Class History: Security Analysis & Portfolio Management (Fall 2017)

shahed.link/2vYmyFf

Course: Security Analysis & Portfolio Management (Fall 2017, BBA, Finance major) 

This page summarizes all the classes (including extra classes) of the course Security Analysis & Portfolio Management (Fall 2017, BBA, Finance major).

• • Regular classes (usually on Mondays and Wednesdays, at 2:20 PM): 27

  • Extra classes: 31

  • Total classes: 58

Class 1

September 11, Room 701, Time 2:25 - 3:35 

Course outline given to the class.

Orientation class: An overview of the whole course.

Class 2

September 13, Room 701, Time 2:25 - 4:00 PM 

Finance defined. The scope of this course explained: personal investment and investment of idle money by firms.  Investment defined. Various kinds of financial instruments: common stock, bond, debenture, preferred stock, and mutual funds.

Class 3

September 18, Room 701, Time 2:25 - 3:25 PM 

Value and its classification: book value, market value, economic value, intrinsic value. Asset defined. Types of asset. Security defined and explained. Theory and principles of investments: IV > MV, IV < MV, IV = MV.

Class 4

September 20, Room 701, Time 2:30 - 3:50 PM 

Investment decision. Theory of valuation: underlying principle of intrinsic value calculation. Top-down and bottom-up approach. Math: Risk free rate, risk premium, CPI of current and previous years, and cashflows of several years are given. Find out intrinsic value of the asset. 

Announcement of the 1st class test (quiz).

Class 5

September 25, Room 701, Time 2:30 - 3:30 PM 

Risk premium. The 15 percent rule. Present value in details. Discounting. Present value and intrinsic value.

Class 6 (Extra)

September 25, Room 701, Time 3:30 - 4:30 PM 

Impact of risk premium on present value and intrinsic value. 

MCQ Quiz.

Class 7

September 27, Room 701, Time 2:30 - 3:45 PM 

Basic concept of financial instrument and security. Fixed income securities.  Characteristic of preferred stock. Intrinsic value of preferred stock: the infinite series formula and its simplification. Math: Face value, dividend %, inflation, RF, and RP are given. Find out the IV of preferred stock. Implement 15% rule. 

Class 8, Class 9 (Extra)

October 2, Room-701

2:25 -3:30 PM (Class 8)

3:30 – 4:15 PM (Class 9) 

Theoretical and mathematical topics discussed.

Class 10

October 4, Room-701, 2:25 -4:00 PM 

Bond and its cashflows. Types of bonds: coupon, debenture, zero-coupon, step-up notes, treasury STRIPES. Annuity, PVIFA, PVIF. Finding the intrinsic value of a simple bond. 

Class 11, Class 12 (Extra)

October 9, Room-701

2:30 -3:30 PM (Class 11)

3:30 – 4:25 PM (Class 12) 

Payment mode (m). Mathematical problems on intrinsic value of bonds. Yield vs. return: the differences. Current yield and after-tax current yield. YTM and after-tax YTM. 

Class 13

October 11, Room-701, 2:25 -3:30 

Arbitrage-free valuation approach of bonds. Differences between traditional and arbitrage-free valuation approaches. Mathematical problems on arbitrage-free valuation.

Class 14 (Extra)

October 11, Room-701, 3:30 – 4:30 PM 

Bond valuation using arbitrage approach: more details.  A comparison between traditional and arbitrage-free valuation approaches. 

Class 15 (Extra)

October 11, Room-701, 4:30 – 5:15 PM

How to use TI BA-II Plus financial calculator for Chapter-2 math.

Class 16 (Extra)

October 12, Room-601, 3:00 – 4:15 PM 

Zero-coupon bond. Chapter 3. How to find out g: Mathematical problem in details. 

Class 17, Class 18 (Extra)

October 16, Room-701

2:25 -3:35 PM (Class 17)

3:35 – 5:00 PM (Class 18) 

How to find out EPS, DPS, ROE, and DPR from EBIT.  Mathematical problems on Gordon growth model. Multi-stage Gordon model. 

Class 19, Class 20 (Extra)

October 16, Room-701

2:40 -3:45 PM (Class 19)

3:45 – 5:15 PM (Class 20) 

Theoretical and mathematical topics discussed in the class. 

Class 21, Class 22 (Extra)

October 23, Room-701

2:30 – 3:30 PM (Class 21)

3:30 – 4:30 PM (Class 22) 

Terminal growth rate (g). Alternative approaches of security valuation.

Review of midterm syllabus and problem solving. 

Class 23, Class 24 (Extra)

October 25, Room-701

2:30 – 3:40 PM (Class 23)

3:40 – 4:40 PM (Class 24) 

1st model test. 

Class 25 (Extra), Class 26 (Extra), Class 27 (Extra)

October 25, Room-701

5:00 – 6:00 PM (Class 25)

6:00 – 7:00 PM (Class 26)

7:00 – 8:00 PM (Class 27) 

Solution to the 1st model test. Problem solving. 

Midterm exam

November 2, Time: 3:00 – 4:30 PM

Syllabus: Chapter 1, 2, 3.

Class 28

November 6, Room – 701, Time 3:00 – 4:00 PM 

Chapter 4. Return and HPR. Average return of a stock. TTM return. Risk and its proxies: variance, semi variance, standard deviation. Risk premium. 

Class 29

November 8, Room – 701, Time 2:30 – 4:00 PM 

Return and related topics. Holding period return, average return, and TTM return. 

Class 30, Class 31 (Extra)

November 13, Room – 701

2:25 – 3:35 PM (Class 30)

3:35 – 4:15 (Class 31) 

Review of previously-discussed topics: return, HPR, TTM return. Risk and related topics. Sources of risk (10 sources risks, including country risk). The concept of risk premium. 

Class 32, Class 33 (Extra)

November 15, Room – 701

2:25 – 3:35 PM (Class 32)

3:35 – 4:30 (Class 33) 

Standard deviation as a standard proxy of risk. Calculation of standard deviation. Coefficient of variation. Comparison of two securities using CV. Calculating standard deviation using TI BA-II Plus financial calculator. 

Class 34, Class 35 (Extra)

November 20, Room 701

Time 2:30 - 3:35 (Class 34)

3:35 - 4:25 (Class 35) 

Sharpe ratio: mathematical problems with interpretation. Expected return and risk calculation from probability distribution of expected price: mathematical problems. Annualized return, risk, and volatility: mathematical problem.

Class 36, Class 37 (Extra)

November 22, Room 701

Time 2:30 - 3:35 (Class 36)

3:35 - 4:45 (Class 37) 

Calculation of risk premium from (1) estimation of associated risks, and (2) historical average return. 

Chapter 5. An overview of security index. Important aspects when constructing an index. An overview of unweighted index. Mathematics illustration of unweighted index.

Class 38, Class 39 (Extra), Class 40 (Extra)

November 27, Room 701

Time 2:30 - 3:30 PM (Class 38),

3:30 - 4:30 PM (Class 39),

4:30 - 5:30 PM (Class 40). 

Usages of security market index. Total market value of stocks. Market capitalization. Stock split and reverse split. Mathematical problem on price weighted index. DJIA and its drawbacks. Indexes in Dhaka Stock exchange. Problems of DGEN. Overview on DSEX. The concept of float adjusted or freely floating shares.

Class 41 (Extra)

November 27, Room 701

Time 5:30 - 6:20 PM 

Mathematical problem on value weighted index.

Class 42, Class 43 (Extra), Class 44 (Extra)

November 29, Room 701

Time 2:30 - 3:30 PM (Class 42),

3:30 - 4:30 PM (Class 43),

4:30 - 5:35 PM (Class 44). 

An overview on DSEX, DSE30, and DSES. 

Explained: What are the reasons behind the odd-looking base value of DSEX? 

Explained: Price of Stock 1 > Price of Stock 2, but MC of Stock 1 < MC of Stock 2. What will be the impact on the unweighted, price weighted, and value weighted index if the price of both stocks increase or decrease by x%? 

Chapter 6. Market defined. The concept of covariance. The meaning of beta. Beta of risk free securities. 

Math: month-end prices and dividends of a stock are given, along with month-end market index of 6 months. Find out beta, equilibrium return, and alpha. 

A brief overview on equilibrium return (based on CAPM approach) and alpha.

Class 45

December 4, Room 701, Time 2:45 - 4:20 PM 

Finding beta and alpha when required variables are given directly (math). Explanation and interpretation of alpha and beta. Equilibrium return as a proxy of many things. Estimation of RRR and discount rate of common stocks using CAPM. Beta vs. standard deviation. Historical alpha and expected alpha. Investment decision using alpha. Security market line.

Class 46, Class 47 (Extra), Class 48 (Extra)

December 6, Room 701,

Time 2:40 - 3:40 PM (Class 46),

3:40 - 4:40 PM (Class 47),

3:40 - 5:45 PM (Class 46). 

Corrections of lecture note. 

Math: identifying undervalued and overvalued securities using SML on a graph paper. Direct vs. indirect forecasting. Theory and assumption of indirect forecasting using beta. Math: Bulk forecasting of stock price and returns using beta; finding the best-buy and best-sell stocks.

Class 49, Class 50 (Extra)

December 11, Room 701,

Time 2:30 - 3:40 PM (Class 49),

3:40 - 5:10 PM (Class 50) 

Chapter 7. Basics of portfolio. Return and risk of portfolio and related topics.

Class 51, Class 52 (Extra)

December 13, Room 701,

Time 3:00 - 4:15 PM (Class 51),

4:15 - 5:30 PM (Class 52). 

Risk of a 3-asset portfolio. Calculating risk of a large portfolio using matrix method. Determinant of risk in a portfolio. Other related topics.

Class 53 (Extra), Class 54 (Extra)

December 14, Room 601,

Time 4:00 - 5:00 PM (Class 52),

5:00 - 6:15 PM (Class 53). 

Chapter 8. Efficient portfolio. Feasible set and efficient set of two-asset portfolios. Minimum variance portfolio. Finding the optimum weight for MV portfolios. Diversifying the unsystematic risk. Rule for adding a new asset in an existing portfolio.

Class 55

December 18, Room 701,

Time 3:15 - 4:45 PM. 

2nd Model Test.

Class 56 (Extra), Class 57 (Extra), Class 58 (Extra)

December 18, Room 701,

Time 5:15 - 6:15 PM (Class 56),

6:15 - 7:15 PM (Class 57),

7:15 - 8:20 PM (Class 58). 

Solution to the 2nd Model Test.

Review of the whole final exam Syllabus. Problem solving. 

Final exam

December 22, Room: B2-301, Time: 2:00 – 4:00 PM 

Syllabus: Chapter 4, 5, 6, 7, 8.

Course Details

• Security Analysis & Portfolio Management (Fall 2017, BBA, Finance major)