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This paper will discuss certain advanced topics in investment, such as fixed-income securities (including the bond evaluation and the term structure of interest), security analysis (including equity valuation models and financial statement analysis), and derivatives securities (including valuation and trading strategies).
The lectures will be delivered on campus (The lecture will be recorded via Panopto and be available on Moodle after the lecture). The students are encouraged to attend the on-campus lectures and use the videos as a tool to review the contents.
To help students’ learning, the lecturer will chunk down the contents of each chapter into multiple sections. Each section will cover one or two specific topics for around 10-20 min long.
Provide quick access to the whys and hows of dealing with the questions in finance. Provide easy-to-understand information, including equations and examples that can be quickly applied to the problems of finance.
The PowerPoint slides are uploaded onto Moodle for students to download before lectures. The slides with notes will also be uploaded to Moodle after each lecture (I hope the slides with notes may save student time in copying my notes, so they can concentrate on understanding the course materials during the lectures).
The tutorials will be scheduled on-campus and online (Please refer to the FINAN302-21B Moodle page for the information). The students are encouraged to attend the scheduled tutorials on campus.
All students should attend one tutorial session each week. These sessions are conducted by tutors who are senior students. Tutorials normally include revision of lecture material and exemplar questions for the tests. The tutors will be available to assist students in completing these tutorial questions and to answer any other questions about the topic.
The PowerPoint slides are uploaded onto Moodle for students to download before the tutorials. The slides with answers will also be uploaded to Moodle after each tutorial.
Students who successfully complete the paper should be able to:
Understand bond valuation and term structure of interest rates [LO1]
Identify different types of bonds and explain how these bond features (such as the call feature, convertibility and sinking fund provisions) affect bond value and bond yields. Interpret bond ratings and address the major ratios that rating agencies use. Illustrate the term structure of interest rates.Linked to the following assessments:
Understand equity valuation and financial statement analysis [LO2]
Understand and apply the various equity valuation models (e.g., the dividend discount model, the price/earnings ratio model and the free cash flow model) and address the limitations of each of these models. Analyse a firm using the financial statements to perform ratio analysis.Linked to the following assessments:
Understand different trading strategies using option contracts [LO3]
Formulate portfolio management strategies using options and calculate potential profits/losses resulting from various option trading strategies. Understand how to hedge risks, speculate and lock in an arbitrage profit via option contracts.Linked to the following assessments:
Understand valuation of option contracts [LO4]
Calculate option prices using the binomial trees and the Black-Scholes model and identify the factors that affect an option’s value.Linked to the following assessments:
Understand trading strategies and valuation of futures contracts [LO5]
Calculate the daily profit and loss of margin trading arrangements for futures and illustrate the trading mechanics of the margin call. Illustrate determination of futures prices. Address the differences and similarities of forward, futures and options.Linked to the following assessments:
The students who select on-campus tutorial sections and attend over 60% of tutorials will receive 5% bonus points for Test I and Test II. For students selecting online tutorials, they need to attend 80% tutorials in order to receive 5% bonus points. To count attendance, the tutors will do roll call at the begging and/or end of tutorials. The design of extra credits is to encourage the students to attend the scheduled tutorials, particularly on-campus tutorials. There would be five (six) tutorials before (after) teaching recess. Extra credits for tutorial attendance before (after) teaching recess will be accounted into Test I (Test II). The maximum mark of Test I and Test II is 100%.
Both critical-thinking and problem-solving questions will be included in the assignments and tests.
The critical-thinking questions (i.e., short essay questions) will be evaluated by Communication Skills, Professionalism and Innovation. There is an expectation that students demonstrate academic integrity when they attempt the assignments in this paper. Moreover, referencing academic research articles to answer the questions will be rewarded in terms of marks (But referencing non-academic websites, such as Investopedia, will not have a reward). The design is to motivate students to achieve effective academic reading. The critical-thinking questions also allow for the evaluation of effective academic reading by students as their answers will demonstrate their understanding of the concepts explored in the paper. And the short essay questions require students to demonstrate their business writing ability. For the problem-solving questions (i.e., calculation questions), students are required to show all their workings. These questions require students to perform calculations on data and then to demonstrate their understandings of the numbers calculated, and thus equip students with numeracy skills/using data.
The internal assessment/exam ratio (as stated in the University Calendar) is 100:0. There is no final exam. The final exam makes up 0% of the overall mark.
The internal assessment/exam ratio (as stated in the University Calendar) is 100:0 or 0:0, whichever is more favourable for the student. The final exam makes up either 0% or 0% of the overall mark.
Error: Assessment components must add up to 100%
At least one Assessment Component needs to be entered
|Component Description||Due Date||Time||Percentage of overall mark||Submission Method||Compulsory|
|1. Online quizzes||
|2. Test I||
8 Sep 2021
|3. Test II||
13 Oct 2021
|4. Group Assignment: Financial Analyst Report||
27 Oct 2021
Required and Recommended Readings*
Bodie, Kane, and Marcus, Investments, 12th Edition (11th Edition is acceptable). McGraw-Hill Education, 2020.
Please refer to Waikato Reading List of this paper (https://rl.talis.com/3/waikato/lists/88B90AE6-2E37-7460-89C8-4FEEE5D67F56.html?draft=1&login=1) for the recommended textbooks, journal articles, useful websites, and databases.
Use the APA Referencing Style. The University of Waikato Library has put together a selection of resources to help you acknowledge your sources properly. http://www.waikato.ac.nz/library/study/referencing
Lecture slides, tutorial resources and related teaching materials will be available in Moodle.
The course has 36 (3 X 12) contact hours (lectures and tutorials). The rest of the 150 hours expected workload in this 15-point paper can be distributed as follows: 20 hours to complete the Assignment, 20 hours to prepare for and attend the Quizzes, 34 hours to prepare for, and attend Test I and 40 hours to prepare for and attend Test II.
Linkages to Other Papers*
Prerequisite papers: FINA201 or FINAN202
Restricted papers: FINA312 and FINA517