Outline of Investment Part of MIFI 518: Corporate Finance & Investment II

Module 1: Investment Setting (Whole of Module 1 Mainly a review for students, not for
face-to-face lecture; however students could ask questions on it after reading)
Review topics: To be read by students (Not the focus of face-to-face lectures)
- What is investment? (Reading Material 1)
- Comparison between corporate Finance & Investment (No slides but material to read)
- Direct & Indirect Investing (Module 1 reading material 1)
- Investment Environment & Markets: (Module 1 Reading Material plus slides)
o Financial Markets/System and functions;
o Financial Assets/Investment Vehicles
o Key financial intermediaries
- Market Positions in Financial Assets (In slides)
- Orders (from slides available)
- Primary Security Markets (Slides available and reading material for Module1)
- Secondary Security Markets (slides available and reading material for module 1)
- Well-Functioning Financial System and Regulation (slides available)
Module 2: The Investment Process & Key Theories/Models of Investment
 a. Overview of Portfolio Management (Students to read and learn from Module reading
material and slides; Not for face to face lecture)
 b. Portfolio theory (For face-to-face Lecture)
- Markowitz portfolio theory.
- Portfolio Theory I : Risk and Return I
 Characteristics of Financial Assets/Investment Vehicles
o Risk-Return Characteristics of Financial Assets/Investment
o 2 Other Characteristics of Assets/Investment (Distributional
Characteristics of asset returns) when normality assumption associated
with risk-return characteristics break down, i. e.
- Distributional Characteristics – skewness and kurtosis
- Market Characteristics – liquidity; trading cost; analyst
coverage; availability of information; firm size among others

 Characteristics of Investors (Face-to-face Lecture)

o Investor Risk Preferences
o Utility Theory & Indifference Curves
o Application of utility theory & Indifference to Portfolio Selection

 c. Fundamental Asset Pricing Models (FAPM) - Risk & Return II

- . Security Market Indices (For face-to-face lecture)
- . Capital Asset Pricing Model (CAPM) – (for face-to-face lecture)
- . Arbitrage Pricing Theory (APT) – (Brief note during face-face lecture but mainly
 For students extra reading)

 2d. Portfolio Planning and Construction (For face-to-face Lecture)

- Planning Stage
- Execution Stage
- The feedback stage

Module 3: Investment in Stocks

 Overview of Equity Securities (Review: Students own reading; not for face-to-face
lectures)
- What is a stock/share/equity?
- Two main types of stocks
- Main features of a common stock
- Advantages/Disadvantages associated with Common Stocks
-
 Fundamental Analysis

- 2 key approaches to fundamental analysis – Top-down and Bottom-Up

- Economic, Industry and Company Analysis (EIC) and Their Contents

o Stock/Equity/Share Valuation & Investment Decision Analysis/Making

- Share Valuation Models
- Stock Picking/Selecting & Portfolio Formation
- Specific Stock/Equity/Share Investment Strategies
 Sector Rotation & Business Cycle Strategy
 Market Timing Strategy
 Value Screening Strategy
 Technical Analysis

Module 4: Investments in Bonds

 Identification and classification of bonds (Mainly For students own reading, brief attention
during for face-to-face)
 Bond analysis: structure and contents (For Face-to-Face)
- Quantitative analysis
- Qualitative analysis
- Market interest rates analysis
 Decision making for investment in bonds. Bond valuation (For Face-to-Face)
 Strategies for investing in bonds. Immunization
Module 5: Theory of Capital Market Efficiency, Behavioural & Psychological Aspects of
Investment Decisions
 e. Theory of Market efficiency (A review for students own study; not meant for face-to-
face)
- Capital Market Pricing Anomalies (For Face-to-Face Lecture)
- Behavioural Finance (For Face-to-Face Lecture)

Module 6: Portfolio Monitoring, Performance Measurement & Evaluation