During the fall 2011 semester, Dr. David Krause, Marquette University’s AIM program director, taught several investment courses including: FINA 4065 - Fixed Income Securities. Krause said, “This course focused on securities that promise a fixed income stream and all related securities whose valuation is influenced by interest rates. The students are also required to complete a credit analysis of a publicly traded corporate credit. It is a fun course to teach.”
The course sought to teach the 45 undergraduate students the concepts and tools that are useful to managers and investors who want to use these securities, whether for investing, hedging, market-making, or speculating. While the cash flows of fixed income securities are contractually specified, which makes the payoffs relatively easy to quantify, the subtleties of interest rate movements, embedded options, and credit risk make the valuation of bonds particularly challenging. The course required a moderate level of quantitative skill and utilized Frank Fabozzi’s text: Fixed Income Analysis, 2nd Edition, Wiley Publishing.
Dr. Krause said, “The primary objective of the course is to provide students with a solid background in fixed income securities. Upon completion of the course I believe the students should posses the ability to demonstrate a thorough working knowledge of the analysis of fixed income securities, including basic characteristics of bonds in alternative sectors, valuation tools, and the factors that influence bond yields. The students should be able to estimate risk and returns for fixed income investments, analyze fixed income securities with unique features, and value fixed income investments with embedded options – including structured products. The material presented in this course should enable the students to pass the fixed income portion of Level I of the Chartered Financial Analysis (CFA) exam.”
Besides teaching the concepts related to fixed income securities, Dr. Krause utilized his network of Milwaukee, Chicago and New York investment professionals to speak in class. This semester he was able to bring in an amazing group of outside speakers. In total there were 12 fixed income professionals that visited the Fixed Income course this semester. The list included:- Dan Tranchita (Baird Advisors, Milwaukee)
- Quinn Noel, Christi Kukiak, and Amie Hahn (Northwestern Mutual /Mason Street Advisors, Milwaukee)
- William Lunkes (Morgan Stanley, New York)
- Scott Roberts (Ziegler Lotsoff, Chicago)
- Janet Rilling (Wells Capital Management, Milwaukee)
- Pat Brown (Citigroup, Milwaukee) and Tim Fotsch (Wells Capital Management, Milwaukee)
- John DeCaro and Chris Cebula (Elementum Advisors, Chicago)
- Jeffrey Bryden (JB Investment Management, Milwaukee)
Dr. Krause said, “I am very thankful that all of these professionals were able to visit campus and address our students. It is vital that the theories and concepts are brought to life in the classroom. I believe it is essential to show the students the applications of the material they are learning in the curriculum. This was an outstanding group of speakers and on behalf of the students in my Fixed Income course I know they are extremely grateful for the efforts of these guests to impart their knowledge. Thank you.”
