Pace University
Prof. P.V. Viswanath

The Focus of the Course will be Fundamental Analysis, i.e. Discounted Cash Flow Analysis. We will use a text by Aswath Damodaran as a basis for the lecture/discussions as well as for the analysis. This book is one of the primary readings for the CFA Level II exam.  The text is   Investment Valuation, 2001, John Wiley and Sons, and can be accessed at (

Topics to be covered:

Date 12/13/2002

Lubin School of Business
Pace University
New Course Proposal

1.            School:           Lubin School of Business 

2.           Campus:         PLV and PNY 

3.           Department:   Finance and Economics 

4.           Proposed Course Number:             Finance 357 

5.           Proposed Course Title:  Security Valuation for the Student Managed Investment Portfolio 

6.           Proposed Number of Credits: 3        

7.          Catalog Description:  This course deals with the valuation of corporate securities, primarily stocks, for the purpose of making investment decisions for a student-managed portfolio, funded by university monies.  Students will learn about the techniques of investigating and valuing stocks.  Most of the course will be devoted to the valuation of stocks based on fundamental analysis, paying attention to the macro-economy as well as to firm-specific issues such as industry characteristics, quality of accounting numbers, forecasting growth and using appropriate discounted cash flow and relative valuation models.   

  1. Objective and rationale for the course.  The Lubin School currently has several courses, such as FIN 320, FIN 351 and ACC 360 that explain the accounting and financial concepts relevant to asset valuation.  These courses also explain how these concepts would apply to actual firms.  The present course would go one step further, by bringing all these principles together in the valuation of actual corporate securities, primarily stocks and following through with buy/sell decisions.  Such a course gives the sort of hands-on experience that is crucial for students to, on the one hand, ,learn effectively, and, on the other, to convincingly present themselves as qualified candidates for jobs in finance fields, such as Mergers and Acquisitions, Stock Analysis, Portfolio Management and others.  

9.         Which students are expected to be served?  Finance 320, which deals with Corporate Financial Analysis, is a prerequisite for this course.  Hence, most of our students will be Finance majors.  However, we hope to attract specific non-finance majors as well, such as Accounting students and Marketing students who are interested in the marketing of financial services.  Other Lubin majors who can demonstrate the necessary competence are welcomed as well.           

10.       How does this course relate to the department's total program?  This course will become an additional finance elective.

11.       Are there courses elsewhere in the department, school or university, which are similar to this proposed course?     No

 12.       Who is expected to teach this course and what will be the probable teaching method?  Professors Filante and Viswanath have taught the course in 2002 and are scheduled again in 2003.  The teaching method is partly lectures.  However, most of the teaching will be in the form of presentations by students and comments by the instructors and the other students on the content of those presentations.  Significant amounts of learning are also expected to occur through Blackboard.

 13.              When will the course be first offered and what is the expected frequency of future offerings?  Spring 2003; one section per semester in PLV and PNY.

 14.              What are the texts, bibliography and related educational material required for students in this course?  The primarily text will be Aswath Damodaran, Investment Valuation, John Wiley and Sons, Second Edition, 2002.  Students will be expected to keep abreast of economic and financial news by reading periodicals such as the Wall Street Journal, Investors Business Daily and the Economist.  They will also extensively use programs such as StockVal and Telerate, as well as Internet websites such as and to research the stocks.  Professor Damodaran also maintains a website with up-to-date information, which students will use.  The text is also supplemented by notes on Prof. Viswanath’s website. 

Required textbooks: Aswath Damodaran, Investment Valuation, John Wiley and Sons, Second Edition, 2002. 

 Reference Texts: None  

 15.       What are the topics to be covered in this course? 

 Tentative List of Topics to be Covered 

 It is also envisaged that there will be guest speakers, mainly equity analysts, who will be invited about a couple of times per semester.  To date, speakers have included Professor Aswath Damodaran of NYU, Bill Yost of MarketNeutral, Dan Shaffer of Shaffer Asset Management, Mr. Jason Graybill of Abner, Herman & Brock Asset Management, and Mr. Jack Salzman of Kings Point Partners                       

Additional Course Requirements: Periodical reports on relevant topics, as well as PowerPoint presentations of stock recommendations (see proposed course calendar).

Exams: None

Cases/Group Assignments: several research papers, as described in course calendar.

 Additional Readings, Class Participation:  Students will be expected to keep up with business news.  Active student class participation will be important, both in class and on Blackboard. 

Course Outline and Time-Table 

Class Meeting Week and Days

Topics (Chapters  refer to Damodaran, Investment Valuation)

Projects and other Deadlines

Week 1

Macro Aspects of Investing -- the Macro Economy and the firm

Groups will be formed.

Week 2

Chapter 4: The basics of risk -- CAPM and Models of Default Risk; on StockVal; Initial stock screening.

Groups will start writing up a report on the Macro economy; a draft will be submitted.

Week 3

Chapter 7: Riskless rates and Risk Premiums

Final macro-economy write-up due.
Based on screening, we will choose two or three sectors that are promising.

Week 4

Chapter 8: Estimation Risk Parameters and Cost of Financing


Week 5

Chapter 9: Measuring Earnings

The groups will choose firms to focus on.  They will write a report on the industry, laying out earnings drivers for the industry, prospects, relevant valuation models, accounting issues to keep in mind, etc. 

Week 6

Chapter 10: From Earnings to Cash Flows

Industry report due.

Week 7

Chapter 11: Estimating Growth

Presentation of report on financial statement restatements for the firms, taking into account non-recurring items, capitalization of operating leases, R&D etc.

Week 8

Chapter 12: Estimating Terminal Value

Presentation on growth estimates for the different firms. 

Week 9

Chapter 13, 14, 15: Choosing the Right Model

Initial Write-ups.

Week 10

Chapter 17: Relative Valuation


Week 11


DCF Valuation Models due.

Week 12

Stock Research Report Presentation

Evaluation of Existing Stocks.

Week 13

Stock Research Report Presentation

Purchase/Sale Decisions

Week 14

Stock Research Report Presentation

Purchase/Sale Decisions

More information for Students

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