UGBA 103

Ah, the world of finance. In my opinion, finance is analogous to the “dark side” of the force when it comes to left-brain-focused careers. Perhaps that is too dramatic and most certainly too antagonizing, but regardless I can make a case. I hear stories of the number-savvy business student going into banking or hedge funds only to be unjustly labeled “money-hungry” or “sellouts” by those in more self-righteous positions such as consulting or CSR. Similarly, I witness bright-eyed physicists, chemists, or engineers turn to the world of quantitative trading as a means of earning a quick buck to fund their future scientific endeavors, only to refuse the massive step down in compensation a couple years down the road. Why does STEM tend to lose people to finance? The answer is most likely money. Money provides more than just purchasing power. Money is comfort. Money is fame. Money is leverage over people. Money is EVERYTHING… OK, maybe not, but at least in UGBA 103, it was.

I took UGBA 103 over the summer, mostly because I simply wanted to “get the course out of the way”. Yes, it was one of THOSE courses for me. UGBA 103 was a course that I had heard would have a decent workload and wasn’t particularly interested in pursuing a career in. Nonetheless, as with all new knowledge, I couldn’t help but be curious about it. Familiarity with concepts such as dynamic rates, present value, risk, and capital structure are applicable beyond the world of business. After all, until mankind transcends the necessity for currency, money will flow through every aspect of our lives like blood through an organism. Knowing how the big players in the field operate within this organism is surely worth our while.

The first half of this accelerated course covered treasury bonds, present value, risk evaluation, and how monetary policy effects the aforementioned topics. I found these topics to be exceptionally interesting, especially because the mathematical justification behind the concepts taught are intuitive yet non-trivial. What this means is that the equations that govern, say, present value determination of a bond are complex enough to require some thought, yet once the epitome has been reached, the logic flows smoothly. On the other hand, risk evaluation and monetary policy were trickier topics to tackle. Risk evaluation in particular begins to focus on human psychology and makes discrete assumptions about both people and their decisions. To keep the course more clear-cut, it was necessary to attempt to quantify the psychological components or at least categorize what should be a spectrum of risk-averseness into bins. In reality the topic ought to remain a massive grey area.

The second half of the course covered material that was more novel to me. Topics included stocks, CAPM model of valuation, cost of capital models (for example WACC), and capital structure for both traditional companies and startups. This half of the course contained material that was less directly valuable to someone simply trying to gain financial awareness for personal investments and more geared towards a corporation. For that reason, as I am not a business owner myself, this half felt a bit out-of-touch with me. That is not to say the concepts were uninteresting (much like the first half of the course, the mathematical justification lay in a Goldilocks spot), but I simply could not relate to them as much. Despite what I like to believe, much of what I learn in class begins to slip away after a semester. The only way knowledge stays put for the long term is if it is drawn upon repeatedly. Already in my personal financial decisions, I have been relying on material gleaned during the first half of the course, but until I’m given a reason to truly care about a company’s internal financials, this knowledge will remain only in my subconscious.