BLOOMINGTON, Ind. - Indiana University is planning to create a master's program for the "rocket scientist" in derivatives, sophisticated securities design, investment modeling and trading strategies, said John Rau, dean of its school of business.
"There really is no structured program that does anything like this," said Anjan V. Thakor, professor and chairman of the finance department, which is developing the program.
Students "aren't exposed in the MBA program at a high technical level. They have to pick it up on Wall Street. But it's really not done in a structured way," said Mr. Thakor.
"The level of expertise in this area is mainly on the sell side," added Scott Smart, assistant professor. "On the buy side, the level of expertise is significantly less."
"One of the arguments of the people at Procter & Gamble and Gibson Greetings (both of which recently sued Bankers Trust Co. on derivative losses) is that they didn't understand what they were sold."
The new program is being designed to attract treasury and finance professionals at non-financial corporations, institutional investors, consultants and brokerage firms, as well as individuals beginning careers in complex financial techniques.
Derivatives will account for some three-quarters of the curriculum, while the bulk of the rest will be in mergers and acquisitions.
In derivatives, it will focus on pricing, risk assessment, hedging, trading strategies. In M&A, it will focus on pricing, negotiating and financial design.
"It will be something quite distinctive from an MBA," said Mr. Thakor.
He said the program hopes to attract corporations to send employees for formal training in complex finance and subsidize the tuition. The tuition, although not set yet, could range from $20,000 to $25,000, he added.
School officials are considering whether to make the studies a separate master's degree or a certificate program. In either case, Mr. Thakor envisions it will last three months. "There will be enough credit hours to make it a master's degree, so that's no problem," if the school decides participants want a (master's) credential.
"We anticipate a launch date of May 1996," he added, although the school could start it in 1995 depending on the demand. He expects a decision by the first quarter.
The department already has the curriculum "fairly well outlined," Mr. Smart said.
"We suspect one of the minimum prerequisites for an MS in finance will be a clear demonstration of high-level proficiency in mathematical sciences," Mr. Rau said. Or at least an aptitude, added Mr. Smart.
The finance department has been surveying finance and investment professionals about the potential demand and curriculum for the program. "We're still looking for feedback," Mr. Thakor said.