EMBA
B&W
Spring 2005
Date/Time
Thurs., April 7
5:30-9:00 p.m.
Dr. Curcio
Bus.Ad. 67062
Security and Investment Analysis
Meeting
1
Topic
Readings
Presenter
Alternative Investments:
Stocks, Bonds, Mutual Funds,
Options, Futures, Real Assets
Risk & Return
Security Markets
STOCK-TRAK Portfolios
Reilly & Brown
Chaps. 1,2,3,4,5,6,11
Dr. Curcio
Dr. Curcio
Thurs., April 21
5:30-9:00pm
2
Mutual Fund Project
Analysis & Valuation
Market & Economic Analysis
Industry & Company Analysis
Reilly & Brown
Chaps. 12,13,14,18,19,20,22
Thurs., April 28
5:30-9:00 p.m.
3
Bond Valuation
Efficient Capital Markets
Portfolio Theory
Capital Market Theory
Investment Companies
Performance Evaluation
Reilly & Brown
Dr. Curcio
Chaps. 7,8,9,10,15,16,17,26,27
Friday, May 6
4:00-7:30pm.
4
Mutual Fund Project Presentations
Thurs., June 2
5:30-9:00 p.m.
5
Technical Analysis
Derivatives
Thurs., June 16
5:30-9:00pm
6
Individual Project Presentations
To Be
Announced
Friday, June 17
4:00-7:30pm
7
Individual Term Project Presentations
To Be
Announced
Thurs., June 30
5:30-9:00pm
8
Individual Term Project Presentations
To Be
Announced
To Be
Announced
Reilly & Brown
Chaps. 21,23,24,25
Dr. Curcio
Text: Reilly & Brown. Investment Analysis & Portfolio Management. 7th Edition. (2003, Thomson Learning.)
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Grading Basis:
Hypothetical Portfolios (STOCK-TRAK)
Group Project (Mutual Funds)
*Individual Term Project
**Class Participation and Instructor Judgment
10%
30%
45%
15%
Note: This is largely a class participation oriented course. While no exams are scheduled, all students incurring an
unexcused absence will be required to take a comprehensive final exam which will count 15% of the grade (in lieu of
class participation & instructor judgment).
OFFICE:
OFFICE HOURS:
(Until May 6:
By Appt.
Thereafter)
Telephone:
E-mail:
Room 406 BSA
Tues. 1:00pm-1:45pm
Tues. 3:00pm-6:15pm
Thurs. 1:15 p.m. – 1:45 p.m.
Other Hours By Appointment
330-672-1202 (Office)
330-655-5112 (Home)
prof100m@aol.com (Home)
* Please retain a copy of your individual project, since it will not be returned.
** The evaluation of class participation will be based on the frequency and quality of each person’s involvement in
class discussions.
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EMBA
Hypothetical Portfolios (STOCK-TRAK)
Using a hypothetical $1,000,000 available to you to invest and using STOCK-TRAK procedures, choose and
manage a portfolio in which at least $200,000 is allocated amongst 10 or more Equity investments; $200,000
is allocated to 3 or more Mutual Funds; $100,000 is allocated to 3 or more Bonds; $100,000 is allocated to
10 or more Options and $200,000 is allocated to 2 or more Futures investments. You are free to choose how
you invest the remaining $200,000.
All initial purchases must be made before the 3rd class meeting and a copy submitted by the 3rd class meeting.
Compute each portfolio’s, (Stocks, Mutual Funds, Bonds, Options and Futures), performance just prior to the
7th class meeting and submit your recorded prices and performance as of the 8th meeting.
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Dr. Curcio
I-A
Mutual Fund Project
Only one paper, prepared by the entire group, is to be submitted. Each member of the group should participate
in (1) the research, analysis, recommendations and general preparation of the group's report and also (2) the
presentation of the findings and conclusions to the class. My suggested approach is to have each member of the team
be responsible for researching and analyzing one mutual fund, of their choosing, within the group's chosen mutual fund
category. The whole group should then do a comparative analysis and evaluation of all of the mutual funds examined
by the members. The evaluation should include a comparison of returns, risks, the size and nature of the sales load (if
any), 12b-1 fees, expense ratio, turnover ratio, relative performance during bear markets and any other important
characteristic.
The comparative evaluation should especially emphasize the relative return/risk performance.
Definitely plot all of your group's mutual funds on a capital market line (return [mean] on the vertical axis and risk
[std. dev.] on the horizontal axis), using the mean and standard deviation of the Vanguard Index 500. (Data to be
provided.) Also plot a security market line. (The Vanguard Index 500 has a β = 1.0.) Other return/risk measures
include Morningstar's star rating, the Sharpe ratio and alpha. The report and also the presentation should include
comparative graphs and tables of the above characteristics. Also, the analysis should identify the sector weightings of
each mutual fund and, perhaps, portray such with a pie graph. Additionally, the top 5 – 7 stock holdings of each
mutual fund should be noted. Finally, based on your analysis and your future projections of the economy, financial
market performance and individual sectors, industries and companies, the group should rank-order the mutual funds
which you have evaluated and make a recommendation as to which mutual funds you would advise investors to invest
in and which to avoid. Of course, I will give you more help and assistance on this in class or via the phone, e-mail, etc.
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Dr. Curcio
EMBA B&W
Security and Investment Analysis
Bus. Ad. 67062
Individual Term Project
Students may choose either format: I – B, or I – C for their Individual Term Project.
I–B
Outline for Individual Project
In conjunction with your hypothetical Stock-Trak portfolios, explain, in a presentation and a report,
the motivation and investment strategies behind your investment selections and trades for each of the
four categories: (1) Equities, (2) Mutual Funds, (3) Bonds, (4) Options and Futures and for the overall
portfolio. The explanation of motivation should be preceded, in each category, by a concise
explanation (in your own words) of the investment theory, which belies the category. You may use
your book, handouts, class notes and/or tutorials from the “internet” etc. for this theoretical
foundation.
Additionally, evaluate the performance of your investment and trading selections and strategies todate, and comment on whether you would maintain your investment choices and strategies or you
would change your selections and strategies. How and why would you change your investment
selections and strategies going forward?
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Dr. Curcio
Security & Investment Analysis
Bus.Ad. 67062
I-C
Outline for Individual Project
Industry Analysis of Four Companies
Table of Contents
Executive Summary – A two-page summary of the analysis, forecasts and recommendations.
I.
Introduction – State the purpose of your report, identify and describe your chosen industry and the four
companies to be analyzed. Explain the organization of your report.
II.
Macroeconomic Analysis & Forecasts – provide your two-year economic & financial market forecasts of the
U.S. and major regions of the world.
Refer to www.yardeni.com, www.bloomberg.com,
www.economist.com, and The Economist Intelligence Unit on AOL at AOL, Keyword: EIU.
III.
Industry Analysis & Forecasts – Provide your assessment of the timeliness and future prospects for your
industry. Focus on major factors which will impact the expected revenues, costs and profits for this industry.
See Standard & Poors Industry Outlook and Valueline’s industry timeliness rankings and industry analysis
data sheets.
IV.
Company Analysis
A. Conduct an historical, comparative ratio analysis of your four companies. The ratio categories should
include (1) liquidity, (2) asset management, (3) debt, and (4) profitability and (5) market value as
described in handout No. X - Investment Evaluation. The analysis should cover the past five years. Many
of the ratios can be found on the Valueline company analysis pages and in Standard & Poors stock
Reports. Also, refer to www.morningstar.com, and, www.msnmoney.com, for ratios, graphs of ratios and
comparisons with industry and general market levels.
B. Conduct a technical analysis of your four companies focusing on current prices in relation to the 50-day
and 200-day moving averages, relative strength indicators, volume, support & resistance levels and trends.
Refer to your handout No. XI – Technical Analysis.
Also, refer to www.bigcharts.com,
www.yahoofinance.com, www.investorama.com, www.stockpoint.com and Decision Point Timing
and Charts on AOL through AOL, (channel) Personal Finance, (selection) Investing Forums.
C. Plot a graph of the comparative stock price performance of your four companies, the S&P 500 (symbol is
SPX) and your industry (you need to look up the symbol) for one, two and five years! Take note of the
52-week high and low and the current price.
D. Based on your two-year economic and financial forecast, fundamental ratio analysis and technical
analysis, provide a two-year forecast of each of your companies’: sales, earnings per share, dividends per
share, P/E multiples and share price (end of 2002 and end of 2003). Refer to Standard & Poors Stock
Reports and Valueline’s projections and also professional analysts’ forecasts on www.msnmoney.com.
Investment Recommendation – Indicate whether you would recommend a strong buy, buy, hold, sell or strong sell
for your companies. Support your recommendations. Refer to Valueline, Standard & Poors stock reports,
www.msnmoney.com, and www.morningstar.com for professional evaluations of these companies and timeliness and
safety ratings.
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Dr. Richard J. Curcio
Dr. Richard J. Curcio received his Bachelor’s Degree in Science and Ph.D. in Finance from The
Pennsylvania State University.
Dr. Curcio served as Chairman of Kent State University’s Department of Finance and Public Administration
from 1975-1983. Prior to coming to Kent State, he was an administrator in the Mathematics Department of
The Pennsylvania State University and a research chemist with the Beryllium Corporation (subsequently,
Kawecki-Berylco, Inc.).
His primary teaching and research interests are in the fields of Financial Management, Investments, Real
Estate, Small Business Finance, International Finance and Stock Index Futures. He has published and
presented numerous articles on such topics as capital budgeting, cost of capital, financial analysis of banks,
real estate portfolio selection, measurement of investment risk, quantitative approaches to real estate
valuation, global mixed-asset diversification and stock index arbitrage. His research has been published in
the Journal of Portfolio Management, Decision Sciences, the Journal of Financial Research, Review of
Futures Markets, Journal of the Midwest Finance Association, the American Real Estate and Urban
Economics Association Journal, Journal of Real Estate Research, Global Finance Journal, The Multinational
Business Review and the Journal of Financial and Strategic Decision Making.
Dr. Curcio has organized and conducted executive training sessions for such companies and organizations as
Goodyear Tire and Rubber Co., Goodyear Aerospace Corp. (subsequently Loral Systems), Stouffer’s Foods,
Lubrizol, Salem Community Hospital and FirstEnergy Corp.
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