Investment Analysis

FIN432

Investment Analysis

Spring I 2008

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Argosy University

COURSE SYLLABUS

FIN432

Investment Analysis

Faculty Information

Faculty Name: Robert Castaneda

Campus:Chicago

Contact Information:312-498-2028 Fax: 312-945-3169

Office Hours:9AM to 10PM Mon-Fri 9AM to 5PM Saturday

Short Faculty Bio:Roberto Castaneda received his graduate degree (DBA) in Accounting from Argosy University/Schaumburg; (MM/MBA) in Marketing and Finance from NorthwesternUniversity, and his undergraduate degree in Accounting and Marketing from DePaulUniversity. He is also a Certified Public Accountant. Dr. Castaneda has worked in senior finance positions at American Express, PepsiCo and McDonald’s Corporation in a number of international countries.

Course description:

This course focuses on investment principles and problems. Topics include the effects of current financial events upon the markets and their operations. Students analyze the selection of investments that provide the maximum future return at an acceptable level of risk. Examination of marketable financial instruments, common stocks, preferred stocks, bonds, put options, call options, futures contracts on the traditional commodities, and financial futures.

Course Pre-requisites: None

Required Textbook:

Jones, Charles P. (2006). Investments: Analysis and management. (10th ed.). Wiley Publishing. ISBN# 9780470047811

Course length: 7.5 Weeks

Contact Hours: 45 Hours

Credit Value: 3.0

Program Outcomes:

1. Communication
2. Communicate business concepts effectively, both written and orally appropriate to the audience
3. Team
4. Define the attributes of an effective team member and leader and the characteristics of an effective team in reaching specific business goals
5. Cognitive
6. Problem Solving – Given a business problem, select and defend a business solution chosen from specific alternatives
7. Information Literacy – Given a business research question, access information from a variety of sources, select appropriate sources to respond to a business question
8. Analysis/Application
9. Integration – Describe the interrelationship of the functional business areas of statistics, accounting, operations, finance, marketing, and strategy
10. Ethics/Diversity
11. Diversity – Identify the issues and challenges related to diversity in current business organizations
12. Ethics– Identify the issues and challenges related to ethics in current business organizations
13. Financial Application

6.1 Given a specific business case, choose a financial strategy to reach a business goal

Course Objectives:

1)Distinguish the differences between liquidity and marketability. (Program Outcomes: 1.1, 3.2, 4.1)

2)Assess the impact of a given monetary of fiscal policy on interest rates and/or security prices. (Program Outcomes: 1.1, 3.1, 4.1, 6.1)

3)Compare and contrast various types of investment risks. (Program Outcomes: 1.1, 3.1, 4.1, 6.1)

4)Describe the terminology, characteristics, and sources of risk of debt securities and preferred stock. (Program Outcomes: 1.1, 3.1, 3.2, 4.1, 6.1)

5)Discuss equity investment valuation models. (Program Outcomes: 1.1, 3.1, 3.2, 4.1, 6.1)

6)Calculate the intrinsic value of a stock value and expected rate of return. (Program Outcomes: 1.1, 3.1, 4.1, 6.1)

7)Calculate the price, compound return, taxable yield equivalent, and yield to maturity of a bond. (Program Outcomes: 1.1, 3.1, 3.2, 4.1, 6.1)

8)Analyze the characteristicsand sources of risk withinvarious option strategies. (Program Outcomes: 1.1, 3.1, 3.2, 4.1, 6.1)

9)Evaluate the risk-adjusted performances of investment securities or portfolios. (Program Outcomes: 1.1, 2.1, 3.1, 3.2, 4.1, 6.1)

10)Determine suitability of equity investment using ration analysis. (Program Outcomes: 1.1, 2.1, 3.1, 3.2, 4.1, 6.1)

Assignment Table

• Liquidity and marketability considerations
• The effect of the Monetary and Fiscal Policies on the Financial Markets

• Diversifiable versus non-diversifiable risk
• Beta Coefficient
• Expected returns
• The Constant dividend Growth Model

• Each AAA stock pays current dividends of $1.50 annually with 6% expected annual increases. The current market stock price for AAA is $30/Share.

• Each GHL stock pays current dividends of $1.75 annually with 6% expected annual increases. The current market stock price for GHL is $27/Share.

• Each BAC stock pays current dividends of $2.25 annually with 7% expected annual increases. Current market stock price for BAC is $35/Share.

• The DOD stock investment strategy
• The Dow Jones Industrial Stocks
• Stock splits
• Stock dividends

• Taxable equivalent yield calculations.
• Yield to Maturity Calculations.
• Bond investment strategies
• Convertible securities

• The benefits and limitations of ratio analysis.
• Ratio Calculations.

• Fundamental versus technical analysis.

• Its most current stock price
• Its stock 52 week highs and lows
• Company stock’s beta
• The company’s following financial ratios:
• P/E ratio
• Return on Assets
• Return on Equity
• Current Ratio

• Asset Allocation Considerations.
• Suitability Factors
• Mutual Funds Investing

• A sum of $20,000 is to be earmarked for Dr. McGregor’s upcoming wedding and honeymoon trip in June of next year. Dr. McGregor wants this portion invested in a very safe place with no expense, sales, or early withdrawal charges.
• He is also planning to assist his nephew with college expenses in six years. To this end, he wants $30,000 earmarked in an account with higher than current certificate of deposit or money market rates but minimal market volatility.
• His average, long-term (5+ years) minimum required rate on equity investments is 8%.
• Dr. McGregor has a moderate risk tolerance.
• Construct an asset allocation model for Dr. McGregor, including his financial objectives and risk tolerance level. Explain and defend the rationale behind recommending the model. The asset allocation must have between 3-5 asset classes.

• The name of the fund
• Its portfolio manager’s name, experience, and qualifications
• Its investment philosophy and strategy.
• How long this fund has been in existence.
• It’s current NAV (share price).
• Its yearly management fees (must not exceed 1% of amount invested).
• The fund’s 1, 3 and 5 year returns*.
• An assessment of some of the risks involved in investing in this fund.
• Names of some popular mutual fund families. (Please note that a mutual fund family is comprised of many funds. Make sure to recommend specific funds.) Do not pick a mutual fund that has been in existence for less than five years, as it will not have an established track record. Providing a link to a fund web page is NOT an acceptable substitute for your discussion.

• Options & Futures
• Basic Hedging Strategies

Grading Criteria

Grading ScaleGrading Requirements

Library:

All resources in ArgosyUniversity’s online collection are available through the Internet. The campus librarian will provide students with links, user IDs, and passwords.

Library Resources: ArgosyUniversity’s core online collection features nearly 21,000 full-text journals and 23,000 electronic books and other content covering all academic subject areas including Business & Economics, Career & General Education, Computers, Engineering & Applied Science, Humanities, Science, Medicine & Allied Health, and Social & Behavior Sciences. Many titles are directly accessible through the Online Public Access Catalog at Detailed descriptions of online resources are located at

In addition to online resources, ArgosyUniversity’s onsite collections contain a wealth of subject-specific research materials searchable in the Online Public Access Catalog. Catalog searching is easily limited to individual campus collections. Alternatively, students can search combined collections of all Argosy University Libraries. Students are encouraged to seek research and reference assistance from campus librarians.

Information Literacy: ArgosyUniversity’s Information Literacy Tutorial was developed to teach students fundamental and transferable research skills. The tutorial consists of five modules where students learn to select sources appropriate for academic-level research, search periodical indexes and search engines, and evaluate and cite information. In the tutorial, students study concepts and practice them through interactions. At the conclusion of each module, they can test their comprehension and receive immediate feedback. Each module takes less than 20 minutes to complete. Please view the tutorial at

Academic Policies

Academic Dishonesty/Plagiarism: In an effort to foster a spirit of honesty and integrity during the learning process, ArgosyUniversity requires that the submission of all course assignments represent the original work produced by that student. All sources must be documented through normal scholarly references/citations and all work must be submitted using the Publication Manual of the American Psychological Association, 5th Edition (2001). WashingtonDC: American Psychological Association (APA) format. Please refer to Appendix A in the Publication Manual of the American Psychological Association, 5th Edition for thesis and paper format. Students are encouraged to purchase this manual (required in some courses) and become familiar with its content as well as consult the ArgosyUniversity catalog for further information regarding academic dishonesty and plagiarism.

Scholarly writing: The faculty at ArgosyUniversity is dedicated to providing a learning environment that supports scholarly and ethical writing, free from academic dishonesty and plagiarism. This includes the proper and appropriate referencing of all sources. You may be asked to submit your course assignments through “Turnitin,” ( an online resource established to help educators develop writing/research skills and detect potential cases of academic dishonesty. Turnitin compares submitted papers to billions of pages of content and provides a comparison report to your instructor. This comparison detects papers that share common information and duplicative language.