Investment Strategy

MBA Investment Strategy Track
At the heart of the modern investment process is the tradeoff between risk and return. While seemingly straightforward, this tenet of the financial services industry poses serious challenges once one is forced to say exactly what it means and how it should be implemented. How do we measure risk and return? Which combinations of risk and return are appropriate for different classes of investors? Can we view the risk and return on specific assets in isolation, or must we take a broader, market-based view? Where does government policy enter the picture? A foundational understanding of the answers to these questions is a necessary starting point for a leadership-level position in today’s global financial services industry.

The Investment Strategy Track provides students with the knowledge base to be leaders in both the buy and sell-side of the money management industry. The track emphasizes three core sets of skills: the mathematics and statistics underlying the modern language of asset pricing, the financial economics that brings these tools to life, and the data and IT skills required to bridge theory and practice in a data-driven, problem-solving environment.

Who Should Apply
The skill set associated with the track is valuable for any finance career, but is of particular importance for positions in money management, sales and trading, structured products and corporate treasury. Students with a strong interest in financial markets and an inclination towards quantitative methods in math, statistics and economics are the target applicants.

Prerequisites
The prerequisites for admittance into the track are an average of A- or better with no grades below B in 45-811 Investment Analysis, 45-810 Corporate Finance and 45-752 Macroeconomics. It is important to note that these prerequisites must be completed in the first year of the Tepper MBA program. Exemptions from prerequisite courses are not permitted without the explicit permission of the faculty track coordinator (this applies independently of exemption rules in the MBA program more generally). Students who are admitted into the track after their first semester in the MBA program will be conditionally admitted and will be reevaluated upon completing their second semester.

Students who are considering the Investment Strategy track are strongly cautioned against exempting from Tepper’s introductory finance class, 45-710. This advice is independent of a student’s academic and practical background in finance. One reason is that Tepper’s introductory finance class is a Master’s level class, taught to a group of people with extensive business experience. The context is strongly cast within the contemporary business environment and the class is taught by a world-class faculty member. Previously-taken classes will often be a poor substitute. A second reason is that, in the event that a student achieves borderline performance in the in the above prerequisite classes, consideration may be given to their performance in the introductory finance class.

Required Track Courses
In addition to the prerequisites, the track features a blend of required courses and a choice of track electives. All courses must be taken for a letter grade. Pass/fail grades are insufficient. Required courses for students graduating in 2010 are
• 45-814 Options
• 45-816 Studies in Financial Engineering
• 45-956 Alpha
• 45-849 Financial Economics
• 45-815 Fixed Income Analysis
• 45-921 Time-Series Analysis

Students must also take at least 2 of the following electives

• 45-904 Taxation and Financial Strategy
• 45-911 Optimization Methods in Finance
• 45-903 Credit Derivatives
• 45-818 International Finance
• 45-803 Corporate Financial Reporting
• 45-802 Financial Statement Analysis
• 45-917 Financial Statements of the Banking Industry

The Tepper MBA program requires the completion of a “capstone” course in order for a student to graduate. For Investment Strategy track students graduating in 2010, the courses “Studies in Financial Engineering” and “Alpha” --- courses that are designed to be integrative in nature --- will be considered sufficient to satisfy the capstone requirement.

It is the student’s responsibility to register and complete the courses necessary for the track. In order to assure registration for the necessary courses, students must rank track courses among the highest during pre-registration. In the event of a scheduling conflict or some other extraordinary situation it is the student’s responsibility to contact the track administrator before the situation is irreversible.

FACULTY COORDINATOR
Chris Telmer
Associate Professor of Financial Economics
Tepper School of Business
chris.telmer@cmu.edu