Course BA 4346-001

Professor Catherine Xuying Cao, CFA

Term 2008 Fall
Meetings MW 2:30 p.m. - 3:45 p.m., SOM2.106

Professor’s Contact Information

Office Phone 972-883-4898
Office Location SOM 3.811
Email Address xxc041000@utdallas.edu
Office Hours Monday 1:30pm-2:30pm
Friday 9:30pm-10:30pm
Or by appointment

Other Information I strongly urge you to use email to contact me outside of class. I will
check my email messages daily Monday through Friday and occasionally
on weekends, and you can be sure I will receive your message this way.
Feel free to stop by my office during office hours or email or call me to
set up an appointment.

General Course Information

Pre-requisites, Co- Pre-requisites: BA 3341, BA 3351.
requisites, & other Co-requisites: MATH 1326, MATH 2333 and STAT 3360
restrictions
The course assumes that you have completed introductory courses in
basic algebra, finance, accounting and statistics. You are expected to have
proficiency in (i) all mathematics up to calculus, (ii) accounting
principles, (iii) basic statistics, especially knowledge on probability
distributions, mean, variance, covariance, and regression analysis. (iv)
spreadsheet modeling in Microsoft Excel, and (v) internet skills such as
searching, email, downloading files, etc. If you have not completed the
necessary coursework or do not feel comfortable with the requisite skills,
you will find the concepts introduced in this course difficult. Please come
to me if you have any questions about the requirements.

Course Description The primary objective is to provide an understanding of the role of

modern financial theory in portfolio management and to present a
framework for addressing a wide range of issues in the management of
financial assets. The course will emphasize intuition and practical
applications of investment theory as well as some analytical analysis.
Topics to be covered include financial markets, portfolio theory and its
applications, and asset valuation. The course best suits the following
students (but not limited to):

ƒ Those who want to know how to invest for their own benefit.
ƒ Those who aspire to pursue a career in investment banking.
ƒ Those who want to be a powerful security analyst.
ƒ Those who want to become a professional money manager.

The course will be a blend of lecture and class participation. Most class
 meetings will include a breakout session in which students work in groups
or individually to solve a problem or case.

Learning Outcomes By the end of the course, I hope you will be able to independently analyze
security markets, understand the available evidence and use it to make
investment decisions. The course will also improve the ability to read the
business press with a critical perspective. Specifically, there are three
objectives:

ƒ Students will understand the characteristics of different financial

assets such as money market instruments, bonds, and stocks, and how
to buy and sell these assets in financial markets.

ƒ Students will understand the benefit of diversification of holding a

portfolio of assets, and the importance played by the market portfolio.

ƒ Students will know how to apply different valuation models to

evaluate fixed income securities, stocks, and how to use different
derivative securities to manage their investment risks.

Required Texts & Teaching materials are drawn from several books, newspapers, and
Materials periodicals. There are assigned readings for each class. I expect students
come to class prepared for the materials that will be covered that day. You
will find the materials much easier to grasp if you have read the assigned
materials in advance. I may make cold calls on students to answer
questions.

Essentials of Investments, Zvi Bodie, Alex Kane & Alan J. Marcus

(McGraw-Hill/Irwin, 7th edition, 2008).
Financial Calculator, such as the HP-12C or the TI BAII Plus

Suggested Texts, Wall Street Journal, Business Week, The Economist;

Readings, & http://www.marketwatch.com/;
Materials http://finance.yahoo.com/;
http://money.cnn.com/;
http://moneycentral.msn.com

Assignments & Academic Calendar

This agenda is subject to change. The exact timing of lectures and content of exams will depend
on the flow of the course.

Session Date In-class Activity Readings

Introduction and
1 Aug. 25 Ch1
Overview of investment Financial Markets
2 Aug. 27 Instruments and Markets Ch2
Sept. 1 LABOR DAY HOLIDAY
Sept. 2 Investment Competition Starts
3 Sept. 3 Mutual Funds Ch4
4 Sept. 8 Security Trading Ch3
 Sept. 10 Review Ch1-Ch3
Sept. 15 Exam 1
Sept. 17 and Risk and Return
5 Ch5
Sept. 22
Sept. 24 and Efficient Diversification
6 Ch6
Sept. 29
7 Oct. 1 Capital Asset Pricing and APT Ch7
8 Oct. 6 Market Efficiency and Portfolio management Ch8
Oct. 8 Review Ch5-7
Oct. 13 Efficient Frontier Project Demo
Oct. 15 Exam 2
Oct. 20 and Bond Valuation
9 Ch10
Oct. 22
10 Oct. 27 Macroeconomics and Industry Analysis Ch12
11 Oct. 29 Financial Statement Analysis Ch14
Nov. 3 Review and In-Class Help Session Ch10, Ch12,
Ch14, Excel
Project
Nov. 5 Exam 3
Nov. 10 and Equity Valuation
12 Ch13
Nov. 12 Excel Project Due on Nov. 12
Nov. 17 and Options market
13 Ch15
Nov. 19
Nov. 21 Investment Competition Ends
Nov. 24 and Performance Evaluation and Active Portfolio
14 Ch18
Nov. 26 Management
C13, Ch15,
Nov. 26 Review
Ch18
Dec. 1 Investment Competition Presentation (1)
Investment Competition Presentation (2) and
Dec. 3
Review
Dec 8 Exam 4
Dec 15 Final Exam (Comprehensive)

Course Policies
Grading will be based on a combination of the following:
Class participation and In-class Problem-solving 5%
Homework and Quizzes on previous lecture 7%
Grading (credit) Project 10%
Criteria Based on Investment Competition and presentation 8%
Performance Exam 1 17.5%
Before Dec 10, 2008 Exam 2 17.5%
Exam 3 17.5%
Exam 4 17.5%

Grading (credit) I will inform each student of the tentative grade by Dec. 10, which is
Criteria Based on evaluated according to performance before Dec 10, 2008. If I have not
 Performance assigned any grade for you, then you have to take the comprehensive final
During Whole otherwise you will be failed. If you miss one of the exams, you have to take
Semester the final. For student having his/her tentative grade, you can choose to take
the final or not. You are responsible to inform me of your decision by Dec.
11, 5:00pm.

Grading will be based on a combination of the following:

Class participation and In-class Problem-solving 5%
Homework and Quizzes on previous lecture 7%
Project 10%
Investment Competition and presentation 8%
Exam 1 10%
Exam 2 10%
Exam 3 10%
Exam 4 10%
Final Exam 30%

Grading scale:
A 89.5% +
B 79.5% - 89.4%
C 69.5% - 79.4%
Grading Policy D 59.5% - 69.4%
F Below 59.4%
There will be no +’s or –‘s used in the grading scale. There will be
absolutely no “curving” of test scores.

Be prepared for a weekly 15-min quiz over the material that was covered
during the previous class session. Be sure to maintain an ample supply of
the green scantrons form 882-E and bring one to each class meeting.
Quizzes and Exams
The quizzes, exams, and Final exam will be closed book. But you can bring
one standard size (8.5 x 11) cheat-sheet one-sided for the exam and two-
sided for final exam. Calculators will be required.

After most lectures, I will recommend some end-of-chapter problems for

you to complete. I urge you to stay current with homework assignments. I
will specify homework assignments to be turned.

Due dates and other details will be explained in class. Late submissions will
not be accepted for any reason. The work you submit must be yours alone;
incidents of copying, sharing, plagiarizing, or any other academic
Homework dishonesty on the homework or the project notebook will result in a
Assignments
minimum two-letter-grade penalty to the final letter grade of all involved
plus academic discipline proceedings. The homework solutions and the
project must not include input from any unauthorized source (e.g., existing
solutions to cases, students in other classes, relatives, non-approved internet
sources, other instructors or professionals are all unauthorized). Do all your
own work. You will learn more, and the alternative is not worth the risk.
The homework assignments will be available on WebCT. The due day is to
be announced. I will post the solution on the WebCT after you have turned
in the assignment. No late homework is accepted.
 What you turn in should look neat and professional. Please strive to make
your project easy to follow. The project is intentionally open-ended in order
to (1) allow you to learn how to retrieve some historical data on individual
stocks, (2) allow you to learn how to compute betas, average returns,
standard deviations, and (3) allow you to know how to build an efficient
frontier. Just as the jobs that you will have upon graduation will not involve
hand-holding on a day-to-day basis, neither does the project. Although you
are welcome to discuss the project with your classmates, the final work you
Excel Project turn in should be your own. Thus, discussion is encouraged, but outright
collaboration should be kept to a minimum. You should expect the project
to be challenging and time-consuming. It is intended to help students
develop marketable skills at finding real-world data and applying course
concepts to real-world situations. The complete project is due by the
2:30pm of Nov. 12, 2008. Late submissions will not be accepted.

Details related to the semester project will be provided in a separate

document.
This is a group project. Each group is invited to join in “Investment
Competition Game”. Every group is endowed with invest $100,000 of "BA
4346" money and then can purchase or sell short only stocks (no options,
futures, or mutual funds allowed). Note that groups can put at most $50,000
in any single stock at the beginning of the game. Students in the top-
performing group can earn bonus points towards exams.
Investment
competition
Each group member will be given a Peer Group Evaluation form, which is
used to rate each member’s participation in the group project. The rating
will be a portion of each student’s individual project grade.

Details related to the investment competition will be provided in a separate

document.
You may bring your laptop computers to class, however you will not be
Laptops & permitted to have them open during the lectures, unless permitted by the
Cell phones instructor. You may not use your cell phones or other electronic
communication devices in class.
Lectures are an important part of the learning process. As I intend this to be
a highly interactive class, your participation in class discussion is
demanded, and is an integral part of how the course is structured.
Participation points are not automatic—you have to earn them.
Class Attendance
You may request a waiver from attending a class by sending me e-mail
before the class describing (a) the reasons for absence and (b) how you plan
to cover the material discussed in the class (you may be assigned additional
problems at my discretion).

I will establish a course web page on the Internet. Always check the
WebCT: Delivery WebCT page before class. This site will include PowerPoint files of the
of Course course lecture notes, homework assignments, any external web links, and
Materials relevant updates about the class including any changes in assignments or
exams. You will be responsible for bringing the relevant course notes to
each lecture.
 If a file or link is not operational, let me know via email ASAP so I can
correct the link. If you have any other problems using WebCT, contact the
UTD technology help desk.
Off-campus, out-of-state, and foreign instruction and activities are subject to state
law and University policies and procedures regarding travel and risk-related
Field Trip Policies activities. Information regarding these rules and regulations may be found at the
Off-Campus website address
Instruction & http://www.utdallas.edu/BusinessAffairs/Travel_Risk_Activities.htm. Additional
Course Activities information is available from the office of the school dean. Below is a description
of any travel and/or risk-related activity associated with this course.

If you experience any problems with your UTD account you may send an email to:
Technical Support
assist@utdallas.edu or call the UTD Computer Helpdesk at 972-883-2911.

The University of Texas System and The University of Texas at Dallas have rules
and regulations for the orderly and efficient conduct of their business. It is the
responsibility of each student and each student organization to be knowledgeable
about the rules and regulations which govern student conduct and activities.
General information on student conduct and discipline is contained in the UTD
printed publication, A to Z Guide, which is provided to all registered students each
academic year.

The University of Texas at Dallas administers student discipline within the

procedures of recognized and established due process. Procedures are defined and
described in the Rules and Regulations, Series 50000, Board of Regents, The
Student Conduct University of Texas System, and in Title V, Rules on Student Services and
and Discipline Activities of the university’s Handbook of Operating Procedures. Copies of these
rules and regulations are available to students in the Office of the Dean of Students,
where staff members are available to assist students in interpreting the rules and
regulations (SU 1.602, 972/883-6391) and online at
http://www.utdallas.edu/judicialaffairs/UTDJudicialAffairs-HOPV.html

A student at the university neither loses the rights nor escapes the responsibilities of
citizenship. He or she is expected to obey federal, state, and local laws as well as
the Regents’ Rules, university regulations, and administrative rules. Students are
subject to discipline for violating the standards of conduct whether such conduct
takes place on or off campus, or whether civil or criminal penalties are also
imposed for such conduct.

The faculty expects from its students a high level of responsibility and academic
honesty. Because the value of an academic degree depends upon the absolute
integrity of the work done by the student for that degree, it is imperative that a
student demonstrate a high standard of individual honor in his or her scholastic
work.

Scholastic Dishonesty, any student who commits an act of scholastic dishonesty is

Academic Integrity subject to discipline. Scholastic dishonesty includes but is not limited to cheating,
plagiarism, collusion, the submission for credit of any work or materials that are
attributable in whole or in part to another person, taking an examination for
another person, any act designed to give unfair advantage to a student or the
attempt to commit such acts.

Plagiarism, especially from the web, from portions of papers for other classes, and
from any other source is unacceptable and will be dealt with under the university’s
policy on plagiarism (see general catalog for details). This course will use the
 resources of turnitin.com, which searches the web for possible plagiarism and is
over 90% effective.

The copyright law of the United States (Title 17, United States Code) governs the
making of photocopies or other reproductions of copyrighted materials, including
music and software. Copying, displaying, reproducing, or distributing copyrighted
works may infringe the copyright owner’s rights and such infringement is subject to
Copyright Notice appropriate disciplinary action as well as criminal penalties provided by federal
law. Usage of such material is only appropriate when that usage constitutes “fair
use” under the Copyright Act. As a UT Dallas student, you are required to follow
the institution’s copyright policy (Policy Memorandum 84-I.3-46). For more
information about the fair use exemption, see
http://www.utsystem.edu/ogc/intellectualproperty/copypol2.htm

The University of Texas at Dallas recognizes the value and efficiency of

communication between faculty/staff and students through electronic mail. At the
same time, email raises some issues concerning security and the identity of each
individual in an email exchange. The university encourages all official student
email correspondence be sent only to a student’s U.T. Dallas email address and that
Email Use faculty and staff consider email from students official only if it originates from a
UTD student account. This allows the university to maintain a high degree of
confidence in the identity of all individual corresponding and the security of the
transmitted information. UTD furnishes each student with a free email account that
is to be used in all communication with university personnel. The Department of
Information Resources at U.T. Dallas provides a method for students to have their
U.T. Dallas mail forwarded to other accounts.

The administration of this institution has set deadlines for withdrawal of any
college-level courses. These dates and times are published in that semester's course
Withdrawal from catalog. Administration procedures must be followed. It is the student's
Class responsibility to handle withdrawal requirements from any class. In other words, I
cannot drop or withdraw any student. You must do the proper paperwork to ensure
that you will not receive a final grade of "F" in a course if you choose not to attend
the class once you are enrolled.
Procedures for student grievances are found in Title V, Rules on Student Services
and Activities, of the university’s Handbook of Operating Procedures.

In attempting to resolve any student grievance regarding grades, evaluations, or

other fulfillments of academic responsibility, it is the obligation of the student first
to make a serious effort to resolve the matter with the instructor, supervisor,
administrator, or committee with whom the grievance originates (hereafter called
“the respondent”). Individual faculty members retain primary responsibility for
assigning grades and evaluations. If the matter cannot be resolved at that level, the
grievance must be submitted in writing to the respondent with a copy of the
Student Grievance
respondent’s School Dean. If the matter is not resolved by the written response
Procedures
provided by the respondent, the student may submit a written appeal to the School
Dean. If the grievance is not resolved by the School Dean’s decision, the student
may make a written appeal to the Dean of Graduate or Undergraduate Education,
and the deal will appoint and convene an Academic Appeals Panel. The decision of
the Academic Appeals Panel is final. The results of the academic appeals process
will be distributed to all involved parties.

Copies of these rules and regulations are available to students in the Office of the
Dean of Students, where staff members are available to assist students in
interpreting the rules and regulations.
Incomplete Grades As per university policy, incomplete grades will be granted only for work
 unavoidably missed at the semester’s end and only if 70% of the course work has
been completed. An incomplete grade must be resolved within eight (8) weeks
from the first day of the subsequent long semester. If the required work to
complete the course and to remove the incomplete grade is not submitted by the
specified deadline, the incomplete grade is changed automatically to a grade of F.
The goal of Disability Services is to provide students with disabilities educational
opportunities equal to those of their non-disabled peers. Disability Services is
located in room 1.610 in the Student Union. Office hours are Monday and
Thursday, 8:30 a.m. to 6:30 p.m.; Tuesday and Wednesday, 8:30 a.m. to 7:30 p.m.;
and Friday, 8:30 a.m. to 5:30 p.m.

The contact information for the Office of Disability Services is:

The University of Texas at Dallas, SU 22
PO Box 830688
Richardson, Texas 75083-0688
(972) 883-2098 (voice or TTY)
disabilityservice@utdallas.edu
Disability Services
If you anticipate issues related to the format or requirements of this course, please
meet with the Coordinator of Disability Services. The Coordinator is available to
discuss ways to ensure your full participation in the course. If you determine that
formal, disability-related accommodations are necessary, it is very important that
you be registered with Disability Services to notify them of your eligibility for
reasonable accommodations. Disability Services can then plan how best to
coordinate your accommodations.

It is the student’s responsibility to notify his or her professors of the need for such
an accommodation. Disability Services provides students with letters to present to
faculty members to verify that the student has a disability and needs
accommodations. Individuals requiring special accommodation should contact the
professor after class or during office hours.
The University of Texas at Dallas will excuse a student from class or other required
activities for the travel to and observance of a religious holy day for a religion
whose places of worship are exempt from property tax under Section 11.20, Tax
Code, Texas Code Annotated.

The student is encouraged to notify the instructor or activity sponsor as soon as

possible regarding the absence, preferably in advance of the assignment. The
student, so excused, will be allowed to take the exam or complete the assignment
within a reasonable time after the absence: a period equal to the length of the
absence, up to a maximum of one week. A student who notifies the instructor and
Religious Holy completes any missed exam or assignment may not be penalized for the absence. A
Days student who fails to complete the exam or assignment within the prescribed period
may receive a failing grade for that exam or assignment.

If a student or an instructor disagrees about the nature of the absence [i.e., for the
purpose of observing a religious holy day] or if there is similar disagreement about
whether the student has been given a reasonable time to complete any missed
assignments or examinations, either the student or the instructor may request a
ruling from the chief executive officer of the institution, or his or her designee. The
chief executive officer or designee must take into account the legislative intent of
TEC 51.911(b), and the student and instructor will abide by the decision of the
chief executive officer or designee.

These descriptions and timelines are subject to change at the discretion of the Professor.