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SESSION 2SESSION 2GUIDANCE NOTES FOR GUIDANCE NOTES FOR SEMINAR IN FINANCESEMINAR IN FINANCE

LEADING TO THESIS/SCRIPTLEADING TO THESIS/SCRIPT

Lectured by Prof. Dr. Ferdinand D. Saragih, Lectured by Prof. Dr. Ferdinand D. Saragih, MAMA

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1. AIMS1. AIMS

The aims of the class seminar in finance The aims of the class seminar in finance inin

respect of its teaching are twofold:respect of its teaching are twofold: to provide an educational experience, to provide an educational experience,

encompassing depth of learning encompassing depth of learning through the medium of financethrough the medium of finance

To provide an atmosphere in which To provide an atmosphere in which students are motivated to conduct students are motivated to conduct research in line with their thesis/script.research in line with their thesis/script.

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1. AIMS1. AIMS

The class aims to:The class aims to: Flexibly respond to new demands Flexibly respond to new demands

and new developments arising from and new developments arising from research and practice, andresearch and practice, and

Cover relevant areas of finance in Cover relevant areas of finance in the context of existing and emerging the context of existing and emerging issues at national and international issues at national and international level.level.

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1. AIMS1. AIMS

The class within the degree program is The class within the degree program is designed to encourage cognitive skills designed to encourage cognitive skills such that as the students move such that as the students move through the four levels of their through the four levels of their programmes, they develop knowledge programmes, they develop knowledge and comprehension, learn to apply that and comprehension, learn to apply that knowledge and comprehension and knowledge and comprehension and become versed in the deeper approach become versed in the deeper approach to learning evidenced by powers of to learning evidenced by powers of analysis, synthesis and evaluation.analysis, synthesis and evaluation.

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1. AIMS1. AIMS

Analysis, synthesis and evaluation are Analysis, synthesis and evaluation are transferable skills of value to students in transferable skills of value to students in their future life far wider than the individual their future life far wider than the individual subject areas covered. Other transferable subject areas covered. Other transferable skills include communication, quantification, skills include communication, quantification, interactional and interpersonal skills and the interactional and interpersonal skills and the ability to clarify values are fundamental to ability to clarify values are fundamental to the degree programmes. During the the degree programmes. During the seminar class, students are encouraged to seminar class, students are encouraged to use their powers of reasoned argument to use their powers of reasoned argument to enable and empower them to identify with enable and empower them to identify with or challenge the material available on any or challenge the material available on any subject.subject.

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1. AIMS1. AIMS

The class provides the opportunity to The class provides the opportunity to expand students’ knowledge of subject expand students’ knowledge of subject areas covered in the first three semesters areas covered in the first three semesters of courses in finance and to explore new of courses in finance and to explore new areas. The courses are designed to develop areas. The courses are designed to develop students’ approach to learning finance, by:students’ approach to learning finance, by:

understanding material for students understanding material for students themselves rather than passively accepting themselves rather than passively accepting the interpretation provided by others.the interpretation provided by others.

interacting vigorously and critically with interacting vigorously and critically with relevant subject material.relevant subject material.

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1. AIMS1. AIMS

relating students’ ideas to their relating students’ ideas to their previous knowledge and experience.previous knowledge and experience.

using organizing principles to using organizing principles to integrate ideas.integrate ideas.

examining the logic and consistency examining the logic and consistency of an argument.of an argument.

relating conclusion to evidence.relating conclusion to evidence. assembling evidence to support assembling evidence to support

conclusions.conclusions.

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2. OVERVIEW2. OVERVIEW

The class seminar is an opportunity to The class seminar is an opportunity to activate and encourage a deeper activate and encourage a deeper approach to learning process. It is approach to learning process. It is perhaps the most rewarding and perhaps the most rewarding and enjoyable time at university. It is very enjoyable time at university. It is very different from previous years and can different from previous years and can seem like very hard work, but if seem like very hard work, but if approached in a constructive, positive approached in a constructive, positive manner it offers the potential for manner it offers the potential for personal as well as academic personal as well as academic development.development.

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3. BRIEF CLASS TOPICS3. BRIEF CLASS TOPICS Pricing of Securities in Financial MarketsPricing of Securities in Financial Markets The class will analyze theoretical The class will analyze theoretical

developments related to the pricing of developments related to the pricing of securities in financial markets and the securities in financial markets and the empirical evidence in this regard. The topics empirical evidence in this regard. The topics covered in the class will be drawn from the covered in the class will be drawn from the followingfollowing::

Efficient markets hypothesis and its implication for share price Efficient markets hypothesis and its implication for share price behavior, portfolio theory, the capital asset pricing model, the behavior, portfolio theory, the capital asset pricing model, the arbitrage pricing model, pricing of bonds and money market arbitrage pricing model, pricing of bonds and money market securities, valuation of futures contracts, models for pricing securities, valuation of futures contracts, models for pricing options on stocks, indices, futures contracts and currencies, options on stocks, indices, futures contracts and currencies, convertible securities, swaps, optimal hedging and issues convertible securities, swaps, optimal hedging and issues related to market micostructure.related to market micostructure.

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3. BRIEF CLASS TOPICS3. BRIEF CLASS TOPICS

Management of Investments in Management of Investments in Financial MarketsFinancial Markets

The class will analyze the theory and The class will analyze the theory and practice related to the management of practice related to the management of investments in financial markets. Topics investments in financial markets. Topics covered in the class will be drawn from the covered in the class will be drawn from the following:following:

Asset allocation models, international diversification, stock Asset allocation models, international diversification, stock selection strategies, equity valuation models, theoretical role selection strategies, equity valuation models, theoretical role of earnings, forecasting of earnings, quantitative fundamental of earnings, forecasting of earnings, quantitative fundamental models, bond ratings, hedging strategies, arbitrage models, bond ratings, hedging strategies, arbitrage strategies, trading systems, use of derivative assets, dynamic strategies, trading systems, use of derivative assets, dynamic hedging/portfolio insurance, failure prediction models, index hedging/portfolio insurance, failure prediction models, index fund management, pension fund management and the fund management, pension fund management and the evaluation of portfolio performance.evaluation of portfolio performance.

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3. BRIEF CLASS TOPICS3. BRIEF CLASS TOPICS Corporate Investment Theory and Corporate Investment Theory and

PolicyPolicy The topics covered in the class will The topics covered in the class will

normally be drawn the following:normally be drawn the following: Overview of capital investment theory under conditions of Overview of capital investment theory under conditions of

certainty and uncertainty, the real option approach to certainty and uncertainty, the real option approach to investment, techniques of adjusting for risk and uncertainty, investment, techniques of adjusting for risk and uncertainty, strategic investment decisions and the usefulness of option strategic investment decisions and the usefulness of option pricing theory, mergers and acquisition, theories of the pricing theory, mergers and acquisition, theories of the market for corporate control, including synergy and value market for corporate control, including synergy and value creation, hubris and the winners curse, capital market creation, hubris and the winners curse, capital market response to merger and acquisitions, market efficiency and response to merger and acquisitions, market efficiency and anomalies in the market for corporate control, ex-post anomalies in the market for corporate control, ex-post performance of merged firms, investment policy and the performance of merged firms, investment policy and the value of the firm, interaction of financing and investment value of the firm, interaction of financing and investment decisions, managerial incentives and corporate investment decisions, managerial incentives and corporate investment decisions, issues in corporate governance.decisions, issues in corporate governance.

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3. BRIEF CLASS TOPICS3. BRIEF CLASS TOPICS

Corporate Financial Theory and PolicyCorporate Financial Theory and Policy

The class will analyze the theory and The class will analyze the theory and practice related to corporate financial practice related to corporate financial decisions. The topics covered in the decisions. The topics covered in the class will be drawn from the following:class will be drawn from the following:

The financial theory of agency: evidence and The financial theory of agency: evidence and problems, corporate financial policy with respect to problems, corporate financial policy with respect to dividends, share repurchases, capital structure, dividends, share repurchases, capital structure, leasing and new capital issues.leasing and new capital issues.

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4.LINK SEMINAR WITH CHOICE 4.LINK SEMINAR WITH CHOICE OF THESIS/SCRIPTOF THESIS/SCRIPT

Having completed their courses, Having completed their courses, students must do their script in a students must do their script in a finance related area. Students may finance related area. Students may choose either of their joint subjects for choose either of their joint subjects for a script topic. If they prefer to do a a script topic. If they prefer to do a script in their joint subject then the script in their joint subject then the program involved will provide them program involved will provide them with the necessary information. I wish with the necessary information. I wish to emphasize that the program in which to emphasize that the program in which students choose to do their script is students choose to do their script is theirtheir choice. choice.

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE Script GuidanceScript Guidance These notes are intended to give These notes are intended to give

student some ideas for managing student some ideas for managing her/his script. They contain a number her/his script. They contain a number of generalization which may make of generalization which may make them less applicable to some topics. them less applicable to some topics. If student has any queries about any If student has any queries about any of the issues raised she/he should of the issues raised she/he should discuss them with her/his supervisor.discuss them with her/his supervisor.

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE Why write a script?Why write a script?

The class in finance is supposed to develop The class in finance is supposed to develop students’ understanding of the theory students’ understanding of the theory underlying the subject. Students’ scripts are underlying the subject. Students’ scripts are an important part of this learning process. The an important part of this learning process. The process of identifying a topic, researching it process of identifying a topic, researching it and writing up students’ results provide an and writing up students’ results provide an opportunity to develop students’ critical opportunity to develop students’ critical powers. It also gives students an insight into powers. It also gives students an insight into the process whereby the finance literature is the process whereby the finance literature is developed.developed.

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE What exactly is a script?What exactly is a script? How long is a piece of string? In the How long is a piece of string? In the

BROADEST possible terms a script is a piece BROADEST possible terms a script is a piece of original writing on a subject of student’s of original writing on a subject of student’s choice. It should add something to the choice. It should add something to the existing literature (without being over existing literature (without being over ambitious). Student might collect some ambitious). Student might collect some empirical evidence and use it in the empirical evidence and use it in the investigation of some practical problem or the investigation of some practical problem or the student might summarize the existing student might summarize the existing literature on a topic and identify areas which literature on a topic and identify areas which are weak or which require further research. are weak or which require further research. Most scripts involve an element of both Most scripts involve an element of both approaches approaches

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE Choosing a topicChoosing a topic Choosing a topic is one of the most difficult aspects Choosing a topic is one of the most difficult aspects

of the project. It is worth seeking advice from of the project. It is worth seeking advice from lectures. To help student pick a topic, try the lectures. To help student pick a topic, try the following exercises:following exercises:

- - Was there a particular topic that captured your interest during your Was there a particular topic that captured your interest during your previous classes?previous classes? - what things interest you outside university?- what things interest you outside university? - is there an issue that interests you currently in the academic press - is there an issue that interests you currently in the academic press

or or contemporary events in the news?contemporary events in the news? - Can you see a link between two topics that other people may not - Can you see a link between two topics that other people may not

be be aware of? aware of?

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE

Support during the scriptSupport during the script

Discuss your program of meeting Discuss your program of meeting with your assigned supervisor. It is with your assigned supervisor. It is important that you submit written important that you submit written work periodically during the work periodically during the semester, starting as soon as semester, starting as soon as possible and keep your supervisor possible and keep your supervisor informed of your progress, plans and informed of your progress, plans and any problems as soon as they arise.any problems as soon as they arise.

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5. THE SCRIPT IS AN EXTREMLY 5. THE SCRIPT IS AN EXTREMLY IMPORTANT PART OF THE COURSEIMPORTANT PART OF THE COURSE Length and Structure of the scriptLength and Structure of the script There is no upper word limit on the script, however, There is no upper word limit on the script, however,

more words does not evaluate with more marks. There more words does not evaluate with more marks. There is no optimum length for a script, it very much depend is no optimum length for a script, it very much depend on the topic and research methodology adopted. If a on the topic and research methodology adopted. If a script is less than 10,000 words it is unlikely to contain script is less than 10,000 words it is unlikely to contain sufficient evidence of meeting the script objectives, sufficient evidence of meeting the script objectives, unless it is exceptionally well structured and argued. unless it is exceptionally well structured and argued. As a rule of thumb scripts would be expected to be As a rule of thumb scripts would be expected to be between 15,000 to 20,000 words. All scripts submitted between 15,000 to 20,000 words. All scripts submitted must include a word count. Appendices may be used must include a word count. Appendices may be used to provide supporting evidence but will not contribute to provide supporting evidence but will not contribute directly to the assessment of the script. Students may directly to the assessment of the script. Students may wish to include in appendices evidence that confirm wish to include in appendices evidence that confirm the originality of their work of illustrates points of the originality of their work of illustrates points of principles set out the main text.principles set out the main text.

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6. THE OTLINE OF A SCRIPT6. THE OTLINE OF A SCRIPT

IntroductionIntroduction Overview where student identify the research Overview where student identify the research

questions and signpost her/his approach and questions and signpost her/his approach and structure of the thesis.structure of the thesis.

Literature ReviewLiterature Review This section will evaluate the key relevant articles This section will evaluate the key relevant articles

of student’s topic and outline the framework or of student’s topic and outline the framework or principal theories she/he will use in the rest of the principal theories she/he will use in the rest of the script.script.

MethodologyMethodology This section will be used to describe the methods This section will be used to describe the methods

student has chosen to gather the evidence to student has chosen to gather the evidence to help answer her/his research question. It should help answer her/his research question. It should also be used to identify any limitations associated also be used to identify any limitations associated with her/his research methods and explain why with her/his research methods and explain why she/he chooses it. she/he chooses it.

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6. THE OTLINE OF A SCRIPT6. THE OTLINE OF A SCRIPT

Empirical DataEmpirical Data This section is used to describe and present any This section is used to describe and present any

empirical evidence student has gathered or empirical evidence student has gathered or constructed. This section could also be used to constructed. This section could also be used to evaluate the empirical data using the framework evaluate the empirical data using the framework described in the literature review section.described in the literature review section.

ConclusionConclusion This should be used to present any conclusions that This should be used to present any conclusions that

can be drawn from the previous sections, further can be drawn from the previous sections, further research requirements and an answer to student’s research requirements and an answer to student’s research question. Please note that a successful research question. Please note that a successful script does not require a positive or negative script does not require a positive or negative answer to the research question. The process of answer to the research question. The process of investigating the research question is an important investigating the research question is an important in a time-limited project such as the script. in a time-limited project such as the script.

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7. A REASONABLE METHOD7. A REASONABLE METHOD Outline of the topic and an explanation of its Outline of the topic and an explanation of its

importanceimportance Discuss the theory underlying student’s topic and Discuss the theory underlying student’s topic and

summarize and comment on any relevant literaturesummarize and comment on any relevant literature Describe the empirical work/case study which Describe the empirical work/case study which

student has done and give an overview of the main student has done and give an overview of the main findings.findings.

Most importantly, provide a clear statement of the Most importantly, provide a clear statement of the research findings. What changes should be research findings. What changes should be introduced in the light of the script findings? What introduced in the light of the script findings? What further work could be undertaken?further work could be undertaken?

All of the above points may sound rather daunting. All of the above points may sound rather daunting. Student should find that, once she/he gets started, it Student should find that, once she/he gets started, it is not too difficult to achieve the objectives is not too difficult to achieve the objectives described Above.described Above.

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The End of This SessionThe End of This Session

Thank you