Course Outline - Security and Portfolio Management

7/31/2019 Course Outline - Security and Portfolio Management

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Faculty:Dr. C. P. Gupta

Department of Financial StudiesSouth Campus, University of Delhi

Delhi.

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SECURITY AND PORTFOLIO EVALUATION

THE COURSE

The World of Financial Investment is a fascinating one - full of promises,

challenges, excitements, joys as well sadness. But, the best part about it

is that one can enter this World without any restriction, can actively

participate in the whole process of investment decision making and see

the results of his/her own decisions. However, this place is not simply for

FUN but a serious one. Therefore, Security and Portfolio Evaluation is a

serious subject matter and of late, it is becoming more and more

technical and thus, assuming largely a shape of SCIENCE. Nevertheless, it

is still to some extent an ART. This Course will focus on the Science as

well as Art aspect of Security and Portfolio Evaluation.

For pedagogical reasons, the whole course is divided broadly into two

modules - first module will be dealing with fixed income securities, i.e.

bonds while second module on variable income securities, i.e. equities.

Whatever securities we shall be discussing the framework will be as thus- first understand about the security; next, evaluating the security in

terms of its risk and return parameters; next, proper valuation at which

one should buy the security; next, how to reduce the risk through

diversification and by constructing suitable portfolio of securities; and

finally, how to evaluate the performance of that portfolio.

The Course is aimed at equipping the participants with necessary

knowledge, tools and skills to evaluate securities under consideration; tomake suitable portfolios to take the advantages of diversification and to

evaluate their performance. By the end of the Course, it is expected that

the participants must feel themselves as one of the competent and

confident players of financial markets as an investment manager.

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Career

Investing in appropriate financial assets is becoming day by day a highly

specialized job. To provide such specialized services, a number of

institutions have emerged in financial markets like investment firms and

mutual funds. These institutions look for those finance professionals who

can evaluate scientifically fixed income securities as well as variable

income securities; who are capable of making optimum portfolios of

various securities for themselves/clients; and who can provide constantly

objective ways of monitoring the performance of various investment

managers. Further, the corporate also requires investment analysts to

invest their unutilized funds so as to earn maximum returns withcommensurate level of risk. The present course is aimed to prepare the

participants to look for career as an investment analyst in corporates,

investment firms, mutual funds and other financial institutions.

Pedagogy

The thrust of the pedagogy adopted would essentially be problem

solving. Sessions are designed to take up problems related to Security

and Portfolio Evaluation either through cases or through some events

reported in financial media and then, deliver necessary technical and

conceptual knowledge through lectures and to appreciate the diversity of

various issues through discussions. The main emphasis will be on the

training of minds to be sensitive to various pieces of information and

issues. A number of problems in the form of assignments will be given to

the participants and they will be encouraged to use computers to find

solutions of the problems. Students will be asked to make their own

portfolios and track them over the Course. On the whole, the driving

force behind the pedagogy will be learn and apply.

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INVESTMENT MANAGEMENT

SessionNo.

Topic Readings/References/Cases

1 & 2 Introduction and overview of Investment Management; twoparametric framework to analyse asecurity and a portfolio; risk andreturn their determination andtrade-off.

CPJ: Ch. 1FJ: Ch. 1 and Ch. 3CF: Ch. 1 and Ch. 2

3, 4, 5 Bond Valuation; Term Structure;Analysis of Risk in Bonds Durationand Convexity; Bond Portfolios.

CPJ: Ch. 8 And Ch. 9FJ: Ch. 9CF: Ch. 12, Ch. 13And Ch. 14. Reading On Bond

Price Volatility Case For Discussion:

DurationsParadox!!!

Articles ForDiscussion: A Two-Way Street,Alright! andAdmiring thoseshapely curves.

6 Approaches to Security Evaluation Fundamental Analysis and TechnicalAnalysis A framework

CPJ: Chs. 10,11, 13,14,15, 16

7, 8, 9 Fundamental and Technical Analysis a detailed analysis.

FJ: Ch. 4, Ch. 5, Ch.6, Ch. 7, Ch. 8, andCh. 16

CF: Ch. 15, Ch. 16and Ch. 17.

MP: Chs. 7-11 andChs. 18-19.

Cases For Discussion:Finolex CablesLimited and HeroHonda; and someother companieslisted at BSE.

10 Efficient Market Hypothesis CPJ: Ch. 12FJ: Ch. 16

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11 13 Modern Portfolio Theory Measurement of return and risk of aportfolio; dominance principles forreducing the choice set; Utility Theoryand Markowitz Portfolio Theory.

CPJ: Ch. 19FJ: Ch. 17CF: Ch. 9 and Ch. 19 Case For

Discussion: A

number of companies willbe selected fromBSE.

Single Index Model and Capital AssetPricing Model

CPJ: Ch. 20FJ: Ch. 18 and Ch. 19CF: Ch. 10 and Ch. 20

Evaluation of Portfolio Revision andPerformance

CPJ: Ch. 22FJ: Ch. 19CF: Ch. 21

Evaluation

Three short-tests/quizzes (Best of Two) 15%

Mid-Term 25%

End Term 35%

Projects/Assignments 25%

References:

1. Investments Analysis and Management Charles P. Jones; John

Wiley & Sons, Inc. (CPJ)

2. Bond Markets, Analysis and Strategies - Frank J. Fabozzi; Prentice-Hall,

Englewood Cliffs, NJ. ( FF )

3. Investments: Analysis and Management - Jack Clark Francis; McGraw Hill

International Editions, McGraw-Hill, Inc. New York. ( CF )

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4. Security Analysis and Portfolio Management - Donald E. Fischer and

Ronald J. Jordan; Prentice - Hall of India Private Limited; New Delhi.

( FJ )

5. Modern Portfolio Theory and Investment Analysis - Edwin J Elton and Martin J

Gruber; John Wiley, New York. ( EG )

6. Portfolio Construction, Management and Protection - Robert A. Strong; South-

Western College Publishing, Thomson Learning, USA. ( RS )

7. Introduction to Investments - Haim Levy; South-Western College Publishing,

Thomson Learning, USA. ( HL )

8. Investments-An introduction - Herbert B. Mayo; The Dryden Press, Harcourt

College Publishers, USA. ( MA )

9. Quantitative Analysis for Investment Management - Robert A. Taggart;

Prentice-Hall, New Jersey, USA. ( RT )

10. Technical Analysis Explained Martin J. Pring; McGraw-Hill, Inc. USA, Third

Edition. ( MP )

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Course Outline - Security and Portfolio Management

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