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finance research practicumMIT Sloan School of Management

Prospective Sponsor GuideWinter 2012

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 

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 

final project deliverable: a paper, presentation, software code, 

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. 

S A M P L E   P R OJ EC TS

• 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  

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. 

 

finance research practicumMIT Sloan School of Management

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?

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. 

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John Minahan

Senior Lecturer, Finance

Email: jminahan@mit.edu

Telephone: 617.715.4673

timeline and key dates

D AT E R E S P O N S I B I L I T Y

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.* 

The Vice President for Human Resources is designated as the Institute’s Equal Opportunity 

Officer and Title IX Coordinator. Inquiries concerning the Institute’s policies, compliance 

with applicable laws, statutes, and regulations (such as Title VI, Title IX, and Section 504), 

and complaints may be directed to the Vice President for Human Resources, Room E19-215, 

617-253-6512, or to the Coordinator of Staff Diversity Initiatives/Affirmative Action, Room 

E19-215, 617-253-1594. In the absence of the Vice President for Human Resources or the 

Coordinator of Staff Diversity Initiatives/Affirmative Action, inquiries or complaints may be 

directed to the Executive Vice President, Room 3-211, 617-253-3928, or to the Director of 

Labor and Employee Relations, Room E19-235N, 617-253-4264, respectively. Inquiries about 

the laws and about compliance may also be directed to the Assistant Secretary for Civil 

Rights, US Department of Education.

*The ROTC programs at MIT are operated under Department of Defense (DOD) policies and 

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.