Christopher M Hrdlicka
Introduction to the nature, problems, and process of evaluating particular securities and portfolio construction and administration. Special attention is directed to the risk and rate-of-return aspects of particular securities portfolios, and total wealth. Prerequisite: FIN 350; either B ECON 300 or ECON 300; may not be repeated. Offered: AWSp.
This course will teach you how to think about and answer the fundamental questions: What is alpha? How do we measure it? And what does it mean?
In answering these questions we will cover the following topics: term structure of interest rates, portfolio theory, mean variance analysis, CAPM, multifactor models, measuring portfolio manager performance, and market efficiency.
Time permitting we will cover the special topics of outside income's impact on portfolio choice, life cycles funds, return predictability and luck versus skill in money manager performance.
To apply the skills learned in a broader context there will be a portfolio simulation game. This project will require researching and selecting an investment portfolio. At the end of the class you will use the tools learned to decide if you have any skill or alpha at investing.
Finance is inherently quantitative. To build those skills through the quarter there will 4 to 5 numerical problem sets. But, finance is more than numbers. There will be 2 to 3 cases to hone your ability of applying course material to realistic situations. Each case will require a written analysis and class discussion.
Student learning goals
General method of instruction
Class assignments and grading