Stevens Institute of Technology Howe School of Technology Management Syllabus BT 321 Corporate Finance Fall, 2008 Instructor name and contact information Jan Klein Executive in Residence Tel : 201-216-5612 Email : janklein@stevens.edu Day of Week/Time Office Hours: Tuesday Class Website: http://webct.setvens.edu/webct/public/home.pl Overview This is designed to be a practical class that will focus on managing investments. Although investments can span a broad range of alternatives from pure equity and debt offerings to complex derivates and options; this class will concentrate on common stock. The investment strategies course will focus on the different fundamental approaches and tactics used by leading investors to achieve their financial goals by: 1. Targeted readings and class room discussions of investment styles, including momentum, growth, income, distressed, asset allocation, and vulture investing, to name just a few. 2. Participating in a real-time market simulation game in which each student (or teams of students) will learn how to create viable portfolio s of stocks, bonds and other investments; while tracking their performance against the overall market and the class on a weekly basis throughout the course. Prerequisites: BT321 Learning Goals. 1. Understand the discipline and analytical processes that underscore the objective of creating investor wealth. 2. Comprehension of how both fundamental securities analysis and technical market behavior impact the short and long term value of an equities security 3. Develop an understanding of how to create a financial plan that is suitable to an investors goals and how to select/manage securities that meet these objectives 4. Preparation of a final paper on either creating a portfolio and lessons learned in managing stocks or performing an equity valuation on a public company to establish target buy and sell prices.
Pedagogy This course will teach the practical side of investing how to set investment objectives; determining which investment styles will help meet these objectives; as well as the tactical side of how to buy and sell individual securities and protect gains or hedge risks. Students will be required to sign-up for the STOCKTRAC simulation program that allows virtual buying and selling securities just like professional investors without the expense and/or risk of actual trading. No prior trading experience or finance courses will be required. Students will develop portfolios and report during the semester on their progress. A final portfolio analysis report will be required at the end of the semester. While there will be incentives for achieving the greatest return; your class grade will reflect more about what you learned from your trading experience than the absolute level of return you achieve. As required and available we will supplement lectures with visits from financial professionals who select, trade and manage stock portfolios and they will be available to answer your investing questions. Central to the course will be a core curriculum that will focus on financial planning; securities analysis and the development of an appropriate portfolio based upon careful stock selection. While it is hard to refute the old adage that it is better to be lucky than it is to be good ; students must recognize that the public stock markets are essentially a zero sum game for every winner there is a corresponding looser. As a general rule the Monday evening class will focus on investment styles and strategies and the Tuesday class will discuss the practical rules and procedures for trading. Class Sessions: You are required to read the material before the day on which it is discussed in class and participate in classroom discussion. You are expected to arrive on time and stay for the entire class. Each week we will review the current activities associated with the different capital markets and you should keep abreast of events that are associated with the topics we will be discussing. You will be held responsible for the material and all reading assignments regardless of whether or not they are covered in lecture. Required Text(s) 2
Required text: Fundamentals of Investing, Ninth Edition, by Lawrence Gitman and Michael Joehnk 2005, Pearson Addison Wesley HIGH RECOMMENDED. Account with Stocktrak3 software. The website for sign-up is www.stocktrak3.com BUT DO NOT SIGN UP UNTIL A CLASS ACCOUNT IS ESTABLISHED DURING THE SECOND WEEK OF THE CLASS Assignments 3
Class Date Day Topic Reading Assignment 1 28-Aug Tue 4:00PM Introduction/Goals and Risk Assessment 2 30-Aug Thur 4:00PM Stock Track/Stock Mkt Intro 3 4-Sep Tue 4:00PM What are your goals and investment options - Goals and life cycle investing - Basics of investment vehicles 4 6-Sep Thur 4:00PM What are your goals and investment options Mootley Fool Article - Risk Profiles of different investments - Term Paper requirements 5 11-Sep Tue 4:00PM What types of investing strategies to use Basics of stocks and bonds Article Investment Objectives DUE - Developing an investment theme - Growth verses Value investing 6 13-Sep Thur 4:00PM No Class - Rosh Hashanha 7 18-Sep Tue 4:00PM What types of investing strategies to use Basic investment strategy Article - The ABC's or Alpha's and Beta's of investing - Past Student Investment Approaches 8 20-Sep Thur 4:00PM The how and why of choosing stocks Article on Random Walk Theory - Individual: Stock screening - Individual: Basic analysis 9 25-Sep Tue 4:00PM The how and why of choosing stocks Buffet Article on Graham - Intrinsic valuation - Case review 10 27-Sep Thur 4:00PM Understanding Market Behavior Profile of Peter Lynch Investment Strategy DUE - Market physcology - Market myths and legends 11 2-Oct Tue 4:00PM Understanding Market Behavior - Technical Analysis 12 4-Oct Thur 4:00PM Fixed Income Investing: Mathematics Article on Yield Spreads 9-Oct Tue 4:00PM No class Monday Schedule 13 11-Oct Thur 4:00PM Fixed Income Investing: Corp + Govt Investment Selection Rationale 14 16-Oct Tue 4:00PM Portfolio Strategies and Diversification Sharpe Article on Efficient Investing - Risk/Return/Sharpe Ratio - Diversification 15 18-Oct Thur 4:00PM Portfolio Strategies and Diversification Read two mutual fund prospectus - Portfolio Management - Asset Allocation 16 23-Oct Tue 4:00PM Portfolio's, Indexes and Mutual Funds Mutual Funds Selection Article - Mutual Funds and ETF's - Portfolio reviews 17 25-Oct Thur 4:00PM Portfolio's, Indexes and Mutual Funds Jeremy Siegel on ETFs - Selecting Mutual Funds and ETFs 18 30-Oct Tue 4:00PM Price Speculation and Leverage Article on Contrarian Investing Portfolio Benchmarking DUE - Why and when to use margin - Shorting the market or a stock 19 1-Nov Thur 4:00PM Price Speculation and Leverage No reading - Cases that work and those that didn't 20 6-Nov Tue 4:00PM Playing the Options - Basics ICS presentation on Options 21 8-Nov Thur 4:00PM Playing the Options - strategies Trading Analysis DUE 22 13-Nov Tue 4:00PM Are futures and Commodities in your future Primer on futures from CBOE - Futures contracts verses Options - Futures market operations 23 15-Nov Thur 4:00PM Are futures and Commodities in your future Article on upside and perils of commodities - Commodities Basics 24 20-Nov Tue 4:00PM Dealing with Taxes Review IRS Pub 17 and annual letter Draft Project Paper 22-Nov Thur 4:00PM No Class Thanksgiving Recess 25 27-Nov Tue 4:00PM Tax Strategies 26 4-Dec Thur 4:00PM Portfolio Analysis 27 6-Dec Tue 4:00PM Open Final Project Due 4
Course Grading Grading will be based upon your performance on two quizzes; a final project, as well as attendance: Exams: None at this time; Final Project 70%; Attendance/participation: 30%; Total Points 100 points Percentage Class Grade. 93 100% A 90-92% A - 87 89% B+ 80 86% B 77 79% B- 74 76% C+ 70 73% C 67 69% C- 60 66% D Below 60% F D. Exams Exams may include multiple choice, essay, and problem-style questions, and will also include current events questions that may not be found in the readings therefore making class attendance and participation important. E. Make-up Policy You are expected to take all exams when scheduled. If for some extraordinary reason you are not able to do so, contact me as soon as possible. Make-up exams are a privilege not a right, and will be given at my discretion Ethical Conduct 5
Enrollment into the undergraduate class of Stevens signifies a student s commitment to the Honor System. It is the responsibility of each student to become acquainted with and to uphold the ideals set forth in the Honor System Constitution. All students are reminded that, as a condition of being admitted to Stevens, they will uphold and adhere to the standards of the Stevens Honor System. Specific Student responsibilities include: 1. Maintaining honesty and fair play in all aspects of academic life at Stevens 2. Writing and signing the pledge, in full, on all submitted academic work 3. Reporting any suspected violations to an Honor Board member or to the Dean of Undergraduate Academics 4. Cooperating with the Honor Board during investigations and hearings. 6