University of San Francisco’s

Master of Science in Financial Analysis

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The MSFA Program Director

Professor John Veitch• Director of the MS in Financial Analysis program• CFA, 1999: Ph.D. Northwestern 1985, Financial

Markets• Education Director, CFA Review Program for the CFA

Society of San Francisco. – CFA-SF Exam Review programs to 350+ candidates

at all levels each year.• Adjunct faculty member, Berkeley Columbia

Executive MBA program, UC Berkeley, Haas School of Business.

• Current research: Econometric studies of the relationship between currency crises and stockmarket returns in South America and the Pacific Rim.

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University of San Francisco

• University of San Francisco, a Catholic Jesuit university, was founded in 1855 as San Francisco's first university.

• USF has over 500 full-time and part-time faculty members across its Schools and Colleges.

• USF is a founding member of the Western Association of Schools and Colleges (WASC) and is accredited by WASC.

• The USF Business School is accredited by the American Assembly of Collegiate Schools of Business (AACSB) for both our undergraduate and graduate Business programs.

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Why the USF MSFA Program?

1. Practitioner-oriented with a curriculum that covers the knowledge required by the Chartered Financial Analyst® (CFA) exams.

2. USF’s MSFA program is an official Program Partner of the CFA Institute.

– We are part of a select 20 programs around the world, joining Oxford, London Business School, HEC, HK-UST, and UNC-Chapel Hill.

3. Taught by USF Professors and CFA-credentialed practitioners. The MSFA program is relevant to your professional and career needs.

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Why the USF MSFA Program?

4. Quantitative training in investment management.

5. Students move through the program as a group (or cohort), learning with and from one another and developing bonds that continue beyond the program.

6. Support for CFA® exam study with review materials and programs with the CFA Society of San Francisco Review programs.

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Specialist Training

• The MSFA program provides sophisticated training in in quantitative financial analysis and economics.

• The program is structured around the knowledge and the tools considered necessary for the Chartered Financial Analyst® examinations.

• In the 2-year Professional MSFA: – First year courses emphasize topics that are

important on the Level I CFA® exam.– Second year courses emphasize topics that are

important on the Level II CFA® exam.

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Grounded in Ethical Behavior

• The University of San Francisco, a Jesuit University, is grounded in the importance of ethical behavior.

• The MS in Financial Analysis program has an explicit ethical component.

• Our CFA® charterholder instructors address ethical issues that investment professionals are likely to face in their careers throughout the program.

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Which MSFA Program?

• Professional MSFA:– Meets on Saturdays over 2 years.– Focused on working investment professionals.– Includes all course materials & heavily

discounted access to the CFA-SF Exam Review program.

• Accelerated MSFA:– A 1-year, 3-consecutive semester program.– Focused on full-time students with strong

quantitative backgrounds.– Covers the same courses with most of the same

instructors from the Professional MSFA program.

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The Professional MSFA Curriculum

Program meets SaturdaysAugust to MayFor Two Years

Professional MSFA Curriculum

Year 1: Semester 1

Microeconomics (3 units)Microeconomics (3 units) Macroeconomics Macroeconomics (2 units)(2 units)

Financial Markets (3 units)Financial Markets (3 units) Corporate Finance Corporate Finance (2 units)(2 units)

Year 1: Semester 2

Equity ValuationEquity Valuation(2 units)(2 units)

Fin. Statement Fin. Statement AnalysisAnalysis(2 units)(2 units) Finance Finance

& Ethics & Ethics I I

(1 unit)(1 unit)Fixed Income ValuationFixed Income Valuation(2 units)(2 units)

Derivatives IDerivatives I(2 units)(2 units)

Year 2: Semester 1

Computer Models for Computer Models for Risk Management (2 Risk Management (2

units)units)

EconometricsEconometrics(2 units)(2 units)

Derivatives IIDerivatives II(2 units)(2 units)

International FinanceInternational Finance(2 units)(2 units)

Year 2: Semester 2

Capital Market Theory Capital Market Theory (2 units)(2 units)

Portfolio ManagementPortfolio Management(2 units)(2 units) Finance Finance

& Ethics & Ethics II II

(1 unit)(1 unit)Financial EconometricsFinancial Econometrics (2 units)(2 units)

Alternative Alternative InvestmentsInvestments

(2 units)(2 units)

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The Accelerated MSFA Curriculum

Program meets week days/nights

August to AugustFor One Year (3 semesters)

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Accelerated MSFA Curriculum

Semester 1: August -

December

Micro for Finance Macro for Finance

Financial Markets Equity Valuation

Corporate Finance Fixed Income Valuation I

Semester 2: January - April

Adv. Fin. Statements International Finance

Econometrics Derivatives I

Fixed Income Valuation II

Computer Models for Risk Management

Semester 3: May - July

Capital Market Theory Alternative Investments

Financial Econometrics

Portfolio Management

Derivatives II

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Frequently Asked Questions about the

MSFA programs

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USF MSFA Instructors –Knowledge & Credibility

USF Faculty

Prof. John Veitch, Ph.D. CFA MSFA Program Director.

Financial Econometrics

Prof. John Gonzales, Ph.D.International Finance

Prof. Man-lui Lau, Ph.D. Math Economics, Derivatives

Instructor Practitioners

Peter Chau, CFA Fixed IncomeBrad Craig, CFA Alternative Investments

Instructor Practitioners

Patrick Collins, Ph.D. CFAInvestment Management

Mark Fredenburg, MA, CFA Equity Valuation

Jim Keene, CFA, CFP Alternative Investments

Peter Lou, CFA Computer Modeling

Satish Swamy, CFA Fixed Income, Portfolio Mgmt

Loren Walden, CFA Ethics

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Requirements for International Applicants

• Minimum TOEFL score [550-paper or 213-computer] or a degree from an English-speaking school.– Most accepted students have 590+ or 250+ scores

• Professional MSFA– Significant work experience in finance or

investment management.

• Accelerated MSFA– Strong GRE or GMAT and/or strong academic

performance in MSFA fundamental areas. • Accepted students have Quantitative section scores at

80 percentile or above.

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Scholarships & Financial Aid

• Professional MSFA– Program for full-time working professionals. – Students are eligible for financial aid but NO

scholarships or Tutor Assistant positions.

• Accelerated MSFA– Program is for well-qualified full-time students. – Students are eligible for financial aid.– Exceptional students are considered for partial

scholarships in the form of tuition remission. – There are NO Tutor Assistant positions due to

the short length of the program.

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How are the MSFA and an MBA different?

• Traditional MBA in Finance:– Involves many courses that are outside of the

finance area, often a majority of the courses!

• MSFA Program:– Training in areas deemed essential by practicing

financial analysts and investment managers as determined by the CFA® Institute.

• MBA Option for MSFA Students:– Students in good standing after first year of

MSFA can apply for an MBA in Finance from USF Business School.

– Must take one extra year of coursework (24 units).

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Will the MSFA program ensure I pass the CFA exams?

• The MSFA program is an academic degree program.

– It is not part of the CFA® exams or CFAI® directly, nor is it simply a CFA® Exam Review course.

• Students who complete the MSFA program will have learned the material covered by the CFA® exams.

• Considerable self-study is necessary for any student to prepare adequately for the form and specific content of any of the exams.

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The Professional MSFA Curriculum

Program meets SaturdaysAugust to MayFor Two Years

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Year 1 – Semester 1

Microeconomics for Finance (3 units) • Consumer choice under uncertainty. The microeconomics of industry

structure including perfect competition, competition with differentiated products and monopoly.

Macroeconomics for Finance (2 units) • How economies perform in the long run and the short run. The structure of

macroeconomic relationships and the role of government policies in financial market outcomes.

Financial Markets (3 units) • An overview of the characteristics of financial markets including their structure

and organization. Features of debt markets, including yields, credit spreads, and term structure of interest rates. Equity markets for common and preferred shares.

Corporate Finance (2 units) • The basic concepts of corporate finance: dividend discount models,

determining a firm’s cost of capital, capital investment decisions and net present value vs. internal rates of return, overview of mergers and acquisitions, hybrid securities.

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Year 1 – Semester 2

Equity Valuation (2 units) • Finance models in the valuation of firm valuation and the value of equity.

Models include relative ratio analysis such as the DuPont model, general cash flow model for valuing assets and liabilities.

Financial Statement Analysis (2 units) • Treatment of advanced accounting issues including leases, mergers,

pension funds, and international transactions. Analysis of quality of financial reports with emphasis on accounting irregularities.

Fixed Income Valuation (2 units) • A thorough study of the structural features of debt markets. Term structure

analysis of interest rates and bond valuation. Assessing sources of risk for debt portfolios, including the role of duration and convexity in evaluating the effects of interest rate changes. Credit analysis for corporate bonds.

Derivatives I (2 units) • An introduction to derivative markets and derivative instruments including

options markets, futures markets, and swap markets.

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Year 2 – Semester 1

Computer Models for Risk Management (2 units) • Excel modeling for risk analysis and management. Includes financial

statement forecasting, bond valuation, Value at Risk, and valuing derivatives.

Econometrics (2 units) • Probability models for portfolio risk, Value at Risk models, and decision

making under uncertainty. Simple Regression analysis with hypothesis tests, goodness of fit, and testing for problems with the data or the model.

Derivatives II (2 units) • Analysis of fixed-income derivatives including custom interest rate

agreements and analysis of interest rate and currency swaps. Analysis of equity options and warrants, hedging and hedging strategies.

International Finance (2 units) • International financial systems and foreign exchange rate regimes. Foreign

exchange market calculations and arbitrage relationships. Exchange rate forecasting methods. Study of currency strategies for international portfolio management. International CAPM models of securities pricing.

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Year 2 – Semester 2

Capital Markets Theory (2 units) • Efficient financial markets theory. Asset pricing theories and models. Asset

allocation and general portfolio construction.

Portfolio Management (2 units) • Portfolio management policies for individual investors, mutual funds, and

institutional investors. Fixed income vs. equity portfolio management strategies. Risk measurement and management.

Financial Econometrics (2 units) • Multiple regression models with and applications to portfolio management.

Time-series analysis and technical analysis of securities’ prices.

Alternative Investments (2 units) • An overview of alternative investments including REIT’s, commodity trading

advisors, hedge funds, distressed debt and leveraged buyouts.

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Ethics Courses in the MSFA

Year 1, Semester 2Ethics and Finance I (1 unit) • Applicable laws and regulations including professional standards of practice,

ethical conduct and professional obligations. Topics include conflicts of interest, insider trading, and an overview of presentation standards for portfolio results. Focus is on global regulatory differences and ethical obligations across countries.

Year 2, Semester 2

Ethics and Finance II (1 unit) • Professional standards of practice regarding Performance Presentation

standards and associated ethical obligations. Ethical and practical issues in constructing and maintaining portfolio returns and appropriate benchmark portfolios.

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The CFA Designation, Exams, and Study

ProgramThe CFA® designation has become harder to get and why self-study

may not be the best approach any longer

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CFA Institute

• Founded in 1990. Has over 90,000 members and 135 societies/chapters worldwide. www.cfainstitute.org

• Mission is to advance the interests of the global investment community by establishing and maintaining the highest standards of professional excellence and integrity.

• Administers the Chartered Financial Analyst Program (CFA®). – Curriculum develops & reinforces knowledge of investment

principles. – Three levels of examination measure candidate ability. – CFA® exam is given annually in more than 141 nations worldwide.– Over 140,000 enrolled candidates from 160 countries around the

globe

• Other benefits include membership, access to timely conferences and publications, network of societies and chapters.

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International Recognition– Employers and media around the world praise the CFA designation

Credibility– Clients & colleagues regard you with a presumption of expertise

Respect– Your efforts connect you with the prestige of existing charterholders

Competitive Advantage– Employers & clients require professionals who demonstrate competence in implementing international investment strategies

Knowledge with a Global Perspective– Practice analysis is conducted every five years to determine a globally relevant, broad-based curriculum.

Connections– 78,000+ charterholders & 100,000+ candidates around the world who are active investment professionals with senior responsibility

CFA® Program Benefits

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Where CFA® Charterholders Work

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CFA® Charterholder Job Functions

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Top Employers of CFA® Charterholders

Western Region USA

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• Level I Knowledge & Comprehension of Fundamental Investment Tools and Concepts

• Level II Application & Analysis focused on Asset

Valuation

• Level III Synthesis & Evaluation of Client Needs and Portfolio Management Issues

• Ethical & Professional Standards Emphasized at every Level!!!!!

What is the CFA® Program?Three Levels & Three Exams

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The CFA® Course of StudyBody of Knowledge

• Ethical & Professional Standards

• Quantitative Methods• Economics• Financial Statement

Analysis• Corporate Finance• Analysis of Debt

Instruments

• Analysis of Equity Investments

• Analysis of Derivatives• Analysis of Alternative

Investments• Portfolio Management• Performance

Measurement & Portfolio Attribution Analysis

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25

35

45

55Pass Rate

pre-2002

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

Exam Date

CFA® Exam Pass Rates

Level ILevel I I

The CFA® ExaminationsHistoric Pass Rates

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The CFA Institute Response

Bob Johnson, CFA Executive VP in charge of CFA® program

• Successful candidates indicate they spent 250+ hours studying for the exam.

• Exam difficulty is unchanged over past 5 years. – Sample exam on website is same difficulty as actual

exams.– Top 1% candidate scores have remained constant.

• Falling pass rates due primarily to:– Candidates fail to spend enough time preparing for the

exam. – Candidates do not study correctly, study questions

rather than studying the material.– Candidates over-reliance on prep notes rather than texts

and readings.

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Schweser Response

• CFA Institute survey shows 57% studied less than 200 hours for 2004 CFA® exams.

1. Agree that candidates study too little and start too late. Stress of everyday life makes 250+ hours difficult to dedicate.

2. Candidates try guaranteed “shortcuts” and rely overly on studying test banks instead of learning the material. Unprepared for the unexpected.

3. Partly due to exam day stress, exams increasingly becoming tests of reading comprehension, and need for test-taking skills.

4. Changes in candidate pool have led to more marginal, less qualified candidates who lack basic economics and accounting.

5. Curriculum itself has become more challenging each year, despite CFA Institute’s claim about similar levels of difficulty.

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Academic Programs?

• Very difficult to pass all three levels of the CFA® exam without advanced academic training.

• Academic programs can be structured to address several requirements for CFA® exam success:– Conceptual frameworks and “big picture” of results in a

field taught by experts; both academics and practitioners.– Sustained exposure to the quantitative, economic, finance

and accounting results in financial analysis study areas.– Exposure to academic exam situations, time management,

and study discipline; especially important for practitioners.– Integration of increasingly sophisticated tools and results

over the course of the academic program.– Cohort program, where students move through a program

together, provide opportunities for study groups and support.