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Master of Science in

Finance

Course catalogue 2010/2011 (tentative)

The content of this document may be subject to change without notice between now and the start of the courses

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Master of Science in Finance

Director: Blaise ALLAZ Professor of Finance Finance Department Email: allaz@hec.fr Assistant: Jocelyne KADOCHE Tel: 01.39.67.74.03 Email: kadoche@hec.fr

OBJECTIVES The Master of Science in Finance (MIF) is an in-depth, broad-reaching program covering the major aspects of the field of finance. It is designed for students aiming to work in the Finance sector, in the broad sense of the term, as well as those wishing to maintain a certain level of flexibility but are aware of the advantages offered by in-depth knowledge of the most technical and complex aspects of finance in the success of their professional lives. It is also aimed at those attracted by the intellectual challenge offered by the study of finance and who realize that the HEC MIF is the best choice for them to keep all options open. Finance is at the heart of all operations and decisions in the business world. The level of technicality of financial operations, both at the level of the corporation and at the financial markets level, has increased steadily in recent years. The HEC MIF is offered to students just before their entry on the job market, an ideal moment for them to learn techniques that are constantly being improved. The objective of the HEC MIF is to provide students with « a financial dimension», allowing them:

- to gain deeper insight and knowledge of Finance, an essential aspect of the field of management;

- to put the various skills acquired throughout their studies into perspective around the Corporate Finance and Financial Markets tracks;

- to offer students the most valuable preparation for their entrance into the professional world.

Despite the objective stated above, it would be a mistake to assume that the HEC MIF prepares students for a specific position on the job market. Given the limited time frame, such an objective would be unrealistic, as the field of Finance covers a wide variety of different facets. Rather than organizing the program of the HEC MIF around certain specific professions, it appears more beneficial to organize the courses around key themes aimed at developing students’ capacity for financial logic.

In short, the main goal of the HEC MIF is to provide students with high-level skills in the financial field. The HEC MIF has a very high reputation with employers. Students benefit from the status of the HEC brand name, paving the way in particular for a career on the international market.

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THE CURRICULUM The HEC MIF unfolds over two semesters. The first period (September to December) is made up of lectures of an academic nature, while the second period (starting in January) offers a wide variety of elective courses with a strong practical focus. The semester starts with mandatory courses. Therefore there is no need to register for courses before arrival on campus. The first semester offers a global perspective, with both tracks (Corporate Finance and Financial Markets) equally represented. One of the specificities of the MIF is the very broad variety of electives to choose from, offering students the possibility to tailor their program to their specific needs. Students having a good level in French have access to electives taught in French. All classes have a very strong financial dimension. Finally, the MIF offers students the opportunity to prepare the Chartered Financial Analyst (CFA ®, Level 1) exam, the most highly recognized international financial qualification with growing relevance over the past few years.

CONTENT The HEC MIF:

Mandatory courses Elective courses

The 1st semester is made up of compulsory, fundamental courses while 2nd the semester offers students a variety of specialization electives (45 ECTS credits).

The mandatory courses are divided into two major tracks:

1. Financial Market Track:

- International Finance - Derivatives - Asset Management : General overview - Asset Management: Quantitative Methods - Securities Markets: Mechanisms, Liquidity And Investment Decisions

2. Corporate Finance Track:

- Financial Analysis and Financial Analysis Seminar I & II - Valuation and Mergers & Acquisitions - Corporate Finance Theory - Advanced Applied Corporate Finance

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The elective courses are divided into two tracks. Students may choose courses from one

track or mix the courses from both tracks. Some electives are offered in French. To join these courses students must have a proficient level in French.

1. Financial Markets: - Advanced Asset Pricing - Hedge Funds (French) - Hedge Funds : Risk and Value Creation - Energy and Finance - Fixed-Income Emerging Markets - Credit Derivatives (French) - Origination and Marketing of Derivatives Products - Trading of Derivatives - Volatility Modeling - Financial Risk Management - The credit crisis: Historical and Technical Analysis - Insurance - Financial Engineering and Derivatives - Financial Engineering

2. Corporate Finance: - Financial Modeling - Equity Capital Markets - Due Diligence in Mergers and Acquisitions - Corporate Finance and Strategy - Debt Restructuring (French) - The Art and Technique of Negotiation (French) - Credit Risk and Company Restructuring (French) - Treasury Management in a Multinational Corporation (French) - Private Equity - Socially Responsible Investment (French) - International Growth Strategy - Economics of Banking

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The Market Finance Track offers an Asset Management Specialization, aimed at preparing students for a career in an environment which has developed substantially in recent years, particularly in Europe (pension fund management, open borders). More and more institutional investors use portfolio management methods, while the Private Banking and Insurance worlds are increasingly turning to funds managed by asset managers. In recent years, specific concepts and problems to the field of asset management have arisen which students should be aware of. The specialization is made up of two general courses:

- Asset Management: Overview - Asset Management: Quantitative methods

as well as two specialized courses

- Fixed Income - Hedge funds. On a practical level, the HEC MIF encourages group work and individual research. - The Master allows students to focus on a specific subject for a relatively long period. - There are relatively few courses and a lot of preparation time. - The Pedagogical Methods leave a high level of personal research, as well as

individual and group work. - The Master prepares students for the job market and meets the requirements of

industrial or financial organizations, private and public

THE MASTER THESIS

Research is an essential aspect of the HEC curriculum. The thesis validates 30 ECTS credits. Research is normally carried out individually or in groups of two students. Subjects are put forward by professors as early as October, and students make their choices in November. The thesis is mainly developed during the second semester and is usually due in May in order to allow students to start their internship, but must be validated by September 15th 2011 at the latest.

CERTIFICATES

A certificate corresponds to an optional group of courses with a sectorial focus on a specific area that are offered to students from April to June (15 credits):

− Energy and Finance (Deloitte & Société Générale) − Real Estate (Rodamco-Unibail & Morgan Stanley) − Social Business (Danone) − Luxury Strategies (Gucci Group)

http://www.hec.edu/tracks/ Students who successfully complete all the courses in the same track will be awarded an additional certificate to their MSc Degree.

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INTERNSHIP In order to graduate with the HEC Master of Science in Finance student must also validate an internship of a minimum of 16 weeks that must be completed by September 30th 2011 at the latest. First job experience will be counted as internship experience. Students may validate previous professional/internship experience if the job was related to finance. Every exemption is subject to approval by the Academic Director at the beginning of the academic year. CAREER SERVICES The Career Development Services ensure the best integration of graduates to the corporate world. They assist graduates in their job search and students in their internship search by organizing, company presentations, specific seminars, round tables, coaching, mock interviews with recruiters, meetings with Alumni and several job/internship fairs over the year of which the most important for finance students is the ‘International Finance Forum’ in October. In 2009, 29 financial institutions came to campus to meet with our students: Bank of America/Merrill Lynch, Barclays Capital, BNP Paribas, Citi, Crédit Agricole, Crédit Suisse, Deutsche Bank, Dexia, Ernst & Young, Exane, General Electrics, Goldman Sachs, JP Morgan, Lazard, Leonardo & Co, Macquaire, Morgan Stanley, Natixis, Nomura, Oddo Cie, Oliver Wyman, PricewaterhouseCoopers, RBS, Rothschild, Société Générale, Thomson Reuters, Tibra Capital, UBS, Vendôme Associés. CAREER OPPORTUNITIES

Traditional opportunities:

- Financial division in a corporation - Corporate Finance, M&A - Capital markets - Commercial Banks and insurance - Asset Management: pension funds, institutional investors - Private Banking - Private Equity - Hedge Funds

On top of these, the HEC finance graduates have a very strong reputation with employers, whatever their field of activity. It opens doors to careers in strategic consulting, auditing or in corporations. The strong international dimension of the finance graduates is reflected in the level of international placements: recently, 40-45% of graduates started their careers outside France, and the trend is still growing.

FRENCH LANGUAGE COURSE HEC offer to all international students the possibility to join a French language course on Tuesdays and Thursdays from 5.30 – 7.30 pm .

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MANDATORY COURSES

INTERNATIONAL FINANCE Instructor: Blaise ALLAZ, Professor HEC Paris Obectives To offer students a conceptual framework to work in an international, multi-currency environment. Organization 20h, 10 x 2-hour lectures Content The course is divided into three parts. The first focuses on exchange rates: organization and operation of the foreign exchange market, the main exchange instruments, international parity. The second part analyses the advantages and drawbacks of international diversification and the development on an international level of the financial asset valuation model. The third part is dedicated to foreign exchange risk management: measurements of the exposure to exchange risk, description and assessment of foreign exchange derivatives (futures, options and currency swaps), hedging techniques. Pedagogical Methods Lecturers Travail personnel - Readings. - A series of exercises. Evaluation - Midterm exam. - Written Final Exam.

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DERIVATIVES

Instructor: Christophe PÉRIGNON, Associate Professor, HEC Paris Objectives The objective of this course is to provide a broad overview of the derivatives markets. Organization and Pedagogical Methods Twelve sessions. Teaching combines theory, numerical examples, and guest speakers from the industry. Classes are taught in English. Content In the first part of the course, we discuss the main approaches to value derivative securities (Topics 1-3) and to measure and hedge the risks associated with the use of derivatives (Topics 4-5). The second part of the course consists of a series of selected topics on derivatives markets (Topics 6-12), such as implied volatility, organization and mechanics of derivative markets, new families of derivatives products, and employee stock options. Work Load Readings to be made prior to each lecture. Problem sets to be solved. Global review before each exam. Evaluation - Midterm Exam: 1/3 - Final Exam: 2/3

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ASSET MANAGEMENT: GENERAL OVERVIEW Instructor: Jean-Charles BERTRAND, Executive Director in charge of Bond Management and Absolute Return Management SINOPIA Asset Management (member of the HSBC group) Presentation Asset management is a growing sector, particularly in Europe (pension fund management, open borders). The course offers a practical introduction to the concepts and methodology applied by investors and managers. Particular attention is paid to management techniques such as indexed management or guaranteed product management as well as the approaches taken by institutional investors in particular. Recent innovations and developments of management processes are studied: return forecast models, performance allocation methods. A detailed presentation of the current trends in asset management is given: LDI and core-satellite approaches, the portable alpha concept, open architecture. Objectives The course, taught by an asset management professional, is aimed at building a link between the models and concepts of Modern Finance and their use by managers and investors. The course introduces the different asset management techniques, based on recent academic work applied to portfolio management. Course schedule This 12-hour course is divided into six 2-hour sessions. Content First of all, the course gives an overview of asset management in general through the introduction to the various players and management styles. Students are introduced to the major trends in asset management (LDI and core-satellite approaches, open architecture). An in-depth analysis of indexed management is offered, in particular the different replication techniques. Guaranteed fund management, or portfolio insurance, has developed substantially. The various methods (stop loss, options or Cushion Method) are introduced and analyzed. The third session is dedicated to asset allocation and active management. The different stages of asset allocation are presented, as well as their respective importance based on recent academic studies. Active asset management requires the creation of return forecast models as well as portfolio construction methodologies. The fundamental law of asset management is presented and analyzed. The course ends with a session dedicated to performance measurement and analysis. The limits of past achievements are presented through the study of concrete examples and improvements based on return/risk ratios are proposed Pedagogical Methods The course is based on a handout summarizing the presentations given during each session. Evaluation 100 % test

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ASSET MANAGEMENT: QUANTITATIVE METHODS

Instructor: Laurent FRESARD, Assistant Professor, HEC Paris Objectives The objective of this course is to provide a broad overview of the quantitative methods used in modern asset management. Organization and Pedagogical Methods Eight lectures. Teaching combines theory and practical examples. Classes are taught in English. Content This course examines portfolio theory from a practitioner’s perspective. We build on Markowitz Mean-Variance theory, and then take the point of view of a portfolio manager who is willing to put the model into practice. We first show with concrete examples that this theory cannot be applied straightforwardly to “real-life” portfolios. Conventional Markowitz optimization often returns portfolios with little investment intuition and is extremely sensitive to parameters’ estimation. We present and apply different methods proposed in the literature to overcome these problems. Work Load Readings to be made prior to each lecture. Problem sets to be solved (discussed in class). Evaluation

- Final Exam: 75% - Problem sets: 25%

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SECURITIES MARKETS: MECHANISMS, LIQUIDITY AND INVESTMENT DECISIONS Instructor: Thierry FOUCAULT, Professor, HEC Paris Presentation Execution cost management has become a major challenge for players on the financial market (dealers, brokers, stock exchange, listed companies, investors, portfolio managers, etc…) While some of these costs are easy to measure (commissions or taxes), others, linked to financial market liquidity are more difficult to measure and control. Strategies to be implemented to minimize execution costs require a sound understanding of execution cost determinants. The first part of the course is aimed at describing transaction costs supported by operators, as well as what these costs imply (for portfolio managers or financial product valuation for example). The second part is dedicated to the study of the determinants of these costs, with a particular focus on the existence of a correlation between the exchange mechanisms used on financial markets (order-driven markets, price-driven markets, etc…) and the level of transaction costs. Finally, in the third part of the course, students will study various execution cost estimation techniques as well as the strategies implemented by operators in order to minimize these costs. Objectives At the end of the course students should be capable of: . Describing the different exchange mechanisms used on financial markets. . Understanding the notion of market liquidity. . Explaining why financial assets can be more or less illiquid. . Proposing different execution cost measurements on financial markets. Content 7 two-hour sessions Session 1 . Transaction costs: a typology. . Various liquidity measurements: Depth and bid-ask spread . Implications: (i) for portfolio management, (ii) for the valuation of financial assets and(iii) for

investors. Session 2 . Who are the players on financial markets? . How are exchanges organized on financial markets? . Exchange mechanisms and Transaction Costs. . Recent developments/new exchange technologies. Session 3 and 4 . The causes of illiquidity on financial markets. . The effects: volatility and price evolutions. Session 5 . Exercises . How to measure transaction costs (I) Session 6 . How to measure transaction costs (II) . « Best Execution » Session 7 • Conclusions • Final Exam Evaluation • Exercises • Final Exam.

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FINANCIAL ANALYSIS COURSE AND SEMINAR I Instructor: Bruno HUSSON, Affiliate Professor HEC Paris Presentation and Objectives Modern financial analysis is at the crossroads of two key management disciplines: strategy and finance. In a market economy open to competition, the former cannot durably ignore the objectives and asset constraints set by the latter, while the latter rapidly loses substance without the content offered by the former. This financial analysis course is divided into two different stages, with the following objectives: to provide students with a comprehensive methodology for financial analysis, and then offer them the opportunity to apply it as professionals to actual situations. Organization The first stage is organized over five 2-hour sessions, plus an examination session, and ends late October. The second stage spans over 5 seminar-sessions from late October to the end of January. It aims to offer students the opportunity to perform a comprehensive financial analysis, meeting the same quality requirements as those expected from professionals working in the leading banks on the market. Content The course is structured as follows: - evolution of the objectives of financial analysis and its consequences on the nature of the tools used; - presentation of a general methodology for financial analysis and associated tools (functional financial statements, key ratios, …); - implementation of this methodology in complex situations, taking into consideration the impact of the accounting techniques used to draw up the consolidated financial statements, or the difficulties stemming from the analysis of groups comprising highly contrasted sectors of activity. Pedagogical Methods An alternation of lectures and case studies. The latter are taken from recent real-life situations, particularly initial public offering operations on the New market of the Paris Stock Exchange. Work Load . Exercises . Case studies Evaluation In-class work and final exam

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FINANCIAL ANALYSIS COURSE AND SEMINAR II Instructor: Vedran CAPKUN, Assistant Professor, HEC Paris Objectives One of the primary objectives of accounting is to help those outside the firm predict its future cash flows. This is done by understanding and evaluating the key drivers of the firm, its financial position and performance. The present (or current) value of those cash flows provides an estimate for the value of the firm. Accounting systems and information is also required for business and legal reasons. It is therefore essential for managers to be aware of the signals they get from or give to the business community through these documents. It is also useful to be able to understand and interpret the signals given by other companies through their final statements. Accounting is about communication, it is an economic information system, and can be thought of as the language of business. Accounting standards are as much a product of political action as they are of careful logic or empirical findings. Accounting principles cannot be discovered; they are created, developed, or decreed and supported or justified by intuition, authority, and acceptability. We have alternatives in our accounting choices. If we understand the economic consequences of each choice, we can appropriately base our selection on the desired outcome as well as interpret the selection made by others. The process is political and tradeoffs will be made.

This course reviews and extends key aspects of accounting and financial (including prospective) analysis. We begin by remembering the limits of accounting information (it is more an art form than a science) and how accounting forms the basis of firm valuation. Next we review how accrual accounting statements can be converted in to cash accounting statements and deepen our examination of ratio analysis. Then we extend our analysis to build pro-forma (as if, or future) financial statements. Finally we examine the techniques of firm valuation. The ultimate goal is to improve your ability to use accounting information effectively. Readings Reference book is: Healy P., Palepu K, Bernard V. Peek E. (2007) Business Analysis and valuation: an IFRS edition, Thomson, 1st ed. Format The course consists of 8 sessions 2 hours each. We will be using cases, examples, slides and other materials necessary to explain and adopt the concepts described above.

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VALUATION AND MERGER & ACQUISITIONS Instructor: Franck CEDDAHA, ODDO Course highlights Eight fundamental lectures on Valuation and Merger & Acquisitions. Students complete several take-home case studies, which are available on HEC intranet and present to the group their analyses in a professional manner. Test at the end. Outside professionals will present during the course real-life examples of valuation and M&A practice. Summaries of lectures are listed below. Course Description Much of course focuses on M&A and corporate finance issues IPO, LBO.... The course is designed to be a hands-on overview of key valuation and financial themes and practical implication for companies. Four lectures for each topics are scheduled at the beginning of the course, while the last seven sessions are case studies and the final test are done in separate groups. Student Assessment Because of course progress and density of concepts, attendance to all lectures is compulsory. Absence without excuse will not be permitted and may be counted as F or Fx on final grade. Each lecture will have to be prepared by students. Take the necessary time to review and prepare case studies in small groups, up to three persons per group. Final test will be organised during the last session. Intermediary tests may be organised on any lecture during the course without prior notice. Final grade will also reflect criteria such as attendance, quality of group case study preparation and presentation and active participation. Evaluation Final test For French-speaking students: optional track of Prof. Philippe KIENAST on Financial Engineering in France is a « must do » as it allows to understand all the structuring issues of any deal : tax ; legal ; accounting,…

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CORPORATE FINANCE THEORY

Instructor: Ulrich HEGE, Associate Professor, HEC Paris Presentation and Course Objectives This course presents the major theoretical concepts of modern corporate finance and initiates the students to the state-of-the-art thinking in the field. We will discuss the ideas behind these theories and their rationale, and put particular emphasis on how these concepts can be applied to corporate finance issues in practice. The course will also acquaint students with the methodology used in corporate finance, in order to enable them to follow advances in corporate finance research on their own. Course schedule 10 lectures of 2 hours, and two exams. Course content In the first part of the course, we will discuss basic concepts and theoretical explanations of the financial policy and payout policy. We will introduce the major modern capital structure theories, such as debt overhang, the pecking order model, financial signaling and the role of cash. We will study how agency conflicts are intertwined with financial policy and look at the implications for incentives and executive compensation. We will also look at dividend policy and at the strategic effect of capital structure decisions in view of product market competitors. The second topic of the course looks at securities issuance. We will develop the background and possible explanations for puzzling phenomena like underpricing in IPOs, and analyze the role of investment banks and conflicts of interest. In the final part, we present and discuss models of takeovers and mergers. We will put them in the context of fundamental concepts in corporate governance and analyze their role in the working of the market for corporate control. Teaching Methods Lectures and classroom discussion. Course Grades Problem Sets 20% Mid-Term Exam 40% Final Exam 40%

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ADVANCED APPLIED CORPORATE FINANCE Instructor: Pascal QUIRY, Affiliate Professor, HEC Paris

Presentation Finance is all too often presented as a set of techniques belonging to the realm of day-to-day management. However, in order to achieve substantial growth, firms need a carefully planned financial policy conveying its overall competitive strategy. Objectives The objective of this course is to: 1) Give a professional dimension to the set of skills acquired so far. 2) Introduce students to the main challenges facing Corporate Finance today. 3) Overcome any potential shortcomings in students’ knowledge of Corporate Finance. Students will be given the opportunity to perform an in-depth analysis of situations and operations on the European and American markets. This course complements the courses given by Philippe KIENAST and Franck CEDDAHA. Content The course covers the following subjects: 1. In terms of corporate strategy: - Financial strategy and general economic data - Financial analysis of a sector and development of a financial product - Mergers and acquisitions: negotiation techniques and assessment methods 2. In terms of financial policy: - Financial policy, market value, cash flow and capital decrease. - Financial policy, market value and public offering: « risk venture ». - Financial policy: should firms remain on the stock market? 3. In terms of engineering: - Deconsolidating packages - Value optimization - Divisions - Companies in difficulty: liability assessment and renegotiation Pedagogical Methods Students are divided into work groups and assigned a case to present after having studied it in depth. Evaluation Case: 35 % Final Exam: 65 %.

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ELECTIVES

ADVANCED ASSET PRICING Instructor: Nizar TOUZI, Professor, Ecole Polytechnique Presentation and objective This course provides an introduction to continuous-time models for the valuation and hedging of derivative securities. Our objective is to provide the students with the necessary modeling skills in continuous-time, so that they can be familiar with the classical models in financial engineering together with their limitations. From the technical viewpoint, we expect the students at the end of course to master the stochastic analysis in the Gaussian case. Content The first lectures are dedicated to an introduction to the stochastic analysis tools which are needed for our financial problems: Brownian motion, together with the corresponding stochastic integration, Itô’s formula, Girsanov’s theorem, stochastic differential equations and the connection with partial differential equations. Then, we build the continuous-time approach for the theory of hedging and valuation in the context of complete markets. We will then focus on the Black and Scholes model and its various extensions. The practical use of this model is connected to the problem of calibrating the volatility surface. We next move to the fixed income theory. We start by factor models, and introduce the Heath-Jarrow-Morton model which automatically fits the interest rate model to the current yield curve. We finally extend the theory to the multi-currency context, and provide application to the pricing and hedging of hybrid derivatives. Course Organization 15 sessions of 2 hours each, including tutorial sessions for problem sets solving Evaluation Written exam, 2 hours

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HEDGE FUNDS (taught in French) Instructors: Jean-Charles BERTRAND, Executive Director in charge of Bond Management and Absolute Return Management SINOPIA Asset Management (member of the HSBC group) Paul BESSON, Director of Research and deputy director of Management Operations, ADI Alternative Investments Presentation The course gives a concrete introduction to the mechanisms of hedge funds and the various strategies in place. It offers a broad overview of the strategies implemented by hedge funds. The major challenges faced by hedge funds are also covered: risk and performance analysis, regulation, the place of hedge funds in investor portfolios. Objectives The course, taught by recognized alternative management professionals, aims to offer students an introduction, both theoretical and practical, to the main instruments and concepts used by managers. Talks are given by specialized managers in every kind of strategy in order to present analyses of “real life” market situations. Course schedule This 14-hour course is divided into seven 2-hour sessions. Content The two first sessions are devoted to a general overview of hedge funds their challenges: definition, history, main strategies, performance and risk analysis, regulation. The following sessions are dedicated to the precise description of each type of strategy: volatility and credit convertible arbitrage, rate arbitrage, Event driven and Funds of Hedge Funds. The different strategies are presented in a detailed manner: instruments and techniques used, risk factors. Pedagogical Methods The course is based on a handout summarizing the presentations given during each session. Evaluation 100% Test

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HEDGE FUNDS: Risk and Value Creation Instructor: Augustin LANDIER, ADA Investment Management et NYU - Stern David THESMAR, Professor, HEC Paris Overview

This class provides an overview of hedge fund strategies from a practical but also academic perspective. Cases will be used to illustrate concepts (risk&return, value creation, risk management, liquidity, incentives, etc) that are especially crucial in this industry.

Aim Several existing styles of alternative investment strategies employed by hedge funds are discussed. In each case the sources of value creation (risk, alpha) are discussed, so that the students are trained to critically assess the viability and applicability of a particular investment approach. Course Structure This course consists of 8 modules of 2h each. Content The program will start with a general description of hedge funds: what is a hedge fund and what distinguishes it from another fund management firm. We will review the classes of strategies. We will then turn to performance evaluation, in particular risk adjustment. We will pay particular attention to the specific risk exposures of hedge funds (liquidity risk, extreme risk etc), and how to manage them. We will then describe the organizational specificities of hedge funds, in particular in their relations with their investors (LPs). We end with a discussion on new trends in hedge fund products (130/30, synthetic hedge funds, socially responsible investment). Course material Slides will be distributed in class. Test Students are evaluated at the end of the course in a 1h30min exam consisting in the analysis of a virtual fund prospectus.

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ENERGY AND FINANCE Instructor: Jean-Michel Gauthier, Global Partner Deloitte Presentation Energy is a major driver of the world economy, and a key parameter affecting the financial markets. Investments into the necessary infrastructures to ensure energy security for the EU-25 are assessed to be US$1600 bn over 25 years, and the figure for the whole world could be 5 to 10 times this amount. The supply of energy will result in a major drain on the capital markets. The global trend towards energy deregulation results in a dramatic restructuring in oil and gas contracts, economics and markets. Long term oil-indexed gas contracts have been replaced by regional markets organised around a few trading hubs where transactions are governed by spot or futures prices. Electricity is now traded on organized power exchanges or through OTC arrangements in most EU countries. Electricity traded contracts include contracts for physical deliveries but also financial products and derivatives. A number of “secondary” markets have further developed, including auctions for virtual power capacities or cross-border interconnection capacities. In addition, the recently created CO2 emission trading scheme is expected to alter the whole value chain of energy. The new conditions of the global oil game, in addition to the new rules governing the gas and electricity markets, raise fresh fundamental questions: how can deregulation be combined with the increasing requirements for security of supply? Are our economies still sustainable in a globally volatile price environment for energy commodities? How will the huge infrastructures be financed? How will our requirement for competitive, abundant energy be compatible with environment protection and climate change? Content Topics that will be developed include the following:

1. The fundamentals of oil, gas and electricity markets, the importance of coal 2. The segments of the energy industry: production, transportation, distribution 3. Gas and electricity markets in Europe: from regulation to deregulation 4. Gas and electricity pricing mechanisms: spot prices and forward curves 5. Spot and Futures markets. Derivatives. Hedging mechanisms 6. Cycles, Seasonality and Volatility of gas and electricity markets in the EU 7. The lessons of deregulation: the UK example and the NETA rule 8. Overview of the US market organization: the example of the PJM market 9. The Scandinavian market model 10. Gas and electricity market mechanisms in Germany, France, Spain and Italy 11. Competitiveness of fuels on deregulated markets: oil, gas, coal, and nuclear 12. The economics of renewables 13. The valuation of oil, gas and electricity assets and contracts 14. Kyoto Protocol, CO2 and Green House Gas trading mechanisms 15. New rules of the game, new players: oil super majors, utility majors, multi- utilities...

Their strategies and those of producing countries, traders,… 16. Financing energy infrastructures: equity and debt financing, project finance. 17. The issue of long term security of supply

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FIXED-INCOME EMERGING MARKETS Instructor: Perrine Fontaine Presentation Emerging Markets play an increasing role in international financial markets. Large investment flows have poured in for the last five years and there is no end in sight to this “wall of money”. Even conservative institutions are now scrambling to put together EM teams while the pioneers are reaping huge profits in Russia and Latin America, for example – and yet, those same markets triggered the last major world financial crisis (Russia 1998) and the biggest sovereign default ever (Argentina 2001). What are really those Emerging Markets? Where does the risk embedded in them come from? Are we on the verge of a new E.M. “bubble”? These are a few of the points raised in the course, which seeks to highlight the main issues at stake when dealing with Emerging Markets. Extensive use will be made of real-life market situations, term-sheets and legal documents to illustrate the points raised. Objectives The course has as its objectives: - to put into perspective the concept of Emerging Markets debt, as seen by borrowing countries, G7

investors, and the IMF. - to understand the benefits as well as the pitfalls of foreign indebtedness for EM borrowers. - to highlight the stakes of foreign-exchange fluctuations for emerging economies. - to analyze the risks linked to EM assets as well as the returns they generate. What is the usefulness

of such assets in traditional and alternative asset management? Course schedule 5 lectures of 2 hours each, taught in English. Test (1/2 hours). Content 1. An introduction to Emerging Markets

From Mexico’s Brady to a mature asset-class. Special focus on the IMF. Example: IMF’s stand-by agreement with Argentina, 2003-05.

2. Foreign exchange rates, international capital flows, and solvency : the specificities of emerging economies. Implications for debt-management. Example: Impact of currency volatility in Latin America.

3. External debt: the starting point and still the bulk of EM. Key driver is default risk. Case study: build a portfolio of real-life external debt assets for a mutual of hedge fund.

4. .Local markets: today’s key market in terms of profitability and innovation. Drivers are FX and inflation; material non-financial risks. Case Study-2: add local assets to portfolio.

5. A changing universe: prospects and conclusions. End of case study: analyze investment rationale / P&L based on real-life performance.

Pedagogical Methods Lectures; case study; multiple choice test.

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ORIGINATION AND MARKETING OF DERIVATIVES PRODUCTS Instructor: Frédéric ROBERT Presentation The world of derivative and structured products is a mysterious one for the outsider. They offer such high levels of flexibility for the management of both the investment and the risk coverage that their very existence can no longer be put into question. As a result of this flexibility, they attract a broad variety of different clients, for often very different reasons, sometimes simple, often complex. They require a solid command of a very wide set of technical skills, as well as the ability to negotiate and to sell. On top of this, as they address users with varying degrees of knowledge in terms of financial engineering, these products make it necessary to offer clients tailored levels of support.

The aim is to encourage high levels of in-class participation from students. The speaker has extensive experience of these products and of the context they are treated in, with both Investment Banks and clients. The course is based on his experience as a professional and is best suited for highly motivated students with at least some knowledge of basic derivative products.

Objectives The course has 3 major objectives:

1) To grasp the main families of derivative and structured products as well as their financial logic.

2) To study client demand in terms of derivative products as well as their underlying motives and trends.

3) To offer insight into the role, functions and duties of the structurer within the different aspects of the position.

Course schedule Four 3-hour sessions. Content 1. Derivative Instruments: Products or tool-boxes?

2. Products and strategies used by portfolio managers

3. Structured MTNs

4. Structuring complex products through three examples: (i) legal framework and « ALM »

(ii) derivative products used by investment funds, in compliance with the European directive, (iii) convertible asset swap.

5. The use of derivatives in corporate finance: (i) participation management, (ii) employee participation plans, (iii) examples of packages using the derivative technique in an M&A operation.

6. « Derivative credits ».

7. Alternative investments: the use of derivatives by hedges funds; products based on hedge funds

Pedagogical Methods - Description of actual transactions performed for clients. The different parts are structured as Marketing presentations or product presentations for potential clients. Evaluation - Attendance - Interest in the topics discussed and in-class participation.

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SECURITIZATION, CREDIT STRUCTURED PRODUCTS AND COLLATERALIZED DEBT OBLIGATIONS (CDO) Instructor: Loïc FERY, Global Head, Structured Credit & CDO, Calyon

Richard BRUYERE, Associate Manager, Advention

Presentation The objective of this course is to introduce students to the main principles and techniques of securitization, which consists in isolating a credit portfolio (made up of commercial debts or bonds for example) and structuring it in such a way as would be expected by investors. The course aims to highlight the practical applications of securitization techniques, in particular regarding balance sheet management for companies and banks. The second part of the course tackles the different uses of securitization on capital markets, in particular through the study of CDO products (Collateralized Debt Obligation). This is a highly interactive course with numerous studies of actual transactions. Course schedule Four 3-hour sessions Content Session 1: Introduction to Securitization. Evolution and market development motors. Rating

agencies, Practical case on the ABS market (Asset-Backed Securities) Session 2: Main types of transactions (True Sale / Synthetic) Capital management (regulatory and economic) through securitization techniques, Evolution of the prudential environment, Practical case for financial institutions (example of Balance-sheet CLO transactions). Séance 3: Applying securitization techniques to the capital markets: CDO (Collateralized Debt

Obligation). Elaboration techniques for CDO products and Risk analysis, and practical case.

Séance 4: Convergence of « cash » and synthetic securitizations. The boom of the CDO market

and new developments. Case study on new transactions Work Load Study of transactions, in-class participation Attendance is compulsory for the conference by Mr Richard PAROLAI (Clifford Chance) on the « legal aspects of structured financing. Evaluation Case study.

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TRADING OF DERIVATIVES Instructor: Cyril Levy-Marchal, J-P Morgan Objectives The objective is to introduce students to the fundamentals of derivative trading, in a short period of time and as interactively as possible. Course schedule Three 4-hour sessions. Content The course offers an overview of the main trading methods and techniques used for derivatives today. Although the examples refer mainly to stock derivatives, the same principles are valid for all classes of assets. Positioning in general - Micro-structure : market making vs prop trading - Type of trading: relative value vs directional, micro vs macro… - Type of positions - How do you find ideas? - Implementing ideas : from ideas to execution

Trading derivatives - Where derivatives bring value - Multi dimensional risk - Path dependency - Playing on timing - Different instruments for different purposes, profiles and goals

Risk management - how do we look at risks : measures, systems, static vs dynamic, issues with growing

complexity of products - using Greeks - example of risk limits - analyzing risk reward - trading under constraints of limits, capital management - running his profits and cutting his losses : stop losses and how to use options

Pedagogical Methods Highly interactive sessions alternating presentations and practical examples . Work Load High levels of in-class participation required from students, exercises to be handed in, readings to complete before class. Evaluation - Exercises 20% - Participation 40% - Final test 40%

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VOLATILITY MODELING Instructor: Laurent-Emmanuel CALVET, Professor, HEC Paris

Presentation Recent turbulence on financial markets is a useful reminder that changes in volatility are both abrupt and persistent, and play a crucial role in value-at-risk and option pricing. The objective of this course is to review some of the most important models of volatility used by portfolio managers, hedge funds, and risk managers. Content The course will begin with ARCH/GARCH models, for which Prof. Robert Engle received the 2003 Nobel Memorial Prize in Economic Sciences. We will then introduce stochastic volatility models, which have been widely used in option pricing. The course will conclude with a presentation of multifrequency volatility modeling, a powerful and tractable new technique that can substantially outperform traditional volatility models in forecasting and value-at-risk applications. Course schedule 10 hours Evaluation The course evaluation will be based on a short project.

References Engle, R. F. (1982), Autoregressive conditional heteroskedasticity with the estimates of the United Kingdom inflation, Econometrica 50, 987-1008. Hull, J, and White, H. (1987), The pricing of options on assets with stochastic volatilities, Journal of Finance 42, 281-300. Calvet, L. E., and Fisher, A. J. (2008), Multifractal Volatility: Theory, Forecasting, and Pricing. Elsevier – Academic Press.

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FINANCIAL RISK MANAGEMENT

Instructor: Christophe PÉRIGNON, Associate Professor, HEC Paris Objectives To provide participants with an in-depth knowledge of the most recent risk identification, measurement and management techniques in finance. This topic is essential for professionals involved in risk management, derivatives research, trading, treasury management, financial corporate strategy, as well as supervision of financial institutions. This course examines modern techniques for managing financial risks which are due to movements in financial prices, volatilities, or correlations. Organization and Pedagogical Methods Six lectures of two hours. Teaching combines theory, numerical applications, and student presentations. Classes are taught in English. Content In the first part of the course, we discuss the main approaches to measure market risk in a financial institution (e.g. Value-at-Risk, Expected Shortfall, etc). We explain the key role that they play in setting the regulatory capital of banks. We then present the main statistical techniques used by banks and regulators to assess the validity of the risk estimates. We implement these techniques using actual data from a sample of international banks. Finally, we discuss several potential extensions and improvements on existing risk management methods used by banks and regulators. In particular, we question whether current risk management practices mitigate or exacerbate systemic risk. Work Load Readings of book chapters and academic papers to be made. Problem sets to be solved. Final project (empirical study). Evaluation Final project but no written exam.

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THE CREDIT CRISIS: HISTORICAL AND TECHNICAL ANALYSIS Instructor: Alexandra PRIGENT, Structured Credit, Goldman Sachs International, London Course Overview The purpose of the course is to understand the dynamics that triggered and spread the Credit Crisis. Starting with the so-called Subprime Crisis early 2007, we will analyse the contagion mechanisms that led to a global financial crisis. The course combines both technical and historical aspects. Schedule 5 sessions of 3 hours Content 1- Credit Fundamentals: Secured/Non-Secured financing Recourse/Non-Recourse financing, collateral and margin calls Refresh on financing methods and debt instruments 2- The Subprime Crisis Introduction to the Asset-Backed Securities market What are Subprimes ? Definitions, mechanics and players The Crisis : chronology, originators’ bankruptcies, "negative equity" and moral hazard 3- Contagion Mechanisms Conduits, CDO and SIV Monolines, Reinsurers and quasi-sovereign Agencies "Deleveraging", "Fire Sale" and anti Flight to quality 4- Banks in the Crisis Capital and Regulatory treatment Off-Balance Sheet and Tail Risk consolidation Inter-dealer financing and market risk 5- Liquidity Premium – Business Cases: Dislocation of the Credit Market: Negative basis, Leveraged Loans vs. High Yield bonds Dislocations of the Interest Rate Market : 3M/6M Euribor basis, eonia/Euribor Teaching Methods - Lecture - Market Data analysis - Business cases Students’ Home work - Reading of academic and bank research materials - Attendance to the Securitisation course by L. Fery and R. Bruyere recommended Grade Short Multiple Choice Tests at the beginning of the sessions

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INSURANCE Instructor: Pierre PICARD, Professor at l’Ecole Polytechnique, Affiliate Professor HEC Présentation The course offers an introduction to the main mechanisms of the insurance markets: mutualization and risk transfer by insurers and reinsurers, the reasons why individuals and companies take out insurance, the so-called alternative risk transfer mechanisms. The course focuses in particular on the role played by information mismatches between insurers and the insured, be it a moral, anti-selection or fraud risk. Objectives The objective of the course is to provide students with a general analytical framework to understand the mechanisms of insurance markets and their potential problems. It is designed for students aiming for a career in an insurance or reinsurance company, or in related fields such as risk management or insurance intermediation. Content

- Risk mutualization. - Risk aversion and insurance request. - The motives for insurance requests by companies. - Reinsurance and alternative risk transfer. - Information mismatches - Fraud: scoring and auditing.

Pedagogical Methods Lectures, readings. Evaluation Final Test.

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FINANCIAL ENGINEERING AND DERIVATIVES Instructor: Olivier BOSSARD Presentation The objective of this course is to introduce Master’s students to the fascinating world of Derivative Products, how they are designed, processed and managed on the London and Wall Street trading floors. Students will study the sophisticated mathematical models these products rely on, and be given insight into the pragmatic approach of the traders manage in their day-to-day management of the most complex risks of 21st century financial markets. This course is offered to Finance Master students for the 9th year running. Objectives This course is taught by a professional Derivatives Trader and builds a link between the most advanced quantitative models and their use by different actors of the financial world: Traders, Salespeople, Structurers and Financial Engineers on the trading floors, but also corporate Treasurers, Fund Managers and Speculators. It explores Market Finance theory as it is applied in the professional world, and introduces students to the captivating, highly competitive world of investment banks, which they will discover upon entering the job market. Course schedule This 30-hour course is divided into 10 intensive half-day sessions (usually morning and afternoon combined) to allow for an in-depth analysis of the studied topics. The first part of the course (5 half-days) focuses on key notions of the theory of Derivative Products, in the form of lectures. The 3 following half-days are organized as computer-based Practical sessions (pricing, modelization and portfolio management simulations). Finally, the 2 last sessions are dedicated to student participation, with presentations in groups of 2 or 3 of each case study. Content The fundamental concepts of Stochastic Calculus and Financial Engineering are illustrated through the introduction to complex Derivative Products: Barrier Options, Multi-Underlying Options, Hybrid Products, etc. As well as this theoretical approach, Exotic Option risk management (1st, 2nd and 3rd order, crossed partial derivatives, etc.) is also studied through a hands-on approach, taking real constraints into consideration such as the impact of speculation or illiquidity on the behavior of financial markets. Pedagogical Methods This course requires a solid mathematical background, mainly in terms of analytical skills rather than mechanically assimilated knowledge. Both the Theoretical Courses and the Practical Sessions will test students’ analytical skills, capacity for abstraction and quick mindedness, just like on the Trading Floor (minus the stress and adrenaline rushes, perhaps!). Work Load et Evaluation 30% Participation, 50% Written Report, 20% Oral Presentation

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FINANCIAL ENGINEERING Instructor: Nadia OUJDANE, Ahmed KEBAIER Presentation and Objectives The objective of this course is to introduce students to the basic numerical tools for risk calculation and option valuation and hedging in finance. Course schedule Six 3-hour sessions Three 4-hour sessions divided into 15h of classes and 15h of computer-based practical sessions Content 1- Risk calculation. 2- Black & Scholes model and delta hedging. 3- Greek calculations for exotic options. 4- Numerical methods (EDP, tree, Monte Carlo) for the valuation of exotic options. Evaluation Project handed in as a report. Références [1]-Glasserman, Paul Monte Carlo methods in financial engineering. Applications of Mathematics (New York), 53. Stochastic Modelling and Applied Probability. Springer-Verlag, New York, 2004. [2]-Lamberton, Damien; Lapeyre, Bernard Introduction to stochastic calculus applied to finance. Chapman & Hall, London, 1996.

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FINANCIAL MODELING Instructor: Nicolas NAILLON Course Description: In this course, students are given the opportunity to put into practice their corporate finance skills acquired in various 2nd and 3rd year courses. The objective is to introduce students to the implementation of a corporate valuation model, a task that those who choose a career in corporate finance will have to perform on a daily basis. Objectives : At the end of the course, students are expected to be capable of setting up a model (income statement, balance sheet, free cash flow statement), WACC sensitivity and a DCF meeting the level of standards required by investment banks.

Content : Throughout the course students will fine-tune their valuation of a company 1. Introduction to the basic modeling rules and recap of the main accounting principles (~ 1 session): Recap of basic accounting concepts used to build a model. Introduction to the principles of modeling and practice through exercises. Colors, Excel tricks, presentation of the ‘choose’ and ‘offset’ functions, useful for the creation of switches. 2. Implementing WACC sensitivity (~ 1 session) : Using the universe of comparable companies to the one chosen, reduce the beta debt of comparable companies, then increase the debt again and model WACC sensitivity. 3. Creating a model (~ 2 sessions): Creating a model step by step. Introduction to circular references and their usefulness in interest calculation. 4. Another use of models in finance, chosen by students (~ 2 sessions): -Introduction à lto the construction of an LBO - Sensitivity calculation - Real estate investments for rental purposes : modeling vacancy and maintenance costs - Others Evaluation Students will submit a corporate valuation model.

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EQUITY CAPITAL MARKETS Course description to come

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EQUITY CAPITAL MARKETS (M&A, Private equity and assimilated operations) Instructor: Philippe KIENAST, Affiliate professor, HEC Paris. Co-founder and President of Altedia. Presentation Performing equity transactions in France (M&A, financial engineering for corporate creation and development, private equity etc…), requires a certain level of legal, fiscal and financial knowledge. This course aims to supply students with the necessary technical skills for holding a position within a financial engineering team with a bank, a corporation or a private equity fund. Objectives The objective of this course it to study the technical and strategic aspects of financial engineering operations for equity transactions in France. This course, which complements the course Valuation and Merger & Acquisition taught by Franck Ceddaha and Bruno Delingette, seeks to provide students with the following skills: • The necessary theoretical, professional and technical bases to understand and implement merger and acquisition and financial engineering operations for equity transactions in France. • Creativity and the ability to analyze and control risks and opportunities in choosing financial packages, particularly from the point of view of value creation • The ability to interact and work with the different experts (financial, accounting, legal, fiscal

…) involved in equity operations This course does not cover evaluation techniques, which students will have studied in depth during the compulsory courses. Course schedule This 18-hour course is divided into six 3-hour sessions. Pedagogical Methods The course is based on readings of technical notes which will be commented on and discussed in class, on presentations given by the professor and on the case study and/or practical exercises. Evaluation 100% Test

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DUE DILIGENCE IN MERGERS AND ACQUISITIONS Instructor: Brice CHASLES, Corporate Finance Partner Deloitte & Touche Presentation This course focuses on the following aspects relative to due diligence operations prior to mergers or acquisitions: - operational: analysis of the firm to identify its strengths, weaknesses, opportunities and threats; - accounting: analysis of accounting principles, quality of the assets and liabilities, quality of past

and forecast results; - financial: analysis of the working capital requirements, analysis of the financial debt - legal: corporate law, contract analysis, social law and status of the personnel; - fiscal: corporate taxes, V.A.T., business tax, other taxes. Objectives - To identify the challenges linked to due diligence processes prior to merger and acquisition

operations. - To analyze the themes to study and necessary operations to perform a due diligence. - To study the impact of due diligence operations on the structuring of the offer as well as the

acquisition process. Course schedule The course is divided into six 2-hour sessions, made up of presentations illustrated with real-life cases. Content 1. The different steps to follow in a corporate acquisition process and the place and purpose of due diligence. Understanding the considered transaction. Analyzing the firm from an operational point of view: the market, products/services, competition, management, production factors, strategy and development (SWOT analysis). (1 session) 2. Analyzing the firm’s accounts (2 sessions): - accounting principles - quality of past results (two to three fiscal years) - quality of future results (the « business plan ») - quality of the assets and liabilities. 3. Financial analysis (1 session): - working capital requirements - financial debt 4. Legal, fiscal and social due diligence (1 session) 5. Due diligence operations and the impact of the conclusions on the transaction: price, representations and guarantees (1 session). Pedagogical Methods Course, readings. Evaluation In-class participation.

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CORPORATE FINANCE AND STRATEGY Instructor: Olivier de MANDOLX, Project Manager, McKinsey&Company Presentation Corporate Finance and Corporate Strategy are generally separated disciplines inside academic modules, corporations and consulting. However, no strategic decision can be made without an assessment of its financial impact, and any financial decision – structuring the balance sheet, acquisition, sale… - should only be made in compliance with the direction set by the strategy. CEOs are primarily responsible for creating value for shareholders, and are therefore the key integrators of both complimentary perspectives. Objectives Following a brief theoretical introduction, this course relies on real-life situations and places the students in the shoes of a CEO, allowing them to explore the interactions between both disciplines. Its goal is to provide participants with: A thorough conceptual framework explaining the main value-creating levers available to corporate managers,

A concrete illustration of the notions introduced through the presentation of real-life cases, A dynamic introduction to financial and strategic decision-making through two interactive cases

debated in class. Course schedule Five 2-hour sessions Content 1. Stock-market strategy and performance: conceptual framework and examples of a strategy for

restoring the viability of a bank 2. Financial and strategic value-creating levers 3. Interactive case: takeover decision-making process and recovery strategy for an airline 4. Negotiation of transactions and value-creation distribution 5. Interactive case: negotiation of the takeover price of an online distribution company Pedagogical Methods - Presentations by the professor - Presentation and real-life case studies Evaluation - Participation - Group work

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DEBT RESTRUCTURING (taught in French) Instructors: Philip VIVIER de VAUGOIN, Director Bank of America Presentation Over the four or five last years, a large number of groups have changed drastically, forsaking former activities and, through acquisitions, concentrating on newer, more promising sectors. Less spectacularly, some major groups have undertaken such levels of external growth that their portfolios of activities have been entirely reshuffled. Facing today’s economic downturn, some of these corporations having undergone such transformational operations find themselves in a relatively delicate situation: excessive indebtedness, plummeting stock prices, unhappy shareholders, disputed management… Should the economic crisis be singled out as the only culprit, or are these operations also to blame for the present problems? The goal of this course is to analyze the technical aspects of the transformational operations and, in light of recent examples, to try to identify the inherent risks to these operations as well as the causes of some failures. Objectives The main objectives of the course are: - To acquire in-depth technical understanding of the mechanisms of the main operations leading to the transformation of a group: acquisitions, mergers, public exchange offers, divisions. - To analyze market reactions to these operations: what does the market expect? Is this expectation stable in time ? How to anticipate and manage it? - To understand the risks of such operations over time; sensitivity to economic cycles, upheaval of shareholder structure, excessive leverage… Course schedule Five 2-hour sessions Content - Introduction - Acquisitions: impact on the stock price, legal aspects analyzed from a financial point of view - Public exchange offers / mergers: determining parities, impact on the stock price - Divisions: accounting and fiscal aspects, value creation analysis - Study of recent examples. Pedagogical Methods - A few short preliminary readings - Presentations with audiovisual supports - Study / discussion of recent examples during the final session.

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THE ART AND TECHNIQUE OF NEGOTIATION (taught in French) Instructors: Pierre SERVAN-SCHREIBER* and Armand GRUMBERG** *Lawyer, member of the Paris and New York Bars ** Lawyer, member of the Paris Bar Partners, Skadden, Arps, Slate, Meagher & Flom LLP Presentation and Objectives The objective of this course is to shed some light on the fundamental principles and mechanisms applicable to negotiations in complex and/or international operations. The goal is to better comprehend:

the main negotiation strategies and techniques, the importance of preparation in a negotiation, and the factors in play in the definition of a

negotiation strategy, the different stages of a negotiation and how they are conducted, how to make the best of one’s own strength and weaknesses as well as the opposite party’s, and

the key success factors of a negotiation Course schedule The course is divided into five bi-monthly 2-hour sessions, each focusing on a specific theme. It is taught by one or two speakers from the Skadden, Arps legal firm. Content The course will focus on the following topics: 1. Bilateral negotiations: how to approach a negotiation in a bilateral framework and maximize one’s chances of succeeding? 2. Multilateral negotiations: how to avoid the pitfalls and difficulties inherent to negotiations involving several parties? 3. Multilateral negotiations in a multi-cultural environment: how to adapt one’s negotiation strategy according to the cultural environment? Pedagogical Methods The teaching method is primarily based on negotiation simulation exercises, allowing students to apply the negotiation concepts, strategies and techniques they studied. The corresponding documentation, taken in large part from the Harvard Program on Negotiation will be supplied to students prior to the course. Every negotiation simulation exercise will be followed by a general debriefing, in order to analyze the results achieved and the impressions expressed by the different groups, and also to define the key factors of success and failure of a negotiation in the considered environment. Evaluation Evaluation will be based on participation in the negotiation simulation exercises and written exercises. N.B. some exercises will be in English.

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CREDIT RISK AND COMPANY RESTRUCURING (taught in French) Instructor: J-L GREVET, Partner, Butler Capital Partners Presentation This course presents the environment of a struggling company (before and after liquidation). It addresses in particular the main financial procedures used to anticipate difficulties and restructure the balance sheet of such companies. Course schedule Eight 1.5-hour sessions Content Session 1: Introduction - Struggling companies

- Legal context - Financial aspects

Session 2: Analysis of the different actors: - Management’s point of view

- The financial creditors’ point of view (credit risk analysis) - Other creditors’ point of view - Shareholders’ point of view

- Other actors (Commercial Courts/ Ad hoc Trustee / Insolvency Practitioner) Session 3: Financial implications of the difficulties

- Review of the cash position and liquidity deadlock - Unpaid bank loans or vendor loan notes - How to anticipate the situation to avoid liquidation? - When to file for bankruptcy? How to prepare it?

Session 4: How to restore liquidity to struggling companies: - Before liquidation:

Bank Loans Factoring High Yield Bonds Equity Capital After liquidation Session 5: Case study: Remy-Cointreau Session 6 Case study: FLO Group Session 7 Difficulties stemming from LBOs Session 8 Exam

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TEASURY MANAGEMENT IN A MULTINATIONAL CORPORATION (taught in French) Instructor: Benoit ROUSSEAU, Fromageries Bel Presentation This course aims to introduce students to the operational management of the Treasury Management department of a multinational corporation. Objectives The course will introduce students to the different approaches to exchange risk management, rate risk management, relations with banks, auditors and regulation organizations, relations with other departments in the company (management control, accounting, legal and fiscal departments, financial communication…) and cash management. Particular attention will be paid to the impact of the new accounting standards IAS and IFRS and the legal aspects of corporate finance operations. Population The course is designed for students aiming for a career in derivative sales for financial institutions, in auditing/consultancy firms, or in corporate finance for multinational corporations. Content Four 2/3-hour sessions: Session 1: The different types of exchange risks. The different exchange-risk management

approaches according to underlying activities (companies producing consumer goods, or industrial products with a long life cycle), rate risk management (3H)

Impact on the new IAS IFRS accounting standards Session 2: Cash management inside a multinational corporation: from cash pooling to cash/debt

management in developing countries (3 H) Session 3: Negotiating bank loans and their legal aspects: Example: negotiating syndicated loans (choosing banks, Term Sheet, wording…) (2 H) Session 4: Presentation by the different workgroups on the studies Reference Document;

Conclusion of the module on the different kinds of corporate and treasury financing. (3H)

Pedagogical Methods

Presentation Case study: teams of 3 or 4 students will be asked to study and report on the principles and

exhibitions as presented by a certain number of multinationals in their Reference Document. Evaluation In-class participation and presentation of the case study.

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PRIVATE EQUITY Instructor: Marc-Elie BERNARD, Consultant Presentation This course aims to introduce students to the «capital investment » or « private equity » sectors. It focuses more specifically on Leveraged Buy-Out (LBO) operations and their financing issues. Objectives This course will allow students to:

‐ Study the Private Equity sector, a major component of the alternative investment sector

‐ Become acquainted with LBO operation financing techniques

‐ Understand the role of capital markets and other alternative management sectors in the LBO boom of the past ten years

Course schedule Four 3-hour sessions Content

1. General presentation of the capital investment sector a. Company life cycle and typology of the different kinds of capital investments b. Investor logic and expected return c. Actors and historical evolution of European capital investment d. Practical case

2. LBO operation financing techniques: a. Structure of LBO operations in Europe – bank (structured debt) and multiple

financing b. The issues of contractual subordination vs structural subordination c. The role of the sponsor and management of conflicts of interest; covenants

3. Refinancing debt through capital markets a. Evolution of institutional investment in the structured debt b. The weight of CLO (« Collateralized Loan Obligations ») securitizations and other

leveraged debt funds c. Example of CLO

4. Impact of the sub-prime crisis & perspectives for the sector. Pedagogical Methods Presentations, practical examples Work Load Readings Evaluation In-class participation, Final Test

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SOCIALLY RESPONSIBLE INVESTMENT (SRI) (French) Instructor: Robin EDME, Sustainable Development Partner at Grant Thornton, President of the Forum pour l’Investissement Responsable (Forum for Responsible Investment) and Eurosif Presentation and objective: A new form of investment gained momentum in the USA in the early 90s, and 10 years later in Europe, integrating extra-financial criteria (environmental, social, Human Rights, etc.) into its investment criteria, on top of normal financial considerations. The SRI boom came in the wake of financial scandals such as Enron, Parmalat, etc… and went hand in hand with the correlate development of sustainable development concerns. The objective of the course is to: Show… That another form of investment – at least as « profitable » as mainstream investments - is possible, and even necessary;

The part that financial markets can play in meeting the challenges of sustainable development ; Present… The various SRI actors and power play it requires; The differences/similarities between SRI techniques and « mainstream » forms of investment.

Content: Lectures (as an introduction to each of the 3 sessions) Talks by SRI professionals (1 asset manager, 1 broker, 1 representative of an extra-financial information agency)

Mini-case illustrating the session Course schedule: Course schedule:12 h (Three 4-hour sessions) Evaluation:

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ECONOMICS OF BANKING Instructor: Olivier KLEIN, Affiliate Professor HEC CEO in charge of commercial banking and insurance, Banque Populaire Caisse d'Epargne Presentation and teaching objectives

The course analyzes the economic and financial role of banks, considered, along with markets, as central elements of the financial system. It also introduces the different professions that can be found within a bank, the criteria that guide them and their specific management constraints. On top of this, it introduces students to a few key techniques in the banking (credit analysis,…) and market (derivative instruments, VAR,…) fields. The course combines a macro-financial and microeconomic analysis of banking institutions, offering students insight into the economic role and specificities of a bank and the conditions for its profitability. Finally, it aims to analyse banking and market techniques.

Course content

I. COMPARING THE ECONOMIC ROLES OF BANKS AND FINANCIAL

MARKETS 1. Analysis of the economic roles of banking institutions and financial markets: comparative

advantages of intermediated finance and direct finance 1.1 payment method management 1.2 the different types of intermediation 1.3 Borrower / lender information asymmetry 1.4 credit risk taking: banks/markets 1.5 interest rate and liquidity risk taking and transformation: banks/markets 1.6 money creation

2. The evolution of the banking model from "originate and hold" to "originate and distribute"

2.1 The role of securitization and of credit derivatives: growing similarities in the behaviours of banks and financial markets

2.1.1 a look at credit derivatives 2.1.2 a look at securitizations (ABS, SIV, conducts…) 2.1.3 the slide from one banking model to another and its micro and macro

financial consequences 2.2 The 2007-2008 disintermediation crisis: a return to the original model or a

compromise between the two with better regulation? II. BANK TYPOLOGIES AND MANAGEMENT METHODS

− The different banks and their professions − Resources and employment: analysis of bank balance sheets

− The main features of their profit and loss accounts and most important

management ratios − An insight into banking strategy

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III. FINANCIAL RISK MANAGEMENT 1. Recap of a few key financial notions:

1.1 the return / risk couple and diversification: theory and practice 1.2 liquid markets and rating ranges: the role of market holders 1.3 the different types of financial risks

2. The interest rate risk of a bond portfolio and its measurement: concepts and uses of

duration and convexity 3. The global rate risk of a bank: measurement and management

3.1 origin of the global rate risk of a bank 3.2 Asset and Liability Management: the different approaches

3.2.1 the liquidity gap 3.2.2 the rate gap: static and dynamic gaps 3.2.3 net asset duration 3.2.4 Net Interest Margin sensitivity management over a given period 3.2.5 advantages and drawbacks of the methods

4. Volatility risk: the "Greek"

4.1 a quick recap: bonds 4.2 bond management and risk measurement: the « Greek »

5. VAR: definition, methods of measurement and use in risk management 6. Stress scenarios IV. THE PRACTISE OF CREDIT: granting, measurement and risk management 1. Elementary credit techniques 2. Reminders and use of financial analysis 3. The issue of margins and the borrower / lender relationship 4. Practical responses to information asymmetry 5. Credit scoring and statistical measurement of the credit risk 6. Credit risk management V. PRUDENTIAL RULES 1. The need for prudential rules 2. Basel 2: presentation and evaluation of its effects Format and language(s)

24h

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INTERNATIONAL GROWTH STRATEGY Instructor: Olivier SCHAEFFER – GM International & Development – Sephora Europe Presentation The objective of this course is to introduce students to the necessary strategy and mechanisms for the expansion of an international activity. Objectives At the end of the course: • you will have understood the objectives and conditions of the development of an international

corporation • you will be familiar with the major procedures • you will be able to think about the choices governing this expansion Course Schedule • Five 2-hour sessions • One 1h30 test Content The course will focus on the following themes: • Objectives and conditions for international expansion • Terms of the expansion :

• organic growth on the domestic market • organic growth on other markets • franchise • capitalistic partnership • acquisition

Our examples will come mainly – but not exclusively – from the Distribution sector. Pedagogical Methods • Presentation • Case Studies • In-class interactive discussions Work Load • Readings • Case preparation • For it to be beneficial, this course requires students to have sufficient accounting and financial

skills (analysis of financial statements and Management balances) as well as corporate evaluation (corporate and stock value, DCF method, Multiples Method).

Evaluation • In-class participation • Final test (1 h 30)