LaSalle University

Department of Finance

Investment Analysis

FIN 401

Spring, 2003

Dr. K. Rhoda

College Hall 415C

Hours: T, TH 10:00 – 11:00

12:30 – 2:30

Phone: 951-1033

E-Mail: rhoda@lasalle.edu

Course Description

This course is an introduction to the world of investment analysis and involves a study of the investment environment and classical and modern security analysis. Topics include the investment environment; investment theory; security valuation; bond and stock analysis; and performance evaluation. An integral part of the course is a term project involving the selection and management of an investment fund.

Course Objectives

The overall objective of this course is to produce a strong background in investment analysis. Specifically, at the completion of this course, you should:

1. Be familiar with the microstructure of the securities environment.

2. Understand the benefits and risks of the financial securities in which investors typically invest.

3. Be able to conduct a fundamental analysis of securities and be able to evaluate the strengths and weaknesses of this type of analysis.

4. Understand and be capable of evaluating basic concepts in technical analysis.

5. Be able to construct utility maximizing portfolios of securities and be able to manage those securities in both a passive and active manner.

6. Understand the uses of foreign securities and the possible problems resulting from their employment.

7. Be able to evaluate portfolio management performance.

8. Be aware of and be able to assess the current economic/political environment with respect to security investment.

Assignments, Exams and Grading

The material of the course has been assembled into five sections. Each section contains a set of reading assignments from the text and, occasionally, from other sources which we will discuss in class. In addition, each section will include homework questions and problems, some of which will be discussed in class.

Portfolio Project

You will be assigned to complete a term project involving the selection and management of an investment portfolio using Stock-Trak, a portfolio simulator. You will be given a sum of virtual money and be asked to invest it utilizing the principles covered in the course. The details of this project will be outlined in a separate handout.

Current Financial Events

It is crucial for anyone involved in investment analysis to have a good understanding of the domestic and global economic/political environment within which decisions must be made. You are expected to read the Wall Street Journal on a regular basis and be ready to discuss what you read in class.

Group Work

From time to time I will break the class up into groups to analyze and discuss different aspects of the course material, including current financial events. Since the scheduling of this group activity will be somewhat random and since full participation by everyone is important, you should make every effort to attend all classes.

Exams/Grading

There will be three in-class exams during the semester and a final exam. Your course grade will be determined using the following weights:

Course Requirement	Weight
Class Exams	60%
Final Exam	25%
Term Project	15%

Please note the following. You are required to take all exams. There will be no make-ups, except in emergency cases. (The definition of emergency is up to the instructor, but will normally be limited to a documented medical problem.) If an exam is missed for any other reason, the weight of the missed exam will be added to the final. Grades will be assigned on a + - basis.

Prerequsites: Fin 201 (Bus 206), Fin 300 (Bus 208)

Required Texts/Readings

Reilly, Frank, K. and Edgar A. Norton, Investments (Fifth ed.) (Sixth ed.): Thomson, South Western, 1999 (2003).

The Wall Street Journal

Stock-Trak, Stock-Trak, Inc., 2003.

Course Outline

I. The Setting For Investment Decision Making (4 Weeks)

1. Basics of Investment Management

Chapters 1, 2 (6^th Chapters 1, 2, 5)

2. Introduction to Stock Selection and Portfolio Management

Chapters 13, 19 (through pg. 680) ( 6^th Chapters 15 through pg 528, 17 through pg. 626)

3. Domestic and Global Security Markets and Indicators

Chapters 3, 4, 5 (6^th Chapters 3, 6, 7)

Exam #1

II. Developments in Investment Theory (4 Weeks)

1. Introduction to Portfolio Management

Chapter 6 (6^th Chapter 8)

2. Asset Pricing

Chapter 7 (6^th Chapter 9)

3. Efficient Markets

Chapter 8 (6^th Chapter 10)

III. Options and Futures (1 Week)

1. Introduction to Derivatives

Chapters 17, 19 (pages 681-692) (6^th Chapters 11, 17 pages 627-636)

Exam #2

IV. Fundamental Analysis (2 Weeks)

1. Analysis of Financial Statements

Chapter 9 (6^th Chapter 14)

2. Security Valuation

Chapter 10 (6^th pages 529-574)

V. Bond Analysis (2 Weeks)

1. Bond Basics

Chapter 15 (6^th Chapter 18)

2. Pricing and Portfolio Management

Chapters 16 (6^th Chapter 19)

Exam #3

VI. Tracking Equity Prices and Returns (2 Weeks)

1. Technical Analysis

Chapter 14 (6^th Chapter 16)

2. Portfolio Performance Evaluation

Chapter 22 (6^th Chapter 20)