Advanced Investments (FNCE40002)

HonoursPoints: 12.5On Campus (Parkville)

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Overview

Availability
Semester 1
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This subject teaches principles of advanced portfolio choice and asset pricing. The subject emphasizes the close link between theory and empirical analysis in this important area of finance. At the theoretical level, the subject introduces optimal portfolios for households and institutional investors like insurance companies and pension funds. While households are assumed to receive utility from terminal wealth or intermediate consumption, institutional investors consider their liabilities when forming an optimal asset allocation. The subject derives the asset pricing implications of portfolio choice. At the practical level, emphasis is placed on how to implement and evaluate optimal portfolio choice strategies and empirical tests of asset pricing models. The important role of asset return predictability for long-term investors is discussed and critically evaluated. The subject highlights typical biases that may prevent market participants from behaving optimally. The subject lays the foundation for a successful research essay in the fields of portfolio choice and asset pricing.

Intended learning outcomes

On successful completion of this subject students should be able to:

  • Put into practice commonly used techniques of static and dynamic portfolio choice;
  • Critically evaluate the performance of investment managers
  • Understand the implications of return predictability for long-term investors;
  • Question the empirical evidence on return predictability;
  • Understand the asset pricing implications of portfolio choice models;
  • Test whether observed asset prices are consistent with asset pricing theory;
  • Recognize and avoid common behavioural biases in the context of investments.

Generic skills

  • High level of development: written communication; interpretation and analysis; critical thinking.

  • Moderate level of development: collaborative learning; problem solving; team work; application of theory to practice; accessing data and other information from a range of sources.

  • Some level of development: oral communication; statistical reasoning; synthesis of data and other information; evaluation of data and other information; use of computer software.

Last updated: 4 March 2025

Eligibility and requirements

Prerequisites

Admission into the BH-COM Bachelor of Commerce (Degree with Honours)

AND

Code Name Teaching period Credit Points
FNCE30001 Investments
Semester 2 (On Campus - Parkville)
Semester 1 (On Campus - Parkville)
 12.5

Corequisites

None

Non-allowed subjects

None

Recommended background knowledge

Please refer to Prerequisites and Corequisites.

Inherent requirements (core participation requirements)

The University of Melbourne is committed to providing students with reasonable adjustments to assessment and participation under the Disability Standards for Education (2005), and the Assessment and Results Policy (MPF1326). Students are expected to meet the core participation requirements for their course. These can be viewed under Entry and Participation Requirements for the course outlines in the Handbook.

Further details on how to seek academic adjustments can be found on the Student Equity and Disability Support website: http://services.unimelb.edu.au/student-equity/home

Last updated: 4 March 2025

Assessment

DescriptionTimingPercentage

Individual Assignment

  • 1200 words (equivalent)
Week 520%

Group Assignment (up to 4 students)

  • 1200 words (equivalent)
Week 1020%

End-of-semester examination

  • 2 hours
During the examination period60%

Last updated: 4 March 2025

Dates & times

  • Semester 1
    Principal coordinatorJun Yu
    Mode of deliveryOn Campus (Parkville)
    Contact hoursThree hours of lectures and seminars per week
    Total time commitment170 hours
    Teaching period 3 March 2025 to 1 June 2025
    Last self-enrol date14 March 2025
    Census date31 March 2025
    Last date to withdraw without fail 9 May 2025
    Assessment period ends27 June 2025

    Semester 1 contact information

    Email: jun.yu1@unimelb.edu.au

What do these dates mean

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    Subjects withdrawn after the census date (including up to the ‘last day to withdraw without fail’) count toward the Student Learning Entitlement.

Last updated: 4 March 2025

Further information

  • Texts

    Prescribed texts

    You will be advised of prescribed texts by your lecturer.

  • Related Handbook entries

    This subject contributes to the following:

    TypeName
    CourseMaster of Commerce (Accounting)
  • Available to Study Abroad and/or Study Exchange Students

    This subject is available to students studying at the University from eligible overseas institutions on exchange and study abroad. Students are required to satisfy any listed requirements, such as pre- and co-requisites, for enrolment in the subject.

Last updated: 4 March 2025