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**

- University-specific resources
- Security Analysis – a short summary
- Regression Basics – This is the bare minimum you must know about linear regression as an undergraduate business major regardless of what university you attend. It is located in the appendix of
*Introduction to Finance Analytics*in my library. - Fama/French Factors from Kenneth French’s website
**Online Classes**- NYU finance classes by Aswath Damodaran
- MIT Finance Theory I by Andrew Lo

### 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)

**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 – MIT

Beta – Edspira

Estimate Beta – CAPM Regression and Regression Results**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

Earnings Quality – 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**Options**Put and Call Options – Khan Academy

Binomial Option Pricing Model – Rush

Black-Scholes Option Pricing Model – Khan Academy

Portfolio Insurance

Futures – Khan Academy