Riyadh Philanthropic Society for Science
Prince Sultan University
‫مؤسسة الرياض الخيرية للعلوم‬
‫جامعة األمير سلطان‬
College of Business Administation
‫كلية إدارة األعمال‬
COURSE Title: Fin450— Investment analysis & Portfolio Management
Instructor: Dr. Jamal Bdour
Class Time: Sun, Tues 1:10-2:25
Office Hours:
Office No. (337) 3rd floor CBA Building
Office Phone No. 8719
E-mail: jbidour@psu.edu.sa
Prerequisites: Fin350- strictly enforced.
Credit Hours: 3 Credit hours.
Course Objective: To examine how to construct and manage a collection of investments
(portfolio). Given the wide spread of support for efficient markets paradigm, we study the portfolio
management mainly within an efficient market environment. However, we also pay attention to the
fact that anomalies exist and our portfolio should be flexible enough to respond to these anomalies.
In addition, portfolio construction can not be done in vacuum. Portfolio managers should be well
educated to create the best possible collection of investments for each client’s unique needs and
objectives. Since some of you may take jobs in financial industry as portfolio managers, the goal of
this course is also to help you in acquiring important skills necessary for a portfolio manager
including communication and presentation skills both written and oral and team building.
Methodology: This course is a combination of lecture, paper presentation, and discussion. In this
course, various portfolio strategies are examined. Portfolio strategies are formulated with heavy
emphasis to two elements of investment: risk and expected rate of return. Quantitative materials
of a reasonable level are included to assist in making the necessary analysis. Students are expected
to read the assigned chapter(s) before the class meeting. Each student is strongly encouraged to
spend an adequate amount of time and effort on the suggested problems as they are essential to an
understanding of sound investment decisions.
To enrich students’ communication and analytical skills, students (maximum of 3 students in each
group) are expected to work on two projects. One project is financial ratio analysis where students
select three public traded companies and calculate key financial ratios over a period of at least three
years. Based on their analysis, students predict the stock price movements for one year forward (no
oral presentation is required for this project). For other project, students are free to select any topic
in the area of investments and write up a minimum 10- page (single space, typed) paper. Students
are expected to make oral presentation for this essay. Please inform me about your topics before
you start on your paper. Consistent with our mission in CBA, I encourage students --in selecting
their topics-- to focus on new and innovative ideas and thoughts that are now emerging in the
investment area.
Modules Covered:
1. The Investment Background
2. Analysis and Management of Common Stocks
3. Analysis and Management of Bonds
4. Derivative Security Analysis
5. Specification and Evaluation of Asset Management
Attendance: A regular student should attend all classes and lab sessions. A student may be drop
from a course and denied entrance to its final examination if his attendance is under limit
determined by the University Council.
Grading: The final grade for this course will be determined as follows:
Item*
Class attendance
Project:
Ratio analysis
Essay project (written)
Class Presentation
Midterm exam 1
Midterm exam 2
Final
Total
Scale
Weight
5%
10
10
5
15
15
40
100%
A+ =95 – 100%
A = 90 – 94
B+ = 85 – 89
B = 80 - 84
C+ =75 – 79
Absences (times)
0-2= 5
3-6= 3
7-9= 2
10-12= 1
More than 12= 0
C =70 - 74
D+ = 65 - 69
D = 60 - 64
F = Less than 60.
*No make-up tests without a written medical excuse or documentation of extraordinary
circumstances. For the latter, please notify me prior to the exam. Failure to follow these
procedures may result in a zero on an unexcused exam.
Text: Analysis of Investments and Management of Portfolio, Brown/Reilly,
9th Ed. South-Western.
Recommended: Business Week, Financial Times, WSJ
Web Sites: www.google.com/finance; www.cnbc.com; finance.yahoo.com;
www.investopedia.com.
Assignments: The following Schedule is tentative and subject to adjustment as the class
progresses.
Module 1, The Investment Background
Class Orientation
Chapter 1, The investment setting
Chapter 2, The Asset allocation Decision
Suggested Problems
Due date to submit your topics for your essay: Saturday October 18, 2009
Chapter 3, Selecting Investments in a Global Market
November 3, 2009:
EXAM #1: Chapters 1, 2, 3 (Subject to Change).
Module 2, Valuation Principles and Prctices
Chapter 10, Analysis of Financial Statements (students’ assignment)
Chapter 11, An Introduction to Security Valuation
Module 3, Analysis and Management of the Common Stocks
Chapter12, Macroanalysis and Microvaluation of the Stock Market
Chapter 16, Equity Portfolio Management Strategies
December 22, EXAM # 2: Chapters 10, 11, 12, 16 (Subject to Change).
Module 4, Analysis and Management of Bond
Chapter 17, Bond Fundaments
Chapter 18, The Analysis and Valuation of Bonds
Chapter 19, Bond Portfolio Management Strategies
Module 5, Derivative Security Analysis
Chapter 20, An Introduction to Derivative Markets
Chapter 21, Forward and Futures Contracts
Chapter 22, Evaluation of Portfolio Performance
Chapter 23, Swap contracts and Convertible Securities
Student presentation: January 24 and 26, 2010
January 30 – February 10, Final Exam: chapters: 17, 18, 19, 20, 21, 22, 23 (Subject to
Change).
GOOD LUCK!
Project Guidelines
1. Each group should select at least three publically traded companies. These companies can
be Saudi Arabian, American, or any other companies across the globe. Make sure you can
get enough data to be able to make a meaningful analysis (for example, at least three years
of financial statements may be required). There are two classical security analyses are
mentioned in the literature:
A. Fundamental Analysis
B. Technical Analysis
2. Each group should apply at least one of the above analyses to the selected companies to
determine whether the common stocks of these companies are fairly priced by the market.
Your analyses will eventually result in one of the three possible outcomes: Fairly priced,
over priced, or under priced. Then, you should recommend to a hypothetical investor an
appropriate course of action. Consistent with our mission in the CBA, I encourage students
to apply any other innovative approaches they can come up with in evaluating the selected
companies.
3. Based on your analyses in (2) above, you should predict target prices for the next year.
You should provide three target prices for each company: High, average, low, based on
optimistic scenario, moderate, and pessimistic scenario.
4. For a thorough analysis, it is imperative for students to study chapters 10, 13, 14, and 15.
5. To spread the work over the semester, you should submit the first part of your paper by
December 6, 2009. This part consists of a) profile of the three companies selected (nature
of businesses), b) a brief discussion of the above analyses (fundamental versus technical)
and, c) any other(s) you may want to apply.
6. Complete paper will be due on the same day of your oral presentation. Oral presentations
will be conducted on January 24 and 26, 2009.
Good luck.