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Course Objective
The Investment Management course is designed to achieve some important objectives. These are to
- explain the term “Investment” and its types;
- explain the role of auction markets in the area of investment;
- describe various investment concepts;
- describe various techniques of security analysis; and
- explain various steps involved in portfolio management.
Investments & Markets (MARKS -50)
Investment-Weight-20%
404.01 Investment Background
Understanding Investment: The nature of investment, importance of the discipline, investment process and investment decision. The nature of Investments – Importance of investments – Investment Process – Investment Decisions – Investment alternatives: Financial assets – non – marketable financial assets – Money market securities Fixed Income securities – Equity securities Derivatives – Investment companies: Types of mutual funds.
404.02 Important Investment Concepts:
The Returns and Risk from investing – Return – Risks – Returns Measurement – Risk Measurement – Expected Return and Risk –Investment Risk and Return – Duplication Efficient portfolio – The CAPM.
404.03 Buying and Selling of Securities:
Order size – Time Limit – Types of orders – Margin Account.
Security Market -Weight-20%
404.04 Security Markets
Security markets and security Analysis: Importance of financial markets, primary and secondary markets, how are security traded, how order works. Market analysis, assessing the economy, understanding the stock market, valuing the market, forecasting change in the market, Industry analysis, company analysis, technical analysis.
Investment Alternatives-Weight-10%
404. 05 Investment Alternatives
Organizing financial assets, non-marketable financial assets, money market securities, fixed income securities, equity securities and derivative securities, fixed income securities, equity securities and derivative securities. Indirect investing: Investment companies, types of Investment companies, major types of mutual funds, measuring investing performance.
Portfolio Analysis & Management (MARKS -50)
Portfolio Theories -Weight 20% - 25%
404.01 Portfolio Management:
Concept, process, importance, measuring risk and return from portfolio, Markowitz portfolio selection model, single asset portfolio, two-assets, three assets portfolio. Portfolio risk and return in risky and uncertain situation. Formulate appropriate investment portfolio policy, efficient portfolio. Efficient frontier-Index model, correlation model, Portfolio strategies,
404.02 Capital Market Theory
Capital asset pricing model (CAPM), uses of CAPM-Capital asset pricing, fund transfer, cost of capital, Historical and empirical CAPM, Market portfolio, estimating beta, equilibrium risk return trade off, estimating security market line (SML), capital market line (CML), Arbitrage pricing theory (APT)-concepts, testing APT, estimating APT
Debt and Equity Portfolio -Weight-10%
404.03 Fixed Income Securities’ Portfolio Management:
Bonds, types, yield, price, price changes, .yield spreads, structure of interest theories, Bond strategies: immunization, Why buy bonds, pond portfolio, strategies.
404.04 Common Stocks
Concepts, valuation, valuation models, techniques, building stock portfolios, equity portfolio strategy.
Financial Derivative -Weight-10%
404. 05 Financial Derivative
Options, Payoff and profits from basis options, basic option strategies, option valuation, puts and call options. Futures, understanding future markets, the structure of future markets, future contract. Financial futures. Swaps-swap structure, types of swaps, Convertible securities, Warranties, Hedging,
Portfolio Performance Evaluation- Weight-5% - 10%
404.06 Portfolio Performance Evaluation
Performance evaluation framework, risk and return consideration, risk adjusted measures of performance models-Sharpe’s, Jensen’s model. Monitoring performance, performance attribution.
Text Books
1. Financial Accounting Theory, 3rd Canadian edition - Scott
2. Financing Large Projects; Using Project Finance Technique and Practice - Khan and Parra.
3. Investment Analysis and Portfolio Management, 5th Edition - Frank K. Reilly & Keith C.Brown.
4. Investment Management- Security Analysis and portfolio Management, 9th Edition - V. K. Bhalla (S. Chand & Company Ltd. New Delhi).
5. Investment Analysis and management, 8th Edition - Charles P. Jones (John Wiley and Sons, Inc.).
6. Modern Portfolio Theory and Investment Analysis, 5th edition - Edwin J. & Martin J. Gruber (John Wiley and Sons, Inc.).
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