F420/C567 INVESTMENTS  COURSE OUTLINE FOR SPRING 2008
(Class# 15943/15919  Tu 7:00-9:45 p.m. KO 287)

  INSTRUCTOR: Dianne Roden, PhD Office: KO 174G, phone: 455-9470, fax: 455-9348 E-Mail:   droden@iuk.edu Office hours: Tu&Th   2:30-4:00 and 5:30-7:00 p.m. (or by appointment)

 
 TEXT: Bodie, Kane & Marcus, Essentials of Investments, 7th edition
TEXT WEBSITE:      (includes chapter summaries and on-line quizzes)        

OPTIONAL: Student Problem Manual for Essentials of Investments. This book will be on reserve in the library.
A calculator is necessary to do the assignments and exams. A financial calculator is recommended, but is not required.

 
PREREQUISITES: BUS F301 
 
EXAMS: There will be three exams, two during the semester and one during the final exam period.
 

first midterm	Feb 12	in class
second midterm	March 25	in class
Final exam	April 29	7:00-9:00 p.m.

 
Your grade will be determined based on the following weights:
 

	F420	C567
investment simulation	5%	15%
class participation	5%	5%
first midterm	30%	25%
second midterm	30%	25%
Final exam	30%	30%
TOTAL	100%	100%

Exam format will contain some multiple choice, some short answer, and a number of problems similar to ones assigned in class.

GRADES: A 90-100, B 80-89, C 70-79, D 60-69, F < 60
(plus and minus grades will be given in the high & low range of each group) 
Grades will be posted on Oncourse at:     http://oncourse.iu.edu
 
INVESTMENT SIMULATION: All students will participate in teams in a realistic investment simulation which gives hands-on stock market experience. You will start with a fictional $500,000 account and you will make trades of stocks, bonds, mutual funds, options and futures using the web. Graduate students (C567) will serve as team leaders and will be responsible for documenting an asset allocation plan and the rationale for all transactions, which will be summarized in a final presentation (due April 22). Teams should diversify their portfolio and are encouraged to attempt to sell short, buy foreign stocks, buy on margin, and create hedging strategies.

INVESTMENT SIMULATION LINK 

We will be using $500,000 Stock-Trak Silver accounts and trading will take place over 12 weeks (from Monday Jan 21 to Friday April 11). The following are the main components that I will consider when grading the report:

• Description of an investment philosophy and an asset allocation plan.
• Efforts to diversify the portfolio.
• Investments in a variety of types of securities including stocks, bonds, mutual funds, options, and futures.
• Attempts to sell short, buy foreign stocks, buy on margin, and create hedging strategies.
• Explanation of why you made the trades, what worked, what did not work, and why.
• A bonus will be given to the team that ends up with the most money.

CLASS PARTICIPATION: Problems from the text will be assigned each week and the solutions discussed in class. Participation in this process, other class discussions, and general attendance will impact this portion of the grade.
 
GOALS:
This course provides the conceptual and analytical framework for formulating investment policies, analyzing securities, and constructing portfolio strategies for individuals and institutions. Topics include risk and return analysis, portfolio theory, valuation of stocks and bonds, financial institutions, market efficiency, and derivative securities.
 

OBJECTIVES:

• Describe the features of the major types of marketable securities that trade in the world markets. In addition, students will be familiar with the characteristics of the world's major secondary exchanges.
• Understand and use mean/variance analysis to facilitate work in an environment where risk and return are related. Students will demonstrate proficiency with portfolio theory including applications of the Capital Asset Pricing Model.
• Learn the theory and implications of market efficiency including informational economics, market psychology, portfolio construction, and investment strategy.
• Understand the structure and function of the capital market. Students will be familiar with issues relating to debt issues, initial public offerings, seasoned offerings, and the role of investment bankers.
• Use the Black-Scholes model to value and understand options.

 
The structure of this class makes your individual study and preparation outside class extremely important. You will get much more from the lectures if you attempt the problems on your own and you come to class prepared.

LIBRARY RESOURCES: Solutions to all problems will be put on reserve in the library after they are discussed in class. A Student Problem Manual for Essentials of Investments will also be on reserve. The IUK library offers a large variety of resources to supplement this course. Examples include current newspapers (Wall Street Journal), magazines (Business Week), databases (ABI Inform), and access to the Internet.
 
 

WEEK	DATE	TEXT	TOPIC &ASSIGNMENT (P=Practice Problems at the end of each chapter)
1	Jan 8	ch1  ch2	introduction and background asset classes and financial instruments
2	Jan 15	HW  ch3 & ch4	ch1  P#1,4,5,7,13,14    ch2  P#1,4,5,10,13,14,15,16,19  security markets and mutual funds
3	Jan 22	HW  ch5	ch3 P#1,2,3,7,8,13,14      ch4 P#3,4,5,8,9  risk & return
4	Jan 29	HW  ch6	ch5 P#1,4,5,9,10,15,16,17,19,20,24,25,26      portfolio diversification
5	Feb 5	HW  review	ch6 P#1,3,6,7,8,9,16,19,21 review
6	Feb 12	EXAM I  ch7	EXAM I  capital asset pricing model
7	Feb 19	HW  ch8	ch7  P#3,4,5,6,8,9,16,21,24,26,28,37,38 market efficiency
8	Feb 26	HW  ch10	ch8 P#2,3,5,6,9,10,13,14,17,18,21,26 bond prices and yields
9	March 4	HW  ch13 & ch14	ch10  P#4,8,9,10,14,16,21,24,31,33,35 equity valuation & financial statement analysis
10	March 11	no class	SPRING BREAK
11	March 18	HW  review	ch13  P#1,3,5,6,9,11,21,23      ch14  P#2,7,15 Guest Speaker: Scott Altman, Investment Executive
12	March 25	EXAM II  ch15	EXAM II  options markets
13	April 1	HW  ch16	ch15  P#1,3,4,5,6,10,13,14 option valuation
14	April 8	HW  ch17	ch16  P#2,4,7,8,10,11,12,17,26 futures markets
15	April 15	HW  ch9	ch17  P#2,6,7,9,12,15,17,23,25 behavioral finance & technical analysis
16	April 22	HW  review	ch9  P#1,6,7,9,10,13,14,15,16 Investment Presentations
17	April 29	FINAL  EXAM	FINAL EXAM

 

The Mission Statement of the IU Kokomo School of Business may be found at:  www.iuk.edu/~kobus/

Indiana University Kokomo provides equal access and support services to students with special needs. Students with documented disabilities should contact the University Division (455-9309) and discuss any necessary support services or accommodation with the instructor.

 

USEFUL WEB SITES:
 

CNN MONEY Business news, stock quotes
BIG CHARTS  Historical stock charts
INVESTMENT SIMULATION Realistic investment simulation that gives hands-on experience
OPTION PRICING MODEL Computer calculation of an option using the Black-Scholes Model
WALL STREET JOURNAL On-line version of the business bible
YAHOO FINANCE A one-stop financial center
OTHER COOL FINANCE SITES	FUN FINANCE SITES

 

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