IE Master in Finance ranked No. 2 worldwide by FT

IE Business School holds the No. 2 position in the Financial Time ranking of Masters in Finance programs.

The IE Master in Finance achieved this result in the pre-experience category with its full-time English-taught program, aimed at young professionals with an international profile. The student body of IE’s Master in Finance program comprises 95% international students from 23 countries, and takes place in Madrid and New York.  It is the first finance program in Spain to be awarded the status of Program Partner by the CFA (Chartered Financial Advisor) Institute, the leading international standard for financial analysts.

Ignacio de la Torre, Director of Masters in Finance at IE Business School says that the finance sector needs specialized profiles with an international focus. “This is exactly what our programs provide, and our graduates work in firms like UBS, Morgan Stanley, Credit Suisse, Waterland and BCG. Emerging economies also offer enormous potential given the rapid development of their capital markets.”

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Alternative Financing

IE Focus | By Ignacio de la Torre, Academic Director of Master in Finance, Master in Advanced Finance

The credit crunch could go on for years. That’s why alternative funding is on the rise, and it looks like it is here to stay.In 2009 more European companies financed their businesses using bonds rather than banks. This has never happened before, so what’s going on? The current situation means that banks are having to clean up their balance sheets, build up equity and write off toxic assets, which makes it difficult for them to offer companies competitive interest rates. Plus, Basel III will penalize bank loans to companies, which further exacerbates the current liquidity crunch. This scenario has forced companies to do their homework and to seek alternative sources of funding for expansion.

What is alternative financing? It’s the kind that does not depend on the banks. Traditionally, risk capital has played a major role in financing companies undergoing growth. It is normally broken down into two types: venture capital, which finances startups (often technology-related businesses) and private equity, which is generally used by more mature companies with a lower growth rate and a higher debt volume.

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Hedge funds and short sales. An open debate

IE Focus - Hedge FundsIE Focus | By Rafael Hurtado, Professor at IE Business School

The collapse of the stock market has highlighted the shortcomings of the hedge fund system of short sales and fuelled debate on the need to set limits and rules for this type of operation.In recent months, and in particular after the great crash of the stock markets as from September 2008, the hedge fund system of short sales has been a subject of analysis and debate by many players on financial markets. The consequences and system of short sales are a source of great controversy in the financial sector.

Short sales take place through the loan of securities. A short position (short sale) takes place through the sale of an asset that is not held by the investor, but borrowed through an intermediary and later bought to pay the loan. The profit is obtained if the initial sale is completed at a higher price than the purchase price. With a short sale, the investor obtains greater profit if the price of the asset falls.

On many occasions, hedge funds not only involve short sales, but also use a significant amount of leverage. For a short sale, an intermediary must lend a certain number of shares. Some companies say that they have uncovered signs of their shares being lent as part of a chain. This type of transaction involves further risk.

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Subprime mortgages in Spain: do they exist?

IE Focus - Subprime mortgages in SpainIE Focus | By Antonio Rivela and Ignacio de la Torre. Professors. IE Business School
In spite of the real estate bubble, Spain has suffered relatively little fallout from subprime mortgages. Is that because they don’t exist? They exist alright, but they are well controlled.
When commenting on how a high-risk mortgage (subprime) was turned into a fantastic AAA-rated bond backed by prestigious rating agencies through the magical art of financial engineering, the prestigious North American investor, Warren Buffett, said “you can´t make a silk purse out of sow’s ear”. A subprime mortgage is a mortgage loan awarded by banks to customers that have no credit record and, in many cases, no proven income. This process for converting “sow’s ears into silk purses” (the mutation of subprime mortgages into bonds with the highest possible credit rating) was implemented through securitisations and it is of key importance for understanding the financial debacle facing the West.

However, many foreign analysts are asking why the subprime hurricane has had hardly any effect on the Spanish market in comparison with its impact on the North American or British banking market if, in theory, Spain was on a similar track (housing price bubble, high credit penetration and runaway foreign deficit). Although many have responded to this question with apocalyptic visions, it is our opinion that the actual situation is much less dramatic. In this article, we will make a detailed analysis of this opinion as objectively as possible.

As was pointed out by Alfredo Sáenz, CEO of Banco Santander, subprime mortgages do exist in Spain. However, his statement needs to be explained: yes, they do exist, but to a much lesser extent than in other markets. Where do they come from? There are two basic ways in which the subprime disease can be caught: by awarding subprime mortgages or by buying securitisations linked to subprime risk. If we analyse the first of the phenomena, there are four very good reasons why hardly any subprime mortgages have been awarded in Spain:

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IE Business School becomes inaugural CFA Program Partner in Spain

CFA Institute, the global association for investment professionals that awards the prestigious Chartered Financial Analyst® (CFA) designation, is pleased to announce a CFA Program Partnership with IE Business School in Spain. In 2009, the Financial Times Global MBA Rankings ranked IE Business School 3rd in Europe and 6th in the world. IE Business School has…

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Students from IE’s Master in Finance win the 4th CFA Global Investment Research Challenge in Spain

A team of students from IE Business School’s Master in Finance have won 1st prize in the 4th edition of the CFA Institute’s Global Investment Research Challenge organized in Spain in collaboration with Bolsas y Mercados Españoles and Spanish business daily El Economista. The members of the winning team were Jonas Aita (Germany), Sebastian Mentzen…

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