MIT Sloan

Finance
MIT Sloan School of Management

finance research practicum

Prospective Sponsor Guide

Winter 2012
 MIT Sloan School of Management

finance research practicum

The course
The Finance Research Practicum is a graduate-level finance elective course in which students work in teams
on projects proposed by external sponsors. Our goal is to provide students with an outstanding opportunity
to work with leading industry practitioners on important business problems, while helping them bridge the
gap between theory and practice, and introducing them to the broader financial community. The course is
full-time during the month of January and includes some preparation and follow-up before and after the full-
time experience. While intended primarily for Master of Finance students, the course is open to all students
with the necessary prerequisites.

 The projects
We seek projects that address real business problems, which can
be completed by a team of approximately three highly motivated,
well-trained students working full-time for a month. The majority of

SA M P L E P R OJ ECTS
• Model development and evaluation to:
• Recommend whether a pension fund should
conduct “tail risk hedging.”
• Help an endowment decide how much to
allocate to an inflation swap that takes into
account: the preferences of the investor; the
risk/return characteristics of the swap; and   final project deliverable: a paper, presentation, software code,
the need to set aside and manage collateral.
• Value and hedge variable annuity guarantees.
• Value and hedge Brazilian interest rate options.
• Develop and back-test an equity trading
strategy.
• Create an agent-based model of the stock market
that generates endogenous volatility; use this model
to propose recommendations for how traditional
portfolio construction methodology should be
modified to account for endogenous risk.
• Analyze the history of commercialization of
university-based research in the Boston area and
identify common attributes of successful ventures.
projects involve the use of one or more advanced technical skills,
including financial econometrics, simulation, derivatives valuation,
optimization, and related software and programming languages.
We also seek a small number of less technical projects.
Sponsor responsibilities
Sponsors must have an appropriate project, that they really
care about, and must be willing to write a short description of
the project by November 1, 2011. Each sponsor will specify the
model, or any combination of these. During the full-time portion
of the project, sponsors should be able to allocate at least one
to two hours a week to provide ongoing feedback, guidance and
direction. However, some sponsors may provide more time,
so availability will vary by sponsor. Sponsors may opt to host
students in their offices during all or part of the month of January.
While such sponsors are encouraged to pay for student travel  
expenses, this is not required. Additionally, most sponsors
choose to have their team conduct a final in-person presentation,
which also may involve travel expenses.
Software and data
Students have access to Bloomberg, Capital IQ, Compustat,
CRSP, FactSet, MATLAB, Mathematica, Northfield, Windham
Portfolio Advisor, and a variety of other software tools and  
data sources. In some cases, the sponsor will provide the data  
and software.
 Q: How are students assigned to projects?
A: The course instructor determines the assignments, taking into account the preferences of both students
and sponsors, as well as the required skill set for the project.

Q: If I agree to participate, am I guaranteed a team will be assigned to my project?

frequently asked questions

A: No. While we intend to use every project, the number of projects needed is not finalized until course
participants are confirmed. If the sponsor is amenable, however, we will attempt to shift the unused
projects to other courses.

Q: How does the Finance Research Practicum differ from an internship?

A: In some ways, the Practicum is very similar to an internship, especially for students who conduct their
project at the sponsor’s site. However, it differs from an internship in the following ways:
• The course instructor recruits projects that leverage the academic curriculum  
and meet the course objectives
• The school, rather than the sponsor, assigns the teams
• Students receive mentoring from the course’s instructional staff
• Students are not employees of the sponsor

Q: Can I use the Practicum as a recruiting tool?

A: Yes. Please let us know if this is your goal, and we will work with you and our Career Development Office to
ensure that your needs are met.

Q: What is the cost for me to participate in the Practicum?

A: MIT does not charge sponsors to participate. However, some sponsors incur out-of-pocket costs. Most
notably, some sponsors hosting students onsite in a location outside of the Boston area pay for students’
travel and living expenses. Other expenses may include the sponsor traveling to campus and the purchase
of data and software.

Q: What determines if the project is done onsite or offsite?

A: The sponsor decides this. Our preference is for the project to be onsite, but we recognize that some
sponsors cannot accommodate this option.

Q: Is it appropriate to ask students to sign a confidentiality agreement?

A: It is important to think about what is and is not confidential and communicate this to students. In some
cases, sponsors may wish to formalize an understanding. However, such agreements should not prevent
students from presenting the results of their project in class.
 timeline and key dates

D A T E RESPONSIBILITY

September 15, 2011 Deadline for communicating your intent to participate.  

Note: Please contact John Minahan if you need additional time.

November 1, 2011 Project descriptions are due from sponsors (should be ½ to 1-page long).  
If you need assistance, please submit a draft no later than October 15, 2011.

December 1, 2011 Students receive their assignments.  

During December, teams will coordinate the logistics with their sponsors.

January 9, 2012 Course officially starts. There is some flexibility on the start date. Schedule
permitting, some teams may begin their projects before this date.

February 3, 2012 Last day students are available for full-time project work.

Feb./Mar. 2012 Student production of deliverables (unless produced during the full-time
portion of the course) and post-Practicum follow-up.

The mission of the MIT Sloan School of Management is to  

develop principled, innovative leaders who improve the world  
and generate ideas that advance management practice.

N O N D I S C R I M I N AT I O N P O L I C Y

The Massachusetts Institute of Technology is committed to the principle of equal opportu-

nity in education and employment. The Institute does not discriminate against individuals
on the basis of race, color, sex, sexual orientation, gender identity, religion, disability, age,
veteran status, ancestry, or national or ethnic origin in the administration of its educational
policies, admissions policies, employment policies, scholarship and loan programs, and
other Institute administered programs and activities, but may favor US citizens or residents
in admissions and financial aid.*
John Minahan
Senior Lecturer, Finance The Vice President for Human Resources is designated as the Institute’s Equal Opportunity
Email: jminahan@mit.edu Officer and Title IX Coordinator. Inquiries concerning the Institute’s policies, compliance

Telephone: 617.715.4673 with applicable laws, statutes, and regulations (such as Title VI, Title IX, and Section 504),
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regulations, and do not comply fully with MIT’s policy of nondiscrimination with regard to
sexual orientation. MIT continues to advocate for a change in DOD policies and regulations
concerning sexual orientation, and will replace scholarships of students who lose ROTC
financial aid because of these DOD policies and regulations.