Course Overview

The objective of Finance 6203 is to introduce the theory and practice of investments from the point of view of an investment/portfolio manager. We will begin with a review of asset classes, financial history, and preferences for risk. Next, we will have a brief review of statistics and finance and we will review matrix algebra. We will then apply these tools to examine the trade-off between risk and return and to develop and implement Modern Portfolio Theory. The major topics covered will include the Capital Asset Pricing Model (CAPM), Markowitz optimization, performance evaluation, market efficiency, Arbitrage Pricing Theory (APT), and Factor Models. The last portion of the course will be devoted to fixed income securities including interest rates, bond valuation, and bond immunization. If we have time at the end of the semester, we will provide a brief introduction to volatility, repurchase agreements, and short sales (not very likely)

The course is primarily conducted in the lecture/discussion format. Throughout the course, our focus will be on applying analytical tools to solve multi-step financial problems. Just knowing how to plug numbers into formulas or memorizing problems will not be sufficient for a passing grade in this course. In addition, there will be a reasonable amount of material that you will be responsible for that we will not have time to cover in class. Hopefully, most of this will be more information oriented rather than problem solving. Note that there are many variations to the basic problems and concepts that we cannot cover in class, so it is very important to understand how to apply the concepts.

Important Warning

This course contains a significant amount of technical material. We will use statistical tools, matrix algebra, and spreadsheets (we will spend time in class reviewing matrix algebra before we use it). These techniques and tools are standard amongst investment professionals.

Accessing the course:

· All the material will be posted on Canvas. Canvas and its announcement webpage will be the official communication channel.

· All classes will be in-person unless otherwise stated.

· Classes may be recording on Zoom, However, only the recording for the classes whose attendance is higher than 90% will be shared. Recording is not mandatory; however, I think these are useful supplements for the class. I encourage you to attend all classes.

· You DO NOT have to notify me if you are not going to attend. It is your responsibility to ask your teammates for class notes.

Prerequisites

You will need to be proficient in some accounting, algebra, basic calculus (i.e, know how to take a first derivative), economics, and statistics. You will also need knowledge of Microsoft Excel.

Course Material

· The strongly suggested (not required) textbook for the course is:

o Zvi Bodie, Alex Kane, and Alan Marcus, Investments, 9th (or 10th or 11th ) Edition, McGraw Hill Irwin.

o ISBN-10: 0073530700

o ISBN-13: 978-0073530703

· Throughout the semester, I will post course material and announcements on Canvas.

Readings

You should always reinforce the lectures by doing the readings, which will be assigned during class. You will notice that some topics that I consider to be very important will be covered in great detail. You are responsible for all the material covered in the assigned readings even if it is not directly covered in class. In addition, you are strongly encouraged to keep up with current events in the business world. I recommend that you get into the habit of reading one of the following optional publications: (i) The Wall Street Journal (ii) The Economist (iii) Bloomberg News.

Grading

The midterm exam date will be determined as we go (see the tentative schedule on page 4). There is no final exam…All exams will be open book.

The final course grade will be determined as follows:

· Regarding the quizzes:

o There will be at least 8 quizzes in class

o Each quiz will be no more than 25 mins

o All quizzes will be administered on Canvas

o Each quiz will be announced at least one week in advance

o The expectation is to have at least 8 quizzes in class

o The worst 2 quizzes will be waived.

o There will be no make up quizzes. In the event you cannot attend a quiz due a force

majeure, your grade won’t be affected as that will be one of the quiz that will be waived.

· There will be no make-up midterm.

o In the event a student is unable to attend the midterm exam for any approved absence (including job interviews, emergencies, or illness), the final course grade will be adjusted such that the quiz score counts for 80% of the course grade

o It is strongly advised that students schedule job and internship interviews around their class and exam schedules. Employers understand that academics are your top priority. For off-campus interviews at an employer’s site, most employers will accommodate a student who needs to schedule an interview around a class or exam.

· Homework:

o These will be graded on a Pass/Fail basis and graded based on effort.

o Individual

o MUST be submitted at the beginning of the class. No online submissions.

· Group presentations:

o TBD

As per school guidelines, the average grade for this course is set to be 3.15. Your final grade will be determined by your ranking in the class using the following distribution:

Course Policies

· Students should not use laptops, tablets, PDAs, or other electronic devices during class unless required by the instructor.

· Students are expected to keep their mobile phones and pagers turned off or have them set on silent during class. Students should not answer phone calls and students should not read or send text messages during class.

· Students are expected to arrive and be seated prior to the start of each class session. They should display their name cards in all classes at all times.

· All the important date (for the deliverables) will be posted on CANVAS in the “Announcement Section”.

· Any arrangement regarding religious holidays has to be made at least three weeks in advance.

Regrading Policy

All regrade requests are due one week from when the assignment or exam was returned (no exceptions. In making your requests, keep in mind that the entire exam or assignment is subject to regrading. Thus, it is possible that your score may be revised upwards or downwards.

Academic Integrity

Students are required to abide by the Northeastern University Student Code of Conduct. Academic dishonesty of any form will not be tolerated. Please refer to the Student Code of Conduct for responsibilities, guidelines, and procedures regarding academic integrity. A copy of the Student Code of Conduct is available online. You may also consult with your program coordinator or the Undergraduate Office (extension 3270) if you have questions or concerns.

Disabilities

Reasonable accommodations will be made for students with verifiable disabilities. Please contact the Disabilities Resource Center for further instructions.

Course Registration and Waitlist Status

If you have question about registering for the course, your waitlist status, etc., please contact your program coordinator or the Undergraduate Office (Ext. 3270). I do not have any information about course registration.