working Capital Management permanent; Eliminated the Insurance Track due to lack of demand; Added a discussion period to Honors Financial Management.

· 96-97: Created two experimental courses: (1) Security Trading and Market Making and (2) Working Capital Management and a permanent course: Personal Financial Management; Revised the structure of the finance major for honors students.

· 95-96: Reengineered Money, Banking, and Capital Markets – converting it from required to elective, from ill-defined to well-defined, and from jointly taught to solely taught

· 94-95: Comprehensive overhaul of the Finance Major, including:

· Three new finance courses: (1) Intermediate Finance, (2) Corporate Finance and Modeling Skills, and (3) Derivative Securities,

· Three new accounting courses for finance majors: (1) Cost Management, (2) Tax Analysis, and (3) Financial Statement Analysis and Interpretation, and

· Six new department policies, including a standard undergraduate grading policy.