University of Manitoba Asper School of Business Department of Accounting & Finance FIN 3410 A01 - Investments Winter 2018 Professor Alex Paseka Course Website: D2L site accessible from https://universityofmanitoba.desire2learn.com Class Time: Mondays and Wednesdays, 11:30 am 12:45 pm Class Room: 138 Drake Centre Office Hours: Tuesdays 1:00 pm 2:00 pm, or by appointment Office: 474 Drake Centre Phone: (204) 474-8353 Email: alex.paseka@umanitoba.ca COURSE DESCRIPTION The objective of this course is to familiarize you with the investment process and portfolio management from both a theoretical and a practical perspective (acquired through laboratory sessions). At the end of the course you should have a reasonable appreciation of the available investment instruments and their application. Starting from the assumption that the best learning is accomplished "by doing" and by applying the concepts that are discussed in class you will be expected to carry out a "hands-on" project during the term. To this end you will participate in a computer lab session and complete a project. REQUIRED MATERIAL 1. Bodie, Kane, Marcus, Perrakis and Ryan, Investments: Eighth Canadian Edition, McGraw-Hill Ryerson, Inc., Toronto, 2015. 2. Class notes - Students are required to bring a copy of my notes to class. It will be difficult to follow the lecture without these notes. The notes are available on the course s D2L site. 3. For the lab (that may span a few classes) students are required to bring a laptop computer ready with Microsoft Excel. It is important that you go to Data tab and make sure that Data Analysis and Solver tools are installed. If not, go to File -> Options -> Add-ins and install these tools. OTHER RESOURCES McGraw-Hill Ryerson has an excellent Online Learning Centre for the eighth edition of the required text. For every chapter in the book, this site includes a chapter overview, YouTube Videos, multiple-choice quizzes, and web links. Please take advantage of this useful site. The URL of the Online Learning Centre is: http://highered.mheducation.com/sites/007133887x/student_view0/index.html 1
LAB SESSION This course will incorporate an in-class computer lab session. The outline lists the tentative dates for the session. The session is designed to implement financial models acquired in this course using Excel. See important information below regarding attendance during the lab session. TERM PROJECT A term project will be handed out at least three weeks prior to the due date. The project must be completed in groups of minimum four and maximum five students. The project is due at the beginning of class on April 4. Late projects will not be accepted. All projects must be typed. Hand-written projects will not be accepted under any circumstances. SUGGESTED END-OF-CHAPTER PROBLEMS A list of suggested end-of-chapter problems from the required text will be given to you shortly. I strongly recommend that you master these problems. Solutions will be posted on D2L. ATTENDANCE Class attendance is important if students are to derive maximum benefit from the course. It is important that you read the assigned material prior to the class and think about the issues covered. You are responsible for knowing what occurs in class, which may include material not covered in the readings, modifications to the syllabus, and announcements concerning exams. Important: the term project is based on methodology covered in the Lab. The only way you can do the term project and contribute to your group is if you actually attend this lab. Therefore attendance in all parts of the Lab is mandatory. Students failing to attend any part of the lab will receive a grade equal to 75% of their group s term project grade. You are responsible to bring your student ID to the labs and sign lab attendance sheets. Note that a student failing to bring a laptop computer (ready with Microsoft Excel) to any part of the Lab will be considered absent from this lab and, thus, will receive a grade equal to 75% of their group s term project grade. BLOOMBERG MARKET CONCEPTS (BMC) COURSE Anyone who completes all four modules of Bloomberg Market Concepts (BMC) course on Bloomberg terminals will receive 3% credit towards their course grade. To get the credit, all four modules must be completed by midnight, February 26. Partial completion will not be rewarded in any way. This self-paced course is designed to prepare you for a career in finance and financial services which is why you are introduced to the technology that you will be expected to use in the workplace, such as Bloomberg (http://www.bloomberg.com/professional). The University of Manitoba has made multiple Bloomberg Terminals available to you to use for research, homework assignments, following financial press, communicating with alumni working in the industry and, of course, enhancing your resume. BMC will expose you to some of the most frequently used Terminal commands. The 4 modules of the course are: Economic Indicators, Currencies, Fixed Income, Equities. To get started, please visit Bloomberg Lab at the Management Library on the 2 nd floor of Drake Center 2
and login to the Terminal by following the instructions on the desk. Once you have signed in, type BMC into the command line and hit <GO>. Select 7) SIGN UP Please tick to confirm you are TAKING BMC AS PART OF A GROUP and enter GROUP CODE: ZKCVG5Q7LB. I will receive a report with your performance on all four modules. GRADING Grades will be assigned according to the following schedule: Maximum Grade Term Project 30% Midterm Exam 30% Final Exam 40% Total 100% Students must achieve at least a 60% grade on the term project in order to pass the course. A fixed percentage grading scale is not used in this course. The midterm exam will take place on Tuesday, February 27 (location and time TBD). Please keep this date free. No makeup exam for the midterm will be given. A student who misses the midterm exam for a legitimate reason (e.g., illness) will have the weight of the midterm added to the final exam. Students are not allowed to miss the midterm exam unless a valid medical excuse is provided. A grade of zero will be given to a missed examination without a legitimate reason. A student with valid medical excuses must obtain a doctor's certification that his (her) condition is severe enough to prevent him (her) from taking the examination or test. Students who miss the final examination for a legitimate reason (medical, compassionate, academic conflict or university sports team travel) must apply to the Undergraduate Program Office for possible deferred examination privileges. Successful applicants will write the deferred examination on in May (location, date, and time to be announced). Students who fail to write the examination at this deferred examination time and are successful in applying with the Undergraduate Program Office to re-defer will have to write the examination with the next offering of this course. If you miss a final examination for medical or compassionate reasons, you may be granted a deferred examination. Applications for a deferred examination after the examination has been missed must be filed within 48 hours of the date of the missed examination. A medical certificate of otherwise appropriate documentation may be required. Both midterm and final exams will be closed book except as follows: a one-sided 8.5" x 11" sheet with anything hand-written on it can be taken to the midterm and a two-sided 8.5" x 11" sheet can be taken to the final. Formula sheets must be hand written. No word-processed or photocopied material is allowed on your formula sheet. Improper formula sheets will be confiscated. You are also allowed to bring a financial (nonprogrammable) calculator. The use of laptops and mobile phones is not permitted during the exams. Note: the final exam is cumulative. 3
EMAIL Students must use their University of Manitoba email account in all correspondence with me. Please include your full name in every email. It is a university policy that email communication between students and faculty be conducted solely with University of Manitoba email accounts. GENERAL During class time, you can only work on material being covered in the class. Students who use class time for any other purpose (e.g. work on assignments, read/send text messages, etc.), will be asked to leave the class. When you come to class, please turn off your mobile phones as their use during class time is strictly prohibited. SUMMARY OF IMPORTANT DATES No class February 19, Louis Riel Day No classes February 20 23 (Winter Term Break) No class March 7 (In lieu of midterm) Midterm exam: February 27, evening (2 hours long; location and time TBD) Project is due: Apr 4; at the beginning of class 4
Tentative Course Outline Topic Date Chapter Reminder Introduction 1. The Recent History of Investing and the Investment Objective Jan 3 Jan 8 1 2. Financial Markets and Instruments Jan 10 Jan 15 2 3. How Securities are Traded Jan 17 3 Fixed Income Securities 4. Bonds Valuation Jan 22 12 5. Bonds Duration and Portfolio Management Jan 24 Jan 29 14 Modern Portfolio Theory (MPT) 6. Risk Aversion and Introduction to MPT Jan 31 Feb 5-12 Feb 19 Feb 20-23 4.5, 4.6, 4.8, 5, 6.1-6.4 No class (Louis Riel Day) No classes (Winter Break) LAB Estimating the Markowitz Frontier and the Capital Market Line (CML) Feb 14 Feb 26 Mid-Term Exam Time: 6:00 8:00 p.m. Location: TBD Tuesday, Feb 27 Asset-Pricing Models 7. The Capital Asset Pricing Model Feb 28 7.1, 11.1 8. Factor Models 9. APT Mar 5 Mar 12 8.1-8.3, 8.5-8.6, 8.10, 11.4 8.7-8.9 Mar 7 No class (In lieu of midterm) Equity Derivatives 5
10. Options Introduction Mar 14-28 2.5, 17.1 17.4 11. Option Strategies and Payoffs Apr 2-4 18.1 18.4 12. Option Pricing Models 19.1 19.5 Project is due Apr 4 at the beginning of the class 6
Academic Integrity It is critical to the reputation of the I. H. Asper School of Business and of our degrees that everyone associated with our faculty behaves with the highest academic integrity. As the faculty that helps create business and government leaders, we have a special obligation to ensure that our ethical standards are beyond reproach. Any dishonesty in our academic transactions violates this trust. The University of Manitoba Undergraduate Calendar addresses the issue of academic dishonesty under the heading Plagiarism and Cheating. Specifically, acts of academic dishonesty include, but are not limited to: using the exact words of a published or unpublished author without quotation marks and without referencing the source of these words duplicating a table, graph or diagram, in whole or in part, without referencing the source paraphrasing the conceptual framework, research design, interpretation, or any other ideas of another person, whether written or verbal (e.g., personal communications, ideas from a verbal presentation) without referencing the source copying the answers of another student in any test, examination, or take-home assignment providing answers to another student in any test, examination, or take-home assignment taking any unauthorized materials into an examination or term test (crib notes) impersonating another student or allowing another person to impersonate oneself for the purpose of submitting academic work or writing any test or examination stealing or mutilating library materials accessing tests prior to the time and date of the sitting changing name or answer(s) on a test after that test has been graded and returned submitting the same paper or portions thereof for more than one assignment, without discussions with the instructors involved. Group Projects and Group Work Many courses in the I. H. Asper School of Business require group projects. Students should be aware that group projects are subject to the same rules regarding academic dishonesty. Because of the unique nature of group projects, all group members should exercise special care to insure that the group project does not violate the policy on Academic Integrity. Should a violation occur, group members are jointly accountable unless the violation can be attributed to a specific individual(s). Some courses, while not requiring group projects, encourage students to work together in groups (or at least do not prohibit it) before submitting individual assignments. Students are encouraged to discuss this issue as it relates to academic integrity with their instructor to avoid violating this policy. In the I. H. Asper School of Business, all suspected cases of academic dishonesty are passed to the Dean s office in order to ensure consistency of treatment. 7
AACSB Assurance of Learning Goals and Objectives. The Asper School of Business is proudly accredited by AACSB. Accreditation requires a process of continuous improvement of the School and our students. Part of student improvement is ensuring that students graduate with the knowledge and skills they need to succeed in their careers. To do so, the Asper School has set the learning goals and objectives listed below for the Undergraduate Program. The checked goal(s) and objective(s) will be addressed in this course and done so by means of the items listed next to the checkmark. Goals and Objective in the Undergraduate Program 1 Quantitative Reasoning A. Determine which quantitative analysis technique is appropriate for solving a specific problem. B. Use the appropriate quantitative method in a technically correct way to solve a business problem. Goals and Objectives Addressed in this Course Course Item(s) Relevant to these Goals and Objectives Entire course Entire course C. Analyze quantitative output and arrive at a conclusion. Entire course 2 Written Communication A. Use correct English grammar and mechanics in their written work. Term Project and two exams B. Communicate in a coherent and logical manner Term Project and two exams C. Present ideas in a clear and organized fashion. Term Project and two exams 3 Ethical Thinking A. Identify ethical issues in a problem or case situation Chapter 1 B. Identify the stakeholders in the situation. Chapter 1 C. Analyze the consequences of alternatives from an ethical Chapter 1 standpoint. D. Discuss the ethical implications of the decision. 4 Core Business Knowledge Entire course 8