MFIN5700 Investing & Security Analysis
This course begins with a detailed overview of the features of equities and bonds. The measurement of risk and return for individual assets and portfolios is covered in depth. Modern Portfolio Theory is introduced, showing how risk can be dramatically reduced through diversification. This leads to a discussion of asset pricing models, such as the Capital Asset Pricing Model (CAPM) and Arbitrage Pricing Theory (APT). Several equity-pricing models are covered in detail, such as the discounted dividend model and the Gordon growth model. Passive and active equity portfolio strategies are introduced; these include buy-and-hold, sector rotation and market timing. Fixed-income markets are explored in detail, beginning with an in-depth look at the features of bonds and other interest rate products that are actively traded. Several measures of interest rates are defined; measures of interest rate risk, including modified duration and convexity, are used to determine the sensitivity of fixed income assets to changes in interest rates. Several types of fixed income portfolio strategies, such as buy-and-hold, indexing and yield spread analysis, measures of investment performance, such as the Sharpe Ratio and Jensen's alpha, are defined and used to compare the relative returns of different assets, and the role of derivatives in implementing hedging strategies are also covered.