FINC 3600: Financial Investments Omar Farooq

ofarooq@ada.edu.az
School of Business
ADA University, Azerbaijan

Course Description
This course provides an up-to-date coverage of current investment practices. It discusses
diverse theories and techniques used to build and manage portfolios with different goals
and within given risk parameters. The course also serves as an introduction to professional
portfolio management. The concepts of modern portfolio theory, capital asset pricing,
efficient markets and security analysis are introduced.

Objectives/Goals
The primary objective of the course is to study the theory and empirical evidence relevant
for investing. The major topics will include:
• Overview of Investment Process and Analysis
• Market Efficiency
• Relation between Risk and Return
• Portfolio Theory
• Capital Asset Pricing Model

Assessment of the Learning Objectives/Goals

Lectures of this course will concentrate on theoretical as well as practical issues. Major
themes are explored by illustrating them with real-world examples drawn from major
financial publications. The length and difficulty of the lectures vary depending on the
material covered.

By the end of the course, the students will be able to demonstrate the main concepts used
in the analysis of financial investments.

Prerequisite(s)
Students are expected to have completed core courses in basic finance and statistics. The
study of investments is inherently quantitative. Knowledge of basic statistics (means,
covariances, regression, etc.) is critical, as these tools will be used repeatedly throughout
the semester.

Text
• BODIE, KANE, and MARCUS (BKM): Investments, 10th Edition, McGraw-Hill/Irwin.
• JONES (J): Investments – Analysis and Management, 12th Edition, Wiley.

Additional Material
In addition to the required textbook, students are encouraged to read financial (and also
economic) newspapers during the semester. The course will frequently discuss important
current events linked to the Azerbaijani and international financial environment.
Recommended newspapers include:
• Wall Street Journal
• Financial Times
• The Economist
• Business Week

Project
You are required to pick a company (after consultation with me) and analyze it. At the end
of analysis, you should recommend whether to buy a firm or sell it.

A sample report is uploaded on Blackboard. You have to follow similar structure for your
report.

Course Requirements and Grading

The grades for the course will consist of the following components:
• Unannounced Quizzes (5%)
• Assignments (15%)
• Midterm Exam (30%)
• Final Exam (30%)
• Project (20%)

Students will be graded on absolute scale provided below.

A+ 98 – 100 A 94 – 97 A- 90 – 93
B+ 87 – 89 B 83 – 86 B- 80 – 82
C+ 77 – 79 C 73 – 76 C- 70 – 72
D+ 67 – 69 D 60 – 66 F 0 – 59

Statement about Academic Integrity

Consult http://www.ada.edu.az/en-US/Pages/honor_code.aspx for ADA Student Code
of Conduct.

Student Code of Ethics

Consult http://www.ada.edu.az/en-US/Pages/honor_code.aspx for ADA Honor Code.
Topics
NOTE: I reserve the right to add or subtract any topic.

Themes Topics Recommended Readings

Introduction to Investments Chapter 1 (BKM)
Macroeconomic and Industry Chapter 17 (BKM)
Analysis
Investment Company Analysis and Multiple Chapter 15 (J)
Analysis Based Valuation
Market Efficiency Chapter 11 (BKM)
Behavioral Finance and Technical Chapter 12 (BKM)
Analysis
Index Construction Chapter 3 (BKM)
Risk and Return Chapter 5 (BKM)
Capital Allocation Chapter 6 (BKM)
Portfolio Theory Optimal Portfolio Selection Chapter 7 (BKM)
Index Models Chapter 8 (BKM)
Capital Asset Pricing Model Chapter 9 (BKM)
Multifactor Pricing Models Professor’s Notes
Market Microstructure Chapter 3 (BKM)
Introduction to Options Chapter 20 (BKM)
Miscellaneous
Option Valuation Chapter 21 (BKM)
Futures Chapter 22 (BKM)