Golden Gate University Finance Department. Xi (Airin) Bai. FI 340 INVESTMENTS-SF1 Spring 2016

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1 Golden Gate University Finance Department FI 340 INVESTMENTS-SF1 Spring 2016 Xi (Airin) Bai Adjunct Professor Ageno School of Business Golden Gate University Contact Information or First Day of class: January 11 Last Day of class: April 18 Course Description From Course Catalog: Presents the theory and practice of investment analysis. Topics include efficient market theory; risk and return analysis for stocks, bonds and cash equivalents; modern portfolio theory; asset pricing models; bond pricing and the term structure of interest rates; effects of taxes and inflation on investment choices; and derivative asset analysis and alternative investments. Prerequisite: FI 300. Investment, defined as current commitment with an expectation of acquiring future benefit, has become so pervasive nowadays. Broadly speaking, any activity an individual is involved, sacrificing now and in the hope of a prospect avail, can be accounted as investment. That is, not only purchasing shares of stocks, bonds, or depositing money in savings are investments, the time you choose to study this course by sacrificing your spare time or job and expect future knowledge and career enhancement, is also investment.

2 The focus of this course is the narrow part of investment, which is the current commitment of dollars for a period of time in order to derive future payments that will compensate the investor for (1) the time the funds are committed, (2) the expected rate of inflation, and (3) the uncertainty of the future payments (Reilly & Brown). Based on that, we will elaborate the discussions on investment background, developments in investment theory, valuation principles and practices, and analysis of different classes of investments. We concentrate on resolving the issues like why do people invest? What factors should you consider when you make asset allocation decisions? What investments are available and how to use them? The approach of the course is lecture-based, with individual book review report and class discussion driven. This graduate-level course assumes basic knowledge on the intermediate level of corporate finance from FI300. Course Objectives After completing this course, the students are expected to: 1. Understand the basic features of different types of financial instruments, including securities, fixed-income securities, derivatives and other alternative investments. 2. Be familiar with the investment settings, the investment environment, the organization and functioning of security-market indexes, and the theory of efficient market. 3. Practice portfolio management by comprehensively applying a variety of asset allocation financial theorems, combining with analysis of different security and industry valuations, to demonstrate optimal efficient investment decisions. 4. Participate in the class discussions about contemporary researches and cases in investment. 5. Demonstrate academic communication Required Textbook Bodie, Z., Kane, A., & Marcus, A., Investments, 10 th edition, 2013, McGraw- Hill Education, ISBN-10: , ISBN-13: Recommended Readings Bernstein, William J. The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk. New York: McGraw Hill, Print.

3 Bernstein, William J. The Four Pillars of Investing: Lessons for Building a Winning Portfolio. New York: McGraw Hill, Print. Blanchard, Kenneth H., and Sheldon M. Bowles. Raving Fans: A Revolutionary Approach to Customer Service. New York: Morrow, Print. Bogle, John C. The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Market Returns. Hoboken, N.J.: John Wiley & Sons, Print. Malkiel, Burton Gordon. A Random Walk down Wall Street: The Time-tested Strategy for Successful Investing. [Completely Rev. and Updated]. ed. New York: W.W. Norton, Print. Ramsey, Dave. Entreleadership: 20 Years of Practical Business Wisdom from the Trenches. New York: Howard, Print. Shiller, Robert J. Irrational Exuberance. Princeton, NJ: Princeton UP, Print. BookStore: To purchase course books and materials from efollett, GGU's official online bookstore, please see the Important Info section of this course. University Library Find the GGU Library Home Page at There are several databases available through the Golden Gate University Library for students to conduct research on various topics. Remote (off campus) access to the databases requires your last name and student ID# (located on the front of your ID card). Course Requirements, Student Responsibilities, Evaluations Course Requirements This graduate-level class is assumed that the student will have read the assigned chapters before each class meeting. Please make the appropriate time allowances for preparing for each session. Being adequately prepared for each meeting is a key part of your responsibility in this course. The class format is one of active learning, rather than memorization.

4 Your grade will be evaluated on the basis of your: (1) quizzes, (2) book review (3) class participation, and (4) midterm and final exams. (1) Quiz (20%). There will be 12 quizzes, one for each class, except for Week 2,6 (holidays) and Week 9, 15 (exams). Each session quiz consists of 10 to 15 multiple-choice questions based on the covered text material. These quizzes are time-limited, open-book. (2) Book Review (20%). Select a book that addresses an investments topic and write a review of the book. This is a great opportunity to read a scholarly book or a substantive business press book, which will enhance your interest in investments and finance. The book review consists of book review report and presentation Book Review Report (15%) You are not required to conduct any data collection and data analysis further than the content of the book. However, at a minimum, your report should: State clearly the research problem(s), objective(s), and the contribution of your selected book. Identify related previous literatures and theories. Summarize the main content of the book Utilize critical analysis to review the book from both academic and practical perspectives Indicate future fields of studies and possible anticipated limitations The length of your report should be 5-10 pages, plus bibliography, in standard APA format. Presentation (5%) You are expected to show your classmates a brief overview of your work using PowerPoint. Please be professional, be prepared, and be courtesy to others. Please provide a copy of your presentation in advance. (3) Class Participation (10%) You are encouraged to discuss in class. Your discussion is expected as relevant and thoughtful. (4) Exams (50%) The exams are not comprehensive. Midterm exam takes up 25% of the grade and covers first-half of the term s material, where final exam also takes 25% and covers the second half. Exams are close-book, close-note, and consist of multiple-choice and problem sets. Each of the exam will have two and a half hours to complete.

5 Student Responsibilities You will receive 3 units of credit if you successfully complete this class. This means that you can expect to spend 2 hours and 40 minutes in class and/or online each week plus an additional 8-12 hours each week. Active learning is highly recommended. Attendance and Participation It is expected that you attend all classes and your attendance follows GGU s Bulletin guidelines. Additional Resources for the Course GGU provides resources to assist you in preparing written assignments, the Writing Center and the Online Writing Center (OWL). I highly recommend you utilize these excellent resources. Additional information is available at: writing_center Evaluations You will receive an opportunity to evaluate the course and instructor at least once this term. Grading Policy Your grade will be made up of a number of components, including the following: Grading Categories Weekly Quizzes 20% Book Review 20% Class Participation 10% Midterm Exam 25% Final Exam 25% GGU Grading Standard % A 90-92% A % B % B 75-79% B % C % C 50-59% D <50% F

6 Instructor Bio Xi Bai, CFS, CAS, has almost ten years experience dedicated in finance industry. She holds both of the Bachelor s and Master s degrees in finance and she is now on the way to get her doctoral degree. Her dissertation research is focused on derivatives. Xi has worked in the field of Finance since graduate school, where she has been with China Banking Regulatory Commission as a financial analyst. In her role, she served on board of the Banking Supervision Department and facilitated regulating and auditing annual reports of thirty provinces major commercial banks in China. She worked at Ernst &Young as an auditor before she joined GGU. She was key in consulting and implementing financial strategies for restructurings. Throughout her career, Xi has written extensively in the areas of alternative investments, financial modeling, derivatives, banking, and long-term capital investment. Xi has been the co-owner of an art studio resides in 5 major cities (New York City, Chicago, Atlanta, Taipei, and Tokyo) since She has worked with several corporations, notably Nike, Supreme, Burton, A Bathing Ape etc. Contacting the Instructor I will check and elearning site regularly. If you need further tutoring beyond the class, please contact me by to schedule an appointment.

7 Course Outline This schedule may be subject to change. Updates will be announced in class and online. Session Date Chapters in Bodie, Kane & Marcus Session 1 1/11 Introduction, Ch 1: The Investment Environment Session 2 1/18 No Class, Martin Luther King Jr. Day Session 3 1/25 Ch 2: Asset Classes and Financial Instruments; Ch 3: How Securities are Traded Session 4 2/1 Ch 17: Macroeconomic and Industry Analysis; Ch 25: International Diversification Session 5 2/8 Ch 11: Efficient Market Hypothesis Session 6 2/15 No Class, President s Day Session 7 2/22 Ch 5: Risk, Return and the Historical Record; Ch 6: Capital Allocation to Risky Assets Session 8 2/29 Ch 9: The Capital Asset Pricing Model; Ch 10: Arbitrage Pircing Theory and Multifactor Models of Risk and Return Session 9 3/7 Midterm Exam Session 10 3/14 Ch 18: Equity Valuation Models Session 11 3/21 Ch 14: Bond Prices and Yields; Ch 15: The Term Structure of Interest Rates Session 12 3/28 Ch 20: Options Markets: Introduction; Ch 21: Option Valuation Session 13 4/4 Ch 22: Futures Markets; Ch 26: Hedge Funds Session 14 4/11 Ch 24: Portfolio Performance Evaluation; Ch 27: The Theory of Active Portfolio Management Session 15 4/18 Final Exam