COURSE DESCRIPTION :

 Investment Analysis and Portfolio Management covers both modern investment and portfolio theory and traditional approaches to investment selection and management. Modern theory includes the examination of asset pricing models and efficient market hypotheses. In addition to traditional approaches to stock and bond selection such as fundamental analysis and technical analysis, we will also explore the characteristics of mutual funds. Investment management strategies are developed for individuals and institutional investors. Current topics, such as options, futures, swaps and other financial derivatives, are also explored. The regular uses of TheWall Street Journal, Barron's and other investment information sources, such as those found on the internet, provide real time examples for classroom discussion and debate.

COURSE EXPECTATIONS

 This course will emphasize the application of analytical methods to actual securities. Students who undertake this course will be expected to have a fundamental background in basic finance. A basic background in accounting and investments is also expected. Course work will include projects and assignments which will require some familiarity with micro-computers and the use of spreadsheets. In addition, class members will need to acquire skills in using data bases to gather needed information for course projects and assignments. Every class member should have a financial calculator with functions to calculate present values and yields to maturity.

COURSE METHODOLOGY

 The instructional format will include some lecture sessions. Class projects, assignments and articles from financial press will form the basis for some of the class discussions.  Active participation in discussions is a course expectation and requirement.

COURSE GOALS and OBJECTIVES

 Students will be able to:

• Explain and apply basic concepts of finance,
• Analyze and interpret financial data,
• Demonstrate knowledge of investment management.

 The specific objectives of this course are for each student to be able to:

• Describe the current investment environment (domestic and international)
• Obtain and interpret investment information from various sources (both traditional and electronic)
• Analyze the various investment vehicles such as:
• Common stock,
• Fixed income securities (e.g., bonds and preferred stock),
• Derivative securities (e.g., options and futures contracts), and
• Mutual funds.
• Relate financial theories of valuation (risk and return), portfolio management and efficient markets to current market conditions.

 1.  Required Text:  Reilly, Frank K. and Keith C. Brown. Seventh Edition, Investment Analysis and Portfolio Management, (South-Western a division of Thomson Learning, 2003).  (ISBN 0-324-17173)
Text's web site for update material is  http://reilly.swcollege.com

2. FINANCIAL PRESS: articles distributed by e-mail and in class.

COURSE GRADE: The course grade will be determined as follows:

 A  scores of 93% or higher

AB scores between 88% and 92%

B    scores between 83% and 87%

BC scores between 78% and 82%

C   scores between 70% and 77%

F scores below 70%

1. Exams. Two class exams will be administered during the semester.   Exams will be part short-answer and part multiple choice.  Some of the questions or parts of questions will be quantitative.

2. Individual Term Paper Project.  Students turn in two copies of term paper.  One copy is read and evaluated by the instructor.  The second copy is read and critiqued by other students in class (see Critique of Term Paper Assignment H).  Students will chose  ONE of the following paper topics:

a. Economic and Industry Analysis (outline is provided),

b. Industry or Company Analysis (outline is provided),

c. Investing Across the Life Cycle. (outline is provided),

d. Beta Adjusted Return Analysis of an Event. (ask instructor for details),

e. Analysis of a variety of mutual fund types (outline is provided),

f. Create portfolio that is consistent with a mutual fund objective. (ask instructor for details or use undergraduate project as a guide))

g. Use portfolio tracking software to trade a variety of securities and measure performance using a variety of techniques.

h. An detailed analysis of how portfolio managers use financial derivatives.

i. An detailed analysis of one of the recent finance debacles (e.g., Barings Banks, State of Wisconsin Pension Fund, Orange County, NASDAQ bid/ask spread, Solomon Brother Treasury Action Scandal, P&G's and Gibson Greeting Cards use of derivatives, etc.)

j. .Investigate the impact of the new tax legislation on Investments. For example, what is the impact of the decision between buying stock and bonds? Another Tax Relieve Act projectexample, explain and analyze the differences between a deductible IRA, non-deductible IRA, Roth IRA and an Educational IRA.

k .Special instructor approved topic; e.g., review of on-line financial data sources or internet data sources.

RESEARCH ORIENTED PROJECT SUGGESTIONS:

1. Analysis of returns for closed in funds around their ex-dividend dates,
2. Analysis of the premium and discounts for closed in funds, do they revert toward their NAV.
3.  Do Multinational Companies provide more diversification benefits than just domestic companies?
4.  What is the relationship between stock returns and macro-economic variables?
5.  Do dogs of the Dow strategies work in rebalancing months other than January?
6.  Do ADRs provide more diversification benefits than domestic companies?
7.  Are stock returns related to beta measures provided by compustat, NASDAQ.com, etc.
8.  What day of the month has the highest rate of return.  Is there more risk on those days?
9.  Are stock returns related to P/Es, P/B, dividend yield?
10.  What are the financial characteristics of firms that go bankrupt?  Can we predict bankruptcy?
11. What are the financial characteristics of firms that are merged?  Can we predict mergers?
12a.  What portion of beta is related to business risk?
12b What portion of beta is related to financial risk (use of debt)?
13.  How can be assess the additional exchange rate risk of Multinational Companies (MNC)?
14a.  Do firm's with high returns in one year continue to have high returns in the next year?
14b Do firms with hight returns continue to have high returns in the next 2 years, 3 years, 5 years?
15.  Do firms with high research and development costs produce high returns in the future?
16.  Are there difference in total returns based on size (market value of assets, etc.) across firms.
17.  Here's one that my grain trading friend always says, "Buy the rumor, sell the fact"

3. Quizzes, Assignments,Chapter questions and problems, and Group Discussion.

Quizzes

Students may be required to complete an in-class or a take home quiz.  The purpose of the quizzes is to prepare students for the exam or project.

Assignments will be made periodically though the semester. The following is an incomplete list of assignments:

Group discussion: Each class will include a discussion of articles from the financial press. Students will be assigned specific articles from The Wall Street Journal.  Articles and other topics will be discussed is class.

4. Contribution & Professional Evaluation.

Each student is responsible for the preparation of all required questions, problems, assignments and projects assigned for each class session. Further, relevant issues reported in the financial press (especially The Wall Street Journal) are considered required reading. Grades for participation are assigned by the professor on the basis of the student's ability to raise and/or respond to relevant issues which arise in the course of the class discussion. Participation in small group discussions is also a part of this grade.  A lack of effort on the pretest or any other course requirement will be reflected in the participation grade. At least once during the  during the semester you will be asked to turn-in a self evaluation.

Attendance is not part of this grade; however, it is extremely difficult to make a contribution to the course if students are not attending the course.  Students are required to be prepared and alert during all class meetings.  Students can make a contribution to the course in a number of different ways including:  (1) asking relevant questions about a course topic (e.g., how  topic relates to a current event), (2) volunteering to answer questions from the professor addressed to the class, (3) correctly answering a question from the professor addressed to the student,  (4) answering questions from other students addressed to the professor, (5) asking a relevant question about a course topic by e-mail or during professor's office hours, (6) providing professor with current article on a course topic, and (7) participation in small group discussions.  A lack of effort on the pretest or any other course requirement will be reflected in the contribution grade. During the semester students may be required to turn-in a self evaluation and/or a peer evaluation.  The contribution grade is the professor's subjective evaluation of how well a student knows course  material and how the student used that knowledge to improve the learning environment of all students.  That is, did student's participation in the course contribute to the overall learning of all students?

Each student is responsible for the preparation of all required questions, problems, assignments and project(s) assigned for each class session. Further, relevant issues reported in the financial press (especially The Wall Street Journal) are considered required reading. Grades for participation are assigned by the professor on the basis of the student's ability (subjective judgment) to raise and/or respond to relevant issues which arise in the course of the class discussion and small group discussion.
 

CONNECTING TO YOUR UWO  ACCOUNTS

IF USED--Your user name for the vaxa account will be: the first 5 letters of your last name, the first letter of your first name and the last 2 digits of your social security number. For example, my account name would be HUFFMS99. The first time you log into the VAX your password will be your social security number WITHOUT the dashes. You will have to change the password when you login to something other than your social security number. Your password CANNOT be a word, but must have at least 4 characters. Good Luck!