Investments

The evaluation of the risk and return of a financial asset is called security analysis. Traditionally, this process uses accounting information to model the relevant cash flows and market information to estimate an appropriate discount rate. This is also called fundamental analysis. Investments also provides an introduction to portfolio optimization and the Black-Scholes Option Pricing model. Check my library for additional books, blogs, magazines, and movie recommendations.

Textbook – Investments by Bodie, Kane, and Marcus

Assessment

  • 2 Exams
  • Online Homework completed on the students’ schedule
  • Relative Valuation
  • Portfolio Optimization in Microsoft Excel
  • Efficient Frontier
  • Estimate Beta(s) using Microsoft Excel and Bloomberg
  • Equity Analysis

Resources

Topic Coverage

  • Securities Markets
    Markets – Principle-Agent | Adverse Selection
    Short Selling a Stock – Khan Academy | Edspira
    Initial Public Offering (IPO) – Khan Academy
  • Risk and Return
    Diversification and Portfolio Calculations – MIT
    Uncertainty – Yale
    Value at Risk – MIT
  • Portfolio Theory
    Efficient Frontier – MIT(1) | MIT(2)MIT(3)
    Efficient Portfolios – Edspira
  • Portfolio Optimization
    Linear Algebra Review – Khan Academy
    – Matrix Multiplication – Khan Academy
    Portfolio Calculations using Linear Algebra
    – Portfolio Expected Return
    – Portfolio Variance
    Optimal Risky Portfolio – MIT | Yale
  • The Capital Asset Pricing Model
    Capital Asset Pricing Model – Edspira | MIT
    Beta – Edspira
    Estimate Beta – CAPM Regression and Regression Results
    Systematic vs Idiosyncratic Risk – Edspira
    Security Market Line – Edspira
    Capital Market Line – Edspira
  • Arbitrage Pricing Theory (APT)
    Multifactor Models – Edspira
  • Macroeconomic and Industry Analysis
    GDP – Khan Academy
    Unemployment – Khan Academy
    The Money Supply – Khan Academy
    Foreign Exchange – Khan Academy
    Balance of Payments – Khan Academy
  • Financial Statement Analysis
    DuPont Analysis – ATM
    Additional Paid-in Capital – Edspira
    Altman Z score – Edspira
    Earnings Management – Edspira
    Earnings Quality – Edspira
    Net Working Capital – Edspira
  • Equity Valuation
    Relative Valuation – Rush | Edspira
    The Dividend Discount Model – Rush | Edspira
    Discounted Cash Flow Valuation
    – The Weighted Average Cost of Capital (WACC) – Edspira
    – Free Cash Flow to the Firm – Edspira
    – DCF using FCFF – Edspira
    – Free Cash Flow to Equity
    – DCF using FCFE
    Sustainable Growth Rate – ATM
  • Options
    Put and Call Options – Khan Academy
    Binomial Option Pricing Model – Rush
    Black-Scholes Option Pricing Model – Khan Academy
    Portfolio Insurance
  • Commodities and Futures
    Futures – Khan Academy