Dr. P.V. Viswanath

pviswanath@pace.edu

Fin 652 INVESTMENT ANALYSIS

I am not teaching this course during this term.  What follows is are the learning objectives for this course, when I do teach it.

Course Objectives

This course will emphasize an understanding of the economic forces that influence the pricing of financial assets. This is viewed as a necessary prelude to the application of financial theory. Accordingly, understanding of the theory will be stressed and accompanied by the discussion of normative techniques such as portfolio selection and interest rate immunization.

Although the course material will cover formulas that can be applied in different business situations, a primary objective of this course will be, on the one hand, to learn the concepts behind the formulas. This second aspect is very important for a good reason: simple memorization of formulas is meaningless and is no use to most people; the reason is that in this age of computers, simple computation of formulas is increasingly automated. Rather, the added value that a human being brings to a work situation is the ability to impose structure on a unstructured situation and then to analyze the situation

So what can you expect to get from this course? When you have completed this course successfully, you will be familiar with:

• Asset valuation -- how to value assets such as stocks and bonds.
• Risk-return models -- how to price risk, i.e. how to adjust the value of an asset to take into account the riskiness of the asset.
• Interest rates -- how interest rates are determined; how to interpret the term structure of interest rates; how to manage interest rate risk.
• Portfolio Management -- how to manage portfolios.

When you have completed this course successfully, you should know (time permitting):

• How to figure out when an trading account at a brokerage firm will receive a margin call.
• How to optimally diversify portfolios
• How to measure the riskiness of a stock or a portfolio position
• How to allocate investments into stock and bond portfolios in accordance with a person's risk preferences.
• How to value stocks using financial statement information.
• How to price a bond.
• How to use the yield curve to make interest rate forecasts.
• How to measure the interest rate risk exposure of a fixed income asset or portfolio.
• How to hedge against interest rate exposure

This course will not teach you:

• How to beat the market
• How to price options and futures contracts.
• How to do technical analysis.
• How to time the market
• How to minimize the tax liability on your investments.