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Press Release

Michael B. Laffin

For immediate release:
April 13, 2005

Carnegie Mellon Announces Results of Financial Engineering Case Competition

UC Berkeley finishes first, Tepper School team places second

PITTSBURGH—Five MBA students from the University of California, Berkeley won the Eighth Annual Graduate Business School Financial Engineering Case Competition, hosted by the Tepper School of Business at Carnegie Mellon University. A team from the Tepper School placed second in this year's contest, which was held at the global headquarters of Lehman Brothers in New York City on April 7-8.

Sponsored by Lehman Brothers and Appaloosa Asset Management, the Financial Engineering Case Competition (FECC) is the only inter-university case rivalry that showcases the business acumen and analytical skills of top MBA students in the areas of derivative security valuation and financial engineering.

The teams represented six top B-schools and competed against one another, and the clock, as they worked to solve a complex financial-engineering problem in six hours. The competition involved valuation and structuring issues for asset-backed securities in the home equity loan market, with a focus on the interactions of interest rates and various types of credit risk.

Teams were asked to develop a derivative-based solution, designing a structured product to meet the client's needs. They also were asked to price the deal and build a hedging strategy to manage risk. After the six hours had passed, the students presented their recommendations in 20-minute presentations to a panel of judges comprising faculty from the competing schools and Lehman Brothers executives. A question and answer session followed.

"The FECC is an excellent way for these focused students to expand their knowledge of financial-engineering techniques and applications," said Kenneth B. Dunn, dean of the Tepper School and professor of finance. "It's also a great opportunity for companies to get a good look at the best and brightest students in this complex area of finance." Other schools represented in the competition were Columbia University, Massachusetts Institute of Technology, University of Pennsylvania and the University of Chicago.


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