SUNWAY UNIVERSITY BUSINESS SCHOOL

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SUBJECT OVERVIEW
FIN3024/BAB3207: Investment Management


Course : BSc (Hons) in Accounting and Finance
Subject Code and Title : FIN3024/BAB3207 Investment Management
Semester : March 2014
Contact Hours : 2-hour lecture; 1-hour workshop; 1-hour tutorial
Lecturer and Tutor : Alvin Kwan
E-mail address : alvink@sunway.edu.my
Room : SUBS Academic Office, Level 3, North Building
Telephone No. : (603) 7491 8622 Extension 3665
Consultation Hours : Mondays 3:00pm 4:00pm
Wednesdays 11:00am 12:00pm and 2:30 3:30pm
Thursdays 2:30pm 3:30pm
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Subject Description
The growth and volatility of the capital and derivative markets has spurred the need for more
professionals who are well versed with the mechanics of investing as well as the theories
and tools for making sound investment decisions. This course will equip students with the
knowledge to deal with some of these key investment challenges. The course provides a
deep and wide-ranging coverage of the main areas of investment management, i.e., portfolio
theory, tools for management of risks, arbitrage theory, multifactor models, portfolio
performance evaluation and the valuation of options and futures.

Subject Objective
The objective of this subject is to enable students to understand and apply investment
theories and tools that can be used to maximise shareholders wealth.


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Subject Learning Outcomes
On completion of this subject, students are expected to be able to:
SLO1 explain the tools and concepts of investment management;
SLO2 apply the relevant investment management tools in a business scenario; and
SLO3 Analyse fundamental issues in investment management and propose effective
solutions.

Programme Learning Outcomes
On completion of this programme, students are expected to be able to:
PLO1 apply fundamental business knowledge with a focus on accounting and finance;
PLO2 apply relevant tools and techniques used by industry to interpret data and
undertake business analysis;
PLO3 take into consideration social, cultural and environmental factors in making
business decisions;
PLO4 embed empathy, responsibility, integrity and professionalism in making business
decisions;
PLO5 function effectively as an individual and within a group as well as demonstrate the
responsibility and qualities of an effective leader;
PLO6 communicate and interact effectively with all levels of an organisation and the
wider community;
PLO7 systematically identify problems and provide efficient and effective solutions;
PLO8 manage information and engage in life-long learning; and
PLO9 apply managerial and entrepreneurial skills.


Mapping of Subject Learning Outcomes to Programme Learning Outcomes
Subject Learning
Outcomes
Programme Learning Outcomes
PLO1 PLO2 PLO3 PLO4 PLO5 PLO6 PLO7 PLO8 PLO9
SLO1
SLO2
SLO3


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Programme Objectives
This programme aims to:
PO1 produce employable business graduates or professionals with a sound knowledge
and understanding of accounting and finance;
PO2 produce business graduates who are ethical and responsible leaders or managers;
PO3 produce business graduates with the skills and competencies in critical thinking
and problem solving;
PO4 produce business graduates with managerial and entrepreneurial skills; and
PO5 produce graduates who recognise the need to engage in life-long learning for
personal and professional growth and development.

Mapping of Subject Learning Outcomes to Programme Objectives
Subject Learning Outcomes Programme Objectives
PO1 PO2 PO3 PO4 PO5
SLO1
SLO2
SLO3

Delivery Methods
Lecture times: Fridays 2:30pm 4:30pm (Audi 5)
Lectures are delivered with MS Power Point as a visual aid. Each lecture covers a major
topic. Students should note that while a lecture is self-contained in terms of presentation,
topics are closely interrelated and this interconnectedness is essential to their understanding
of the contents of this subject.
Workshop times: Wednesdays 9:30am 10:30am (Hall 3)
Workshops are conducted as a combined tutorial, where students are encouraged to attend
if they encounter difficulty or would like to have some questions cleared that were not able to
be covered during tutorials. They shall also be used to discuss the coursework and guides
on how to solve certain aspects of the assignment.
Tutorial times: You must attend your assigned tutorial slot. There will be no allowance for
switching between tutorials unless a prior request is approved by the lecturer/tutor via e-mail.
Tutorials are designed to supplement lectures and to enhance students understanding of
topics. In tutorials, students are given exercises that are both theory-based and calculation-
based. Activities that relate real issues and theory may also be conducted to prepare
students for their working life. The exercises are to be attempted before class and discussed
during the tutorials. Students are expected to participate actively in all tutorials.
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Assessment
Students are assessed in two ways, namely final examination and coursework. The
allocation of marks for each assessment mode is as follows:

No. Method of Assessment %
1. Coursework 30
2. Final Examination 70
Total 100

Coursework (30%)
The topic and instructions for the coursework will be given via e-learn at a later date.
This will be a group assignment, tentatively due at the end of week 10 (May 30, 2014). You
are encouraged to form your own group of 3 members and submit these names to the
lecturer by the end of the third week of the semester. Students who have not formed groups
by April 11, 2014 will be placed randomly into groups of 3.

Examination (70%)
The final examination, of 3 hours duration, will consist of two sections:
Section A (25 marks) Answer 4 compulsory questions.
Section B (75 marks) Answer 3 out of 4 questions.














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Subject Outline
The following is the subject outline by topics with recommended readings indicated against
each of them. Readings may be added during the course as and when appropriate.
Week Topics References
1

The Investment Environment
Real and financial asset types, Efficient financial markets, The investment
process, players, asset classes and financial instruments.
Chapter 1-2
2
Securities, Mutual funds & Investment companies
Types of security markets and orders, trading costs, trade margins, and short
selling. Costs and taxation considerations for mutual funds, exchange-traded
funds.

Chapter 3-4
3
Risk and Return
Risk and risk premiums, past return rates based on time-series analyses, normal
distribution, deviations, and moments, non-normal distribution and risk
measurement.


Chapter 5
4
Risk Aversion and Capital Allocation
Risk tolerance and utility values of investors, capital allocation on risk-free and
risky portfolios, Indifference curves and capital allocation line.


Chapter 6
5
Optimal Risky Portfolios
Portfolio risks and diversification effect, optimal risky portfolios two risky and
one risk-free asset, Markowitz portfolio selection model, risk pooling, sharing,
and insurance.



Chapter 7
6
Index Models & CAPM Review
A single-factor security market, Portfolio construction and the single index
model, Review of the CAPM, The Security Market Line, Problems with CAPM,
Extensions of CAPM.


Chapter 8-9
7
Arbitrage Pricing Theory and Multifactor Models
Introduction to factor models and multifactor security market lines, Introduction to
risk arbitrage and single-factor security market lines, Multifactor APT and Multi-
index CAPM, Fama-French 3-factor model.
Chapter 10
8
Portfolio Performance Evaluation
Conventional market theories on portfolio performance evaluation, Performance
measurement for portfolios with changing composition and hedge funds, Market
timing and style analysis, Performance attribution procedures.

Chapter 24
9 MID-SEMESTER BREAK
10
Futures Markets
Futures contracts, Trading mechanics in futures markets, Futures markets
strategies, Futures price determinants

Chapter 19

11
Futures Valuation
Foreign Exchange Futures, Stock Index Futures, Interest Rate Futures,
Commodity Futures

Chapter 20

12
Options Markets
Option types and characteristics, expiration effect on option values, basic option
strategies, put-call parity, arbitrage, types of option-like securities, financial
engineering and exotic options.
Chapter 17

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Tutorials
Please download tutorial questions from E-learn and be prepared to answer them during
class. Please attempt them before tutorial to have a better understanding on the subject
matter before coming to class. We will also be looking at real investment products and
industrial processes to gain some exposure in the financial industry to prepare yourselves for
your working career.

Week Reference Topic Activities
2 Chapter 1-2 The Investment Environment
Real and financial assets The
analysis into Sunway Berhad
3 Chapter 3-4
Securities, Mutual funds &
Investment companies
Securities Exchange Bursa Malaysia
Unit Trust Funds Public Mutual
(under Public Bank group)
4 Chapter 5 Risk and Return
Effective Interest Rate Hong Leong
Bank Step Up 6-month FD promotion
Risk & Return AirAsia Bhd versus
Malaysia Airport Hldgs Bhd
5 Chapter 6
Risk Aversion and Capital
Allocation
Risk Aversion Your parents risk
aversion
Capital Allocation Public Mutual
Balanced Fund
6 Chapter 7 Optimal Risky Portfolios
Degree of Correlation Between Stocks
Google Inc versus Chipotle Mexican
versus Morgan Stanley
7 Chapter 8-9 Index Models & CAPM Review
Index Model and CAPM in the
Computer Gaming Industry
Activision Blizzard Inc
8 Chapter 10
Arbitrage Pricing Theory and
Multifactor Models
Fama French Three Factor Model as a
Alternative to CAPM Activision
Blizzard Inc
9 Chapter 24
Portfolio Performance
Evaluation
To be announced
10 Chapter 19 Futures Markets
Malaysian Futures Market Crude
Palm Oil
11 Chapter 20 Futures Valuation To be announced
12 Chapter 17 Options Markets
Currency Options HSBC Dual
Currency Investment
13 Chapter 18 European Option Valuation
Stock Options CIMB BULL Equity
Linked Investment
14 Chapter 18
American Option Valuation,
Black Scholes Valuation
To be announced
13
European Option Valuation
Restrictions on option values, binomial pricing for European options, arbitrage.
Chapter 21
14
American Option Valuation, Black Scholes Valuation
Pricing for American options, Black-Scholes option valuation
Chapter 21
15 Revision Week
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Reading List
Textbook:

Bodie, Z., Kane, A., and Marcus, A.J. (2014), INVESTMENTS, Asia Global Edition. McGraw-
Hill (Bodie)

Others:

a) Bodie, Z., Kane, A., and Marcus, A.J. (2011) Investments and Portfolio Management,
9th ed. McGraw-Hill (Bodie)