This course will provide students with an understanding of the theory and practice of investment decision making. Through readings and case discussions, students in the course will examine how equities are priced in efficient markets. Using insights from modern portfolio theory and equilibrium models of security prices (such as the capital asset pricing model), students will develop a framework for assessing the risk-return tradeoff. Using this framework, students will evaluate the validity of theory and conventional practice as guidance for managing portfolios. Topics will include equilibrium asset pricing, modern portfolio theory, market efficiency, index models, equities, and fixed-income securities. While the course is designed for students whose career interests lie in the field of investment management, the topics covered and tools developed in the course will be useful for personal investment as well. Valuation in Financial Markets is a prerequisite for this course.


Academic course objectives:


         Teach students a framework for assessing the risk and corresponding return for investments in equities and fixed-income securities

         Allow students to confront a variety of challenging investment issues that require them to identify acceptable alternatives, assess the opportunities and risks; make decisions; and defend those decisions

         Provide students whose career interests lie in the field of investment management and research with a solid foundation for pursuing this goal