THE UNIVERSITY OF MICHIGAN - DEARBORN



FIN 639 – ADVANCED TOPICS IN FINANCE

Summer 2009

INSTRUCTOR: Vicentiu Covrig, Ph.D., CFA

OFFICE: JH4109

PHONE #: 818-677-3405

E-MAIL: vcovrig@csun.edu

WEB: csun.edu/~vcovrig

OFFICE HOURS: Tu and Th, 4:30 to class; or by appointment

CLASSROOM: JH 1212

COURSE OBJECTIVE: (Prerequisite: FIN 635)

In the last years there has been a tremendous growth in institutional money management and financial planning throughout the world. Los Angeles is now the US capital of mutual and pension fund management, and also the home of some of the largest hedge funds, private equity and venture capital funds.

This course is designed to prepare the students to understand the practice of advance portfolio management and investments. The lecture notes are based on the assigned readings and real life cases studies. 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. Students who are interested in wealth management, portfolio management and valuation analysis, or seeking accreditation as a Charter Financial Analyst (CFA) will find this course a good first step towards achieving these professional goals.

COURSE RESOURCES:

Required Readings:

Readings package available at QuickCopies at the bookstore

“Random Walk Down Wall Street” 8ed. by Burton Malkiel, available in paperback at the bookstore for around $16.

Recommended Readings:

Barron’s, the best magazine dedicated to investments.

Additional readings to be assigned and distributed in class.

Online Materials:

Prior to each week’s class, materials (e.g. class notes) and important announcements, will be made available on csun.edu/~vcovrig, under the link for FIN639.

GRADING:

A. Composition

Midterm Exam 30%

Assignments and Class Participation 20%

Book report 10%

Final Exam (take home): Financial Planning Case 20%

Koeler valuation case (group) 20%

The class ATTENDANCE is MANDATORY.

B. Examinations

■ plus/minus grades given

■ under extreme circumstances, and with my approval, you can take a make-up exam but you will be penalized 10 points (out of 100)

■ the topics to be prepared for the exams are found at the end of class notes under Learning Objectives

C. 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

D. Assignments

A1:

(i) Jim Cramer’s 25 rules for investing”. Go to



Briefly discuss 10 rules, in up to a three page summary, single spaced, all together.

(ii) Summarize Malkiel chapter 11, Potshots at the Efficient-Market theory and why they miss” in two pages single spaced.

A2: Summarize in two pages single spaced each the following readings:

“Note on Private Equity Deal Structures” download from the course web site

“Note on Angel Investing” download from the course web site

“Note on Leverage Buyout” download from the course web site

Case study: Investment Banking at Thomas Weisel Partners, download from the course web site

A3:” Allen Family case”. The reading is available in hard copy from the instructor. Discuss the main issues presented on pages 58-61.

The reports should be handed in during the class as shown on TENTATIVE COURSE SCHEDULE below.

E. Case study

The case is Kohler Co, from Harvard Business School, the last reading in your package. The report is expected to be no more than 5 pages double spaced plus a cover page and any tables or graphs that you refer to in the body of the text. The report will be graded on the basis of the quality of the analysis and the clarity of exposition. The due date for the report is 6/30/2009.

E. Book Report

You need to summarize the following chapters from “Random Walk Down Wall Street” 8ed. by Burton Malkiel, in about 2 single spaced pages per chapter.

Chapter 3: Stock valuation from the sixties through nineties

Chapter 6: Technical analysis

Chapter 12:A fitness manual for random walkers

Chapter 14: A Life-cycle guide to investing

F. 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.

F. 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 SCHEDULE

Meeting #1 (May 26): class meeting

Asset allocation

Sources of financial information

Meeting #2 (May 28): No class meeting, I’m at a conference

“Jim Cramer’s 25 rules for investing”

Go to

(more about this in class)

Chapter 11 from Malkiel “Potshots at the Efficient-Market theory and why they miss”.

Work on your Book review.

Meeting #3 (June 2): class meeting

Mutual Funds, Exchange Traded Funds and Hedge Funds

“Professional asset management”, Ch. 24, Reilly and Brown. Reading package.

Assignment 1 is due. (See page 3 above)

Meeting #4 (June 4): class meeting

Valuation

“Company analysis and stock valuation” Ch. 15, Reilly and Norton

Please read Kohler case

Meeting #5 (June 9): class meeting

Financial Derivatives

“An introduction to derivatives instruments” Ch. 11, Reilly and Norton. Reading package.

Meeting #6 (June 11): no class meeting, I’m at a conference

Alternative Investments: self study topic

“Note on Private Equity Deal Structures” download from the course web site

“Note on Angel Investing” download from the course web site

“Note on Leverage Buyout” download from the course web site

Case study: Investment Banking at Thomas Weisel Partners

Meeting #7 (June 16): class meeting

Global investing

“ International portfolio management” Ch. 15, Eun and Resnick. Reading package

Class discussion on Globalization.

Assignment 2 is due. (See page 3 above)

Meeting #8 (June18): class meeting

Behavioral finance

“ Psychology and the Stock Market” Ch. 8, Hirschey and Nofsinger. Reading package

Midterm exam review

Meeting #9 (June 23): class meeting

Midterm-exam based on meetings # 3, 5, 7 and 8.

You have two hours to finish the exam. I also plan to lecture for 1 hour.

Meeting #10 (June 25): class meeting

Financial planning

“The asset allocation decision” chapter 5 in Reilly and Norton

Case study: “Allen family” (available in hard copy from the instructor)

Assignment 3 is due. (See page 3 above)

Meeting #11 (June 30): class meeting

Bonds, and other unfinished topics.

Meeting #12 (July 7): no class meeting

Final exam, 3-5 pages, (Take home exam from meeting # 10) due by July 10

Book report due by July 10

Email me the Final exam and book report in one Word document.

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