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This subject is designed to equip students with the tools necessary to enable them to make the core investment management decisions that managers face on a daily basis as well as the knowledge as to where they can find the information necessary to apply those tools. This subject is an introduction to investment analysis, with emphasis on equity securities and fixed income securities. The topics covered focus on issues fundamental to financial managers, money managers, risk managers, financial advisors and regulators. These topics include fundamental ideas in asset pricing; modern portfolio theory and its applications; equilibrium theories of asset pricing; portfolio performance evaluation; and key issues in the pricing and portfolio allocation of fixed income assets.
Intended learning outcomes
On successful completion of this subject, students should be able to:
- Discuss core concepts in investment management, including risk, return, risk premium and risk aversion;
- Analyse the portfolio selection problem, with emphasis on the mean variance framework;
- Explain the benefits of diversification and the main drivers of those benefits;
- Critically evaluate alternative theories of asset pricing and their application in the valuation of securities;
- Develop techniques to evaluate the performance of portfolio managers;
- Analyse critical issues in the valuation of fixed income securities and the management of fixed income portfolios;
- Critically evaluate the theories of the term structure of interest rates and their application to fixed income portfolio management.
On successful completion of this subject, students should have improved the following generic skills:
- High level of development: have an in-depth knowledge of financial markets; interpretation and analysis; critical and creative thinking; engagement in meaningful public discourse.
- Moderate level of development: written communication; problem solving; synthesis of data and other information; evaluation of data and other information; receptiveness to alternative ideas; interpersonal and decision-making skills.
- Some level of development: oral communication; collaborative learning; team work.
Last updated: 6 December 2019