• introduction to investment management,
• comparison between real and financial assets,
• definition and examples of financial assets,
• real assets on household and national basis,
• five benefits of financial markets and assets,
• agency problems and four 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 / active investment management.

• 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,
• Treasury bills, CDs, Commercial Paper, Repo and Reverse Repo,
• Banker's Acceptance, Eurodollar,
• fed funds rate, broker's call rate,
• calculation of bank discount rate,
• calculation of bond equivalent rate,
• calculation of effective annual yield,
• comparison of taxable and municipal bonds on after tax basis,
• comparison of taxable and municipal bonds on before tax basis, and
• calculation of break even tax rate for municipal bonds.

• comparison of taxable and municipal bonds on after tax basis,
• comparison of taxable and municipal bonds on before tax basis,
• calculation of break even tax rate for municipal bonds,
• basics of equity,
• price, market value, and equal weighted indices calcuations,
• basics of futures and options,
• holding period return calculation,
• arithmetic, geometric, and money weighted returns calculations and implications,
• definition of risk, and
• risk determination using standard deviations.

• standard deviation as risk measurement,
• standard deviation with probability based input,
• standard deviation assuming time series input or equal probabilities,
• normal distribution,
• how to standardize to normal distribution,
• value at risk (VaR),
• skewness and kurtosis,
• capital allocation line (CAL) with risky and risk free assets only,
• risk premium and excess return,
• covariance and correlation coefficient,
• calculation of portfolio return and risk,
• efficient frontier with risky assets only,
• efficient frontier with risky assets and risk free assets,
• extension of capital allocation line.

• downloading of monthly price data for assignment 2,
• fixing data format to be consistent,
• calculate monthly return, average return, and standard deviation,
• calculate annual average return and standard deviation,
• calculate sharpe ratio,
• plot excess return of a stock with S&P index,
• do weighted average allocation of portfolio,
• calculate portfolio monthly return, average return, and standard deviation, and
• discussed on how to do the histogram and use of solver function pending installation of these functions in lab.

• a review of the CAPM model,
• risk and return of a risky asset,
• covariance and correlation of two risky assets.
• portfolio risk and return of two risky assets with different correlation levels,
• theoretical portfolio risk and return of all possible portfolio combination with many assets,
• derivation of efficient frontier,
• addition of risk free asset and the market portolio to derive the capital allocation line (CAL),
• using the CAL to allocation capital between risk free and market portfolio,
• conversion from risk level to a standardized beta as relative measure of risk,
• derivation of security market line (SML) with beta measurement,
• determining under or over priced investments and consequences using SML,
• level of diversification and systematic versus non-systematic risks,
• index model,
• multi-factor model,
• arbitrage theory / pricing model,
• other non-CAPM related questions:
• differences between arithmetic and geometric return, and
• the use of p in the covariance formula.

• a review of the calculation of portfolio return and risk given a complete portfolio / market portfolio under CAPM's asset allication,
• seperation theory between investments to buy and risk preference,
• went through ch 5, 6, and 7 on CAPM topics, and
• review of assignment 1 questions.

• adding histogram to our assignment 2 with countif function for frequencies (see below Excel in blue fonts),
• using matrix multiplication to get weighted monthly return of our investment portfolio in assignment 2 (see below Excel in blue fonts),
• tutorial questions for ch 2, 5, 6, and 7,
• introduction to equity valuation in ch 13,
• book vs liquidation vs replacement value,
• Tobin's q,
• book vs intrinsic value of firms,
• 4 common ways to value equity: multiples approach, free cash flow approach (last part of ch 13 but not covered for this course), dividends discount approach, and options approach (also not covered in this course), and
• the 3 scenarios for dividends of dividends discount approach: constant dividends, constant growth, and multi-stage dividends scenario of didvidends.

• review of topic list for midterm test,
• answered various questions from ch 5 to 7 including total risk vs beta risk, alpha and portfolio alpha, CAPM calculated risk-adjust required rate of return vs expected return, dominant portfolio, single index model,
• practice question on calculation of arithmetic, geometry, and dollar weighted returns,
• practice question on alpha, under / over-prized assets,
• calculation of no growth, constant growth, and multi-stage growth model under DDM,
• PE ratio and components,
• present value of growth opportunities (PVGO), and
• price earnings growth (PEG).

• review of the three versions of DDM,
• share price valuation using PE ratio,
• present value of growth opportunities (PVGO),
• price earnings growth (PEG),
• capitalization rate versus ROE,
• Chapter 13 tutorial questions,
• Group project workshop on user solver to construct efficient frontier and CML,
• securities markets characteristics in Chapter 3,
• limited buy / sell orders,
• stop loss / buy orders, and
• margins calculations for long stocks position of initial and ongoing margin and market price at which margin would be called.

• securities markets characteristics in Chapter 3,
• limited buy / sell orders,
• stop loss / buy orders,
• margins calculations for long stocks position,
• margins calculations for short stocks position, and
• operating expenses, front end loaded, back end loaded, and 12b-1 fees calculation for mutual funds.

• review of questions on assignment 2 that is due this Friday,
• discussion of investment intermediaries in Chapter 4,
• review of fees that can be charged by open-ended funds,
• calculation of NAV in open-ended funds,
• calculation of market price and returns of closed-ended funds based on NAV,
• tutorial questions on Chapter 4,
• discussions weak, semi-strong, and strong form of EMH,
• various implications of EMH,
• anomalies observed, and
• tutorial questions on Chapter 8.

• Chapter 8 efficient market hypothesis
• EMH implications,
• market anomalies,
• explanations for anomalies,
• Chapter 9 technical analysis
• trends and corrections with moving averages, points and figures, breadth, and relative strength
• sentiment indicators with trin ratio, confidence index, short interest, and put / call ratio,
• Chapter 12 macro economic and industry analysis
• demand and supply side approaches,
• monetary and fiscal policies,
• economic cycle and suitable industry for investment,
• business, operating, and financial risks,
• industry / product life cycle,
• Lynch's company classification,
• Porter's Five Forces model,
• Chapter 18 performance evaluation
• Sharpe and Treynor ratio,
• M square and information ratio,
• Jensen's alpha, 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)

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.