2021 SM1 Subject Guide PDF

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FNCE30001 Investments SUBJECT GUIDE

Semester 1, 2021

Prepared by

Dr Bryan Lim [email protected]

Department of Finance Faculty of Business and Economics

Table of Contents Subject Outline ..................................................................................................................................... 3 Introduction ........................................................................................................................................ 3 Subject Overview and Aims ............................................................................................................... 3 Learning Outcomes .............................................................................................................................. 3 Learning Outcomes and Generic Skills .............................................................................................. 3 Eligibility and Requirements ............................................................................................................... 3 Academic Staff Contact Details .......................................................................................................... 4 Subject Coordinator Contact Details .................................................................................................. 4 Tutor Contact Details ......................................................................................................................... 5 Email Protocol .................................................................................................................................... 5 Lectures and Tutorials ......................................................................................................................... 5 Lecture Times .................................................................................................................................... 5 Tutorial Times .................................................................................................................................... 5 Attendance Policy .............................................................................................................................. 5 Lecture and Tutorial Schedule ........................................................................................................... 6 Lecture Slides .................................................................................................................................... 6 Private Tutoring Services ................................................................................................................... 7 Subject Resources ............................................................................................................................... 7 Prescribed References....................................................................................................................... 7 Assessment .......................................................................................................................................... 8 Assessment Overview........................................................................................................................ 8 Tutorial Assessment........................................................................................................................... 8 Exam Policy ....................................................................................................................................... 9 Penalties for Late Submission............................................................................................................ 9 Academic Integrity ............................................................................................................................... 9 Referencing ........................................................................................................................................ 9 University Services ............................................................................................................................ 10 Timetable .........................................................................................................................................10 Stop 1: Connecting Students and Services...................................................................................... 10 Academic Skills ................................................................................................................................ 10 Service Finder .................................................................................................................................. 10 Student Counselling ......................................................................................................................... 10 Student Equity and Disability Support.............................................................................................. 10 University of Melbourne Library Services ......................................................................................... 11 Policy ................................................................................................................................................... 11 Assessment and Results Policy ....................................................................................................... 11 Assignment Extension...................................................................................................................... 11 Exam Policy .....................................................................................................................................11 Information on Calculators in Examinations ..................................................................................... 11 Plagiarism and Collusion.................................................................................................................. 12 Special Consideration ...................................................................................................................... 12

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Subject Outline Introduction Welcome to FNCE30001 Investments, a core subject in the Bachelor of Commerce (Finance) program. With FNCE30002 Corporate Finance, this subject is one of the two foundation stones of our finance curriculum and provides an entry point to more advanced subjects. It provides foundational knowledge on the valuation, risk management, and arbitrage of investment assets. Subject Overview and Aims The overall aim of this subject is to equip students with the tools necessary to enable them to make the core investment management decisions that managers face on a daily basis as well as the knowledge to find the information necessary to apply these tools. This subject is an introduction to investment analysis, with emphasis on equity securities and fixed-income securities. The topics covered focus on issues fundamental to financial managers, money managers, risk managers, financial advisers and regulators. These topics include fundamental ideas in asset pricing; modern portfolio theory and its applications; equilibrium theories of asset pricing; portfolio performance evaluation; and key issues in the pricing and portfolio allocation of fixed-income assets.

Learning Outcomes Learning Outcomes and Generic Skills To view the subject objectives and the generic skills you will develop through successful completion of this subject, please see the University Handbook: https://handbook.unimelb.edu.au/view/2021/FNCE30001

Eligibility and Requirements To view the eligibility and requirements, including prerequisites, corequisites, recommended background knowledge and core participation requirements for this subject, please see the University Handbook: https://handbook.unimelb.edu.au/subjects/fnce30001/eligibility-and-requirements

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Academic Staff Contact Details Content-Related Questions All content-related questions– i.e., questions about the subject material itself – requiring a written response must go through the “Discussions” board listed in the navigation menu of the Canvas/LMS website for this subject. Tutors are expressly forbidden from answering content-related questions via e-mail or other electronic means. Centralising all queries on the LMS maximises the number of questions both that can be answered by tutors and that can be viewed by students. For all content questions, log into the LMS at https://lms.unimelb.edu.au/ and go to Investments FNCE30001_2021_SM2 ® Discussions Students are encouraged to help each other out. Writing out an answer to someone else's question can help a student answering the question to strengthen their own understanding. In addition to the Discussion Board, you are of course encouraged to ask content-related questions during tutorials and consultation hours. PLEASE NOTE: Before the mid-semester exam during the seventh (7th) week, discussions will be closed for new comments starting from Friday, 16 April at 11:59pm. Similarly, before the final exam, we stop taking questions from 72 hours before the final. We do this to allow adequate time for discussions to be resolved. In both cases, should the volume of questions become too much to be resolved prior to the cut-off dates, we may need to close the discussion board early. Administrative Questions While content-related questions should be discussed using the discussion feature, all administrative questions or typographical errors in the subject materials should be directed Dr. Bryan Lim, the subject coordinator. If, for example, a resource is inaccessible on the LMS, please alert Dr. Lim. Subject Coordinator Contact Details Dr Bryan Lim [email protected] Consultation Hours: Mondays 10 am to 12 pm. Appointments can be made if you have a legitimate reason you cannot attend at these times. Zoom Meeting ID: 82113441160 Password: 760620 https://unimelb.zoom.us/j/82113441160?pwd=T2JDNHVvdmVXT3lDU0trMXNURUgzdz0 9 Anyone may attend, but preferably e-mail in advance any questions, which will help the consultation move more smoothly.

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Tutor Contact Details Contact details for all tutors are available on the LMS under “Modules ® Module 0: Subject Information ® Staff Contact Details”. Pit-stop tutorial details are also posted there. Email Protocol Please note that we are only able to respond to student emails coming from a University email address. Please do not use personal email addresses such as Gmail, Yahoo, Hotmail or even business email addresses. Emails from non-University email addresses may be filtered by the University’s spam filter, which means that we may not receive your email. All correspondence relating to this subject will only be sent to your University email address. Note that you must first activate your University email address before you can send or receive emails at that address. You can activate your email account at this link: http://accounts.unimelb.edu.au/. While academic staff endeavor to address queries received via email, it is more appropriate to resolve substantive questions during lectures and tutorials and/or during normal consultation hours. With this in mind, we encourage students to attend all lectures and tutorials and to familiarise themselves with the consultation hours offered by the lecturers and tutors in this subject.

Lectures and Tutorials Lecture Times Lectures will be delivered purely electronically via the LMS. The nominal lecture times are Mondays 1 to 3 pm and Wednesdays 4.15 to 6.15 pm, but these are ultimately relevant only for the mid-semester exam. Please review the Lecture Capture Student Guides page for more information: https://lms.unimelb.edu.au/support/guides/students/lecture-capture-student-guide Tutorial Times Please see the university timetable: https://sws.unimelb.edu.au/2021/ Online tutorials are held live via Zoom. Zoom details will provided through the Announcements page on the LMS. The on-campus tutorials will be held on campus (without Zoom). You MUST attend the tutorial in which you have registered. You MAY NOT attend an alternate tutorial. Section 5.102 of the University’s Enrolment and Timetabling Policy (MPF 1294) states: “students are permitted to attend only the classes for which they have registered.” Attendance Policy While there is no mandatory attendance, wasting the opportunity to attend your

registered tutorial is not recommended. Given the online delivery of the lecture material, tutorials will be an extremely useful resource.

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Lecture and Tutorial Schedule

Week

Week Starting

Topic

Tutorial Topic

1

1 March

Financial Markets

No tutorial

2

8 March

Risk

Financial Markets

3

15 March

Optimal Risky Portfolio

Risk

4

22 March

CAPM & Managed Funds

Optimal Risky Portfolio

5

29 March

Single-Index Model

CAPM & Managed Funds

-

5 April

Easter Break

No Tutorials

6

12 April

Multifactor Models

Single-Index Model

7

19 April

MID-SEMESTER EXAM†

No Tutorials

8

26 April

Fixed Income Fundamentals

Multifactor Models

9

3 May

Coupon Bonds & Term Structure

Fixed Income Fundamentals

10

10 May

Managing Fixed Income Portfolios

Coupon Bonds & Term Structure

11

17 May

Performance Evaluation

Managing Fixed Income Portfolios

12

24 May

Theory versus Reality

Performance Evaluation

†

Subject to change: The mid-semester exam will take place over one hour during regular lecture time. Details will be provided at least a week prior to the mid-semester test. No lectures or tutorials are held in the week of the mid-semester exam. Students must sit the exam during the time for the lecture for which they are registered. Lecture Slides Lecture slides will be available on the LMS page for this subject prior to each lecture.

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Private Tutoring Services The Faculty has become increasingly concerned about the existence of a number of private tutoring services operating in Melbourne that heavily target University of Melbourne students enrolled in FBE subjects. Students are urged to show caution and exercise their judgement if they are considering using any of these services, and to please take note of the following: Any claim by any of these businesses that they have a “special” or “collaborative” or “partnership” style relationship with the University or Faculty is false and misleading. Any claim by a private tutoring service that they are in possession of, or can supply you with, forthcoming University exam or assignment questions or “insider” or “exclusive” information is also false and misleading. The University has no relationship whatsoever with any of these services and takes these claims very seriously as they threaten to damage the University’s reputation and undermine its independence. It is also not appropriate for students to provide course materials (including University curricula, reading materials, exam and assignment questions and answers) to operators of these businesses for the purposes of allowing them to conduct commercial tutoring activities. Doing so may amount to misconduct and will be taken seriously. Those materials contain intellectual property owned or controlled by the University. We encourage you to bring to the attention of Faculty staff any behaviour or activity that is not aligned with University expectations or policy as outlined above.

Subject Resources Prescribed References The prescribed text is: Bodie, Z., Kane, A. and Marcus, A.J., ISE Essentials of Investments, McGraw Hill Irwin, 2019 (11th Edition). You can purchase this as a print book through Booktopia, Amazon, Zookal, and the McGraw-Hill website. The e-book is available through VitalSource and the McGraw-Hill website. For more information, check the LMS for this subject, under “Modules ® Module 0 ® Purchasing the Textbook”.

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Assessment Assessment Overview Your assessment for this subject comprises the following: Individual or Group

Due

Weighting

Tutorial assessment*

Individual

Monday 9 am Weeks 3-6, 9-12

10.0%

Mid-semester exam

Individual

Week 7 (starting 19 April)

20.0%

End-of-semester (final) exam**

Individual

TBA

70.0%

Assessment Task

* The tutorial assessment is explained in more detail below. ** Hurdle requirement: To pass this subject, students must pass the end-of-semester examination. Tutorial Assessment •

Given the online delivery this semester, the tutorial assessment will take the form of marked assignments that you submit via the “Quizzes” tab on the LMS.

•

These are due each Monday at 9:00am, from Weeks 3 through 6 and Weeks 9 through 12.

•

Each assignment is worth 1.25 marks, and the lowest mark will be replaced with 1.25 marks, meaning you can miss one assignment without penalty.

•

If you have a serious reason for not doing your tutorial assignment, please see https://students.unimelb.edu.au/admin/special-consideration for information on how to apply for special consideration. Given the free pass on one assignment, however, only apply for special consideration if you are unable to do more than one assignment.

•

Requests for an assignment http://go.unimelb.edu.au/yh9n

extension

should

be

submitted

here:

Before completing this form, please read the Assignment Extension Policy, which can be found at: http://policy.unimelb.edu.au/MPF1326

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Exam Policy The one-hour mid-semester exams for both streams will be held in the week beginning 12 April, as detailed in the Lecture and Tutorial Schedule above. As noted earlier, you must sit the exam during the stream in which you are enrolled. The exam is on material covered in the first 5 weeks/modules. The exam is open book. Approved calculators (see “Information on Calculators in Examinations” later in this document) are permitted. The end-of-semester (final) exam will be held during the Semester 1 examination period and will be of 3 hours’ duration (to which 15 minutes reading time is added). The exam is open book. Approved calculators (see “Information on Calculators in Examinations” later in this document) are permitted. This subject has a hurdle requirement: you must pass the exam to pass the subject. The University requires that you are available for the entire examination period. Please see the University's Principal Dates at https://www.unimelb.edu.au/dates for the full annual calendar. Supplementary exams will not be provided in cases of absence during the examination period unless the absence is due to serious illness or other serious circumstances and a Special Consideration application is submitted and approved. Be sure NOT to purchase non-refundable travel arrangements until your exam timetable has been officially announced. Exams missed will score zero unless Special Consideration is granted. Academic staff are NOT able to decide Special Consideration. See the Special Consideration website for more information: https://students.unimelb.edu.au/admin/special-consideration. Penalties for Late Submission Students with a genuine and acceptable reason, such as illness, for not completing an assessment task can apply for special consideration (see policy below).

Academic Integr...