MODULE CODE: BU3680 Investments
Dr. Martha O’Hagan-Luff
Office Hours: TBC
This module begins by introducing the life cycle model of investment and consumption, and the decisions made by investors determined by timing and risk. After measuring the risk and return of individual assets, it then introduces Modern Portfolio Theory, the efficient frontier, and the interaction with an investor’s utility function. We will then examine several asset pricing models such as the Capital Asset Pricing Model, the Single Index Model, the Arbitrage Pricing Theory amongst others. It will evaluate the factors that determine the asset allocation mix of an investment strategy, and how portfolio performance is evaluated.
The course then moves to examine the available financial assets, and the markets in which they are traded. It will briefly examine the use of derivatives as a tool in managing an investment portfolio. It will then look at types of investors; individuals, and institutions such as pension funds, asset managers, insurance funds, hedge funds etc. We will examine active and passive investment strategies. Finally, we look at ethical investment, investment screening, and the impact on investment return and utility.
Having successfully completed this module, the student should be able to:
- Measure the risk and return of risky assets, and of portfolios of assets.
- Understand portfolio theory and asset pricing models.
- Understand the factors affecting asset allocation and how portfolio performance is evaluated.
- Describe the financial assets available to investors, and understand how they are incorporated into portfolios.
LECTURES AND TUTORIALS/CONTACT HOURS2
Lectures per week, 1 Tutorial per week. Full attendance at all lectures and tutorials is required.
RECOMMENDED TEXTS/KEY READING
To be advised
Test during Semester 1 (Michaelmas Term) Week 12 - 65%
Project, 35 %
PENALTIES FOR LATE SUBMISSION
To be advised
Students unable to submit a term assignment for medical reasons must produce a medical certificate to the School of Business Studies office within three working days of the missed submission date. Certificates received after that time will not be accepted.