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  1. 1. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 FACULTY OF COMMERCE AND MANAGEMENT SCHOOL OF ACCOUNTING BANKING AND FINANCE COURSE OUTLINE - SEMESTER 2, 2001 ABF7029N ADVANCED FINANCE AND SECURITY ANALYSIS COURSE CODE AND TITLE ABF7029 ADVANCED FINANCE AND SECURITY ANALYSIS PROGRAMS Master of Banking and Finance Graduate Diploma in Banking and Finance Graduate Certificate in Banking and Finance Master of Commerce in Accounting and Finance Master of Financial Planning STATUS OF COURSE Core course: Master of Banking and Finance, Graduate Diploma in Banking and Finance, Graduate Certificate in Banking and Finance, Master of Financial Planning Elective: Master of Commerce in Accounting and Finance CREDIT POINT VALUE 10 SEMESTER(S) OFFERED Two RELATED COURSES Prerequisites ABF7026 Aspects of Corporate Finance Co-Requisites Nil Prior Assumed Nil Incompatibles FF13A40, ABF3004N and ABF3004L: Advanced Finance & Security Analysis CROSS REGISTRATION STATUS Restricted TIMETABLING INFORMATION* Lecture - night; Tutorials - day and night. *This timetable information may be subject to change /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 1
  2. 2. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 STAFFING Course Convenor Dr. Eduardo D. Roca Teaching Team Dr. Eduardo D. Roca Mr. David Willis BRIEF DESCRIPTION OF COURSE This course provides a theoretical framework for understanding resource acquisition, allocation and distributions within the context of efficient capital markets. It extends the study of finance decisions to include the analysis of securities and develops the application of the theoretical concepts of finance to difficult and complex problems such as dividend, finance and investment decisions. OBJECTIVES OF COURSE Upon completion of this course, students should be able to: • soundly understand portfolio, capital market and efficient market theories which are major theories in finance and which serve as theoretical foundations of security analysis; • recognise the assumptions underlying various investment strategies; • be aware of the issues involved in bond and equity portfolio management; • identify the role of derivatives in modern portfolio management; • employ a top-down or three-stage security analysis approach; • use a number of techniques to evaluate portfolio performance. CONTENT The course will cover the following topics which fall under three modules: Module 1: Investment Background This module covers basic concepts and statistical tools in relation to investment. It also deals with the market setting by which investment takes place. Topic 1.1: Investment Concepts Investment framework, return, risk and statistical concepts associated with investment analysis such as mean, variance, correlation, covariance, etc. Topic 1.2: Securities Markets and Indicators An overview of financial markets and a discussion of the important publicly available information in relation to these markets. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 2
  3. 3. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 Module 2: Theoretical Foundations of Investment This module focuses on the major theories in finance which provide the foundation for the understanding of modern investment strategies. Topic 2.1: Portfolio Theory Framework for the construction of optimal portfolios. Topic 2.2: Capital Market Theory Pricing of financial assets under market equilibrium and its implications on the investment process and portfolio construction Topic 3.3: Efficient Market Theory Market pricing of financial assets in relation to the arrival of relevant new information. Module 3: Security Analysis and Portfolio Management This module deals with security valuation and selection and portfolio evaluation. Topic 3.1: Three-Step/Top-Down Analysis An overview of technical analysis and fundamental analysis - market, industry and company analysis. Topic 3.2: Equity Analysis Equity valuation models, selection and management. Topic 3.3: Bond Analysis Bond valuation models, selection and management. Topic 3.4: Derivatives Analysis Futures and option pricing models; use of these instruments in portfolio management. Topic 3.5: Portfolio Evaluation Measurement of portfolio performance. TEACHING AND LEARNING STRATEGIES The course will be conducted through a combination of lectures and tutorials. There will be a two-hour lecture and one-hour tutorial for a period of 14 weeks. The lecture will focus on providing the students with different or alternative theoretical and conceptual frameworks that are essential in security analysis and selected advanced finance topics. Important theoretical applications will also be discussed during the lecture. The tutorials, on the other hand, will provide the students the opportunity to solve certain practical as well as theoretical questions which will test their understanding of the theories and concepts discussed during the lecture. Students are expected to study the assigned reading materials and work on the assigned exercises before coming to each lecture and/or tutorial session Although this course has a formal contact time of three hours per week, students are expected to devote, on average, an additional eight hours per week on self-study and exercises. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 3
  4. 4. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 ASSESSMENT The assessment items for the course consist of the following: % Weighting Item Length Due Date Mid-Semester Exam 2 hours 25% Week 6 Final Exam 3 hours 55% End of semester Semester 4,500-5,000 words 20% October 9, 2000 Paper/Project (Tuesday) Mid-Semester Examination This will consist of a mixture of theoretical and practical questions on topics covered during Weeks 1 to 4. Further details will be provided closer to the time of examination. Final Examination This will be a mixture of both theoretical and practical questions. All materials covered during the semester are examinable, although students may reasonably expect that emphasis will be placed upon previously unexamined material. A guide to the examination structure and content will be provided towards the end of the semester. Semester Paper/Project Each student is required to write a paper or do a project on a particular real world problem or issue in portfolio and security analysis or finance of the student’s choice in consultation with the teaching team. A list of suggested topics is provided in this course outline. The emphasis of the paper/project should be on the analysis of the issue(s), not simple description of events. In its analysis, the paper/project should clearly demonstrate the interaction between theory and real world data. In other words, the paper should analyse real world event(s) guided by theories in portfolio and security analysis or finance. Thus, in this regard, purely theoretical or purely descriptive (simple discussion of data without any attempt or resort to the use of theories) will not be acceptable and therefore will not receive a passing mark. The paper/project is expected to have the following components: • aims and objectives – discussion of the specific questions or problems that the paper/project seeks to investigate. • importance of the study – the theoretical and practical importance of the issues/problems being investigated; have these issues/problems been investigated before by others?; how different is your paper from previous studies on the topic?; what benefits that can be obtained from the results of the paper in terms of new knowledge, usefulness for investors, policymakers, etc.? • theoretical or conceptual framework – theories or concepts in finance or portfolio and security analysis which are used in the study and why and how these are used in the analysis. • methodology – what data are used and why?; how are the data analysed and why?; what kind of statistical techniques (if any) are used and why?; what questionnaires (if any) are used and how are these constructed?. • presentation of results and analysis – discussion and analysis of results with reference to the /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 4
  5. 5. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 theories discussed in theoretical framework and also in relation to previous relevant studies. • conclusion • bibliography/references The paper should be between 2,500 and 3,000 words, typewritten, double line-spaced, presented on A4 paper, with 4 cm left-hand margin, and with appropriate citations and referencing. For papers that exceed the limit, only the first 3,000 words will be considered. A hard copy as well as an electronic copy (disk copy) of the paper must be submitted to any member of the teaching team or through Griffith Flexible Learning Services (GFLS) no later than Tuesday, October 9, 2001. Papers submitted without the accompanying disk copy will not be marked. Late submission will attract a deduction of 10% a day. Excuses such as computer breakdown, work commitments, etc. will not be acceptable. A submission form must be filled out and submitted together with the paper. Paper without a submission form will not be accepted. The submission form will be made available to students during Week 1. An important objective of the paper or project is to gauge how well a student expresses his/her own ideas. Thus, it is expected that students will use their own words when writing the paper. Verbatim quotes are therefore only to be used when absolutely necessary. Students should take extra care to make sure that their papers/projects will not in any way breach any of the guidelines of the university on plagiarism. Plagiarism is considered by the university as a very serious offence. If you are unsure about the university’s guidelines on plagiarism, take time to familiarise yourself with these from the University’s homepage in the internet. TEACHING TEAM As stated earlier, this course will be taught by Dr. Eduardo Roca and Mr. David Willis. Their contact details are as follows: Eduardo D. Roca David Willis Room 0.47 BUN Building 2.48 BUN Building Mailing Address School of Accounting, Banking School of Accounting, and Finance Banking and Finance Faculty of Commerce and Faculty of Commerce and Management Management Griffith University Griffith University Nathan, Queensland 4111 Nathan, Queensland 4111 Telephone (07) 3875 7583 (07) 3875 7609 Fax (07) 3875 7760 (07) 3875 7760 Email Address E.Roca@mailbox.gu.edu.au D.Willis@mailbox.gu.edu.au /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 5
  6. 6. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 Eduardo is presently a Lecturer in the School of Accounting, Banking and Finance in Griffith University. He has taught finance, both in the undergraduate and graduate levels, not only in Griffith University but also in the Queensland University of Technology and the University of Southern Queensland. Eduardo completed a Ph.D. from Griffith University dealing with international financial markets and financial econometrics with a focus on Australia, the US, UK and the major Asian stock markets. Last year, Eduardo published a book on Equity Market Price Interdependence in the Asia- Pacific Region with Ashgate Publishing Ltd, UK. He has also published/written some journal articles dealing with international portfolio diversification and stock market integration among the ASEAN countries and between Australia and its major trading partners. In terms of practical experience, Eduardo has previously worked in the finance area in financial, business and government institutions for a number of years. David is also currently a Lecturer in the School of Accounting, Banking and Finance in Griffith University. He has an MBA from Bradford, UK and a Bachelor of Economics (with Honours) from Leeds, UK. David has an extensive experience in banking having previously worked as an international banker in the UK and as a Senior Credit Analyst with the Commonwealth Bank. He has been actively involved in teaching in the Financial Planning Programme in Griffith University. David is presently taking some courses at Griffith University in preparation for further studies that will lead to a Ph.D. degree. READING MATERIALS Prescribed Textbook Brailsford, T. and R. Heaney (1998). Investments: Concepts and Applications. Sydney: Harcourt Brace. Supplementary Reading The following textbooks on investments, security analysis and finance are recommended for supplementary reading: Strong, R.A. (2001). Practical Investment Management, 2nd ed. South-Western College Publishing. Gitman, L.J.; M.D. Joehnk; r.h. Juchau; B.J. Wheldon and S.J. Wright (2001). Fundamentals of Investing (Australian edition). Longman. Brealey, R.A. and S.C. Myers (1996). Principles of Corporate Finance. 5th ed., McGraw-Hill. Elton, M.J. and M.J. Gruber (1995). Modern Portfolio Theory and Investment Analysis, 5th ed., New York: John Wiley & Sons. Haugen, R.A. (1997). Modern Investment Theory, 4th ed. New Jersey: Prentice Hall. Peirson, G; R. Howard; S. Easton; and P. Howard (1998). Business Finance, 7th ed. Sydney: McGraw-Hill. Reilly, F.K. and K.C. Brown (1997). Investment Analysis and Porfolio Management, 5th ed., Fort Worth: The Dryden Press/Harcourt Brace College Publishers. Sharpe, W.F.; G.J. Alexander; and J.V. Bailey (1999). Investments. New Jersey: Prentice Hall. Periodicals Students are encouraged to consult periodicals/journals such as Euromoney, Asiamoney and Finance, Personal Investment, The Economist, Business Review Weekly, Journal of Finance, Journal of Portfolio Management, Journal of Applied Corporate Finance, Accounting and Finance, among others. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 6
  7. 7. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 WEEKLY SCHEDULE AND READING GUIDE Week Topic Readings Websites Brailsford and • http://www.afma.co 1 1.1 Investment Concepts Heaney, Ch. 1 m.au 16-20 July • http://www.asx.com. au • http://www.personali nvestor.com.au • http://www.comsec.c om.au • http://www.etrade.co m.au • http://www.afr.com.a u • http://www.kurtteej.c om/tools/toolmenu.h tm Brailsford and • http://www.sirca.usy 2 1.2 Securities Markets and Indicators Heaney, Chs. 2, 3 d.edu.au 23-27 July and 4 • http://www.asx.com. au • http://wwww.sfe.com .au • http://www.afr.com.a u • http://www.economi st.com • http://www.cnnfn.co m 3 • http://www.npcgroup 30 July-03 .com/risk.htm Aug Brailsford and 2.1 Portfolio Theory Heaney, Ch. 5 Brailsford and • http://www.stanford. 4 Heaney, Chs. 6 edu/~wfsharpe/art/dj 06-10 Aug 2.2 Capital Market Theory and 7 am/djam/htm • http://www.investorh 5 Brailsford and ome.com/anomaly.h 13-17 Aug 2.3 Efficient Market Theory Heaney, Ch. 13 tm (Part I) 6 Mid-Semester Examination Covers topics 1 to Aug. 21 4 (duration: 2 hours) /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 7
  8. 8. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 • http://www.investorh 7 Brailsford and ome.com/anomaly.h 27-31 Aug 2.3 Efficient Market Theory Heaney, Ch. 13 tm (Part II) Brailsford and • http://www.equis.co 8 Heaney, Chs. 9, 10 m/free/index.html 03-07 Sept 3.1 Three-Step/Top-Down Analysis and 11 • http://www.rba.gov.a u/bulletin/bu_ind.ht ml • http://www.streetnet. com • http://www.asx.com. au 9 • http://www.stocksen 10-14 Sept 3.2 Equity Analysis Brailsford and se.com/valuation.ht Heaney, Ch. 8 ml Brailsford and • http://wwww.smartm 10 3.3 Bond Analysis (Part I): Heaney, Chs. 14 oney.com/si/tools/on 17-21 Sept Fundamentals of Bills and Bonds and 15 ebond/index.cfm? (Part I) story=bondcalc 24-28 Sept Student Vacation Period Brailsford and • http://wwww.smartm 11 Heaney, Ch. 16 oney.com/si/tools/on 01-05 Oct 3.3 Bond Analysis (Part II): Bond ebond/index.cfm? Portfolio Management story=bondcalc Brailsford and • http://wwww.sfe.com 12 Heaney, Chs. .au 08-12 Oct 3.4 Derivative Securities and Markets 17 and 18 • http://www.market- 13 Brailsford and innovations.com/iq.h 15-19 Oct 3.5 Portfolio Evaluation Heaney, Ch. 21 tml 14 22-26 Oct Revision /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 8
  9. 9. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 SEMESTER PAPER/PROJECT TOPICS In addition to your interest and the usefulness of the topic to you, a very important factor that you should consider in choosing a topic is your ability to obtain the necessary information or data. Never choose a topic in which data or information would be a problem for you. So when you have thought of a topic that is of interest to you, the next thing that you should do is to immediately check whether you are able to obtain the data or information that you will need. If this a problem with the topic that you have in mind, then try another one. Below are suggested semester paper/project topics. You may work on a topic outside of this list; however, you will have to get this approved by a member of the teaching team no later than Week 3 of the semester (fill out the topic approval form and have this signed by a member of the teaching team). If you decide to choose a topic that is on this list, there is no need to obtain approval for this. • On-line investing Identify major websites in which investment can be done focusing on the Australian scene; provide a brief description of each; then evaluate the usefulness of 3 of these sites within the context of theories and concepts learned or to be learned in the course; gather the opinions of experts and/or major users of each site and then put in your own opinion. . • Evaluation of the performance of a major fund based in Australia. Select a fund, explain why you think this is to be considered a major fund and then evaluate its performance based on theories, concepts and techniques learned or to be learned in the course; cite major studies, here in Australia as well as overseas, which have evaluated funds and discuss how your study is similar or different to these previous studies. • Share repurchases in Australia. Investigate share repurchases in Australia within the context of the efficient market hypothesis. Use an event study methodology to determine the effect of share price repurchases on the share price of those companies which have been involved in this activity. • The relationship between technological and financial performance Investigate the relationship between technology and financial performance in a certain industry or industries in Australia. Is it the case that as an industry becomes more technologically advanced, its financial performance also improves? Why? Would you recommend investing in industries which show technological progress? • International investing and the issue of “home bias” Do funds invest substantially overseas or do they prefer to invest within their home country? Why? Analyse this issue using the experience of a major or well-known fund based in Australia or in another country. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 9
  10. 10. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 Griffith University Faculty of Commerce and Management School of Accounting, Banking and Finance ABF7029N Advanced Finance and Security Analysis TOPIC APPROVAL FORM* Name of Student ________________________________________________________ Student Number ____________________________________ Signature _______________________________ Date _________________________ Proposed Topic or Title of Paper or Project ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ Specific issues or problems to be studied or investigated _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ ___________________________ Reasons for Choice of Topic (or Importance of the Topic) _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ ___________________________ Approved by: Name and Signature _______________________________________________________ Date _________________________ *This form must be submitted no later than Week 3 of the Semester. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 10
  11. 11. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 GRIFFITH UNIVERSITY Faculty of Commerce and Management School of Accounting, Banking and Finance Paper/Project Submission Form (Note: The research or project paper should be submitted together with this form) Course Code: ______________ Course Title: ________________________________________________ Name of Student: _____________________________________________ Student Number: __________________________ Title of Paper/Project: __________________________________________ ____________________________________________________________ Total number of pages: _____________________ Statement of Originality: “I declare, to the best of my knowledge and belief that this paper contains no material previously published or written by another person except where due reference is made in the paper itself” Signature of Student: ________________________________________ Date: ________________________________ /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 11
  12. 12. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 ADMINISTRATION: Course Evaluation This course will be evaluated through surveys run by the School in accordance with University and Faculty policy. Submission of Assignments Assignments should be submitted according to the Course Convenor’s instructions by the due date. All students should keep a copy of their assignment until it is marked and returned to them. Assignments should be kept until a final grade is awarded. Extensions Extensions may be obtained by consulting the course Convenor. Requests for extensions are usually made in writing, and accompanied by appropriate documentation to support the case for the extension. Late Submission of Assignments Requests for an extension of time for submission of an assessment item must be lodged before the due date for the assessment item. Requests received on or after the due date will only be considered in exceptional circumstances. Extension requests must be made in writing to the Course Convenor, and be accompanied by appropriate supporting documentation. Where an extension has not been granted, an assessment item submitted after the due date will be penalised as follows: the mark awarded to the item will be reduced by 5% of the maximum possible mark for each day that the assessment item is late. Each weekend (from Saturday and Sunday) will count as one day. Plagiarism / Academic Misconduct Students must conduct their studies at the University honestly, ethically and in accordance with accepted standards of academic conduct. Any form of academic conduct which is contrary to these standards is academic misconduct for which the University may penalise a student. Specifically it is academic misconduct for a student to: • present copied, falsified or improperly obtained data as if it were the result of laboratory work, field trips or other investigatory work; • include in the student's individual work material which is the result of significant assistance from another person if that assistance was unacceptable according to the instructions or guidelines for that work; • assist another student in the presentation of that student's individual work in a way that is unacceptable according to the instructions or guidelines for that work; • cheat; (Cheating is dishonest conduct in assessment); • plagiarise; (Plagiarism is knowingly presenting the work or property of another person as if it were one's own.) On determination that academic misconduct has taken place, the penalty which may be imposed on the student is one or more of the following: a. a reduced or nil result for the assessment item affected by the academic misconduct; b. a fail grade for the course in which academic misconduct occurred; c. exclusion from enrolment in the course for a specified period; d. exclusion from the course; readmission to the course is at the discretion of the Faculty based on consideration of the student's case for readmission. Where a student has been found guilty of academic misconduct on more than one occasion and has previously been penalised as set out in above a. - c., the penalty shall normally be exclusion from the course as set out in d., unless in the opinion of the relevant Assessment Board there are mitigating circumstances. Academic Committee Resolution 2/2000 Further Information Students are advised to consult the Griffith University Enrolment Guide for further information on the University’s administration of assessment. /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 12
  13. 13. ABF7029N Advanced Finance and Security Analysis School of Accounting Banking and Finance 150/01/ABF Semester 2,2001 APPENDIX ONE ABF7029n Advanced Finance and Security Analysis Semester 2,2001 RESOURCE DOCUMENT. Is the course manageable within existing resources? Yes COURSE APPROVAL The course outline must be reviewed each semester. The resource implications of any changes should be considered and detailed in the above documentation. The course has been reviewed , and all changes have been indicated. _____________________Course Convenor date The changes to the course outline, and the resource documentation are approved / not approved _____________________Head of School date /home/pptfactory/temp/20100505125006/abf7029ndocdoc4064.doc 13