Intermediate Investments

  • 16-weeks
  • 3 credits
  • Prerequisite: F370 or F304 with a grade of C or better

Part of the finance core. Rigorous treatment of the core concepts of investments for finance majors. Covers portfolio optimization, examines the pricing of equity, fixed income, and derivatives, and analyzes the degree of market efficiency. Makes extensive use of spreadsheet modeling to implement financial models. Serves as a foundation for all 400-level finance electives.

 Learning Objectives:

1.       Equity Securities

A.     Risk and return

B.     Asset allocation

C.     Diversification

D.     Systematic vs. Idiosyncratic Risk

E.      Efficient Market Hypothesis

F.      CAPM: Theory and Evidence

2.       Fixed-Income Securities

A.     Corporate Bond Yields and Ratings

B.     Yield Curve

C.     Duration and Interest Rate Risk

D.     Passive Bond Management

3.       Derivative Securities

A.     Payoff and Profit Diagrams

B.     Binomial Option Pricing Model

C.     Put-Call Parity

D.     Black-Scholes Formula

E.      Futures Vs. Forwards

F.      Spot-Futures Parity

G.     Interest Rate Swaps

H.     Foreign Exchange Swaps

4.       International Investments

A.     Parity Relationships in the Foreign Exchange Market

B.     Hedging Using Currency Derivatives

C.     Global Bond Portfolios

D.     Global Stock Portfolio

Typical Text:   Essentials of Investments, Third Edition by Bodie, Kane, and Marcus