Unraveling Finance: Navigating the Money Maze at BITS Pilani
An introductory guide to understanding finance, the offshoot system and the minor in finance
When students first step foot into BITS Pilani, many find themselves suddenly intrigued by the world of finance. It's like arriving at a buffet after a long day of fasting – you want to sample everything, but you're not quite sure where to start . And let's face it, most of us ended up in engineering because someone said it was a "safe bet," not because we had a burning passion for thermodynamics. So, while suggesting books like "Rich Dad, Poor Dad" and "The Psychology of Money" might make you sound like you've got it all figured out, the reality is that finance is a rollercoaster of probability, speculation, and fancy modelling – all wrapped up in a package that demands relentless hard work. But fear not! In this article, I'm here to point you in the right direction, help you navigate BITS' course offerings, and give you a few pointers on dipping your toes into the exciting world of investing.
Let's dive in!
Let's kick things off by tackling the question: What exactly is finance?
You might come across various definitions depending on where you look, but at its core, finance is all about the study of money. It's distinct from economics, which delves into the realms of production, distribution, and consumption. While the field of finance is vast and multifaceted, grasping the basics sets a solid foundation for a fruitful journey. Understanding these fundamentals also plays a crucial role in answering the age-old question: "Is a career in finance right for me?"
The courses offered in the Finance Minor program at BITS Pilani are designed to address some of these uncertainties. This minor can serve as a valuable launching pad for securing entry-level positions in financial firms, offering you a glimpse into whether a career in finance aligns with your aspirations and interests.
There are several high profile roles in the financial sector like: Investment Banking, Private Equity, Venture Capitalism, Portfolio Management and Quantitative Trading.
The soft skills are of great importance in this field, especially if you get a front-office(client facing) role. Other skills include mathematical acumen, critical thinking and analytical skills.
A deeper dive into the jobs and skills will be done in the upcoming issues.
In the finance minor, there are lots of different courses available. But when companies come to campus looking for students for finance PS-2 roles, they focus on how well students did in six specific courses. The total of all the grades in these courses is what determines the offshoot.
1.Fundamentals of Finance and Accounting (Fundafin): Known affectionately (or maybe not so affectionately) as the most snooze-inducing course in the minor, Fundafin lays down the groundwork by introducing you to financial statements: Balance Sheet, Income Statement, and Cash Flow Statement. These financial fundamentals serve as the cornerstone for analyzing a company's performance qualitatively during investing. Start by wrapping your head around what these statements entail and how to crunch various financial ratios from them.
2.Derivatives and Risk Management (DRM): This course delves into the world of derivatives, covering options, futures, swaps, and more. Brace yourself for a hearty dose of mathematics, especially calculus and probability. It's advisable to tackle DRM once you've nailed down the basics in Fundafin. This knowledge is particularly crucial for those eyeing a "quant" profile and is heavily utilized in quantitative analysis.
3.Financial Management (FinMan) : This is a foundational course in Corporate Finance, offering a comprehensive examination of the various decisions made by a company's Financial Manager to achieve the goal of maximizing shareholder wealth. The course assumes students have done a basic course on accounting, have familiarity with financial markets, financial securities, financial statements, elementary statistics, and MS-Excel. It is recommended that students only start this course after finishing FundaFin.
4.Business Analysis and Valuation (BAV): This course serves as a starting point into financial modeling, laying down the essential groundwork by introducing Discounted Cash Flows (DCF). If you find yourself drawn to this course, alongside developing a fondness for Excel, and are willing to sacrifice any semblance of work-life balance in your early career, you might just be the ideal candidate for a financial analyst. BAV sets the stage for comprehending other commonly used models in the industry, making DCF a solid starting point in this finance realm.
5.Security Analysis and Portfolio Management (SAPM): SAPM dives into the domain of portfolios, showing their significance and strategies for risk management. It explores various modern portfolio theories, reflecting the market's ever-evolving nature. Crucial for those eyeing roles in Asset and Wealth Management or Portfolio Management, SAPM reveals the rollercoaster nature of the job, where everyday mirrors the market's wild ups and downs.
6.Financial Risk Analytics and Management (FRAM): Is a continuation of DRM, but is mostly centered around financial risk management. This is a very important course regardless of which field of finance you venture into, as risk is an integral part of the financial market.
In conclusion, while finance can appear enticing, breaking into this field can be daunting without a clear starting point. The finance minor offers a stepping stone for students, yet learning these topics independently can help determine your interest and clarify which area within this expansive field aligns best with your career goals.
The forthcoming articles in the finance section of the SAC newsletter will provide an insightful overview of the field, explore various job opportunities, and delve into specific topics while offering valuable resources. Don't miss out – subscribe to the SAC newsletter today!