Finance 3050: Introduction to Investments
Fall 2007
Instructor:
Homepage:
Office Hours:
Michael Halling (michael.halling@business.utah.edu)
www.business.utah.edu/~finmh
after class or by appointment via email
Time:
Class Rooms:
Course Website:
Prerequisite:
TH (Tuesday and Thursday) from 7:30 to 8:50 a.m.
FAM 201
WebCT (https://webct.utah.edu)
Finance 3040
1. Course Description
The field of investments and the investment industry itself are quickly growing, dynamic and challenging
areas. Finance 3050 is going to prepare students for future positions in this field and further, more
specialized courses at the university by pursuing the following specific goals:
The course is going to provide a comprehensive overview on investments reaching from the valuation
of individual financial securities to asset management and allocation techniques.
The focus of the course is on basic principles that represent important long-term knowledge.
Institutional details and current, potentially short-living trends are not the focus.
The course is going to be quantitative because good investment decisions require a carefully done
quantitative analysis. You should be familiar with basic mathematical rules such as calculus and
fundamentals of statistics.
The course is based on the book “Essentials of Investment” by Z. Bodie, A. Kane and A. Markus (6th
Edition, additional material can be found at www.mhhe.com). The textbook is available at the bookstore.
Several copies are on reserve at the library with checkout limits of 3 hours. In addition, you need a
financial calculator throughout the class (i.e., for solving the exercises and doing the exams).
2. Assessment and Grades
The assessment is based on two exams (a midterm and a final exam) and four homework assignments.
Further more, active participation in class where you document that you thought about the material we are
discussing yields extra points (or make up for otherwise lost points) – up to 30 points. Grading is going to
follow the usual cutoff points.
Component Possible Points
Midterm Exam
100
Final Exam
Problem Set 1
Problem Set 2
Problem Set 3
100
25
25
25
Problem Set 4
Total
25
300
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2.1
Examinations
There will be two exams. Exams will be closed book/note and will consist of multiple choices. You are
welcome to use a one page cheat sheet. Bring your own calculator. No make-up exams will be given
except for extraordinary circumstances (appropriate documentation is required).
2.2
Problem Sets
Four problem sets will be given as homework assignments. Each problem set has to be turned in on time
(see the deadlines indicated in the course schedule; late submissions will not be considered) and is going
to be graded (don’t forget to make a copy of your solution before you turn it in). In the class meetings
following the deadlines we are going to discuss the solutions to the problem sets. For this purpose, I’m
going to randomly call students to present and explain their solutions. In order to get points for your
submitted exercises you have to be in class to present your solution if I call you! Carefully note the
following rules:
Students who are unable to present their solution for problems turned in lose all the points from the
problem set assigned to this specific week.
Of course, I understand that you might solve the exercises in teams or discuss individual questions
and issues. That is not a problem per se. However, every student has to fully understand the solution
she submitted. Further more, every student has to turn in her own solution.
If you have someone’s solution but you don’t understand it and cannot explain it, you should not turn
this problem in.
2.3
Class Attendance
In general, class attendance is not required but I highly recommend that you come to class. Note,
however, that attendance is required in those sessions where we discuss the solutions to homework
assignments (remember that I’m going to call students to present their solutions).
In theory, students could study the relevant material at home on their own using the book and the
supplementary teaching material. My experience, however, shows that coming to class improves students’
performance significantly.
Finally, I have two important advices: first, read the chapters assigned to each class before class. This
enables you to follow the course very easily and to clarify open questions during class. Second, try to
solve homework assignments on your own. Homework assignments are going to be representative for
questions asked at the exam – and at the exam you have to solve them on your own.
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3. Tentative Course Schedule
Below you find a tentative schedule and assignment of readings and exercises to individual sessions. This
is a rough and ex-ante guideline for students but is expected to change once the course has started and
we fine-tune the speed to go through the material.
Updates to the schedule, lecture notes and exercises to be prepared are going to be published on WebCT
(https://webct.utah.edu). I expect you to check these sources of information at least twice a week. Once
information is posted to the web I consider it to be public knowledge.
Date
Topic
Reading Assignment
Week 1: Aug. 21st and 23rd
Introduction and Overview
Reading: Chapter 1 and 2
Week 2: Aug. 28st and 30th
Risk and Return
Reading: Chapter 5.1 to 5.4
Week 3: Sep. 4th and 6th
Efficient Diversification
Reading: Chapter 6
Sep. 11th before class
Deadline for submission of 1st problem set
Week 4: Sep. 11th and 13th
Presentation of solutions to the problems of the 1st problem set
Week 5: Sep. 18th and 20th
CAPM, APT and Efficient Markets
Reading: Chapter 7 and 8
Week 6: Sep. 25th and 27th
Bond Prices, Yields and Management
of Bond Portfolios
Reading: Chapter 9 and 10
Oct. 2nd before class
Week 7: Oct. 2nd
Deadline for submission of 2nd problem set
Presentation of solutions to the problems of the 2nd problem set
Week 7: Oct. 4th
Midterm Exam
Week 8
Fall break
Week 9: Oct. 16th and 18th
Solutions of Midterm Exam + Equity
Valuation
Reading: Chapter 12
Week 10: Oct. 23rd and 25th
Options Markets
Reading: Chapter 14
Week 11: Oct. 30th and Nov. Option Valuation
1st
Reading: Chapter 15
Nov. 6th before class
Deadline for submission of 3rd problem set
Week 12: Nov. 6th and 8th
Presentation of solutions to the problems of the 3rd problem set
Week 13: Nov. 13th and 15th
Futures
Reading: Chapter 16
Week 14: Nov. 20th
Performance Evaluation
Reading: Chapter 17
Week 15: Nov. 27th and 29th
Performance Evaluation
Reading: Chapter 17
Dec. 4th before class
Week 16: Dec. 4th and 6th
Deadline for submission of 4th problem set
Presentation of solutions to the problems of the 4th problem set
In the examination week
Final Exam
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4. Further Information
4.1
Student Conduct
As used in the Student Code: (2.) “Academic misconduct” includes, but is not limited to, cheating,
misrepresenting one’s work, inappropriately collaborating, plagiarism, and fabrication or falsification of
information, as defined further below. It also includes facilitating academic misconduct by intentionally
helping or attempting to help another to commit an act of academic misconduct.
“Cheating” involves the unauthorized possession or use of information, materials, notes, study aids, or
other devices in any academic exercise, or the unauthorized communication with another person during
such an exercise. Common examples of cheating include, but are not limited to, copying from another
student’s examination, submitting work for an in-class exam that has been prepared in advance, violating
rules governing the administration of exams, having another person take an exam, altering one’s work
after the work has been returned and before resubmitting it, or violating any rules relating to academic
conduct of a course or program.
(3.) “Academic sanction” means a sanction imposed on a student for engaging in academic or
professional misconduct. It may include, but is not limited to, requiring a student to retake an exam(s) or
rewrite a paper(s), a grade reduction, a failing grade, probation, suspension or dismissal from a program
or the University, or revocation of a student’s degree or certificate. It may also include community service,
a written reprimand, and/or a written statement of misconduct that can be put into an appropriate record
maintained for purposes of the profession or discipline for which the student is preparing.
4.2
People with Disabilities
The University of Utah David Eccles School of Business seeks to provide equal access to its programs,
services and activities for people with disabilities. If you will need accommodations in this class,
reasonable prior notice needs to be given to the instructor and to the Center for Disability Services,
http://disability.utah.edu/, 160 Olpin Union Bldg., 581-5020 (V/TDD) to make arrangements for
accommodations. All written information in this course can be made available in alternative format with
prior notification to the Center for Disability Services.
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