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F420/C555 INVESTMENTS
 COURSE OUTLINE FOR SPRING 2014
(Class# 8672/32575  Tu 6:00-8:45 p.m. KO 110)

INSTRUCTOR: Dianne Roden, PhD

D. Roden
Office: KO 174G, phone: 765-455-9470, fax: 765-455-9348
Office hours: Tu, Th   3:00-6:00 p.m.
Or by appointment 
email E-MAIL:   droden@iuk.edu
WEBPAGE:  Roden's home page

TEXT:  Bodie,
                              Kane & Marcus text      Bodie, Kane & Marcus, Essentials of Investments, 9th edition
The student companion website for textbook includes chapter summaries and on-line quizzes.   text website      

TI
                          BAII Plus
A calculator is necessary to do the assignments and exams. A financial calculator is strongly recommended.
Assistance with financial calculators can be found at: www.tvmcalcs.com  


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

First midterm
Feb 18
in class
Second midterm
April 1
in class
Final exam
May 6
4:00-6:00 p.m.

Your grade will be determined by the exam scores based on the following weights:


F420
C555
First midterm 75 points 75 points
Second midterm 75 points 75 points
Final exam 75 points 75 points
Investment Simulation 25 points 50 points
Class participation
25 points 25 points
TOTAL 275 points 300 points

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

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 of 2 or 3 students 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. Using a Stock-Trak Silver account trading will take place over 12 weeks (from Monday Jan 27 to Friday April 18). Graduate (C555) students will serve as team leaders and be responsible for documenting an asset allocation plan and the rationale for transactions, which will be summarized in a final presentation (on April 29).

INVESTMENT SIMULATION LINK:   Investment
                            challenge

 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.
  • Use of 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.

 
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.
Graduate business education differs from undergraduate business education in a variety of ways. This difference is manifest in this class through the development of leadership skills, as shown by the following graduate (C555) learning outcome:
  • Demonstrate leadership skills through effective management of an investment team.
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. The course builds from chapter to chapter and a failure to understand the major concepts of one chapter will lead to difficulties in understanding the chapters that follow.

LIBRARY RESOURCES: Solutions to all problems will be put on reserve in the library. 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 14 Ch1
 
Ch2
introduction and background

asset classes and financial instruments
2 Jan 21 HW 

Ch3 & 4
Ch1 P#3,5,12,14,20,21    Ch2 P#1,12,13,24,25,26,28,34 

security markets and mutual funds
3 Jan 28 HW 

Ch5
Ch3 P#12,14,15,18,19,21,22      Ch4 P#1,12,13,14,17 

risk & return 
4 Feb 4
HW 

Ch6
Ch5 P#5,6,8,9,12,13,17,18,19   CFA#1,7,9  
  
portfolio diversification
5 Feb 11 HW 

review
Ch6 P#2,6,8,9,10,11,18,21   CFA#1

review for first exam
6 Feb 18 EXAM I 

Ch7
EXAM I 

capital asset pricing model
7 Feb 25 HW 

Ch8
Ch7 P#3,4,9,10,11,13,14,21,26,28,30,32   CFA#10,11

market efficiency
8 March 4
HW 

Ch10
Ch8 P#2,4,5,7,11,12,13,14,17,22   CFA#1,4,5,8

bond prices and yields
9 March 11 HW 

Ch13 & 14
Ch10 P#5,8,16,17,23,32,33,37,38,41   CFA#1,3

equity valuation & financial statement analysis
10 March 18
no class


SPRING BREAK

11 March 25 speaker 

HW
Guest: Scott Altman, Financial Advisor, LPL Financial

Ch13 P#14,15,17,18,19,21,22   CFA#8    Ch14 P#4,12   CFA#6
12 April 1
EXAM II 

Ch15
EXAM II 

options markets
13 April 8 HW 

Ch16
Ch15 P#3,4,6,12,13,17,20,29   CFA#1

option valuation
14 April 15 HW 

Ch17
Ch16 P#5,7,16,17,18,20,21,26,34

futures markets
15 April 22 HW 

Ch9
Ch17 P#6,7,8,11,15,19,20,21   CFA#2,4,5

behavioral finance & technical analysis
16 April 29 HW
 
review
Ch9 P#1,14,15,17,18,21,22,23,24   CFA#1

Investment Presentations
17 May 6

FINAL 


FINAL EXAM

 

The Mission Statement of the IU Kokomo School of Business may be found at:  Mission

Indiana University Kokomo provides equal access and support services to students with special needs. Students with documented disabilities should contact the Accessibility Center (765-455-9301) and discuss any necessary support services or accommodation with the instructor.

 USEFUL WEB SITES:
 

CNN MONEY
Business news, stock quotes
cnn
                                  financial
BIG CHARTS 
Historical stock charts
Big Charts
INVESTMENT SIMULATION
Realistic investment simulation that gives hands-on experience
Investment challenge
OPTION PRICING MODEL
Computer calculation of an option using the Black-Scholes Model
options
                                  claculator
WALL STREET JOURNAL
On-line version of the business bible
wsj
OTHER COOL FINANCE SITES
 Fun Finance Sites COOL!
 
dancing
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