ECON*3660 - Investments

Course Description

This course studies the economic literature regarding the determination of security prices and the operation of the stock market.

Learning Outcomes

By the end of the course, the learner should be able to:

1. Articulate evaluations and the implications of utilizing economic and finance theories and analysis, in a manner appropriate to audience needs;
2. Understand Markowitz portfolio optimization, the capital asset pricing model, and arbitrage pricing theory;
3. Calculate the valuation of a common stock;
4. Calculate the investment performance of a portfolio and evaluate it;
5. Apply and critically evaluate economic and finance theories;
6. Locate, analyse, evaluate and effectively use information from and in a range of mediums and formats;.
7. Understand financial mathematics;
8. Understand and be able to discuss results calculated with basic statistical techniques including expectation operators, standard deviation, coefficient of variation, covariance, multiple linear regression analysis;
9. Understand efficient markets and developments in behavioural finance, investor preferences utility and indifference curves; 
10. Understand the historical background of firms selected by the group as well as its industry background;
11. Understand the regulatory and societal context in which the chosen companies operate. Because students are free to choose international firms, students learn about their backgrounds in other countries. They learn how to explain these issues in their portfolio reports;
12. Understand and use Markowitz optimization for minimizing portfolio risk;
13. Understand and use the CAPM and the APT.

Course Topics

• Institutional Background
• Risk and Portfolio Mathematics
• Risk Aversion and Capital Allocation
• Selecting a Portfolio
• Asset Pricing 1: The Capital Asset Pricing Model
• Asset Pricing 2: Index Models and the Arbitrage Pricing Theory
• Is the Stock Market Inefficient?
• Empirical Evidence
• Fundamental Analysis
• Technical Analysis
• Investment Performance Evaluation

Assessment

Note: A passing mark on the final examination is require to pass this course. If you receive less than 50% on the final examination, your final examination mark will constitute your final grade in the course.