FIN638_Syllabus_Fall_2013.docx



FIN 638 – PORTFOLIO MANAGEMENTFall 2016INSTRUCTOR:Vicentiu Covrig, Ph.D., CFAOFFICE:JH4109PHONE #:818-677-3405E-MAIL:vcovrig@csun.eduWEB:csun.edu/~vcovrigOFFICE HOURS:M 5: to 6:45; or by appointmentCLASSROOM:JH 2228COURSE OBJECTIVE:(Prerequisite: FIN 635)The course is designed to improve your understanding of the theory and practice of investments and to provide practical experience in the process of group decision making. We will apply the theory to the management of a real equity portfolio owned by the University Corporation. The portfolio is currently valued at more than $1,000,000. The class discussions are based on the assigned readings and real life cases studies, most of them drawn from the CFA curriculum. As one of the key wealth management centers in United States, there is a need in Southern California for a pool of well-trained finance professionals with a rigorous knowledge of investment management. COURSE RESOURCES:Required Readings:Jones “Investments” 12ed Wiley (11ed is fine too)“Stocks for the Long Run” 5ed. by Jeremy Siegel, available online or at bookstores.Barron’s, the best magazine dedicated to investments.Additional readings to be assigned and posted online or distributed in class.Online Materials:Prior to each week’s class, materials (e.g. class notes) and important announcements, will be made available on HYPERLINK "" csun.edu/~vcovrig, under the link for FIN638.Please divide yourselves in groups, 2 students per group, by September 12 and give me the list of the students with corresponding emails.GRADING:positionStock research and class presentations20%Assignments and class participation 15% Final exam (take home): Financial Planning case 20%Book review 10%Stock Trading Project15%Company valuation project20%The class ATTENDANCE is MANDATORY.B.Scale 97% - 94% A ;93% - 90% A- ; 89% - 87% B+ ;86% - 83% B ;82% - 80% B- ; 79% - 77% C+ ;76% - 73% C ;72% - 70% C- ; 69% - 60% D's ;< 60% F C. Book ReportYou need to summarize the following chapters from “Stocks for the Long Run” 5ed. by Jeremy Siegel, in about 2 single spaced pages per chapter.Chapter 1: The case for equitiesChapter 2: The great financial crisis of 2008Chapter 3: The Markets, the Economy … Chapter 20; Technical analysisChapter 22: Behavioral finance You are responsible for coming prepared to all classes. Readings should be done in advance of class in which the assigned materials will be discussed. If for whatever reason you miss a class, it is your responsibility to get the material and any announcements that you miss. If you have questions about what you miss, ask me or a classmate prior to the next class meeting. In addition, you should bring a calculator to each class so that you can participate in working through in-class numerical problems.Positive contributions to the learning experience of the class will be greatly appreciated. Cheating and plagiarism will not be tolerated. If you are caught cheating or plagiarizing in any form, you will receive a failing grade for the course and reported to the University for appropriate action. Be aware that I caught students cheating before and I enforced the above policies.TENTATIVE COURSE SCHEDULEMeeting #1 (August 29): class meetingIntroduction September 5: NO class meeting: Labor DayMeeting #2 (September 12) class meetingBasic investments review: Chapters 2 and 4Meeting #3 (September 19): class meetingTrading stocks: chapters 5 and 6“Jim Cramer’s 25 rules for investing”Go to static/25-rules.htmlBriefly discuss 10 rules, in 3 single spaced pages total.Assignment is due. Meeting #4 (September 26): NO class meetingBusiness valuation: read the provided referencesChapter 10 Company valuation projectMeeting #5 (October 3): class meetingBusiness valuation: applicationsCost of CapitalCompany valuation project Meeting #6 (October 10): class meeting Presentations: round IMeeting #7 (October 17): class meeting Professional portfolio management: mutual funds; hedge funds; private equity, venture capital: chapter 3Meeting #8 (October 24: class meetingProfessional portfolio management: mutual funds; hedge funds; private equity, venture capital: chapter 3Company Valuation ProjectMeeting #9 October 31): class meetingPortfolio Management: Chapters 11Meeting #10 (November 7): class meetingOptions: chapter 19Meeting #11 (November 14): class meetingFinancial Panning: chapter 21 + readingAllen Family caseMeeting #12 (November 21): class meeting Bonds: chapters 18 and 19Meeting #13 November 28): class meetingPresentations: round IICompany Valuation project reviewMeeting #14 (December 5): class meetingStudent presentations (Stocktrak)Company valuation project due.Final exam (Financial Planning Case) reviewBook report due in hard copy by December 16.Final exam due in hard copy by December 16.Please staple/put the two documents together and slide them under my office pany valuation (group project)Pick up a company with a market capitalization (market value of equity) greater than $20 billion, a dividend yield greater than 2% and more than 30% Debt/Equity ratio. Choose a nonfinancial company. All the analysis will be performed in Excel, no written report.Valuation date is December 31, 2015. Prepare the following:Short business description of the companyRatio analysis: calculate and discuss all relevant ratios (for 2012, 2013 and 2014)Calculate the company’s Cost of EquityCalculate the intrinsic value of the common equity using the Dividend Discount Model (chapter 10) Calculate the corporate (business value) as the present value of future cash flows plus terminal value (chapter 10) (projected cash flows for end 2016, 2017 and Terminal value as of as of December 2017). Calculate the equity value per share (using corporate value)Compare the value per share with the market share price. Discuss some reasons why the three might not be very close. Sources of information: Yahoo Finance, 10-K, Mergent Online (online database through the library), Google Finance, MSN Money, SEC filings, any other source you find useful.StocktrakInstructions for Group Project –Trading ProjectThis project provides a hands-on experience of the real life money management environment, and gives you the opportunity to apply the investment and portfolio management strategies discussed in this class. The presentation will be on December 5, 2016 . The project will be presented in class by the group members. Peer evaluations are required and will be conducted in class the last week of class. Group members will be asked to allocate 100 points among themselves.Stock-Trak, a virtual trading web based platform, will be used for the project.1. Time horizon of the projectJoin a team.The trading will start on September 19, 20162. Registration instructionsEach group will have a different account number.There is a registration fee of $30.95 per account (thus per group).Each group will start with a virtual $1,000,000 in cash to manage with a maximum of 200 trades to be executed during the trading period.Please click on this link to register your group.. The trading rules of gameYou follow the trading rules created by Stock-Trak. You can download them from ultimate goal of the project is to apply to the practice the investments and portfolio management knowledge learned in this and other finance classes. 4. Products to invest in and asset allocationThe initial portfolio balance is $1,000,000. You need to invest in stocks, mutual funds, ETF, closed-end funds and stock options. The ultimate goal of the project is to apply to the practice the investments and portfolio management knowledge learned in this and other finance classes. Thus, you need to have a solid justification for every buy and sell you make. You need to keep track of the reasons for your transactions and present them briefly in an appendix in your report. 5. Learning expectationsProvide a professional justification for your trades. The students are expected to use several sources of information and trading strategies. The use of a diverse group of securities and the use of better research or application of concepts learn in this class will earn higher grading points.The mutual fund part should be as well diversified as possible. Thus, it is recommended investing in at least five mutual funds, funds that in turn follow a diversified index. Select, if possible, no-load mutual funds.Keep in log with your trades, including reasons why you bought that securities and buy/sell priceEnsure that you select mutual funds based on one-, three- and five-year performance. For each fund, prepare a single table showing the following information: (i) fund name; (ii) fund objective; (iii) fund characteristics such as value of assets under management, turnover, fees and loads, etc. (iv) total raw performance for the past 1-, 3- and 5- year . Detail in your report the reasons for your choice of the respective fund.Though you can trade the stocks very often, it is not recommended trading in and out of the mutual funds. Too many trades (i.e. day trading) or too few trades are not recommended. Construct a diversified portfolio that includes domestic and foreign securities.6. Sources of informationThe suggested sources of information are: StockTrak, Wall Street Journal; Barron’s, yahoo.; Morningstar; and other sources.7. PPT PresentationEach group will make a 10 minutes presentation, using PowerPoint slides, on December 7th. The written PPT slides are the only written document you need to prepare for the project.The students in a group will take turn such that each student will present at least once. The PPT presentation should be between 10 to 15 pages/slides, covering:Each type of securities (eg stock long, stocks short, mutual funds, ETFs, options) you invested inMost and least successful trades; reason for investing in these securitiesPerformance relative to S&P500 indexSources of informationYou do not need to sell your securities when you prepare the PPT presentationPlease provide the instructor with a hard copy of your presentation.Peer evaluations are required and are due the last week of class. Group members will be asked to allocate 100 points among themselves. ................
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