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 (http://www.stern.nyu.edu/~adamodar/New_Home_Page/valn2ed/book.htm)
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.
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 http://www.marketguide.com
and http://finance.yahoo.com 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.
|
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. |
|
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 |
Valuation |
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 |