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NOTE: BA 442 is not offered during Summer 2008.
These course materials are for reference purposes only.
BA 442 – Investments
36615/36928
Spring 2008
Instructor: Steven Gallaher Class: MW 8-9:50 / MW 10-11:50
Phone: 737-6049 Room: BEXL 412
Email: steven.gallaher@bus.oregonstate.edu Office: BEXL 422A
Website:
http://classes.bus.oregonstate.edu/ba442/
Office Hours: MW
Prerequisites: BA 340
Course Overview:
“Risk and reward characteristics of investments; sources of investment information; domestic and international security markets; investment characteristics of common stocks, debt securities, convertible securities, option contacts, and investment companies; real property investment; economic market analysis; technical market analysis; tax aspects of investments; and investment management.” – course catalog
The objective of
the course is to introduce students to the basic questions about
investments. We will discuss the primary features and valuation of
financial securities issued by corporation to finance their activities (e.g.
stocks and bonds) and the secondary instruments which market participants have
created based on these securities (e.g. mutual funds and derivatives). We
will also look at the valuation of these securities and the markets in which
they are traded. Finally, we will examine how we can evaluate the
performance of portfolio managers (and ourselves).
By the end of the course, you should be able to:
Collect, analyze, and report financial data.
Articulate the principles of modern portfolio theory and allocate assets efficiently to maximize the risk-reward trade-off.
Articulate the principles of asset pricing models and demonstrate and employ the Capital Asset Pricing Model.
Conduct analysis of equity securities using fundamental and (to some extent) technical analysis.
Describe the basics of fixed income securities, their markets, and the roll of term structure of interest rates in their analysis.
Describe the basics of derivative securities, including their markets, valuation, and use in elevating/diminishing risk within a portfolio.
Evaluate the performance of a fund manager.
Materials Needed:
The textbook for this course is Fundamentals
of Investments: Valuation and Management by
ISBN: 0-07-302721-9.
A calculator with exponents and roots will also be needed. This need not be a ‘financial calculator’, though it certainly can be. The TI BAII Plus Advanced Financial Calculator would be a fine choice, though there are many others.
Evaluation and Grades:
Your grade in this class will be based on 2 mid-term exams and a final, and on four homework assignments.
Exams and Final: Two times during the semester, on 4/21, and on 5/12, we will have an in-class exam. In addition, we will have a final exam during the regularly scheduled final period for this class. Each of these exams will each account for 25% of your final grade. All of these tests may be comprehensive, though they will focus primarily on recent material. The exams and final will consist of short answer questions and computational problems and may also contain a small number of multiple-choice questions.
If you cannot make it to an exam, you need to notify me prior to the exam, either by leaving a message on my voice mail of by sending an e-mail. If you miss an in-class exam for any valid reason, I will simply increase the weight of your final to compensate.
Homework: There are also three homework projects which will be assigned through the semester. These three projects taken together will account for the remaining 25% of your grade. The projects will be due on the Friday preceding each exam (that is, 4/14, 5/9, and 6/6.
Other notes on evaluation: An important part of my job is to provide an accurate assessment of your performance in the classroom. As such, I am careful with grading. However, it is not impossible for me to make mistakes. If you believe there to be an error on any graded material, you may initiate an appeal by submitting to me, in writing, the nature of your appeal along with all relevant material no later than one week after the graded material was returned to the class. I will review your appeal and may ask for additional information.
I have a no-work-shown/no-credit policy. I must be able to clearly follow your logic when solving a question in order for you to receive credit. It is your responsibility to work in such a manner that I will be able to track your line of thinking. A good plan for quantitative questions would be to write down the relevant formula, fill the formula with the relevant numbers from the problem, calculate the answer and, if necessary, interpret the numerical answer to answer the question. Please be aware that I grade everything that you write in response to a question. You should assume that all incorrect statements/calculations/etc will be penalized (up to the full credit of the question) and respond to questions accordingly.
Grades:
Typically grades are based on an absolute percentage scale as follows:
A (93-100) A- (90-93)
B+ (87-90) B (83-87) B- (80-83)
C+ (77-80) C (73-77) C- (65-73)
D (60-65)
F < 60
Barring extraordinary circumstances, I will not “curve” grades, so if you wish to earn a “B” in the course, for instance, you need an overall average of 83% or higher (an 82.99% is a B-). That said, it is not impossible that grades will be curved. Should this happen, the percentages reported above will represent the minimum grade possible. For example, a student with a final average of 80 will never receive lower than a B-, but could receive a higher grade.
OSU and I have strict standards for grading. There will be no “grade-inflation” in this course. Your grade in this course will be determined exclusively by your performance on the material in this course as set out in the above section. Extra work to improve your grade is not available. Other things which will not (directly) affect your grade include your performance in past courses, the quality of your contributions in class, or the amount of time you spend in my office. (Of course, some of these things may indirectly affect your grade a great deal.)
Academic Integrity:
Please review Academic Regulations number 15 in your schedule of classes.
Students assume full responsibility for the content and integrity of the academic work they submit. The guiding principle of academic integrity shall be that a student’s submitted work, examinations, reports, and projects must be that student’s own work. Students shall be guilty of a violation if they:
Represent the work of others as their own.
Use or obtain unauthorized assistance in any academic work.
Give unauthorized assistance to other students.
Modify, without instructor approval, an examination, paper, record or report for the purpose of obtaining additional credit.
Misrepresent the content of submitted work.
The penalty for violating the honor code is severe. The first offense will result in a grade of zero on the assignment/exam in question. A second offense will result in a failing grade for the course. All offenses will be reported to the Office of Student Affairs. If you are unclear about whether a particular situation may constitute an honor code violation, the student should meet with me to discuss the situation. For the purposes of this class, the principle way you can violate this is by copying another’s work in an exam. Please do not do this.
I encourage you to work with others for your homework assignments; it will be up to you to ensure that this enhances rather than detracts from your understanding of the material. While there is little I can do if you copy the bulk of your work from another on a homework assignment; your lack of understanding will likely show itself on the exams.
Special Needs
The university-approved legal boilerplate with regard to students with disabilities is:
Accommodations are collaborative efforts between students, faculty and Services for Students with Disabilities (SSD). Students with accommodations approved through SSD are responsible for contacting the faculty member in charge of the course prior to or during the first week of the term to discuss accommodations. Students who believe they are eligible for accommodations but who have not yet obtained approval through SSD should contact SSD immediately at 737-4098.
If this applies to you, you know who you are. Please let me know who you are.
Communication:
The primary way I will communicate with you outside of class will be via the course website at http://classes.bus.oregonstate.edu/ba442/ . There you will find any announcements, additional handouts and lecture notes.
I can be reached in several ways. First, I will have regular office hours. If this time is not convenient for you and you want to meet with me TALK TO ME. I am happy to set up an alternate time. Second, many questions will lend themselves will to email. I check my email at least daily, and often constantly. Please take advantage of that. Finally, you can call my office (with the understanding that people actually in my office will take precedence).
Schedule
This is a provisional schedule. These are the topics and the sequence we will follow for this course. However, it is entirely possible that we will get slightly ahead or behind as the quarter progresses. The only things set in stone, so to speak, are the exam dates. This will not change except in extreme circumstances.
|
Date |
Textbook |
Topic |
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Introduction and
syllabus |
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Chapters 2 & 3 |
History of Risk and
Return; Trading |
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Chapter 9 |
Interest Rates |
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Chapter 10 |
Bonds and Bond
Valuation |
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Chapters 18 &
19 |
Corporate and
Government Bonds |
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Chapter 20 |
Mortgage backed
securities; Review |
|
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EXAM 1 |
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Chapter 4 |
Mutual Funds |
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Chapter 11 & 12 |
Portfolio Theory
and the CAPM |
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Chapter 13 |
Performance
Evaluation |
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Chapter 5 & 6 |
Stock market and
stock valuation |
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Review |
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EXAM 2 |
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Chapter 14 |
Futures |
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Chapter 15 |
Options |
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Chapter 16 |
Option valuation |
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NO CLASS |
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Chapter 7 |
Market Efficiency |
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Chapter 8 |
Behavioral Finance |
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Review |
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final for |
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final for |
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