FIN 412 B01– Investment Principles

FIN 412 B01– Investment Principles

Department of Finance

Winter 2024 (8 Jan 2024 – 12 April 2024)

Wenjie Chen

1. Lectures

Class	Class Time and Location	Instructor	Office Hours
Lectures	Tue/Thurs 12:30-13:50, BUS 1-10	Wenjie Chen	Thursday 19: 30-21:00

Office hours are online session on Zoom, as listed above and by appointment. The instructor will also often be available to answer questions immediately after the lectures.

E-mail: [email protected] When submitting e-mail questions write in the subject of your message “FIN 412” and a word or words related to your question. The instructor aims to respond within 48 hours on business days.

2. Course objective

This course aims to familiarize students with the workings of asset markets and introduce the fundamental tools of asset valuation. Three important asset classes will be covered: fixed-incomes securities, stocks, and derivatives.

While the main goal of the course is to familiarize students with the fundamental theoretical concepts, this course also emphasizes the concepts’ practical applications. This will be done through Excel computer program in homework assignments. Students will be exposed to real-life examples and applications using up-to-date data from financial markets. Students will understand the relationship between risk and return and will be able to value fixed-income securities, stocks, and derivatives, and to construct a portfolio of financial assets with desired risk-return profile.

Refer also to the broader Learning Goals of the BCom program at the Alberta School of Business at: https://www.ualberta.ca/business/programs/bachelor-of-commerce/why-bcom/learning-goals.html

3. Textbook

Paper Textbook (recommended): Investments, 10th Canada Edition, by Bodie, Kane, Switzer, Boyko, Panasian & Stapleton, McGraw Hill-Ryerson, 2022. This textbook is available from the university bookstore or online and there are copies in the library on reserve.

Online resources (recommended): Connect. This online learning platform is to provide practice questions that aim to enhance students’ learning. For more questions to register and enroll in this course on Connect, please see the “Connect Information”.

4. Prerequisites and Background

Prerequisites: FIN 301 and MGTSC 312

Audio or video recording, digital or otherwise, of lectures, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study and is not to be used or distributed for any other purpose without prior written consent from the content author(s). Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar.

6. Assignments, Exams and Grading

Course grades will be determined by combining points on homework assignments, quizzes, a midterm exam and a final exam. The following table shows the component marks available to students. Letter grades will be assigned to the percentage marks in accordance with University Regulations [Section 23.4(4) of the University Calendar]. Your final course grade will be based on your absolute achievement and relative performance in the class.

Homework assignments 28%	There are 4 group homework assignments. These assignments are intended to provide additional practice of key concepts and are important for exam preparation. Each assignment accounts for 7% of the overall course mark. Assignments must be submitted on eClass in a pdf version and late assignments will not be accepted. For the due date of homework assignments, please see the schedule below.
Midterm exam (80 minutes) 32%	The exams will be closed-book and held in person. The exams must be solved individually. Any collaboration is strictly prohibited.
Final exam (120 minutes) 40%	The exams will be closed-book and held in person. The exams must be solved individually. Any collaboration is strictly prohibited. The content that will be covered in the final is cumulative, but will focus more on the materials after the midterm exam.
TOTAL: 100%

Note: Additional ungraded practice questions will be provided in the online platform Connect.

Sharing, posting, and viewing any material (e.g., slides, homework assignments, exam questions, solutions, etc.) on any medium (e.g., Facebook, message board, Chegg, Course Hero, etc.) is strictly prohibited. If you come across any such postings, please contact me.

For homework assignments, quizzes, and exams, any violations or any ‘cheating’ attempts will be investigated and enforced as strictly as University policies allow.

Final grades are based on the total points accumulated through the semester (points will be weighted according to the table above, although extra points can be earned by active participation in class.

7. Missed Assessment and Deferred Exams

If you miss a homework assignment, quiz or midterm exam, you will receive a grade of zero for that assessment unless you provide supporting documentation of the valid reason. With supporting documentation, the weight of the missed assessment will be transferred equally to the final exam.

Instructors and faculties are not required to grant excused absences for unacceptable reasons that include, but are not limited to personal events such as vacations, weddings, or travel arrangements.

Deferred final examinations will be allowed for students following University procedures for obtaining deferrals. Students interested in a deferred final exam should consult the Undergraduate Office. More information can be found in Academic Regulations, University Regulations and Information for Students of the University Calendar. For more information on University procedures for applying for deferred final examinations consult the Business Undergraduate Office, or go to

https://business.ualberta.ca/programs/bachelor-of-commerce/current-students/exam-policy-procedures/deferred-exams

8. Request of Regrading Exams

Once a final grade is assigned, it will not be changed except in the case of a recording error. Any request to revise the grade on an exam should be brought to my attention no later than the week after the exam has been reviewed by the student. Any such request should include a written explanation as to why more points are warranted. Before writing your request, you should read the exam solutions (exam solutions will be posted on the class website). Note: if you submit your request, I will re-grade your entire exam. As a result, you might end up with a grade that is lower than the grade you were initially assigned.

9. Academic Integrity

The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behavior (online at www.governance.ualberta.ca) and avoid any behavior which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.

10.Lecture Schedule

The proposed class schedule is as follows. The schedule may be modified as the semester progresses if topics take more or less time than planned. Readings and/or chapters from the text may be added or deleted at a later date.

Date	Topic	Textbook Chapter or Comments
Jan 9	Introduction
Jan 11	Time Value of Money	Review of key concepts in FIN 301
Jan 16	Risk and Return	Ch. 5
Jan 18	Market Basics	Ch. 3
Jan 23 Jan 25 Jan 30	Bond Market and Valuation	Ch. 14 Ch. 15
Jan 26		Assignment 1 Due Date
Feb 1 Feb 6	Managing Bond Portfolios	Ch. 16
Feb 8	Diversification	Ch. 7
Feb 12		Assignment 2 Due Date
Feb 13	Preparation for the Midterm Exam	Cover all the materials above
Feb 15		Midterm Exam
Feb 20 Feb 22		Reading week, no class
Feb 27	Capital Allocation	Ch. 6
Feb 29 Mar 5 Mar 7	Optimal Risky Portfolio	Ch. 7
Mar 12	Equity Index Construction	Ch. 2
Mar 14 Mar 19 Mar 21	Index Models	Ch. 8
Mar 23		Assignment 3 Due Date
Mar 26 Mar 28	Capital Asset Pricing Model	Ch. 9
Apr 2 Apr 4	Arbitrage Pricing Theory	Ch. 10
Apr 9	Forward Contracts
Apr 11	Preparation for the Final Exam
Apr 12		Assignment 4 Due Date
TBD	Final Exam	Cover all the materials above
May 31	Deferred Final Exam	Only applicable for those who are approved to skip the final exam

Pre-recorded videos potentially from other chapters of the textbook to support these in-person lectures will be uploaded on eClass. Students who attend the in-person lectures are expected to watch the corresponding pre-recorded videos before the lecture, to achieve the best learning result.