Investments

3 units

Introduces the theory and practice of investments from the point of view of an investment/portfolio manager. We will begin with the financial environment, asset classes, types of financial assets, investment history, and risk preferences. Next, we will have a brief review of statistics and, if time permits, 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 include Markowitz optimization, Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory (APT)/factor models, market efficiency, performance evaluation, and, if time permits, behavioral finance. The last portion of the course will be devoted to fixed income securities, including interest rates, bond valuation, and bond immunization.