Examination of theories and evidence on the investment decision process including operations of equity securities markets, market efficiency, financial asset prices, and portfolio management. Prerequisites: BSAD 180; Business Administration major or minor; Minimum Junior standing. Co-requisite: BSAD 280.
Prereqs enforced by the system: BSAD 180; BSAD, CSIS, EMGT Majors, BSAD Minors, MAcc students; Junior, Senior, or Graduate standing; Required course specific fee of $25; Open to Degree and CDE students.
This course is an introduction to the field of investments. Topics covered will include a survey of the types of financial instruments, the study of how they are bought and sold, and an introduction to how they are valued in the marketplace. Valuation topics will include, the basics of portfolio theory, models of asset pricing, and an introduction to the pricing of options and futures contracts. I will emphasize issues relating to market efficiency (do asset prices accurately reflect public information), and the valuation of derivative securities. The former is important because it is an extremely useful organizing paradigm. The latter is important because the absence of arbitrage principle on which option pricing theory is based provides the framework for modern finance (this material will also provide important background material for International Finance and other advanced finance courses). I will not stress fundamental analysis (using forecasts of earnings and interest rates to determine company valuations). This material is covered in BSAD181 and BSAD 288. I will focus on the fundamental concepts underlying the management and analysis of investments in a portfolio context. Specifically, when you successfully complete this course you will: 1) Understand the purposes served by the wide-range of traded financial assets 2) Understand the concept and practice of efficient diversification 3) Be able to use capital market theory to estimate asset risk premiums 4) Understand the basics of how derivatives are priced and used 5) Appreciate both the compelling logic in favor of market efficiency and some of the evidence against it 6) Understand the basics of portfolio analysis and management
This is a lecture-based course and attendance is required. There will be a text and required readings from the financial press.
Grading There will be three exams in this course. The exams will determine 70% of your final grade and will be equally weighted. If extenuating circumstances will preclude your attendance on the day of an exam, please arrange with me to take it early, as I will not give it late. The final 30% of your grade will be determined by 3 projects. Final grades will be assigned using both plusses and minuses. Problem sets will be assigned periodically. You will not be required to hand them in, but they will provide useful preparation for the exams (answer keys will be available). Projects The three group projects will be worked on in assigned groups of 4. Each group must submit a team contract with the first project that will guide your collective actions throughout the semester. At the end of the semester each group member must complete a “peer evaluation” indicating the contribution of each team member to the completion of the projects. Less than full participation in project completion can reduce the project component of your grade by up to 50%. You should only turn in one project for the entire group with the names of the group members clearly written in alphabetical order. I will give you at least 7 days to complete a project from the time it is assigned. Projects are due at the beginning of class. Late projects will not be accepted.
Ifshin Hall 107 (View Campus Map)
to on Tuesday and Thursday
Note: These dates may not be accurate for select courses during the Summer Session.
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