EASTERN MEDITERRANEAN UNIVERSITY FACULTY OF BUSINESS AND ECONOMICS DEPARTMENT OF BANKING AND FINANCE FALL 2013-2014 COURSE CODE COURSE TITLE COURSE TYPE CREDIT VALUE PREREQUISITES COREQUISITES DURATION OF COURSE LECTURER LECTURE HOURS OFFICE HOURS OFFICE NO E-MAIL TUTORIAL ASSISTANT TUTORIAL HOUR WEB LINKS FINA425 COURSE LEVEL:7st Semester/4th Year-Undergraduate Investments Area Core 3 FINA 301 (Financial Management) None One Semester Korhan GOKMENOGLU Wednesday, 8.30-10.20 and Friday 10.30-11.20 Wednesday, 11:30-12:20 BE 185 korhan.gokmenoglu@emu.edu.tr Bezhan RUSTAMOV (PhD Candidate) Office: BE 145, Tel: 2494, bezhan.rustamov@emu.edu.tr Friday 11.30-12.20 Instructor Web Link→ http://fbemoodle.emu.edu.tr→ Spring 2012 link→ Department of Banking & Finance→ FINA 425 Textbook Web Link→ htttp://www.mhhe.com/bkm CATALOGUE DESCRIPTION /AIMS & OBJECTIVES The last decade has been one of rapid, profound, and ongoing change in the investment industry. The main objective of the course is to give students an introductory understanding of capital markets and financial instruments. We will focus on three modules which are equity markets, fixed income markets, and derivative markets (options and futures). GENERAL LEARNING OUTCOMES (COMPETENCES) On successful completion of this course, all students will have developed knowledge and understanding of: - Elements of Investments - Security Analysis - Fixed-Income Securities - Derivative Assets On successful completion of this course, all students will have developed their skills in: - Identifying major participants in financial markets and global financial instruments with recent trends - How securities are traded - Understanding the risk-return tradeoff - Investment analysis using the practical applications of investment theory - Equity valuation and bond pricing - The use of options and futures On successful completion of this course, all students will have developed their appreciation of and respect for values and attitudes regarding the issues of: - Investment analysis and security valuation - The complexities and required skills in finance 1 - The importance of investments as a core personal skill in their future careers RELATIONSHIP WITH OTHER COURSES This course lays the foundation for all other finance related courses and must be taken by students interested in finance PREREQUISITES This is a course that assumes no prior background in finance. However, you are expected to have an understanding of basic statistical concepts. The basic statistical concepts that you should be familiar with include means, variances, standard deviations, correlations, the normal cumulative distribution functions etc. LEARNING / TEACHING METHOD AND ASSIGNMENTS Class sessions will be devoted to the discussion of readings, chapter assignments and video presentations. In order for everyone to derive the maximum benefit from the classes, it is important to do the assigned reading and chapter problems before the class. The only way to master this material is by solving problems. Written work for the course will consist of chapter problems, a midterm and a final exam. I will not distribute copies of lecture notes or assignments in class. You are responsible for printing them and bringing them to class. METHOD OF ASSESSMENT Your grade will be based on in-class review problems (short quizzes), class participation, problem sets, creative assignment, the midterm, and the final exam. Questions in the exams will be short and long answer format. On the structure of the exams, 80% of it will be pulled out directly from the previous examples from class, lecture presentations, assignments, quizzes, or suggested exercises. The other 20 % will be used to see if you can apply the course concepts to more advanced problems. All exams are closed book. Class Participation and One Presentation Creativity Assignment Quizzes and In-Class Review Problems Mid Term Exam Final Exam : 10% : 10% : 20% : 25% : 35% You will have an exam almost every week (quizzes, in-class review problems etc.) which means that you have to study every week. Don’t wait until the end of the semester to study. WHAT IS CREATIVITY ASSIGNMENT Each student will be asked to submit a “creativity” assignment in the form of a poster which they put together themselves creatively describing their thoughts on Finance Investment Portfolio management Globalization of financial markets International investing Money managers Financial crisis Effect of these topics on our lives ....... You will be expected to provide the creativity!!! The posters will be hung in an open space in the school and people will vote on the posters in order to determine the allocation of fabulous prizes to be awarded at the end of the semester ceremony. MAKE-UPS Please note that in case of emergency, you may take the midterm and final exams at an earlier date by prior 2 arrangement. Please inform me at least a week IN ADVANCE if you need to take the exam earlier. If you get sick on the day of the exam, I need to see the doctor’s report to verify your condition. In that case, I will work out an alternative arrangement with you. No make-up for quizzes. ATTENDANCE It is mandatory to attend the sessions. Students are strongly advised not to miss lecture hours since success is closely related with attendance. If you miss a session for valid reason, make sure you catch up on all the missed material. In general, you are responsible for class lectures, as well as any announcements (including due dates and exam dates), discussions, or remarks. Warning: A nontrivial fraction of the final exam questions could be based on class discussions, assigned readings, and examples which are uncovered in the lecture notes. Also attendance is compulsory by the university regulation. Absence over 20% will be penalized with an NG. TEXTBOOK/S Bodie, Z., A. Kane, & A. J. Marcus. Essentials of Investments, 8th edition, Irwin McGraw-Hill, 2010. A variety of supplementary materials to this textbook such as self-assessment quizzes and interactive graphs be accessed online at the publisher’s website. INDICATIVE BASIC READING LIST I strongly recommend that you regularly follow daily financial newspapers such as The Wall Street Journal Europe, The Financial Times and journals such as The Economist. EXTENDED READING LIST Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies, by Jeremy J. Siegel A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing by Burton G. Malkiel. CONTENT & SCHEDULE Lectures and tutorials will be held on Wednesday, 8.30-10.20 in RD203 and Friday 10.30-11.20 in RD104. The quiz dates will be announced in class. The lecture and tutorial topics within the semester are as in the following schedule. Lectures # 1 2 3 4 5 6-7 8-9 10 Subject Topics Investments: Background and Issues (Chp. 1) Tutorial: Introduction Chp. 1 con’td and Asset Classes and Financial Instruments (Chp. 2) Tutorial: Chp.1 Assignments Asset Classes and Financial Instruments cont’d (Chp. 2) Tutorial: Chp.2 Assignments Securities Markets (Chp. 3) Tutorial: Chp.3 Assignments Securities Markets (Chp. 3) cont. Tutorial: Chp.3 Assignments Bond Prices and Yields (Chp. 10) Tutorial: Video Show Real Assets; Financial Assets; Securities; Investment Process; Recent Trends Money Market; Bond Market Equity Securities; Indexes Security Offerings; Security Trading Exchanges; Mechanism of Trading Bond Characteristics; Pricing & Yields Midterm Examinations Macroeconomic & Industry Analysis (Chp. 12) Tutorial: Chp.12 Assignments Security Analysis; Global and Domestic Economy Business Cycles and Industry 3 Analysis 11 12 13 14 15 16-17-18 Equity Valuation (Chp. 13) Tutorial: Chp.13 Assignments Equity Valuation (Chp. 13) Tutorial: Chp.13 Assignments Options Markets (Chp. 15) Tutorial: Chp.15 Assignments Options Markets (Chp. 15) Tutorial: Chp.15 Assignments Futures Markets & Risk Management (Chp. 17) Tutorial: Chp.17 Assignments Intrinsic Value; Balance Sheet Valuation Dividend Discount Methods; Price-Earnings Ratios; The Aggregate Stock Market Option Contract Values of Options at Expiration Futures Contract; Mechanics of Trading Futures Market Strategies; Financial Futures Final Exams OFFICE HOURS AND COMMUNICATION I will usually be available for quick questions in the classroom during the several minutes before and after the class session begins. I strongly prefer that you come to my office hours, but if you cannot make it, I will arrange an alternative time to meet. E mail is an excellent way to contact me if you need to set an appointment. Also, please check your e-mails frequently for course announcements. TUTORIAL SESSION Mr. Bezhan RUSTAMOV will be holding tutorial sessions once a week. Attendance is COMPULSARY for TS as well. TS will give you an additional resource to gain the ability to use and apply the concepts and tools developed in the course. These sessions will give you a chance to ask questions about the material that has been covered in class, and solve additional practice questions. ONE-MINUTE MEMOS As part of your class participation, you will be asked to complete a 1-minute memo at the end of every class. The purpose of the 1-minute memo is to establish a direct line of communication from you to me so that I can assess your grasp of the main topics of the day, identify unclear points, and address other concerns. I want students to feel that they can be open and honest in these memos, so your grade is not affected by what you communicate to me on these memos. If you are not present, there will be no 1-minute memo from you, and an absence will be recorded. After each class I will return to my office to digest your memos. I will then answer the major questions that were raised during the next class. In this manner you can get replies to your questions and learn from all the questions your classmates have raised as well. PLAGIARISM You are expected to be familiar with and to follow the policies on academic integrity. Your exams and assignments must be solely your own work. Plagiarism is intentionally failing to give credit to sources used in writing regardless of whether they are published or unpublished. Any attempt to represent the work of others as your own will be considered plagiarism. PLAGIARISM (WHICH ALSO INCLUDES ANY KIND OF CHEATING IN EXAMS) IS A DISCIPLINARY OFFENCE AND WILL BE DEALT WITH ACCORDINGLY.) IF YOU DO EXPERIENCE DIFFICULTY IN THIS COURSE, PLEASE CONTACT ME AS SOON AS YOU SENSE YOU ARE HAVING TROUBLE. I WILL BE GLAD TO HELP YOU. 4