• introduction to investment management,
• comparison between real and financial assets,
• real assets on household and national basis,
• five benefits of financial markets and assets,
• agency problems and three mitigating factors,
• asset allocation and security selection,
• top down and bottom up investment strategies,
• risk-return trade off,
• risk reduction with diversification, and
• belief in market efficiency to passive investment management,
• belief in market inefficiency to active investment management,
• players in the financial market,
• money market financial assets,
• calculation of bank discount rate,
• calculation of bond equivalent rate,
• calculation of effective annual yield, and
• comparison of taxable and municipal bonds on after tax basis.

• basics of equity,
• price, market value, and equal weighted indices calcuations,
• characteristics of each index calculation approach,
• basics of futures and options,
• holding period return calculation,
• arithmetic, geometric, and money weighted returns calculations and implications,
• definition of risk,
• risk determination using standard deviations.
• standard deviation with probability based input,
• normal distribution,
• calculation of portfolio return and risk,
• CAPM formula,
• beta in CAPM, and
• systematic and non-systematic risks.

• returns calculation in chapters 2 and 5,
• using standard deviation as risk measurement of investments,
• using divide by n (equal probaibilty) approach or probability based standard deviation as in chapter 5,
• use of value for money or return to risk to evaluate investments,
• correlation important as affects total return,
• probability based calculation of covariance between two risky assets as in chapter 6.2,
• calculation of standardized covariance as correlation coefficient,
• calculation of risk and return for a two risky asset portfolio using a single correlation,
• prepare risk and return for two risky asset portfolio using different weights,
• prepare risk and return for two risky asset portfolio using idfferent weights and different correlation,
• extension from two risky assets to multiple assets portfolio,
• construction of efficient frontier using all risky assets,
• two practical problems with efficient frontier,
• addition of risk free asset to existing theory,
• CAL tangent from risk free asset to efficient frontier,
• market portfolio / complete portfolio, and
• separation theorem.

• downloading and managing of data from Yahoo Finance for group project,
• review of CAPM basic progress from single asset to 2 risk assets to effcient frontier,
• additional of risk free asset to obtain CAL,
• Separation Theorem,
• calculation of sharpe ratio with excess return,
• diversification and systematic and non-systematic risks,
• single index model,
• historical returns in US and other markets,
• single factor model like CAPM,
• multifactor models like Fama French model, and
• Arbitrage Pricing Theory.

• normal distribution,
• risk analysis using VaR, and
• review of practice questions on Chapters 1, 2, 5, and 6.

• review of practice questions from ch 1, 2, 5, 6 and 7,
• real asset vs financial assets,
• BDR, BEY, EAY calculation,
• index types of price, market value and equal weighting calculation,
• adjustment for indices for stock split,
• HPR, arithmetic, geometric, and money weighted returns calculation,
• EAR and APR recalculation and continuous rate calculation,
• risk premium and excess return,
• A as a measure of risk adversiveness and its implications,
• market efficiency believes and investment approach and strategies,
• two risky asset portfolio calculations,
• additions of risk free asset to form CML,
• market portfolio and risk free assets in separation theorem,
• implications of separation theorm on investment behavior,
• single index model,
• CAPM and beta on calcuation of risk adjusted required rate of return,
• calculation of alpha value and overpriced or underpriced securities, and
• Arbitrage Pricing Theory explanation and ways to achieve the arbitraged position.

• introduction to equity valuation in ch 13,
• book vs liquidation vs replacement value,
• Tobin's q,
• intro to DDM approach for equity valuation,
• constant diviends, constant growth dividends, and staged growth dividends approach under DDM to value equity,
• intro to free cash flow (FCF) approach for equity valuation,
• use of FCFF and FCFE to value firm and equity, and
• use of multiples of market based ratios for share price estimation.

• review of midterm questions,
• ch 13 practice questions on equity valuation,
• securities markets characteristics in Chapter 3,
• limited buy / sell orders,
• stop loss / buy orders,
• margins calculations for long stocks position and
• excel set up for group project.

• review of step 4 and onwards on group project assignment on construction of efficient frontier,
• ch 13 practice questions on equity valuation,
• limited buy / sell orders,
• stop loss / buy orders,
• margins calculations for long stocks position and
• margins calculations for short stocks position.

• margins calculations for short stocks positions,
• discussion of investment intermediaries in Chapter 4,
• operating expenses, front end loaded, back end loaded, and 12b-1 fees calculation for mutual funds,
• differences between ETF and mutual funds,
• introduction to EMH,
• discussion and comparison of weak, semi-strong, and strong form of EMH,
• various implications of EMH, and
• anomalies observed.

• anomalies observed under EMH,
• explaining anomalites as risk premium or actual inefficiencies or data mining,
• information processing and behavior biases in behavorial finance,
• forecasting error, overconfidence, conservatism bias, and sample size bias in information processing,
• framing, mental accounting, regret avoidance, and prospect theory in behavior biases,
• limits to arbitrage,
• use of technical analysis for trading, and
• moving averages calculation, point and figure, breadth, RSI, trin stat, confidence index, short interest, and put call ratio as as some of technical analysis tools.

• practice questions on chapter 13, 3, 4, 8, and 9.

• intro to Chapter 18 performance evaluation,
• why need performance evaluation and benchmark for comparison,
• Sharpe and Treynor ratio,
• M square and information ratio,
• Jensen's alpha,
• single factor vs multi-factor factor model,
• style analysis, and
• differentiating selection ability, and market timing ability with excess return graphs.

Investment Background and Issues, Reading: Ch 1 (1.1 - 1.6)

The Effiicient Market Hypothesis, Reading: Ch 8 (8.1 - 8.3)

Course lectures, textbook reading, individual and group assignments, mid-term test, and final examination.

For this course, a general purpose non-financial calcuator can be used. Students who do not have ready access to a financial calculator should be able to perform all the required analysis and calculations using a general purpose non-financial calculator for the tutorials, assignments, mid-term test, and final examination.

You can also use a non-programmable financial calculator for the tutorials, assignment, mid-term test, and final examination. Common financial calculators are HP12c and TI BAII PLUS. User manual in simplified chinese and a tutorial for the HP12c can be found here and a simple tutorial for the HP12c can be found here. User manual for the TI BAII can be found here.

Regardless of the types of calculators used for this course, students are responsible for their own equipment and they cannot be shared in a quiz, test, or examination situation. As a result, students MUST bring their own calculators to each class. In addition, each student must be proficient in the use of their own equipment.

Electronic translators CANNOT be used for quiz, test, or examination situations, but they can be used during class (only with volume off) and your own study time.