TOWSON UNIVERSITY Department of Finance Investments and Equity Security Analysis I FIN333-001 Spring 2012 Instructor: Office: Work

Phone: Class Hours: Office Hours: Moon-Whoan Stephen Rhee Stephens Hall (ST) 316H 410-704-4075 TR 2:00-3:15pm (ST309) TR 10:00-11:00am and W 6:00-6:30pm or by appointment No appointment needed for the office hours posted above. Email: turhee@hotmail.com (You must note your course number (FIN333) in the subject line of your email) Course Home Page: www.towson.edu/~rhee PRE-REQUISITES: Major standing and FIN331

COURSE DESCRIPTION:
FIN 333 Investment and Security Analysis I is an in-depth course intended to give students a broad exposure to theoretical and practical background in the field of investments. Particular emphasis is placed on the process of valuing common stock. The sequence will cover the major topics of financial markets, general principles of financial trading, portfolio theory, valuing common stocks, preferred stocks, options, index options, futures, and performance evaluation.

GENERAL LEARNING OBJECTIVES:

To understand the drivers of systematic risk i.e. macro economic analysis To identify the various security markets around the world To understand the power of diversification to reduce portfolio risk To understand the relationship between return and risk To understand To understand CAPM and other models To be able to value stocks and bonds with various valuation models To understand derivative markets and the risk management applications

SPECIFIC LEARNING OBJECTIVES:

To compare the mechanics and investment implications of buying on margin and short selling To determine the expected return and risk of portfolios that are constructed by combining risky assets with risk-free investments in Treasury bills 1

To construct and use the SML, take advantage of an arbitrage opportunity with a portfolio that includes mispriced securities To calculate the intrinsic value of a stock using a dividend discount model To calculate option value and the profit on futures positions as a function of current and eventual futures prices

REQUIRED TEXT (HARDCOPY OR ELECTRONIC):

Essentials of Investments, 8th Edition by Bodie, Kane and Marcus. REQUIRED PORTFOLIO SIMULATIONS: STOCK-TRAK (you expect to receive a discount by entering a textbook promotional code BMK0810) Key Resources for Class and the Security Analysis Paper: 1. Company PowerPoint presentations are kept under the Investor Relations tab at company websites. 2. S&P Net Advantage - provides company information and access to Compustats multiyear company financials. Net Advantage is available through the library webpage. Go to the information desk in the library and ask for an orientation. The 5year financial statements are very useful for spotting positive and negative trends. 3. Hard copy S&P Industry guides which are kept on reserve at the reference desk. 4. Topic searches etc on the web. Here are a few websites that I use frequently. Each of the websites provides a significant number of related links that are worth exploring. http://www.bloomberg.com/news/regions/us.html http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm http://www.cnbc.com http://www.reuters.com http://www.sec.gov http://www.investinginbonds.com http://finance.yahoo.com/futures

CONDUCT OF THE COURSE:

You are responsible for all assigned readings, handouts, class presentations, group discussion, and homework. I recommend you to read outside sources, such as The Wall Street Journal, Bloomberg.com, Business Week, Fortune and other business magazines that help to contribute to the class discussion and understanding of the lecture. If you miss a class meeting, it is your responsibility to obtain any notes or assignments from your fellow classmates.

ACADEMIC INTEGRITY:
Student Academic Integrity Policy (Towson Undergraduate Catalog p.277): The acquisition, sharing, communication and evaluation of knowledge is at the core of a universitys mission. To realize this part of its mission, a university must be a community of trust. Because integrity is essential to the purpose of an academic community, the responsibility for maintaining standards of integrity is shared by all members of that academic community. The Student Academic Integrity Policy as it pertains to this class: There is zero tolerance of academic dishonesty in this class. Any violations are sanctioned by the professor. Cheating of any form (including on homework/assignments) will not be tolerated and will result in a zero on a text/quiz. Turning in a printout of a fellow student (with or without modifications) even if you work together will be considered to be no different than photocopying somebody elses work. University guidelines will be followed in dealing with academic dishonesty.

LEARNING DISABILITIES:
In accordance with University policy, if you have a documented disability and require accommodations to obtain equal access in this course, please contact the instructor at the beginning of the semester and when given an assignment for which an accommodation is required. Students with disabilities must verify their eligibility through the Office of Disability Support Services (AD232). Writing Skills: Students are expected to display college-level writing skills. Students who lack writing proficiency will be required to visit the writing lab for supplemental instruction.

GRADING:
Breakdown of Grade: Mid Term Exam Final Exam Homework Stock Investment Report (Individual-Group Project) Quizzes Total Percentage 20 or 30% 35 or 45% 10% 10% 15% 100%

FINAL GRADE DISTRIBUTION: 90+ 80+ 70+ 60+ 60 or below A B C D F

(C or better is required to pass)

ATTENDANCE AND PARTICIPATION:

Attendance and participation not only contribute to an interesting class, but also help me to evaluate your performance in the learning process. Therefore, I strongly recommend you to attend and participate in class discussion. Reading the assigned materials and chapters accordingly helps bring in quality comments and is expected. Finally, establishing a healthy relationship with your professor can help her evaluate your performance in a more efficient and accurate way. COURSE WITHDRAWAL: Please note that the last day to drop the class is noted in the online Academic Calendar. Students dropping on or before this date will receive a W on their official transcript. Withdrawal after that date will require an assignment of a letter grade for the course. REPEATED COURSE: According to University policy, all students may repeat any course once. If repeating, you are advised to inform the instructor. For a third attempt, the student must obtain prior written approval from the Academic Standards Committee. If students enroll in a third attempt without permission, they do so at their own risk.

COURSE OVERVIEW
Week 1 2 3 Chapter(s) 1 2 3&4 Topics Investments: Background and Issues Asset Classes and Financial Instruments Securities Markets & Types of Investment Companies

Week 4 5 6

Chapter(s) 5 6 7

Topics Risk and Return Efficient Diversification CAPM and APT Pricing Models

Mid Term Exam I (Slides, 21, 1, 2, 3, 4, 5, 6, & 7) 8 &12 14 13 Efficient Markets Hypothesis & Macroeconomic and Industry Analysis Financial Statement Analysis Equity Valuation Options Markets Options Valuation Futures Markets & Risk Management Performance Evaluation & Active Portfolio Management Stock Investment Report Due Comprehensive Final Exam

8 9 10 11 12 13

15 16 17

14

18

15