Investment and Portfolio Theory

DESCRIPTION: 
Investment theory and practice including financial markets, risk and return, securities, asset allocation and diversification. Utilization of analytical techniques available for investment planning and selection in the environment in which investment decisions are made. Application of models and investment strategies to analyze and manage portfolios.

RATIONALE: 
The subject matter of financial management is in the process of rapid change. A growing analytical content, virtually nonexistent a few years ago, has displaced the earlier descriptive treatment as the center of emphasis in the field. This course acquaints the student with recently developed methods for making decisions that involve interrelated uncertain outcomes. It emphasizes analytical techniques to the exclusion of institutional and descriptive material. The analytical tools are as useful in solving cases as they are in research and should, therefore, appeal not only to research oriented business and economics students but also to students training to be managers.

LEARNING OUTCOMES: 
As a result of taking this course, the student should be able to:
1. Demonstrate detailed knowledge of the statistical input requirements of portfolio analysis.
2. Differentiate between alternative portfolios on the basis of established criteria such as the mean-variance criterion.
3. Apply portfolio theory to investment decision problems.
4. Formulate the portfolio selection problem.
5. Evaluate alternative investment opportunities for the purpose of selecting the best from the investor's point of view.
6. Have an appreciation of empirical issues surrounding the testing of capital market equilibrium pricing models.

METHOD OF TEACHING AND LEARNING: 
In congruence with the learning and teaching strategy of the college, the following tools are used:
- Classes consist of lectures, problem-solving sessions, and class discussions of recent equity market developments. 
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- Office hours: students are encouraged to make full use of the office hours of their instructor, where they can ask questions and go over lecture material.
- Use of a blackboard site, where instructors post lecture notes, assignment instructions, timely announcements, as well as additional resources.