King Abdulaziz University
Faculty of Economics & Administration
Department of Finance
FIN 331: Foundations of Investments
Spring 2013/14
Prerequisite:
Credits:
FIN 331
3
Lectures hours:
Course level:
3 hours per week
Intermediate
Instructor: Dr. Nesma Heshmat
E-mail: nheshmat@kau.edu.sa
Office: 2221
Office Hours: Sun. Tue. Thu 12-1 Mon .Wed 11-12:30
COURSE DISCRETION
The course is a rigorous, quantitative introduction to financial market structure and
financial asset valuation. First, we describe the investment environment, financial
markets, and instruments. Second, we examine the risk-return tradeoff, optimal portfolio
selection, asset pricing models, and market efficiency. Third, we explore theoretical and
applied methodologies for stock analysis and valuation. Finally we provide an
introduction to derivatives securities.
COURSE OBJECTIVES
The main objectives of this course are to:
1. Provide students with deeper understanding of concepts related to investment analysis and
portfolio theory.
2. Equip students with techniques of investment analysis.
3. Expose students to the investment environment, locally and internationally.
LEARNING OUTCOMES
Upon completion of this course student should be able to:
1. Comprehend the fundamental concepts of investment theory and financial markets.
2. Understand the theory necessary to manage and analyze investments and risk effectively.
3. Construct efficient portfolios.
4. Construct and use the security market line.
5. Apply research, analytical, and writing skills through formal case studies and assignments.
COURSE MATERIAL
Required Text
Bodie, Z., Kane, A., and Marcus, A., 2010, Essentials of Investments, 8th edition,
McGraw-Hill.
An important complement to class work is following the financial news. There are
several sources of information on the internet such as Bloomberg, Reuters and Yahoo
Finance.
Supplementary (but optional) Texts
Jordan & Miller, Fundamentals of Investment, 4rd Edition ,2008 (McGraw-Hill)
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COURSE GRADING
Your course grade will reflect your performance on midterm and final exams,
assignments, and class participation, with weights determined as follows:
Quiz
10% Tuesday 3/12/1434 - 8/10/2013
First Exam
20% Tuesday 23/1/1434 - 26/11/2013
Midterm Exam
20% Thursday 16/2/1434 - 19/12/2013
Final Exam
40%
Assignments and Class Participation 10%
IMPORTANT NOTE
If a midterm exam is not completed, the mark assigned to the missed component
will be zero except in the case of a valid excuse (illness, death of a close family
member, etc.). In the case of a valid excuse the marks associated with the missed
component will be re-assigned to the final exam.
In every aspect of the course, students are required to adhere to the standards of
conduct in the King Abdulaziz University Honor Code
CLASSROOM USE
 Students should conduct themselves professionally at all times.
 Class starts promptly at the time indicated on your schedule.
 It is the student’s responsibility to obtain handouts, notes, and assignments from any
missed days.
 Students are expected to follow the college’s acceptable use policy while in the class.
HOW TO STUDY FOR THIS COURSE:
 Spend some time on the course every day, whether you have class or not
 Take good notes in class and review them frequently, comparing them to
corresponding material in the text
 Read the chapter in the textbook (prior to it's being covered in class)
 Answer and study the questions in the text
 Do homework assignments as soon as possible after they have been assigned
 Pay attention to the solutions (i.e., the solution processes), not just the answers
Topic
Introduction to the Investment Environment
Financial Markets, Trading Mechanisms, and IPOs
Readings
Chapter 1:1.1-1.8
Chapters 2 & 3:
2.1-2.4 & 3.1-3.3, 3.5-3.7
Mutual Funds
Chapter 4 (optional)
Introduction to Portfolio Selection & Efficient
Chapters 5 & 6:5.1-5.5 & 6.1-6.6
Diversification
Asset Pricing Models
Chapter 7: 7.1-7.3
Arbitrage Pricing
Chapter 7: 7.4-7.5
Market Efficiency
Chapter 8
Equity Valuation
Chapter 13: 13.1-13.5
Options
Chapter 15: 15.1-15.2
Note: The above course outline is tentative and may be subject to change as class progresses.
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