St Petersburg State University of Economics and Finance and Paris-Dauphine University
Master of International Business “Corporate Finance, Control and Risks”
Investments and Investment Decisions
Course Syllabus
Course name
Investments and Investment Decisions
Semester
First year course
Program
Master of International Business
“Corporate Finance, Control and Risks”
Major
Management / Financial Management
Availability
Mandatory
Teachers
responsible
Professor A.I. Vostroknutova, PhD in Economics
aiv@users.mns.ru
Languages
English
ECTS
4
Hours
Contact hours: 30
Self-study : 48
Total: 78
Pre-requisites
The prerequisites are elements of micro and macroeconomics, basic
knowledge in security markets and financial analysis. Mathematical
aptitude is important, but no advanced mathematics is required.
Course aim
Course objectives
The aim of the course is to study the foundations of financial markets
and investment theory in theoretical and application aspects.
Objectives, results of the course
This course deals with the following aspects:
 What is financial market?
 What properties financial instruments have?
 Compose investment portfolio.
 Portfolio construction.
 Portfolio management.
 Portfolio risk management.
Upon the completion of the course a student should:
1
St Petersburg State University of Economics and Finance and Paris-Dauphine University
Master of International Business “Corporate Finance, Control and Risks”



know
 the financial market regularities;
 the portfolio theory models;
get skills
 in the valuation of financial instruments;
 to investment portfolio construction;
get idea of
 investment risk management.
Course content
Investment management is a very complex and difficult process.
Investors would hold portfolios composed of different financial
instruments such as the stocks, corporative and government bonds,
international securities, saving or deposit accounts and other.
Progress in financial engineering forced the investors to face a
dizzying array of choices. They can now own collateralized mortgage
obligation, floating-rate notes, swaps, puts, calls, and futures
contracts. The list is seemingly endless, and it continues to grow. The
difficulty of making investment decision has increased as the
investment environment has become more complex. This course
introduces to foundations of investment theory.
Topics summary
The students begin study financial market basis, then – investment
portfolio management and portfolio risk management.
Topic
Homework requirements
Class Expectations/assignments due for next class
Hours,
Total
1
Topic 1
Financial market and its segments.
Securities market.
Classification of securities.
Securities market participants.
Issue and circulation of securities
Practice 1: Investment characteristics of securities
Expectations: Please read Chapters 1-3 of
handbook “Investments” (W.Sharpe, G.Alexander,
J.Bailey)
5
2
Topic 2
Basic security varieties
Practice 2: The valuation of riskless securities
Expectations: Please read Chapters 4,5 of
handbook “Investments” (W.Sharpe, G.Alexander, 5
2
St Petersburg State University of Economics and Finance and Paris-Dauphine University
Master of International Business “Corporate Finance, Control and Risks”
J.Bailey)
Teaching
3
Topic 3
The valuation of securities.
Investment value, yield-to-maturity, marketability
and risk of securities.
The portfolio problem.
The portfolio selection problem.
Practice 3: CAPM model
Expectations: Please read Chapters 6,10 of
handbook “Investments” (W.Sharpe, G.Alexander,
J.Bailey)
5
4
Topic 4
Portfolio theory basis.
Portfolio analysis.
Selection of the optimal portfolio.
Diversification.
Bond portfolio.
Immunization
Practice 4: Diversification
Expectations: Please read Chapters 7-8 of
handbook “Investments” (W.Sharpe, G.Alexander,
J.Bailey)
Please prepare your Homework 1
5
5
Topic 5
Portfolio theory basis.
Portfolio analysis.
Selection of the optimal portfolio.
Diversification.
Bond portfolio. Immunization
Practice 4: Markovic’s approach
Expectations: Please read Chapters 9,11-12 of
handbook “Investments” (W.Sharpe, G.Alexander,
J.Bailey)
5
Topic 6
Derivative markets and hedging
TPractice 5: The portfolio evaluation
Expectations: Please read Chapters 20-21 of
handbook “Investments” (W.Sharpe, G.Alexander,
J.Bailey)
6
Please prepare your Homework 2
5
Theoretical inputs
Group discussion
3
St Petersburg State University of Economics and Finance and Paris-Dauphine University
Master of International Business “Corporate Finance, Control and Risks”
Computer practicum
Homework
Assessment
System of evaluation: The exam counts for 50% of the final grade.
Participation in the computer practices and execution of the home
works makes up 50%
Homework: Students have to complete 2 home assignments
Assessment: A three-hour written examination.
The examination contains the problems, for example: Company
“Douglas Dirigibles” has a bond outstanding with four years to
maturity, a nominal value of $1000, and an annual coupon payment of
$100. What is the price of the Douglas Dirigibles bond if its yield-tomaturity is 15%? If its yield-to-maturity is 12%? If its yield-to-maturity
is 8%?
Questions:
1. What are the financial instruments, financial market and
securities market?
2. What kind if cash flow models do you know?
3. What are nominal and efficient interest rates?
4. What is theoretical value of security?
5. What is cash flow internal rate of return?
6. What is yield-to-maturity?
Indicative reading
Supplementary
reading list
Updated on:
The main manual for studying for this course is the book by Sharpe
W.F., Alexander G.J., Bailey J.V. Investments. Fifth Edition. Prentice
Hill Inc., Princeton, NJ. 1995.
1. R.Gibson. Asset Allocation. Balancing Financial Risk. Third
Edition. McGrow-Hill, 2000.
2. Барбаумов В. Е., Гладких И. М., Чуйко А. С. Финансовые
инвестиции. Учебник. Издательство: Финансы и
статистика, 2003.
3. Крушвиц Л. Финансирование и инвестиции. – СПб.: Питер,
2000.
4. Вострокнутова А.И., Друзь И.А. Инвестиции. Учебное
пособие. - СПб.: Изд-во СПбГУЭФ, 2008.
May 11, 2011
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