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fina312-paper_outline.pdf
PAPER OUTLINE
Paper Title: Portfolios and Markets
Paper Code: FINA31214B (HAM)
School: Waikato Management School
Department: Finance
Location: Main Campus, Hillcrest Road, Hamilton
Convenor: Sazali Abidin (Dr) ph. ext: 4513 room : MSB.3.38H Email:[email protected]
Table of Contents
Staffing Timetable Details Purpose Statement Learning Outcomes Activities Topics Assessment Resources Schedule Research Review and Evaluation Linkages Other Information
STAFF
Tutor:
Noor Muhammad (Mr) Email:[email protected]
Administrator:
Denise Martin (Miss) ph. ext: 4448 room : MSB.3.38B Office Hours: 12.305 Email:[email protected]
Student Representative(s)
Jinge Guo [email protected]
Zoe Hughes [email protected]
TIMETABLE DETAILS:
Lectures
Lecture Name Lecture Time Room
LEC 01 Wed 9am – 11am L.G.03
Laboratories
The laboratory groups are now closed (since 31/07/2014 at 12 midnight)
Group No. Room Time Max. No.
1 MSB.0.22 Mon at 9 am for 1hr. 26 25
2 MSB.0.21 Mon at 2 pm for 1hr. 25 23
3 Full MSB.0.21 Tue at 1 pm for 1hr. 26 26
4 Full MSB.0.21 Tue at 2 pm for 1hr. 27 27
5 Full MSB.0.21 Tue at 3 pm for 1hr. 26 26
6 Full MS6.G.30 THU at 10 am for 1hr. 26 26
Projects
The project groups are now closed (since 31/07/2014 at 12 midnight)
Group No. Room Time Max. No.
1 Full 3 3 Abano Healthcare Group
2 Full 3 3 Acurity Health Group
3 Full 3 3 Auckland International Airport
4 Full 3 3 Air New Zealand Limited
5 Full 3 3 Allied Farmers Limited
6 3 0 Aorere Resources Limited
7 Full 3 3 Argosy Property Limited
8 3 1 The a2 Milk Company
9 Full 3 3 Augusta Capital Limited
10 Full 3 3 AWF Group Limited
11 Full 3 3 Airwork Holdings Limited
12 Full 3 3 Briscoe Group Limited
13 Full 3 3 BLIS Technologies Limited
14 Full 3 3 Bathurst Resources Limited
15 Full 3 3 Barramundi Limited
16 Full 3 3 Cavalier Corporation
17 Full 3 3 CDL Investments
18 Full 3 3 Contact Energy Limited
19 Full 3 3 The Colonial Motor Company
20 Full 3 3 Chorus Limited
21 Full 3 3 Comvita Limited
22 Full 3 3 Delegat's Group Limited
23 Full 3 3 Diligent Board Member
24 Full 3 3 DNZ Property Fund Limited
25 Full 3 3 Dorchester Pacific
26 Full 3 3 Ebos Group Limited
27 Full 3 3 Fletcher Building
28 Full 3 3 Finzsoft Solutions
29 Full 3 3 Fisher & Paykel Healthcare
30 Full 3 3 Freightways Limited
31 Full 3 3 Fonterra Shareholder
32 Full 3 3 Goodman Property Trust
33 Full 3 3 Genesis Energy Limited
34 Full 3 3 Green Cross Health
35 Full 3 3 Hellaby Holdings
36 Full 3 3 Horizon Energy Distribution
37 Full 3 3 Hallenstein Glasson
38 Full 3 3 Heartland New Zealand
39 Full 3 3 Infratil Limited
40 Full 3 3 Kingfish Limited
41 Full 3 3 Kiwi Income Property
42 Full 3 3 Kathmandu Holdings
43 Full 3 3 Kirkcaldie & Stains
44 Full 3 3 Lyttelton Port Company
45 Full 3 3 Energy Mad Limited
46 Full 3 3 Millennium & Copthorne
47 Full 3 3 Meridian Energy
52 Full 3 3 Marlin Global Limited
53 Full 3 3 Moa Group Limited
54 3 1 Mowbray Collectables
55 Full 3 3 Mighty River Power
56 Full 3 3 Methven Limited
57 Full 3 3 NPT Limited Ordinary
Note: Provisional enrolments in groups are denoted by *.
Group Information
PURPOSE STATEMENT This paper introduces the fundamental concepts related to portfolio decisions of individual and institutional investors. Based on the concept of riskreturn tradeoff, it discusses the techniques and implications of efficient portfolio diversification and the allocation of assets among different securities. A special feature of this paper is that it provides an opportunity to students to work on an investment project using real world data.
LEARNING OUTCOMES By the end of this paper, students are expected to be able to:
1 : Understand how financial assets are being categorized and the types of financial instruments.
2 : Learn how financial securities are being traded and some market terminology.
3 : Compute returns and the measures of risk.
4 : Understand the concept of diversification, efficient portfolios, and asset valuation models.
5 : Determine undervalued and overvalued securities.
6 : Differentiate active versus passive portfolio management techniques, and understand the basic concept of Eastern Banking and Finance.
7 : Understand the mechanisms of derivative instruments.
8 : Evaluate performance of investment portfolios.
ACTIVITIES
1 : 40 Hours .... Attend classes
2 : 70 Hours .... Complete Group Assignment
3 : 50 Hours .... Prepare for and attend Quizzes
4 : 30 Hours .... Complete the Fund Management Simulation Project
5 : 10 Hours .... Study and sit for the Examination
TOPICS This paper will cover the following topics: • The Investment Environment, Asset Classes and Financial Instruments
• How Securities are Traded
• Mutual Funds and Other Investment Companies, Risk and Return
• Optimal Risky Portfolios, Index Model
• Capital Asset Pricing Model, Arbitrage Pricing Theory and Multifactor Models
• Efficient Market Hypothesis, Behavioral Finance and Technical Analysis
• Bond Prices and Yields, Term Structure of Interest Rates
• Macroeconomic and Industry Analysis, Introduction to Eastern Banking and Finance
• Equity Valuation Models, Financial Statement Analysis
• Futures Markets, Options Markets
• International Diversification, Hedge Funds
• Portfolio Performance Evaluation
ASSESSMENT Internal Assessment/Final Examination 1:1
Internally Assessed Components
Component Details Submission Details
Component Due Date Weighting Comp ulsory
Where How Status
Fund Management Simulation Project Report 1 8/08/2014 at 6:00 pm
2.40% Online Web Submit Information
Only
Fund Management Simulation Project Report 2 15/08/2014 at 6:00 pm
2.40% Online Web Submit Information
Only
Fund Management Simulation Project Report 3 12/09/2014 at 6:00 pm
2.40% Online Web Submit Information
Only
Fund Management Simulation Project Report 4 26/09/2014 at 6:00 pm
2.40% Online Web Submit Information
Only
Fund Management Simulation Project Report 5 10/10/2014 at 6:00 pm
2.40% Online Web Submit Information
Only
Quizzes, Best 4 of 5 60.00% Other Other Information
Only
Quiz 1 1/08/2014 at 6:00 pm
Online Web Submit
FINA Tutorial Quiz Information
Only
Quiz 2 19/08/2014 at 6:00 pm
Online Web Submit
FINA Tutorial Quiz Information
Only
Quiz 3 9/09/2014 at 6:00 pm
Online Web Submit
FINA Tutorial Quiz Information
Only
Quiz 4 23/09/2014 at 6:00 pm
Online Web Submit
FINA Tutorial Quiz Information
Only
Quiz 5 7/10/2014 at 6:00 pm
Online Web Submit
FINA Tutorial Quiz Information
Only
Tutorial Completions, Best 4 of 5 8.00% Other Other Information
Only
Tutorial Completion 1 22/07/2014 at 6:00 pm
Online Web Submit Information
Only
Tutorial Completion 2 5/08/2014 at 6:00 pm
Online Web Submit Information
Only
Tutorial Completion 3 19/08/2014 at 6:00 pm
Online Web Submit Information
Only
Tutorial Completion 4 16/09/2014 at 6:00 pm
Online Web Submit Information
Only
Tutorial Completion 5 30/09/2014 at 6:00 pm
Online Web Submit Information
Only
Group Assignment 17/10/2014 at 6:00 pm
20.00% MSC Web Submit Information
Only
Total 100%
Notes The above Internally assessed components make up 50.00% of the total assessment. The Final Examination makes up the remaining 50.00% You are required to complete the Assessments marked as "Compulsory". YOU MUST do the Compulsory Assessment otherwise you will not pass the Paper.
Examination
Examination Starts Ends Weighting Comp ulsory
Where How
Exam Not Available Ends: 50.00% at Exam Printed
Assignment Details
Fund Management Simulation Project Report 1 (Due Date: Friday, 8 August 2014 at 6:00 pm)
Details will be posted on MyWeb in due course. This assessment relates to Learning Outcome 1 Understand how financial assets are being categorized and the types of financial instruments.
Fund Management Simulation Project Report 2 (Due Date: Friday, 15 August 2014 at 6:00 pm)
Details will be posted in MYWeb in due course. This assessment relates to Learning Outcome 2 Learn how financial securities are being traded and some market terminology, and Learning Outcome 3 Compute returns and the measures of risk.
Fund Management Simulation Project Report 3 (Due Date: Friday, 12 September 2014 at 6:00 pm)
Details will be posted in MyWeb in due course. This assessment relates to Learning Outcome 4 Understand the concept of diversification, efficient portfolios, and asset valuation models, and Learning Outcome 5 Determine undervalued and overvalued securities.
Fund Management Simulation Project Report 4 (Due Date: Friday, 26 September 2014 at 6:00 pm)
Details will be posted in MyWeb in due course. This assessment relates to Learning Outcome 6 Differentiate active versus passive portfolio management techniques, and understand the basic concept of Eastern Banking and Finance.
Fund Management Simulation Project Report 5 (Due Date: Friday, 10 October 2014 at 6:00 pm)
Details will be posted in MyWeb in due course. This assessment relates to Learning Outcome 7 Understand the mechanisms of derivative instruments, and Learning Outcome 8 Evaluate performance of investment portfolios.
Quizzes, Best 4 of 5
The best 4 scores out of 5 quizzes will be taken into account. If you miss a quiz due to sickness, or a family bereavement, you automatically drop that quiz. If you miss more than 1 quiz for valid reasons then you can apply for special consideration. You are expected to attempt all 5 quizzes.
Quiz 1(Due Date: Friday, 1 August 2014 6:00 pm)
Will cover Chapters 1, 2, and 3. This assessment relates to Learning Outcome 1 Understand how financial assets are being categorized and the types of financial instruments.
Quiz 2(Due Date: Tuesday, 19 August 2014 6:00 pm)
Will cover Chapters 4, 5, 7, and 8. This assessment relates to Learning Outcome 2 Learn how financial securities are being traded and some market terminology, and Learning Outcome 3 Compute returns and the measures of risk.
Quiz 3(Due Date: Tuesday, 9 September 2014 6:00 pm)
Will cover Chapters 9, 10, 11, and 12. This assessment relates to Learning Outcome 4 Understand the concept of diversification, efficient portfolios, and asset valuation models, and Learning Outcome 5 Determine undervalued and overvalued securities.
Quiz 4(Due Date: Tuesday, 23 September 2014 6:00 pm)
Will cover Chapters 14, 15, and 17. This assessment relates to Learning Outcome 6 Differentiate active versus passive portfolio management techniques, and understand the basic concept of Eastern Banking and Finance.
Quiz 5(Due Date: Tuesday, 7 October 2014 6:00 pm)
Will cover Chapters 18, 19, 22, and 20. This assessment relates to Learning Outcome 7 Understand the mechanisms of derivative instruments, and Learning Outcome 8 Evaluate performance of investment portfolios.
Tutorial Completions, Best 4 of 5
The best 4 scores out of 5 tutorial completions will be taken into account. Tutorial completions are scored 100% if at least 70% of the tutorial questions are completed, regardless of correct or incorrect answers.
Tutorial Completion 1(Due Date: Tuesday, 22 July 2014 6:00 pm)
Will cover Chapters 1, 2, and 3. This assessment relates to Learning Outcome 1 Understand how financial assets are being categorized and the types of financial instruments.
Tutorial Completion 2(Due Date: Tuesday, 5 August 2014 6:00 pm)
Will cover Chapters 4, 5, 7, and 8. This assessment relates to Learning Outcome 2 Learn how financial securities are being traded and some market terminology, and Learning Outcome 3 Compute returns and the measures of risk.
Tutorial Completion 3(Due Date: Tuesday, 19 August 2014 6:00 pm)
Will cover Chapters 9, 10, 11, and 12. This assessment relates to Learning Outcome 4 Understand the concept of diversification, efficient portfolios, and asset valuation models, and Learning Outcome 5 Determine undervalued and overvalued securities.
Tutorial Completion 4(Due Date: Tuesday, 16 September 2014 6:00 pm)
Will cover Chapters 14, 15, and 17. This assessment relates to Learning Outcome 6 Differentiate active versus passive portfolio management techniques, and understand the basic concept of Eastern Banking and Finance.
Tutorial Completion 5(Due Date: Tuesday, 30 September 2014 6:00 pm)
Will cover Chapters 18, 19, 22, and 20. This assessment relates to Learning Outcome 7 Understand the mechanisms of derivative instruments, and Learning Outcome 8 Evaluate performance of investment portfolios.
Group Assignment (Due Date: Friday, 17 October 2014 at 6:00 pm)
This item of assessment is Compulsory.
You are a Graduate Trainee Investment Analyst at a renowned fund management company. After six (6) months of joining the company, you are asked by your superior to produce a comprehensive report on a publicly listed company on the New Zealand Stock Exchange Limited (NZX) or Australian Stock Exchange Limited (ASX). This assignment is important in determining your confirmation as a permanent employee of the company.
The intended audiences for your report are potential institutional investors who are existing clients of the company. Your report should be at least 2,000 words. As a guide, your report should comprise at least the following:
1. Executive Summary 2. Introduction Purpose and Objectives 3. General Company Description – Shareholders and Management Team 4. Products and/or Services 5. Industry/Sectoral Analysis 6. SWOT (Strength, Weaknesses, Opportunities and Threats) Analysis 7. Porter’s Five Forces Analysis 8. Financial Ratio Analysis 9. Competitors Analysis 10. Scenario Analysis (Good / Average / Poor) 11. Conclusions and Recommendations 12. Appendices 13. References
Hints:
1. Limit the executive summary to one page, in point form of between 8 and 10 points only. It summarizes the whole report for a busy reader who only wants to know the salient points of your report.
2. Be specific on the purpose of your report. Provide some objectives that you think are very relevant and important. A good report will also include scope and limitations.
3. On the company’s description, a copy and paste from the latest annual report will not deserve an A. Be resourceful by including major shareholder changes, director changes, or corporate moves that are pertinent to the company.
4. Point (3) above applies to products and/or services of the company too. 5. Provide a review and development of only the principal business activity of the company. 6. No need for a lengthy elaboration in SWOT Analysis. 7. Same goes for Porter’s Five Forces Analysis (please refer to Chapter 17). This is a finance paper, not management. The SWOT and Porter analyses are only there
so that students have an idea of what should be there in a complete ‘Company Analysis’. 8. Perform a financial ratio analysis (please refer to Chapter 19) for the two (2) subsequent latest years. For any annual report of a publiclisted company, there will
be financial reports for the current year and the previous year. Thus, you only need to get the latest annual report of the company. Provide comments on the trend of the ratios.
9. Select a competitor from the same industry with your company and compare their financial ratios for the latest financial year only. If you just provide the figures, your report will not deserve an A. Provide your comments by comparing the ratios of your company and the competitor.
10. Perform a scenario analysis on three (3) conditions, good, average, and poor. Depending on your company, look at what would be a factor that will have the most significant impact on the profitability of the company. For example, for New Zealand Oil & Gas Limited, it will be the price of crude oil. Forecast the net profit of the company for three (3) different levels of crude oil. Then, calculate the prospective earnings per share and prospective price earnings ratio.
11. Summarize your analyses in the conclusions and provide your stock recommendations. It can be Strong Buy, Buy, Accumulate, Buy on Weakness, Hold, Sell on Strength, Sell, or Strong Sell. Look at broker’s reports for guidance.
12. Include important articles or writeup that you quote in the appendices. If you have many of them, prepare a table of appendices.
Examination ( Date: Unavailable )
No extra Information
Assessment Policy
All tutorial completions, quizzes, and the semester project report must be the work of each student. Group work must be the work of each group. Instances of academic dishonesty will be dealt with according to University Policy.
Late submission of any assessments will not be accepted and will not be marked unless there are grounds for special consideration which normally means health or bereavement.
The application for such consideration can be found under Files. Further information is available at http//www.waikato.ac.nz/sasd/examinations/exams3.shtml
Group Policy: A group may comprise a minimum of 2 members and a maximum of 3 members. Students who wish to complete the group assignment by themselves can do so, if they email the instructor before the end of the second week (before 5.00pm on July 25). Otherwise students are randomly assigned into groups of 3 students. If conflicts arise within a group, students can write a memo to the instructor indicating why they cannot continue in the group and, if the instructor concurs, the student may be allowed to leave the group and complete the assignments individually, carrying the group marks for completed assignments. He or she will not be allowed to join another group. A group that chooses to continue with 2 members cannot add another person to the group. Invariably, people leaving groups are fedup with the lack of effort by others in the group: if you think it is unfair to have 2 members in a group, then contribute to the group, as you will not receive any dispensation whatsoever for having only 2 members. It is recommended that groups get everyone to contribute to each assignment to prevent conflict among members as results are awarded later in the semester.
RESOURCES
Required
Bodie, Kane, and Marcus, Investments, 10th ed., McGrawHill, 2014
Recommended
Ismail, Abdul Ghafar, Money, Islamic Banks and The Real Economy, Cengage, 2010
Timothy R. Mayes and Todd M. Shanks, Financial Analysis with Microsoft Excel, 5th ed., Cengage, 2010. This book is helpful if you need help with Microsoft Excel. It is very basic and also illustrates finance concepts as you learn Excel. Other instructors have recommended similiar books and you are welcome to use those books instead.
Other Resources
1. Extensive use of online databases.
2. Articles published in the NBR are examinable.
SCHEDULE
Title Topics
Week1 beginning 14/07/2014
Staff :Sazali Abidin
The Investment Environment, Asset Classes and Financial Instruments
Investments by Bodie, Kane and Marcus, 10th. Edition Chapters 1 and 2
Week2 beginning 21/07/2014
Staff :Sazali Abidin
Mutual Funds and Other Investment Companies, How Securities are Traded
Investments by Bodie, Kane and Marcus, 10th. Edition Chapters 3 and 4
12 Tutorial Completion 1 22/07/2014 6:00:00 p.m.
Week3 beginning 28/07/2014
Staff :Sazali Abidin
Risk and Return, Optimal Risky Portfolios, Index Model
Investments by Bodie, Kane and Marcus, 10th. Edition Chapters 5, 7, and 8
6 Quiz 1 1/08/2014 6:00:00 p.m.
Week4 beginning 4/08/2014
Staff :Sazali Abidin
Capital Asset Pricing Model, Arbitrage Pricing Theory and Multifactor Models
Investments by Bodie, Kane and Marcus, 10th. Edition Chapters 9 and 10
1 Fund Management Simulation Project Report 1 8/08/2014 6:00:00 p.m. 13 Tutorial Completion 2 5/08/2014 6:00:00 p.m.
Week5 beginning 11/08/2014
Staff :Sazali Abidin
Efficient Market Hypothesis, Behavioral Finance and Technical Analysis
Investments by Bodie, Kane and Marcus, 10th. Edition Chapters 11 and 12
2 Fund Management Simulation Project Report 2 15/08/2014 6:00:00 p.m.
Week6 beginning 18/08/2014
Staff :Sazali Abidin
Bond Prices and Yields, Term Structure of Interest Rates
Investments by Bodie, Kane and Marcus, 10th Edition Chapters 14 and 15
7 Quiz 2 19/08/2014 6:00:00 p.m. 14 Tutorial Completion 3 19/08/2014 6:00:00 p.m.
Week7 beginning 25/08/2014
Teaching Recess
Week8 beginning 1/09/2014
Teaching Recess
Week9
Staff :Sazali Abidin
Macroeconomic and Industry Analysis
beginning 8/09/2014 Investments by Bodie, Kane and Marcus, 10th Edition Chapter 17
3 Fund Management Simulation Project Report 3 12/09/2014 6:00:00 p.m. 8 Quiz 3 9/09/2014 6:00:00 p.m.
Week10 beginning 15/09/2014
Staff :Sazali Abidin
Introduction to Eastern Banking and Finance
Money, Islamic Banks and the Real Economy, Abdul Ghafar Ismail Chapters 1 and 3
15 Tutorial Completion 4 16/09/2014 6:00:00 p.m.
Week11 beginning 22/09/2014
Staff :Sazali Abidin
Equity Valuation Models, Financial Statement Analysis
Investments by Bodie, Kane and Marcus, 10th Edition Chapters 18 and 19
4 Fund Management Simulation Project Report 4 26/09/2014 6:00:00 p.m. 9 Quiz 4 23/09/2014 6:00:00 p.m.
Week12 beginning 29/09/2014
Staff :Sazali Abidin
Futures Markets, Options Markets
Investments by Bodie, Kane and Marcus, 10th Edition Chapters 20 and 22
16 Tutorial Completion 5 30/09/2014 6:00:00 p.m.
Week13 beginning 6/10/2014
Staff :Sazali Abidin
International Diversification, Hedge Funds
Investments by Bodie, Kane and Marcus, 10th Edition Chapters 25 and 26
5 Fund Management Simulation Project Report 5 10/10/2014 6:00:00 p.m. 10 Quiz 5 7/10/2014 6:00:00 p.m. 11 Quizzes, Best 4 of 5 7/10/2014 6:00:00 p.m. 17 Tutorial Completions, Best 4 of 5 10/10/2014 6:00:00 p.m.
Week14 beginning 13/10/2014
Staff :Sazali Abidin
Portfolio Performance Evaluation
Investments by Bodie, Kane and Marcus, 10th Edition Chapter 24
18 Group Assignment 17/10/2014 6:00:00 p.m.
RESEARCH
The results of the Fund Management Simulation Project for the entire class will be reviewed halfway through the semester and at the end of the experiment. The instructor will review the results and provide feedbacks on how the various strategies performed.
REVIEW AND EVALUATION
The Department strives to make all papers relevant, timely, stimulating, interesting and as uptodate as possible. Towards the end of each paper students will be asked to evaluate both the content and teaching of the paper. The results of the evaluations are not seen until after the final grades have been submitted to Examinations. Comments about the content and teaching are also welcome as the paper progresses.
LINKAGES TO OTHER PAPERS
Prerequisites: FINA201 Restrictions: FINA517
EXTRA INFORMATION
Your attention is drawn to the following regulations and policies which are published in the University Calendar. Also, please refer to “Statement and Policies” (which can be viewed on www.mngt.waikato.ac.nz/myweb) outlining Waikato Management School and Departmental policies. Regulations Governing Examinations and Assessment Discipline Regulations Computer System Regulations Policy on the Use of Maori for Assessment Policy on the Ethical Conduct of Coursework Assignments Regulations on Plagiarism.
DEPARTMENTAL POLICY
