Course BA 4346-501

Professor Dr. Cathy Xuying Cao, CFA

Term 2011 Spring
Meetings Monday 7:00 - 9:45 p.m. in SOM 2.107

Professor’s Contact Information

Office Phone 972-883-4898
Office Location SOM 3.710
Email Address Cathy.cao@utdallas.edu
Office Hours Tuesday 6:00 pm-7:00 pm
Friday 9:30 am-10:30 am
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, STAT 3360, BA3390
requisites, & other Co-requisites: MATH 1326, MATH 2333
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):

 Those who want to know how to invest for their own benefit.
 Those who aspire to pursue a career in investment banking.
 Those who want to be a powerful security analyst.
 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:

 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.

 Students will understand the benefit of diversification of holding a

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

 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, 8th edition, 2009).
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.

Class Date In-class Activity Readings

1 Jan. 10 Overview of investment Ch1 & Ch2
Financial Markets

2 Jan. 17 NO CLASS
Assignment due Pre-requisites

2 Jan. 24 Security Trading Ch3

Investment Competition Starts
 Special Quiz 1 Pre-requisites

3 Jan. 31 Mutual Funds Ch4

4 Feb. 7 In-class Practice Ch3 and Ch4

Review Ch1,2,3, & 4

5 Feb. 14 Exam 1

6 Feb. 21 Risk and Return Ch5

7 Feb. 28 Efficient Diversification Ch6 & Ch7

Capital Asset Pricing and APT

8 Mar. 7 Market Efficiency Ch8

Review Ch5,6,7, & 8

Mar. 10 Excel Project Due

9 Mar. 14 Spring Break

10 Mar. 21 Exam 2

11 Mar. 28 Bond Valuation Ch10

12 Apr. 4 Macroeconomics and Industry Analysis Ch12 & Ch14

Financial Statement Analysis

13 Apr. 11 Equity Valuation Ch13

14 Apr. 18 Options market Ch15

Investment Competition Ends

15 Apr. 25 Review Ch10, 12, 13, 14, & 15

16 May 2 Exam3

17 May 9 Cumulative Final Exam

Course Policies
Grading (credit) Grading will be based on a combination of the following:
Criteria Based on Class participation 3%
Performance Quizzes 12% (at least 6 quizzes total, drop 2 lowest scored ones)
Before April 27, Assignment 2%
2010 Special Quizze1 2%
Excel Project 3%
Investment Competition 3%
Exam1 25%
Exam2 25%
Exam3 25%
Grades will be assigned based on the overall section performance, adjusted
for overall section performance. It is expected that the median grade in this
course will be a B.

I will post all grades of exams and quizzes by May 1, 2010. You can
evaluate your own performance according to the above grading policy. You
can choose to take the final or not. You are responsible to inform me IN
FACE of your decision by May 3, 5:00pm. My office is at SOM 3.710.

If you choose to take cumulative final exam, then your grading will be
Grading (credit) based on a combination of the following:
Criteria Based on Class participation 3%
Performance Quizzes 12% (at least 6 quizzes total, drop 2 lowest scored ones)
During Whole Assignment 2%
Semester Special Quizze1 2%
Excel Project 3%
Investment Competition 3%
Exam1 15%
Exam2 15%
Exam3 15%
Final Exam 30%

Grading scale:
Suggested Grade will be absolutely no “curving” of test scores. The
suggested Grade would be “the most important” basis for the final grade.
A+: 98%+
A : 93-97%
A_: 90-92%
B+: 88-89%
B : 83-87%
B_: 80-82%
Grading Policy
C+: 78-79
C : 73-77%
C_: 70-72%
D+: 68-69%
D : 63-67%
D_: 59-62%
F Below 59%
Grades will be assigned based on the overall section performance, adjusted
for overall performance. It is expected that the median grade in this course
will be a B.

Quizzes and Exams Be prepared for a weekly quiz over the material that was covered during the
previous class session and current class session. Be sure to maintain an
 ample supply of the green scantrons form 882-E and bring one to each class
meeting.

The quizzes, exams, and Final exam will be closed book. No cheat-sheet is
allowed. I might provide some formulas for the tests. Financial calculators
are required.

No make-up quizzes. No quiz will be given after the scheduled time.

No early quizzes. You may drop a quiz for any reason.
No early exams. If you have a conflict with a scheduled exam and arrange
with me in advance (at least a week before the scheduled exam), I will
allow you to take a make-up exam at the end of semester (before May 1,
2011) if possible.

Grades are not negotiable and will only be changed in case of a math or
grading error on the instructor’s part.

Lectures are an important part of the learning process. As I intend this to be

Class Participation a highly interactive class, your participation in class discussion is
demanded, and is an integral part of how the course is structured.

The course is built on several prerequisites. You should review all

prerequisites at the beginning of the semester. On Jan. 10 2011, I will assign
questions on the pre-requisites of this course. Please do not ask me any
Prerequisites questions on the assigned problems. This assignment is due on Jan 17,
Review 2011.

On Jan 24 2011, you will take a special quiz on the prerequisites. It’s a
closed-book quiz.

We will cover quite a bit of material each week, so you will be in trouble if
you don’t keep current. Therefore, homework from the text will be assigned
weekly. You don’t need to submit homework. But we have quiz every week
Homework and all quiz questions are VERY similar to assigned homework questions
Assignments
and examples in lectures.

You should work hard on homework problems in order to get good

scores in quizzes and exams. Do all your own work. You will learn more,
and the alternative is not worth the risk.

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
Excel Project 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
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
11:59pm of Mar. 10, 2010. 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.

I will establish a course web page on the Internet. Always check the
ELearning page before class. This site will include PowerPoint files of the
ELearning: course lecture notes, homework assignments and solutions, any external
Delivery web links, and relevant updates about the class including any changes in
of Course assignments or exams. You will be responsible for bringing the relevant
Materials course materials 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 ELearning, contact
the UTD technology help desk.

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
Student Conduct
and regulations for the orderly and efficient conduct of their business. It is the
and Discipline
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
University of Texas System, and in Title V, Rules on Student Services and
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

subject to discipline. Scholastic dishonesty includes but is not limited to cheating,
Academic Integrity 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

Email Use 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
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
Student Grievance grievance must be submitted in writing to the respondent with a copy of the
Procedures respondent’s School Dean. If the matter is not resolved by the written response
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.

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
Incomplete Grades 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.;
Disability Services 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

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.