Investment Management

Search Courses

Investment Management

Introduction to investment: forms of investment, setting investment objectives, measuring investment risk and return. Security markets: market efficiency, organization and operations of primary and secondary markets, distribution, syndication, listing requirements in the secondary market, membership of market participants, over the counter markets. Participating in the securities market, price performance of securities–price weighted, value weighted and equal weighted indices, international stock indices and base year comparison. Industry analysis: the industry life cycle; industry structure analysis– competitive and economic structure; industry trend analysis, rotational investment; suitable growth model. Basic stock valuation concepts: dividend valuation model– constant and non-constant growth models; earnings valuation model, analyzing P/E ratio for stock valuation. Investment in special situation: special/ abnormal returns– mergers and acquisitions, new issues, stock repurchases; book value market value effect in explaining abnormal return. Bonds and fixed investment fundamentals: features and forms of bonds, bond market investors, distribution, other forms of fixed income securities–CD, commercial papers, money market funds etc. Bond valuation and investments: current yield, yield to maturity, yield to call; term structure of interests, theories explaining the yield curve. Duration and reinvestment concepts: duration and price sensitivity, reinvestment. Convertibles and warrants: conversion price, conversion ratio, conversion value, pure bond value, bond price and premium, downside risk. Portfolio management: Markowitz’s mean- variance analysis, capital asset pricing model, roles and responsibilities of portfolio manager.

FIN302 (Business Finance II)

  1. It is the student’s responsibility to gather information about the assignments and covered topics during the lectures missed. Regular class attendance is mandatory. Points will be taken off for missing classes. Without 70% of attendance, sitting for final exam is NOT allowed. According to IUB system students must enter the classroom within the first 20 minutes to get the attendance submitted.
  2. The date and syllabus of quiz, midterm and final exam is already given here, however, announcements will be given ahead of time. There is NO provision for make-up quizzes.
  3. The reading materials for each class will be given prior to that class so that student may have a cursory look into the materials.
  4. Class participation is vital for better understanding of sociological issues. Students are invited to raise questions.
  5. Students should take tutorials with the instructor during the office hours. Prior appointment is required.
  6. Students must maintain the IUB code of conduct and ethical guidelines offered by the School of Business.
  7. Students must refrain from any type of cheating and/or plagiarism in a course. Any student acting otherwise will receive an “F” grade in the course. School of Business, IUB, maintains a zero tolerance policy regarding violation of academic integrity.
  1. Students are not allowed to keep bags, handouts, books, mobile phones, smart watches or any other smart electronic devices with them during any exam. Students are advised to keep everything in the front of the class room before the exam starts. Please note that, just carrying any smart electronic devises (even if the devise is turned off or put it in silent mode) during the exam will be considered as “cheating”. Moreover, during the exam, anything written on hand palms (or anywhere else) and carrying paper materials (whatever is written) will be considered as “cheating”. Any sorts of “cheating” will result in an “F” grade with no exception. During the exam, students are only allowed to carry pen, pencil, eraser, sharpener, ruler, highlighter and calculator in a clear plastic bag.
Type of Evaluation Nos. Weight
Class Attendance and Participation 100% 5
Quiz (Best two will be counted) 5 15
Project and Presentation 01 30
Midterm Exam 01 25
Final Exam 01 30
Total   100%

[Class attendance is mandatory; failure to do so may deduct the final marks]

The following chart will be followed for grading. This has customized form the guideline provided by the school of Business.

A A- B+ B B- C+ C C- D+ D F
90-100 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 0-44

* Numbers are inclusive

The course will be based mostly on the following books [some other books and journals may be referred time to time]:

  • Gitman, L J & Joehnk, M D; 2014, Fundamentals of Investing; 12th Edition; Pearson

 

MORE READINGS:

 

  •  Jones, Charles P; Investments: Principles and Concepts; 11th Edition; Wiley & sons, Inc.

 

Link to virtual learning system: http://103.254.86.4/sb/ (School of Business – Faculty name- Login as a guest- password is 1234).

Sessions Topic Learning Outcomes Readings
Session -1 Introduction Understand the term investment and list the attributes that distinguish one investment from another.

Describe the investment process and types of investors.

Discuss the principal types of investments.

Describe the steps in investing, review fundamental tax considerations, and discuss investing over the life cycle.

Describe the most common types of short-term investments.

Describe some of the main careers available to people with financial expertise and the role that investments play in each.

 

 Gitman, Chapter 1 and Course Outline

 

Page 1-33

 

Handout available on virtual learning system

Session -2  Securities Markets and Transactions Identify the basic types of securities markets and describe their characteristics.

Explain the initial public offering (IPO) process.

Describe broker and dealer markets, and discuss how they differ from alternative trading systems.

Relevant Problem Solving from Text

 Gitman, Chapter 2

 

Page 34-50

 

Handout available on virtual learning system

Session -3  Securities Markets and Transactions Review the key aspects of the globalization of securities markets, and discuss the importance of international securities markets.

Discuss trading hours and regulation of
securities markets.

Explain long purchases, margin transactions and short sales.

    Relevant Problem Solving from Text

 Gitman, Chapter 2

 

Page 51-70

 

Handout available on virtual learning system

Session -4  Investment Information and Securities Transactions

 

 

 

 

 

Project Distribution

Discuss the growth in online investing and the pros and cons of using the Internet as an investment tool.

Identify major types and sources of investment information.

Explain the key aspects of commonly cited stock and bond market averages and indexes.

Portfolio management process and techniques using based on a simulated scenario of creating portfolio using real stocks and holding them for a period of 4 weeks and then determining the return, gain/ loss and reinvestment decisions.

Relevant Problem Solving from Text

 Gitman, Chapter 3

 

 

Page 71-90

 

 

 

Project Handout

 

Handout available on virtual learning system

Session -5  Investment Information and Securities Transactions

 

 

 

 

 

 

 

Quiz 1

Review the roles of stockbrokers, including the services they provided, selection of stockbroker, opening an account, and transactions basics.

 

Describe the basic types of orders, online transactions, transaction costs, and legal aspects of investor protection.

Discuss roles of investment advisors and investment clubs.

Relevant Problem Solving from Text

 

Knowledge of  Securities Markets and Transactions

 Gitman, Chapter 3

 

 

Page 91-116

 

Handout available on virtual learning system

 

Session -6  Return and Risk Review the concept of return, its components, the forces that affect the investor’s level of return, and historical returns.

Discuss the role of time value of money in measuring return and defining a satisfactory investment.

Describe real, risk-free, and required returns and the calculation and application of holding period return.

Relevant Problem Solving from Text

 Gitman, Chapter 4

 

 

 

Page 117-130

 

Handout available on virtual learning system

Session-7  Return and Risk Explain the concept and calculation of yield and how to find growth rates.

Discuss the key sources of risk that might affect potential investments.

Understand the risk of a single asset, risk assessment, and the steps that combine return and risk.

Relevant Problem Solving from Text

 Gitman, Chapter 4

 

 

Page 131-152

 

Handout available on virtual learning system

Session -8  Modern Portfolio Concepts

 

 

 

 

 

 

Quiz 2

Understand portfolio objectives and the procedures used to calculate portfolio return and standard deviation.

Discuss the concepts of correlation and diversification and the key aspects of international diversification.

Describe the components of risk and the use of beta to measure risk.

 

Knowledge of Return and Risk

Gitman, Chapter 5

 

 

Page 166-180

 

Handout available on virtual learning system

Session -9  Modern Portfolio Concepts Explain the capital asset pricing model (CAPM) conceptually, mathematically, and graphically.

 

Review the traditional and modern approaches to portfolio management.

Describe portfolio betas, the risk-return tradeoff, and reconciliation of the two approaches to portfolio management.

 

 Gitman, Chapter 5

 

 

 

Page 181-208

 

Handout available on virtual learning system

Session -10  Behavioral Finance Describe the characteristics of an efficient market, explain what market anomalies are, and note some of the challenges that investors face when markets are efficient.

Summarize the evidence which indicates that the stock market is efficient.

List four “decision traps” that may lead investors to make systematic errors in their investment decisions.

 

 Gitman, Chapter 9

 

 

Page 328-342

 

Handout available on virtual learning system

Session -11  Behavioral Finance Explain how behavioral finance links market anomalies to investors’ cognitive biases.

Describe some of the approaches to technical analysis.

Compute and use technical trading rules for individual stocks and the market as a whole.

 Gitman, Chapter 9

 

Page 343-365

 

Handout available on virtual learning system

Session -12  Managing your Own Portfolio

 

 

 

 

 

 

 

 

Quiz 3

Explain how to use an asset allocation scheme to construct a portfolio consistent with investor objectives.

Discuss the data and indexes needed to measure and compare investment performance.

Understand the techniques used to measure income, capital gains, and total portfolio return.

Relevant Problem Solving from Text

 

Knowledge of Portfolio Concepts and Behavioral Finance

 Gitman, Chapter 13

 

 

Page 494-510

 

Handout available on virtual learning system

Session -13  Managing your Own Portfolio Use the Sharpe, Treynor, and Jensen measures to compare a portfolio’s return with a risk-adjusted, market-adjusted rate of return, and discuss portfolio revision.

Describe the role and logic of dollar-cost averaging, constant-dollar plans, constant-ratio plans, and variable-ratio plans.

Explain the role of limit and stop-loss orders in investment timing, warehousing liquidity, and timing investment sales.

Relevant Problem Solving from Text

 Gitman, Chapter 13

 

 

 

Page 511-531

 

Handout available on virtual learning system

Session -14 Review for Midterm  CHAPTERS 2,3,4,5 AND 9 Gitman, Chapter 2,3,4,5 AND 9
Session -15 Midterm Exam  CHAPTERS 2,3,4,5 AND 9 Gitman, Chapter 2,3,4,5 AND 9

 

Session -16  Bond Valuation Explain the behavior of market interest rates and identify the forces that cause interest rates to change.

Describe the term structure of interest rates and note how yield curves can be used by investors.

Understand how bonds are valued in the marketplace.

Relevant Problem Solving from Text

 

 Gitman, Chapter 11

 

Page 412-420

 

Handout available on virtual learning system

Session -17  Bond Valuation Describe the various measures of yield and return and explain how these standards of performance are used in bond valuation.

 

Understand the basic concept of duration, how it can be measured, and its use in the management of bond portfolios.

Discuss various bond investment strategies and the different ways these securities can be used by investors.

Relevant Problem Solving from Text

 

 

 

Gitman, Chapter 11

 

 

Page 421-451

 

Handout available on virtual learning system

Session -18  Common Stocks

 

 

 

 

 

 

 

 

 

 

 

Quiz 4

Explain the investment appeal of common stocks and why individuals like to invest in them.

Describe stock returns from a historical perspective and understand how current returns measure up to historical standards of performance.

 

Discuss the basic features of common stocks, including issue characteristics, stock quotations, and transaction costs.

Relevant Problem Solving from Text

 

Knowledge of Bond Valuation

 Gitman, Chapter 6

 

 

Page 209- 230

 

Handout available on virtual learning system

Session -19  Common Stocks Understand the different kinds of common stock values.

Discuss common stock dividends, types of dividends, and dividend reinvestment plans.

Describe various types of common stocks, including foreign stocks, and note how stocks can be used as investments

Relevant Problem Solving from Text

 

 Gitman, Chapter 6

 

 

Page 231- 248

 

Handout available on virtual learning system

Session -20  Analyzing Common Stocks Discuss the security analysis process, including its goals and functions.

Understand the purpose and contributions of economic analysis.

Describe industry analysis and note how it is used.

Demonstrate a basic appreciation of fundamental analysis and why it is used.

Relevant Problem Solving from Text

 Gitman, Chapter 7

 

 

Page 249-270

 

Handout available on virtual learning system

Session -21  Analyzing Common Stocks Calculate a variety of financial ratios and describe how financial statement analysis is used to gauge the financial vitality of a company.

Use various financial measures to assess a company’s performance, and explain how the insights derived from the basic input for the valuation process.

Relevant Problem Solving from Text

 Gitman, Chapter 7

 

 

Page 271-289

 

Handout available on virtual learning system

Session -22  Stock Valuation Explain the role that a company’s future plays in the stock valuation process.

Develop a forecast of a stock’s expected cash flow, starting with corporate sales and earnings, and then moving to expected dividends and share price.

Discuss the concepts of intrinsic value and required rates of return, and note how they are used.

Relevant Problem Solving from Text

 Gitman, Chapter 8

 

 

 

Page 290-310

 

Handout available on virtual learning system

Session -23  Stock Valuation Determine the underlying value of a stock using the zero-growth, constant-growth, and variable-growth dividend valuation models.

Relevant Problem Solving from Text

 Gitman, Chapter 8

 

Page 310-328

 

Handout available on virtual learning system

Session -24 Stock Valuation Use other types of present value-based models to derive the value of a stock, as well as alternative price-relative procedures.

 

Gain a basic appreciation of the procedures used to value different types of stocks, from traditional dividend-paying shares to more growth-oriented stocks.

Relevant Problem Solving from Text

 

 

Gitman, Chapter 8

 

Page 310-328

 

Handout available on virtual learning system

Session -25  Project Presentation

 

 

 

 

 

Quiz 5

 Portfolio management process and techniques using based on a simulated scenario of creating portfolio using real stocks and holding them for a period of 4 weeks and then determining the return, gain/ loss and reinvestment decisions.

 

Knowledge of Stock Valuation

Session -26  Project Presentation  Portfolio management process and techniques using based on a simulated scenario of creating portfolio using real stocks and holding them for a period of 4 weeks and then determining the return, gain/ loss and reinvestment decisions.
Session -27  Project Presentation  Portfolio management process and techniques using based on a simulated scenario of creating portfolio using real stocks and holding them for a period of 4 weeks and then determining the return, gain/ loss and reinvestment decisions.  
Session-28  Project Presentation  Portfolio management process and techniques using based on a simulated scenario of creating portfolio using real stocks and holding them for a period of 4 weeks and then determining the return, gain/ loss and reinvestment decisions.  
Session -29 Final Exam Review  CHAPTERS 6,7,8,11 AND 13 Gitman, Chapter 6,7,8,11 AND 13
Session -30 Final Exam  CHAPTERS 6,7,8,11 AND 13 Gitman, Chapter 6,7,8,11 AND 13

Students who are willing to audit the course are welcome during the first two classes and are advised to contact the instructor after that.

Plagiarism- that is the presentation of another person’s thoughts or words as though they were the students’ own – must be strictly avoided. Cheating and plagiarism on exam and assignment are unacceptable.

Please see the green book for further information about academic regulation and policies, including withdrawal and grading, apples and penalties for pilgrims and academic misconduct.

Students with disabilities are required to inform the School of Business/ Department of Economics of any specific requirement for classes or examination as soon as possible.