MFIN 8801-02 Syllabus - Fall 2019 PDF

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INVESTMENTS MFIN 8801-02 Boston College Fall 2019 Wednesday 7:00-9:30 Fulton Hall 135

Rob James 617-552-0886 [email protected] Fulton Hall 224A

Course Description: This course is an introduction to capital markets and financial instruments. It is not a course in personal investing. We will focus on asset valuation, risk measurement and control, and portfolio design for large institutions. We will cover 4 major modules: equity markets, portfolio theory, fixed income markets, and derivative markets. Course Format: In class, we will mainly discuss text material and solve problems related to this material. The only way to master this material is through practice. While we will go through a number of examples in class, you should also try the text problems given in this syllabus. Simply looking at the solutions is not sufficient. If you have questions, I strongly encourage you to ask me in class or out of class. Research Report: Teams of UP TO FOUR students will prepare a report similar to an analyst’s report in an equity research department. You’ll be gathering data with which to apply equity valuation models discussed in class to see whether the stock of your choice is appropriately priced. Your paper should include a brief overview of the company and the industry in which it operates, supported by relevant data on the macroeconomy. You should conclude with a recommendation for or against the purchase of this stock. The models used must be specified, with all relevant data presented. During the course of this project, I expect that you will examine a variety of professional sources. Please remember that you will be graded on your analysis of the data, including the completeness and clarity of the presentation and that the use of information gleaned from any source without clear attribution is fraudulent. Team members and company chosen for analysis must be made known to me by e-mail by Wednesday, October 23. Please note that each group must do a unique company – no two groups can do the same company. When choosing a company, it must be a company that is included in the S&P 500 and you must avoid financials. After the midterm exam, I will be posting further information regarding the research report on Canvas. Key Dates and Grading: Midterm Exam - Wednesday, October 9 Final Exam - Wednesday, December 4 Midterm Exam - 45% Final Exam - 45% Research Report - 10% There will be a number of suggested problems drawn from the textbook. While these won’t be graded, understanding how to solve the problems will be necessary to do well on the exams. The exams are closed book/closed notes. Please note that a make-up exam will not be given – the weight of a missed midterm exam will be added to the final exam. Prerequisite: MFIN 7704 or MFIN 7722 or equivalent

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Textbook: o

Investments, 10th. Ed. by Bodie, Zvi, Alex Kane, and Alan J. Marcus, Irwin/McGraw-Hill, 2014. ISBN: 978-0-077-86167-4  There is a copy of this textbook on reserve at O'Neill Library. The call number is HG4521 .B564 2014. Or

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Investments, 11th. Ed. by Bodie, Zvi, Alex Kane, and Alan J. Marcus, Irwin/McGraw-Hill, 2018. ISBN: 978-1-259-27717-7  There is a copy of this textbook put on reserve at O'Neill Library. The call number is HG4521 .B564 2018. The underlying theories and concepts are the same in both editions. So, from a learning perspective, either edition will be fine for class.

Calculator: You will need a financial calculator for this course. Many students in the past have bought the TI BAII +. However, there are other financial calculators, including the HP 10B II, the HP 12-C, the HP 17BII, the Sharp EL-733A, and others. The TI BAII + and HP 12-C are the only calculators allowed on the CFA exam. If you are purchasing a financial calculator, I recommend purchasing the TI BAII + since it is the calculator that I will be using in class, it is less expensive than the HP 12-C, and it is a calculator allowed on the CFA exam. However, any financial calculator is acceptable. In addition, even though it is not a financial calculator, if you already have a TI graphing calculator, it does have the necessary financial functions that you will need for class. Office Hours: Mondays from 6:00 PM until 7:00 PM, Tuesdays from 3:00 PM until 4:15 PM, Wednesdays from 6:00 PM until 6:45 PM, before or after class in the classroom, or by appointment. Academic Support Services: If you are a student with a documented disability seeking reasonable accommodations in this course, please contact Kathy Duggan, (617) 552-8093, [email protected], at the Connors Family Learning Center regarding learning disabilities and ADHD, or Paulette Durrett, (617) 552-3470, [email protected], in the Disability Services Office regarding all other types of disabilities, including temporary disabilities. Advance notice and appropriate documentation are required for accommodations.

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MFIN 8801 - Investments - Fall 2019 Course Outline Date

Topic

Wednesday, August 28 Session #1 Wednesday, September 4 Session #2 Wednesday, September 11 Session #3 Wednesday, September 18 Session #4 Wednesday, September 25 Session #5 Wednesday, October 2 Session #6 Wednesday, October 9 Session #7 Wednesday, October 16 Session #8 Wednesday, October 23 Session #9 Wednesday, October 30 Session #10 Wednesday, November 6 Session #11 Wednesday, November 13 Session #12 Wednesday, November 20 Session #13 Wednesday, November 27 Wednesday, December 4 Session #14

Introduction to the Class

Readings

Asset Classes and Financial Instruments

Chapter 2

Asset Classes and Financial Instruments

Chapter 2

Asset Classes and Financial Instruments

Chapter 2

How Securities Are Traded Macroeconomic and Industry Analysis

Chapter 3 Chapter 17

Equity Valuation Models

Chapter 18

Efficient Diversification

Chapters 6 & 7

The Capital Asset Pricing Model

Chapter 9

Midterm Exam The Term Structure of Interest Rates

Chapter 15

Bond Prices and Yields

Chapter 14

Managing Bond Portfolios

Chapter 16

The Efficient Market Hypothesis and Behavioral Finance

Chapters 11 & 12

Options Markets

Chapter 20

Option Valuation

Chapter 21

Futures Markets

Chapter 22

No Class - Thanksgiving Break Research Report Due Final Exam

NOTE: I reserve the right to alter this schedule as circumstances and needs dictate. Any changes to this schedule will be made far enough in advance to allow students to adjust.

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End of Chapter Questions:

Chapter 2 Chapter 3 Chapter 17 Chapter 18 Chapter 6 Chapter 7 Chapter 9 Chapter 15 Chapter 14

Chapter 16 Chapter 11 Chapter 12 Chapter 20

Chapter 21 Chapter 22

End of Chapter Questions – Tenth Edition PS 2-8, 13, 14, 16-22 CFA 1-5 PS 1, 3, 4, 6, 7, 9-16 CFA 2 PS 1, 2, 5, 6, 8, 10-15 CFA 1, 3, 4 PS 1-7, 9, 10, 12, 13 CFA 1, 2, 6, 8 PS 13-18, 21, 27, 28 CFA 1-3, 5, 7-9 PS 4-10, 13, 14, 17-19 CFA 4-6, 7, 10, 13 PS 1-8, 10-21, 23 CFA 2-10, 12 PS 1-6, 9 CFA 1, 2, 7 PS 1-5, 7-9, 11, 12, 14-17, 19-22, 24, 25, 28, 30 CFA 1-3, 5, 6 PS 1-5, 7-10, 12-15 CFA 1, 3 PS 1-6, 8, 9, 12, 14-16, 24, 26 CFA 1-6, 9 No Questions PS 1-6, 9-11, 14, 15, 19, 21 CFA 1, 5

End of Chapter Questions – Eleventh Edition PS 2-4, 6-8, 13, 14, 16-22 CFA 2-5 PS 1, 3, 4, 6, 7, 9-16 CFA 2 PS 1, 2, 5, 6, 8, 10-15 CFA 3, 4 PS 1-7, 9, 10, 12, 13 CFA 1, 2, 6, 8 PS 13-18, 21, 27, 28 CFA 1-3, 5, 7-9 PS 4-10, 13, 14, 17-19 CFA 4, 5, 7-10, 13 PS 1-8, 10-21, 23 CFA 2-10, 12 PS 1-6, 9 CFA 1, 2, 7 PS 1-5, 7-9, 11, 12, 14-17, 19-25, 28, 30 CFA 1-3, 5, 6 PS 1-5, 7-10, 12-15 CFA 1, 3 PS 1-6, 8, 9, 12, 14-16, 24, 26 CFA 1-6, 9 No Questions PS 1-6, 9-11, 14, 15, 20, 21, 27 CFA 1, 5

PS 2-4, 6, 11-14, 22-24 PS 1-5, 7, 9, 10, 12, 15, 16 CFA 3

PS 2-4, 6, 11-14, 22-24, 31 PS 1-5, 7-10, 12, 15, 16 CFA 1, 3

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