Finance 3710 Investment Analysis

Professor: Lin Peng

Email: Lin.Peng@baruch.cuny.edu Office: VC 10-259 Phone: (646) 312-3491, Fax: (646) 312-3451 Time: MW 2:30-3:45pm Place: VC3-160 Office hour: MW 3:454:15pm.

Overview
The objective of this course is to provide a rigorous and an integrated framework for understanding the mechanism of financial investment. The course prepares students to work in the investment industry (money manager, security analyst, investment banking) and to gain invaluable perspective into their own investing and financial planning. The course will emphasize intuition and insight, as well as rigorous analysis in order to foster students interest and skills in applying financial theory to practical applications. The materials to be covered include the following areas: financial markets, securities trading, financial analysis of common stocks and fixed income securities, modern investment theory and its applications and option markets and evaluation. Please be prepared to spend a substantial amount of time on this course. You will need to work in groups for some of the assignments and they could be very time-consuming.

Prerequisite
Minimum requirement: Fin 3000. Finance is very mathematical and the course draws heavily from students knowledge learned in the introductory finance, accounting and statistics courses. If you have not taken these courses, it is a virtual certainty that you will have great difficulty in this one. Knowledge of MS Excel spreadsheet is also a must.

Course Materials and Resources

Teaching materials are drawn from several books, newspapers, and periodicals. Required readings include chapters from the textbook and lecture notes. They will be assigned for each class. It is important to read the assigned chapter(s) before coming to the class. It will be difficult to follow the course without reading the background material ahead of time (hopefully the opposite is also true). 1. Textbook: Essentials of Investments with Connect (Bodie, Kane and Marcus, 8th Ed, McGraw Hill Irwin). Connect can be purchased together with the textbook or separately at the website. 2. Lecture notes: Available on Blackboard course website and will be available for download before the lecture 3. Homework: Assigned and graded through Connect. You need to register at the following website: http://connect.mcgraw-hill.com/class/l_peng_3710_spring_2012 (link). 4. Wall Street Journal, New York Times, Business Week, Economist 5. Fun Books: A Random Walk Down Wall Street (Burton Malkiel) The Big Short: Inside the Doomsday Machine (Michael Lewis)

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6. Wasserman Trading Floor / Subotnick Center Students are strongly encouraged to visit the Wasserman Trading Floor / Subotnick Center and expend some time and effort to learn Reuters and Bloomberg software. The Center offers free workshops on these and other topics. For details, visit http://zicklin.baruch.cuny.edu/sfsc/

Course communication
Course announcements and updates will be posted on Blackboard and/or communicated through email. It is your responsibility to check the email and the website for announcements. For further questions, you can contact me via email (preferred) or phone. Due to the prevalence of email spam and virus, it is important that your email does not get filtered out: when you email the professor or the TA, please identify yourself by including FIN3710, your section code and name in the subject of the email.

Grading Policy
Course requirements include class participation, homework assignments, two exams and a final exam. The final grade is based on the following formula: class participation (5%) + homework (10%) + 2 exams (2*20% = 40%) + final (45%) 1. Class Attendance and Participation: Your class participation grade is decided by attendance, classroom discussion, and performance in random/pop quizzes. Attendance is mandatory as the course material builds on each other and gets harder as we progress through the semester. If you have to miss a class, you are responsible for knowing what goes on in class, which may include material not covered in the readings, modifications to the syllabus or lecture notes, and announcements concerning exams. My experience tells me that missing classes on a regular basis will put you in a disadvantageous position because some material is quite technical and difficult. Please also kindly turn off cell phone while the class is in session. I will monitor attendance, and periodically give pop quizzes. Entering the classroom late (more than 15 minutes) or leaving early is counted as absence. According to Baruch Policy, if you miss more than four lectures you will receive a D or F for the course at the professors discretion. 2. Homework: There will be six homework assignments, some may be group assignments, counted 2 points each. 5 of your best homework grades will count towards your final course grades. Homework is due before the start of the class on the due date. The system will not accept any late assignments. 3. Exams: All exams will be close-book. You are allowed to bring one 8 x11 page handwritten formula-sheet. Questions may involve numerical problems and conceptual questions that are related to lectures or reading assignments. While midterms mainly cover the material immediately studied in previous classes, the final exam will be cumulative and comprehensive. There will be no make up quizzes or midterms except for medical emergency as proved by a written note from a doctor with contact information for verification purpose. If you miss the final exam and you have earned at least 50% of the points by the time, you will be given an Incomplete and the department make-up exam will be given by in the beginning of the regular semester that follows. The university rules with respect to cheating are very clear. My policy is to give a grade of zero to any assignment that has been plagiarized or an exam in which you have cheated. You will also receive either an F or D for the course at my discretion. In addition, I am required by College policy to submit a report of suspected academic dishonesty to the Office of the Dean of Students. This report becomes part of your permanent file. For further information, please refer to the website below:
http://www.baruch.cuny.edu/academic/academic_honesty.html.

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Tentative Course Schedule

L: lecture notes, BKM: textbook. The number following the letter denotes the chapter.

(Updates will be posted on the Blackboard.)

Class 1 (1/30) 2 (2/1) 3 (2/6) 4 (2/8) 5 (2/15) 6 (2/21) 7 (2/22) 8 (2/27) 9 (2/29) 10 (3/5) 11 (3/7) 12 (3/12) 13 (3/14) 14 (3/19) 15 (3/21) 16 (3/26) 17 (3/28) 18 (4/2) 19 (4/4) 20 (4/16) 21 (4/18) 22 (4/23) 23 (4/25) 24 (4/30) 25 (5/2) 26 (5/7) 27 (5/9) 28 (5/14) TBD Backgrounds Backgrounds

Topic

Reading Syllabus, L1_2, BKM 1,2 L3; BKM3 L5_part1; BKM5.15.4 L10; BKM10 Sample exam 1 L13; BKM13 L5_part2; BKM5 L6; BKM6

Note

Security Trading Simulation Security Trading Risk and Return I Bond Valuation Bond Valuation Review Session (time permits) Exam 1 Equity Valuation Equity Valuation Risk and Return II Efficient Diversification Efficient Diversification Efficient Diversification Review Session (time permits) Exam 2 Capital Asset Pricing Model I Capital Asset Pricing Model II Arbitrage Pricing Theory I Arbitrage Pricing Theory II Option Market I Option Market II Option Valuation I Option Valuation II Additional topics Additional topics Review Session (time permits) Final Exam (subject to change)

@ Subotnick center HW1 Due before class

HW2 Due before class

HW3 Due before class

Sample exam 2 L7; BKM7

HW4 Due before class

L14; BKM14 L15; BKM15

HW5 due before class

Sample final 3:30-5:30pm

HW6 Due before class

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Fin 3710. Data Sheet / Pledge

Student Name (Please Print): ______________________________________

Please paste a photocopy of your Baruch ID here. The photocopy needs to show a recognizable picture of yours as well as your full name. Your SSN or Baruch ID number is not required. (Some students find that the picture quality is better in colored copies.) You will receive 1 bonus point if you complete, sign and return the form by the 2nd lecture. If you have a resume, please attach it as well.

Major:_______________. Expected graduation date: __________. When did you take FIN3000 and who was your professor? What other courses in Finance, Accounting, Statistics and Math have you taken / are currently taking?

What would you like to learn from this course?

Whats your background and working experience?

Whats your future career plan?

Other interests, hobbies or things you are proud of?

I have read, I have understood, and I will abide by the rules noted on the course syllabus. STUDENTS SIGNATURE: _______________________________________________

Finance 3710 / Prof. Lin Peng

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