FIN 3523 Investments
FIN 3523 Investments
The analysis of investments pervades virtually every financial decision made, e.g., by private investors, professional fund managers, and corporations. What is the price of securities such as stock and bonds? How can you combine them to construct a satisfactory investment portfolio? How do you evaluate the performance of a trading strategy?
This course provides students with the centerpieces of modern investment analysis, e.g., Markowitz’s methodology to construct mean-variance optimal portfolios, the capital asset pricing model (CAPM), multifactor models, the efficient market hypothesis, and standard metrics of performance evaluation.
By the end of the course, students shall know
- How the risk-return trade-off and sustainability considerations affect investment decisions.
- The basic theories behind the pricing of stocks or bonds.
- The concept of diversification and the efficient market hypothesis.
By the end of the course, students are required to
- Construct optimal portfolios.
- Calculate risks and expected returns based on various asset pricing models.
- Evaluate the past performance of a trading strategy.
- Use digital tools such as Excel or R, e.g., to perform the tasks listed above.
Upon completion of the course, students should be able to apply the theories taught throughout the course to price stocks and bonds. They should have a critical attitude towards the realism of the underlying assumptions and understand the implications for their practical applicability.
- Risk vs. Return
- Asset Allocation with Mean-Variance
- Socially Responsible Investing
- Capital Asset Pricing Model, Arbitrage Pricing Theory, and Multifactor Models
- The Efficient Market Hypothesis and its empirical evidence
- Evaluating Investment Performance
- Macroeconomic and Industry Analysis
- Equity Valuation using Price-Earnings Ratios
- Bond Valuation and the Term Structure of Interest Rates
- Managing Bond Portfolios
The course includes lectures, in-class exercises, and an assignment. A class will typically start with a review of the last class or a discussion of in-class exercises students prepared in advance. Then, we will introduce new concepts, explain the intuition behind them, and discuss their practical application in Excel or R. To strengthen the students’ understanding of these concepts, they have to submit an assignment (group work). It requires them to import real-world data into R, perform analyses, and produce tables and graphs summarizing their findings in their solution paper. Here, strong emphasis will be placed on the interpretation of the results from an economic point of view.
Higher Education Entrance Qualification
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
Introductory courses in finance (equivalent to BØK3423 Finans), mathematics and statistics.
| Assessments |
|---|
Exam category: School Exam Form of assessment: Structured Test Exam/hand-in semester: First Semester Weight: 30 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Mid-term. Individual structured test under supervision based on group work during the semester. Exam code: FIN 35232 Grading scale: ECTS Resit: Examination every semester |
Exam category: School Exam Form of assessment: Written School Exam - pen and paper Exam/hand-in semester: First Semester Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Exam code: FIN 35233 Grading scale: ECTS Resit: Examination every semester |
All exams must be passed to get a grade in this course.
| Activity | Duration | Comment |
|---|---|---|
Teaching | 30 Hour(s) | |
Feedback activities and counselling | 6 Hour(s) | Guidance and review of home assignments problems. 3 sessions in auditorium, each 2 hours, by learning assistants. |
Student's own work with learning resources | 27 Hour(s) | |
Prepare for teaching | 70 Hour(s) | Reading textbook-chapter (as marked on the syllabus) prior to attending class, including viewing videos. |
Digital resources | 15 Hour(s) | |
Group work / Assignments | 26 Hour(s) | Students are given a group work during the semester than will end up with an individual (structured) test. |
Examination | 30 Hour(s) | Exam including preparations |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.