Investments: On-site Syllabus



Investments2 CreditsBU.232.701.XX [NOTE: Each section must have a separate syllabus.][Day & Time][Start & End Dates][Semester / ex: Fall 2019][Location / ex: Harbor East]Instructor[Full Name]Contact Information[Email Address][Phone Number, ###- ###-#### (Optional)]Office Hours[Specify the day and time of the 2 hours that will be dedicated to office hours each week. For evening classes, faculty may wish to hold their office hours by phone or email. While faculty are permitted to state “and by appointment,” office hours should not be held exclusively by appointment.]Required Texts & Learning MaterialsInvestments by Bodie, Kane, and Marcus, 2018 (McGraw-Hill – 11th Edition) You can refer to an earlier edition of this textbook; it is not necessary to purchase this exact edition. The text will provide basic knowledge for in-class lectures and discussion. Specific chapters to be covered are indicated in the course schedule at the end of this syllabus. Chapters are not covered sequentially but are ordered according to the learning objectives of the course.Homework assignments will be posted almost every week, starting with the second week of the class. You are required to hand in the assignments at the date specified in the detailed outline.Social Responsibility Reading: Brunnermeier, Markus K. “Deciphering the Liquidity and Credit Crunch 2007-2008,” Journal of Economic Perspectives, Vol 23, 2009. Available at: , Arvind “How Debt Markets have Malfunctioned in the Crisis,” Journal of Economic Perspectives, Vol 24, 2010. Available at: Zingales, Luigi “Does Finance Benefit Society?” Journal of Finance, Vol 70, 2015. Available at: onlinelibrary.doi/10.1111/jofi.2015.70.issue-4/issuetoc [Remark: Instructors can choose a different text for this item as they prefer.]Lecture Notes. The lecture notes will be posted on Blackboard every Friday, before class. Also, all announcements will be posted on Blackboard regularly.Finance and Social ResponsibilityThe effectiveness and perceived integrity of finance have been tested in recent years. Along with preventable excesses and regrettable distortions, financial innovation has, however, always been an effective means for society to achieve its goals, from insurance to consumption to saving. The power of financial innovation as a generator of inclusive prosperity and widespread well-being can (and should be) reclaimed. In this context, optimization of shareholder’s value – for instance – may not be the only metric along which financial success is measured and should be placed, along with other traditional finance metrics, in the broader context of its contribution to society. To this extent, Carey encourages technical, non-ideological, exchanges of ideas leading to a better understanding of the broader role of finance as a force for shared prosperity. The reading (see Social Responsibility Reading under “Required Texts & Learning Materials”) provides an initial opportunity for technical discussions of these issues as they relate to the topics covered in Investments.Course DescriptionThis course offers the financial theory and quantitative tools necessary for understanding how different kinds of financial instruments are priced and used for investment decisions. Rather than delving into the details of current practice, it takes a rigorous and critical view to the process of investing. The aim is to provide the students with a lasting conceptual framework in which to view and analyze investment decisions. Students learn how to value assets given forecasts of future cash flows and the risk characteristics of different asset classes. The focus is mainly on common stocks, but fixed income securities (bonds) and derivative securities (options) are also analyzed. Topics covered include: time value of money, optimal portfolio selection based on mean–variance analysis, economic and statistical models of the relation between risk and return (including the CAPM and multifactor models), term structure of interest rates, no-arbitrage derivative pricing, and market efficiency (including asset pricing anomalies and behavioral finance).Prerequisite(s)BU.510.601 AND (BU.220.620 OR BU.231.620 OR BU.910.611)Learning ObjectivesBy the end of this course, students will be able to: Measure risk and performance.Understand risk aversion. Apply the principles of portfolio allocation.Apply single-factor and multi-factor asset pricing models to measure systematic risk.Understand the concept of market efficiency and its implications for investment decisions.Acquire familiarity with a variety of financial instruments (bonds, options, futures, and forwards, among others).To view the complete list of the Carey Business School’s general learning goals and objectives, visit the Carey website.Attendance Attendance and participation are required for this course. Participants are expected to attend all scheduled class sessions. Failure to attend class will result in an inability to achieve the objectives of the course. Excessive absence will result in loss of points. Full attendance and active participation are required for you to succeed in this course.Assignments AssignmentLearning ObjectivesWeight3 Quizzes 1–630% (10% each)Homework1–620%Final Exam1–650%Total100%Course grades will be based on 3 quizzes (on week 3, week 5, and week 7), weekly homework assignments, and a final exam. The quizzes will be short (maximum 20 minutes long). They will be closed-book. A maximum of one quiz can be missed. If a quiz is missed, additional weight (10%) is put on the final exam. (Missing a quiz only means “not sitting for it.” For example, it does not mean “discarding an unfavorable grade ex-post.”)There will be homework assignments almost every week, starting with the second week of the class. You are required to hand the assignments at the date specified in the detailed outline. After the due date no points will be given for a homework. Answers to the homework problems must be your own, and must be hand-written. You are encouraged to acknowledge any help you received on the front page of your problem set solution.PointsCriteria Description4–5Adequate understanding of the contents is illustrated by high performance on analytical items and deep discussion of conceptual ones.2–3Partial demonstration of understanding of the covered material. Lack of connection to lecture contents, or class discussions.0–1Poor presentation of knowledge which does not indicate understanding of the material. Failing to submit on time.The final exam will be about 3 hours long. It will be closed-book. A formulae sheet will be provided by the instructor.GradingThe grade of A is reserved for those who demonstrate extraordinarily excellent performance as determined by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+ and B are awarded for good performance. The grades of B-, C+, C, and C- are awarded for adequate but substandard performance.?The grades of D+, D, and D- are not awarded at the graduate level (undergraduate only). The grade of F indicates the student’s failure to satisfactorily complete the course work.Please note that for Core and Foundation courses, a maximum of 25% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.3. For Elective courses, a maximum of 35% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.4. (For classes with 15 students or fewer, the class GPA cap is waived.)Tentative Course CalendarInstructors reserve the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.Pre-course readings: Chapters 1, 2, 3, 4WeekTopicReadingDue1Introduction to risk and asset pricingOverview of financial markets Risk and returnThe present value formulaChapters 5 and 182Mean-variance analysisRisk aversion and portfolio theoryMean-variance analysis Chapters 6 and 7Homework 13The capital asset pricing modelMultifactor asset pricing modelsQuiz 1Chapters 9 and 10Homework 24Fixed income pricingBond prices and yieldsThe term structure of interest ratesDuration and convexity Chapters 14, 15, 16.1, and 16.2Homework 35Introduction to derivativesArbitrageOptions marketsQuiz 2Chapter 20Homework 46Options valuationsBinomial option pricingBlack-Scholes formulaChapter 21Homework 57Market efficiency and anomaliesThe efficient market hypothesisMarket predictability and random walksRational vs behavioral financeEmpirical evidence on security returnsQuiz 3 Chapters 11, 12, and 13Homework 68Final examCarey Business School Policies and General InformationBlackboard SiteA Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at . Support for Blackboard is available at 1-866-669-6138.Disability ServicesStudents with disabilities who require accommodations for this course should be registered with Disability Support Services and provide a copy of their accommodation letter as soon as possible. If you have not yet registered with Disability Support Services, please contact them to discuss your needs and begin the registration process (carey.disability@jhu.edu or 410-234-9243). For more information, please visit the Disability Support Services webpage.Academic Ethics PolicyCarey expects graduates to be innovative business leaders and exemplary global citizens. The Carey community believes that honesty, integrity, and community responsibility are qualities inherent in an exemplary citizen. The objective of the Academic Ethics Policy (AEP) is to create an environment of trust and respect among all members of the Carey academic community and hold Carey students accountable to the highest standards of academic integrity and excellence.It is the responsibility of every Carey student, faculty member, and staff member to familiarize themselves with the AEP and its procedures. Failure to become acquainted with this information will not excuse any student, faculty, or staff from the responsibility to abide by the AEP. Please contact the Student Services office if you have any questions. For the full policy, please visit the Academic Ethics Policy webpage.Student Conduct CodeThe fundamental purpose of the Johns Hopkins University’s regulation of student conduct is to promote and to protect the health, safety, welfare, property, and rights of all members of the University community as well as to promote the orderly operation of the University and to safeguard its property and facilities. As members of the University community, students accept certain responsibilities which support the educational mission and create an environment in which all students are afforded the same opportunity to succeed academically. Please contact the Student Services office if you have any questions. For the full policy, please visit the Student Conduct Code webpage.Student Success CenterThe Student Success Center offers free online and in-person one-on-one and group coaching in writing, presenting, and quantitative courses. For more information on these services and others, or to book an appointment, please visit the Student Success Center website.Other Important Policies and ServicesStudents are encouraged to consult the Student Handbook and Academic Catalog and Student Services and Resources for information regarding other policies and services.Copyright StatementUnless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only.?The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Academic Ethics Policy. ................
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