VALUATION AND INVESTMENTS (FINC 421)

OVERVIEW

1. COURSE DESCRIPTION

The course teaches students to pull apart financial statements to find relevant information for valuation, identify “red flags” that indicate an impending liquidity crisis, see how industry fundamentals and competitive forces directly affect financial results and drive stock valuation, and value any public or private company for purchase, sale, minority investment, or going concern. learning to assess real estate investments; identify the main drivers of property market value and performance; analyze company valuation expert reports; and ask the “right” questions. Students will learn how to measure the value of a corporation and real estate assets to make reasonable business decisions. 

2. REASON FOR THE COURSE

Students will learn about different financial markets and their role in the economy, as well as current trends in financial markets and institutions, such as innovation and globalization, with a focus on financial institutions, investors, and financial instruments. The course also covers alternative investment methods in global financial markets, including their logic, strategy building, and administration. Students will learn discounted cash flow models, market multiple models, and private firm valuation in stock valuation and real estate valuation (commercial and residential property, Cambodian real estate market). The course is for corporate finance, investment banking, security analysis, consulting, and private equity students who want to apply valuation methods in real life. Students will also study the CFA Institute Code of Ethics and Standards of Professional Conduct, characterize the sustainability landscape, and examine sustainable technologies, strategies, and business models from managers, entrepreneurs, and investors’ perspectives.

3. STUDY HOURS

4. ROLE IN CURRICULUM

Prerequisites: 
Students must have completed Finance 1 (FINC 311) before attempting this course.

SKILLS

  • COURSE LEARNING OUTCOMES (CLO)
  • ASSESSMENT AND GRADING
  • TEACHING METHODS
  • STUDY PLAN
  • TEXTBOOKS AND REFERENCES

5. COURSE LEARNING OUTCOMES (CLO)

Upon successful completion of this course, students should be able to:

Knowledge

Level of

Learning

 Related PLO
Explain investment fundamentals (CK1)
Explain investment fundamentals, focusing on financial markets and institutions, global financial market alternatives, and investor strategies based on their goals.		 Understand PC1
Explain valuation method of equity and real estate (CK2)
Explain how to appraise and manage equity and real estate investments and the factors affecting their value.		  Understand  PC1
Cognitive Skills

Level of

Learning

 Related PLO
Evaluation of equity investment (CC1)
Evaluate equity investment risk and return and equity valuation models for listed and private companies using real-world data		 Evaluate PC1
Evaluation of real estate investment (CC2)
Evaluate different models for the real estate valuation of commercial and residential properties, considering issues that impact the valuation		 Evaluate PC1
Communication, Information Technology, and Numerical Skills

Level of

Learning

 Related PLO
Produce an equity and real estate valuation (CCIT1)
Produce equity and real estate valuation using Microsoft Excel software		 Create PCIT2
Interpersonal Skills and Responsibilities

Level of

Learning

 Related PLO
Work ethically (CIP2)
Apply ethical behavior as an investment professional in accordance with the CFA Code of Ethics.		 Apply PIP2

6. ASSESSMENT AND GRADING

Grades will be determined based on a grading score, calculated using the following assessments and score allocations:

Topic CLO Assessment and Scoring Skill Weighting
for Grade
Participation In-class test Project Midterm Exam Final Exam
Explain investment  fundamentals (CK1) 20% 50%   30%   15%
Explain valuation methods of equity and real estate (CK2)   20%   40% 40% 30%
Evaluation of equity investment (CC1)     70%   30% 30%
Evaluation of real estate investment (CC2)   30%     70% 10%
Produce an equity and real estate valuation (CCIT1)     40% 30% 30% 5%
Work Ethically (CIP1)     100%     10%

7. TEACHING METHODS

The course will be delivered as a mix of lectures, class discussion, practice assignments, and cases. Some of the questions on the midterm and final exams will be based on real-life financial statements of well-known companies.

Class participation grade will be based both on attendance and constructive participation. You are expected to participate in class discussions, and you will be graded on your contribution to the classroom learning environment. You should expect to be “cold called” to discuss assigned review problems and to offer views on the assigned material.

During the term, there is one project assignment.

Assignment: Business Valuation (CC1, CCIT1 & CIP1)
Work Group: Group of 3-4
Output format: Professional Valuation Report Format, Presentation
Language:  English

Phase 1:  Description:

                                                                                                                                                                                Each team must prepare a written research report on the subject company (the subject company can be ABC, PWSA, PPAP, PAS, GTI, PPSEZ, PEPC, or NagaCorp) chosen by the team, which involves an analysis of the ordinary shares of a publicly listed company. Each team will be required to value the equity of the chosen company. Each student will be tested on their analytical, valuation, report writing, and presentation skills.
Phase 2:  Description:                                                                                                                                                                                 This phase requires each team to value a property in Cambodia. A detailed analysis of the local real estate market condition is the starting point. In addition, you need to predict the future cash flow generated from the asset and use the discount cash flow model to value the property. The quality of the report, the quality of the analysis, and the logical reasoning in developing the analysis are the key factors for the assessment. Assignment Rubric:

8. STUDY PLAN

The course targets the 50 lessons in the study plan below. Each lesson is 1.5 class hours each; there are a total of 75 class hours.  The study plan below describes the learning outcome for each lesson, described in terms of what the student should be able to do at the end of the lesson.  Readings should be done by students as preparation before the start of each class.  Implementation of this study plan may vary depending on the progress and needs of students.

   Lesson Learning Outcomes Teaching and Learning Activities, Assessment
1

Introduction to the Investment Setting

  1. Define and explain what is investment and the  reasons why invest (CK1)
  2. Explain the different types and functions of financial market and financial intermediaries in an investment world (CK1)
  3. Describe the choices and issues in index construction and management (CK1)

Lecture
Discussion

Reading:
CFA Material, Equity & Portfolio
Management: Part I and Bodie, Kane & Marcus (2019) Investments (p. 6-143)
2

Introduction to the Investment Setting

  1. Define and explain what is investment and the  reasons why invest (CK1)
  2. Explain the different types and functions of financial market and  financial intermediaries in an investment world (CK1)
  3. Describe the choices and issues in index construction and management (CK1).

Lecture
Discussion

Reading:
CFA Material, Equity & Portfolio
Management: Part I and Bodie, Kane & Marcus (2019) Investments (p. 6-143)
3

Introduction to the Investment Setting

  1. Describe the choices and issues in index construction and management (CK1);
  2. Compare the different weighting methods used in index construction (CK1);
  3. Calculate and analyze the value and return of an index given its weighting method (CK1);

Lecture
Discussion

Reading:
CFA Material, Equity & Portfolio
Management: Part I and Bodie, Kane & Marcus (2019) Investments (p. 6-143)
4

Introduction to the Investment Setting

  1. Describe the choices and issues in index construction and management (CK1);
  2. Compare the different weighting methods used in index construction (CK1);
  3. Calculate and analyze the value and return of an index given its weighting method (CK1);

Lecture
Discussion

Reading:
CFA Material, Equity & Portfolio
Management: Part I and Bodie, Kane & Marcus (2019) Investments (p. 6-143)
5

Introduction to Alternative Investments

  1. Compare alternative investments with traditional investments (CC1).
  2. Describe categories of alternative investments (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Introduction to Alternative Investments (p. 5-74)
6

Introduction to Alternative Investments

  1. Describe categories of alternative investments (CC1, CIP1).
  2. Summarize hedge funds, private equity, real estate, commodities, infrastructure, and other alternative investments (CC1).

Lecture
Discussion

Reading:
CFA Material, Introduction to Alternative Investments (p. 5-74)
7

Investment risk and return 

  1. Explain the concept of risk and return and how investors measure risk and return (CC1, CIP1).
  2. Calculate the holding period return of an investment (CC1, CIP1).
  3. Calculate the arithmetic and geometric mean return of an investment (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Portfolio Risk and
Return: Part II (p. 191-243)
8

Legal Personality of Company (3)

  1. Show the possibility of having Cambodian nationality of a company.
  2. Explain the existence of rights and obligations of a company.
  3. Develop a case study with regard to the increase of funds to develop a company. (CC1)

Lecture
Discussion

Reading:
CFA Material, Portfolio Risk and
Return: Part II (p. 191-243)
9

Investment risk and return 

  1. Calculate the arithmetic and geometric mean return of an investment (CK1, CC1).
  2. Calculate the expected rate of return from an investment using CAPM (CK1, CC1).
  3. Calculate the beta, variance, standard deviation and share ratio of an investment (CK1, CC1)

Lecture
Discussion

Reading:
CFA Material, Portfolio Risk and
Return: Part II (p. 191-243)
10

Investment risk and return 

  1. Calculate the arithmetic and geometric mean return of an investment (CK1, CC1).
  2. Calculate the expected rate of return from an investment using CAPM (CK1, CC1).
  3. Calculate the beta, variance, standard deviation and share ratio of an investment (CK1, CC1).

Lecture
Discussion

Reading:
CFA Material, Portfolio Risk and
Return: Part II (p. 191-243)
11

Investment risk and return 

  1. Calculate the arithmetic and geometric mean return of an investment (CK1, CC1).
  2. Calculate the expected rate of return from an investment using CAPM (CK1, CC1).
  3. Calculate the beta, variance, standard deviation and share ratio of an investment (CK1, CC1).

Lecture
Discussion

Reading:
CFA Material, Portfolio Risk and
Return: Part II (p. 191-243)
 12

Introduction to Valuation

  1. Illustrate definitions of value and justify which definition of value is most relevant to public company valuation (CC1, CIP1).
  2. Explain broad criteria for choosing an appropriate approach for valuing a given company (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Intro to Valuation: S.2.1 (p.2-4); S.2.2 (p.5-6)

Khan Academy: Interest & Debt (Videos 5-8)
 13

Introduction to Valuation

  1. Illustrate definitions of value and justify which definition of value is most relevant to public company valuation (CK1, CC1, CIP1).
  2. Explain broad criteria for choosing an appropriate approach for valuing a given company (CK2, CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Intro to Valuation: S.2.1 (p.2-4); S.2.2 (p.5-6)

Khan Academy: Interest & Debt (Videos 5-8)
14

Discounted Dividend Valuation

  1. Compare dividends, free cash flow, and residual income as inputs to discounted cash flow models (CC1).
  2. Identify investment situations for which each measure is suitable (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, DD Valuation: S.3 (p.10-13); S.4.1 (p.14-16); S.5.1-5.3 (p.29-35); S.6.1-6.2 (p.44-48)

Khan Academy: Stocks and bonds (Videos 1-2, 7-12)
 15

Discounted Dividend Valuation

  1. Calculate and interpret the value of a common stock using the dividend discount model (DDM) for single and multiple holding periods (CK2, CK3, CC1, CCIT1, CIP1).
  2. Calculate and interpret the implied growth rate of dividends using the Gordon growth model and current stock price (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, DD Valuation: S.3 (p.10-13); S.4.1 (p.14-16); S.5.1-5.3 (p.29-35); S.6.1-6.2 (p.44-48)

Khan Academy: Stocks and bonds (Videos 1-2, 7-12)
 16

Discounted Dividend Valuation

  1. Calculate and interpret the justified leading and trailing P/Es using the Gordon growth model (CK2, CK3, CC1, CCIT1, CIP1).
  2. Evaluate whether a stock is overvalued, fairly valued, or undervalued by the market based on a DDM estimate of value (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, DD Valuation: S.3 (p.10-13); S.4.1 (p.14-16); S.5.1-5.3 (p.29-35); S.6.1-6.2 (p.44-48)

Khan Academy: Stocks and bonds (Videos 1-2, 7-12)
17

Free Cash Flow Valuation

  1. Compare the free cash flow to the firm (FCFF) and free cash flow to equity (FCFE) approaches to valuation (CK2, CK3, CC1, CCIT1, CIP1).
  2. Explain the ownership perspective implicit in the FCFE approach (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
18

Free Cash Flow Valuation

  1. Calculate FCFF and FCFE (CK2, CK3, CC1, CCIT1, CIP1).
  2. Describe approaches for forecasting FCFF and FCFE (CC1, CIP1).
  3. Compare the FCFE model and dividend discount models (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
 19

Free Cash Flow Valuation

  1. Explain the use of sensitivity analysis in FCFF and FCFE valuations (CC1).
  2. Describe approaches for calculating the terminal value in a multistage valuation model (CC1, CIP1).
  3. Evaluate whether a stock is overvalued, fairly valued, or undervalued based on a free cash flow valuation model (CK2, CK3, CC1, CCIT1, CIP1).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
 20

Multiples Valuation

  1. Distinguish between the method of comparables and the method based on forecasted fundamentals (CC1).
  2. Describe rationales for and possible drawbacks to using alternative price multiples and dividend yield in valuation (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Multiples Valuation: S.2.1 (p.3-4); S.3.1 (p.6-7); S.3.2 (p.37-38); S.3.4 (p.52-53); S.4.1 (p.60-61); S.4.3 (p.67)
21

Multiples Valuation

  1. Describe fundamental factors that influence alternative price multiples and dividend yield (CC1).
  2. Calculate and interpret the justified price-to-earnings ratio (P/E), price-to-book ratio (P/B), and price-to-sales ratio (P/S) for a stock, based on forecasted fundamentals (CK2, CK3, CC1, CCIT1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Multiples Valuation: S.2.1 (p.3-4); S.3.1 (p.6-7); S.3.2 (p.37-38); S.3.4 (p.52-53); S.4.1 (p.60-61); S.4.3 (p.67)
 22

Multiples Valuation

  1. Explain alternative definitions of cash flow used in price and enterprise value (EV) multiples and describe limitations of each definition (CC1).
  2. Explain sources of differences in cross-border valuation comparisons (CK2, CK3, CC1, CCIT1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Multiples Valuation: S.2.1 (p.3-4); S.3.1 (p.6-7); S.3.2 (p.37-38); S.3.4 (p.52-53); S.4.1 (p.60-61); S.4.3 (p.67)
 23

Valuing private company 

  1. Understanding the process of valuing private companies (CK2, CC2).
  2. Describe the challenge analysts can face while valuing private companies (CK2, CC2).
  3. Describe the motives behind private company valuation and the different parties that could be involved (CK2, CC2).
  4. Describe the Common Methods for Valuing Private Companies (CK2, CC2).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
 24

Valuing private company 

  1. Calculate the risk adjusted cost of capital for a private company (CK2, CC2).
  2. Calculate the value of a private company using DCF and relative valuation approach (CK2, CC2).
  3. Explain the rationale for “Key Person risk” and “illiquidity risk” and how it affects the value of private companies (CK2, CC2).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
 25

Valuing private company 

  1. Calculate the risk adjusted cost of capital for a private company (CK2, CC2).
  2. Calculate the value of a private company using DCF and relative valuation approach (CK2, CC2).
  3. Explain the rationale for “Key Person risk” and “illiquidity risk” and how it affects the value of private companies (CK2, CC2).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
26

IPO Valuation 

  1. Explain the reasons why a private company might go public and the twist to IPO valuation (CK2, CC2).
  2. Describe the challenges of going public as a private company (CK2, CC2).
  3. Describe the steps in an Initial Public Offering (IPO) and the types of listing (CK2, CC2).
  4. Describe the Common Methods for IPO valuation (CK2, CC2).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
27

IPO Valuation 

  1. Explain the reasons why a private company might go public and the twist to IPO valuation (CK2, CC2).
  2. Describe the challenges of going public as a private company (CK2, CC2).
  3. Describe the steps in an Initial Public Offering (IPO) and the types of listing (CK2, CC2).
  4. Describe the Common Methods for IPO valuation (CK2, CC2).

Lecture
Discussion

Reading:
CFA Material, FCF Valuation: S.2.2.1-2.3.2 (p.4-6); S.3.1 (p.7); S.3.2 (p.10-11); S.3.4 (p.18-19); S.4.3 (p.39-40); S.5 (p.47)

Khan Academy: Stocks and bonds (Videos 16-17)
28

Real Estate Valuation

  1. Classify and describe basic forms of real estate investments (CC1).
  2. Describe the characteristics, the classification, and basic segments of real estate (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Private Real Estate Investments (p. 5-44)
29

Real Estate Valuation

  1. Explain the role in a portfolio, economic value determinants, investment characteristics, and principal risks of private real estate (CK1, CK2, CC1).
  2. Compare the direct capitalization and discounted cash How valuation methods (CC1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Private Real Estate Investments (p. 5-44)
 30

Real Estate Valuation

  1. Describe due diligence in private equity real estate (CC1).
  2. Discuss private equity real estate investment indexes, including their construction and potential biases (CK2, CK3, CC1, CCIT1, CIP1).

Lecture
Discussion

Reading:
CFA Material, Private Real Estate Investments (p. 5-44)
 31

Team Exercise: Multiples Valuation

  1. Calculate and interpret the justified price-to-earnings ratio (P/E), price-to-book ratio (P/B), and price-to-sales ratio (P/S) for a stock, based on forecasted (CK2, CK3, CC1, CCIT1, CIP1)

Brief lecture
Examples of multiples valuation
Mini-presentation and discussion
 32

Team Exercise: Multiples Valuation

  1. Calculate and interpret a predicted P/E, given a cross-sectional regression on fundamentals, and explain limitations to the cross-sectional regression methodology (CK2, CK3, CC1, CCIT1, CIP1).

Brief lecture
Examples of multiples valuation
Mini-presentation and discussion
 33

Team Exercise: Multiples Valuation

  1. Calculate and interpret the P/E-to-growth ratio (PEG) and explain its use in relative valuation (CK2, CK3, CC1, CCIT1, CIP1).
  2. Calculate and explain the use of price multiples in determining terminal value in a multistage discounted cash flow (DCF) model (CK2, CK3, CC1, CCIT1, CIP1).

Brief lecture
Examples of multiples valuation
Mini-presentation and discussion
 34

Team Exercise: Forecasting Performance

  1. Compare top-down, bottom-up, and hybrid approaches for developing inputs to equity valuation models (CC1).
  2. Evaluate whether economics of scale are present in an industry by analyzing operating margins and sales levels.  (CC1, CIP1).

Brief lecture
Examples of performance forecasting
Mini-presentation and discussion
 35

Team Exercise: Forecasting Performance

  1. Forecast the following costs: cost of goods sold, selling general and administrative costs, financing costs, and income taxes (CK2, CK3, CC1, CCIT1, CIP1).
  2. Describe the relationship between return on invested capital and competitive advantage (CC1, CIP1).

Brief lecture
Examples of performance forecasting
Mini-presentation and discussion
 36

Team Exercise: Forecasting Performance

  1. Explain how competitive factors affect prices and costs (CC1, CC2, CC3).
  2. Explain how to forecast industry and company sales and costs when they are subject to price inflation and deflation (CK2, CK3, CC1, CCIT1, CIP1).

Brief lecture
Examples of multiples valuation
Mini-presentation and discussion
 37

Team Exercise: Estimating WACC

  1. Explain and calculate the weighted average cost of capital for a company (CK2, CK3, CC1, CCIT1, CIP1).
  2. Understand the main objective of financial management (CK1, CK2, CC1, CIP1).

Brief lecture
Examples of WACC estimation
Mini-presentation and discussion
 38

Team Exercise: Estimating WACC

  1. Describe the relationship between return on invested capital and competitive advantage (CC1, CIP1).

Brief lecture
Examples of WACC estimation
Mini-presentation and discussion
 39

Team Exercise: Estimating WACC

  1. Estimate the required return on an equity investment using the capital asset pricing model (CK2, CK3, CC1, CCIT1, CIP1)

Brief lecture
Examples of WACC estimation
Mini-presentation and discussion
 40

Team Exercise: Calculating FCFF and MVE

  1. Explain the appropriate adjustments to net income, earnings before interest and taxes (EBIT), earnings before interest, taxes, depreciation, and amortization (EBITDA), and cash flow from operations (CFO) to calculate FCFF and FCFE (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1).
 Brief lecture
Examples of FCFF and MVE calculation
Mini-presentation and discussion
 41

Team Exercise: Calculating FCFF and MVE

  1. Explain the single-stage (stable-growth), two-stage, and three-stage FCFF and FCFE models and select and justify the appropriate model given a company’s characteristics (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1).

Brief lecture
Examples of FCFF and MVE calculation
Mini-presentation and discussion
 42

Team Exercise: Calculating FCFF and MVE

  1. Estimate a company’s value using the appropriate free cash flow model(s) (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1)..
  2. Explain the use of sensitivity analysis in FCFF and FCFE valuations (CC1, CIP1).

Brief lecture
Examples of FCFF and MVE calculation
Mini-presentation and discussion
 43

Team Exercise: Sensitivity Analysis

  1. Estimate a company’s value using the appropriate free cash flow model(s) (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1).
  2. Explain the use of sensitivity analysis in FCFF and FCFE valuations (CC1, CIP1).

Brief lecture
Examples of sensitivity analysis
Mini-presentation and discussion
 44

Team Exercise: Sensitivity Analysis

  1. Calculate and interpret an equity risk premium historical and forward-looking estimation approaches (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1)
  2. Describe strengths and weaknesses of methods used to estimate the required return on an equity investment (CC1, CIP1)
  3. Evaluate the appropriateness of using a particular rate of return as discount rate, given a description of the cash flow to be discounted and other relevant facts (CK2, CK3, CC1, CC2, CC3, CCIT1, CIP1)

Brief lecture
Examples of sensitivity analysis
Mini-presentation and discussion
45

Team Presentations – Complete Report (CK2, CC2, CCIT1, CIP1)

 Team presentations and feedback
46

Team Presentations – Complete Report (CK2, CC2, CCIT1, CIP1)

 Team presentations and feedback
47

Team Presentations – Complete Report (CK2, CC2, CCIT1, CIP1)

Team presentations and feedback
48

Team Presentations – Complete Report (CK2, CC2, CCIT1, CIP1)

Team presentations and feedback
49

CFA Code of Ethics

  1. Describe a framework for ethical decision making, distinguishing between rules and ethics in regards to an investment professional (CK4, CIP2)
  2. Describe and apply the following standards and related substandards of the CFA Code of Ethics and Standards of Professional Conduct:  Standard I Professionalism, Standard II Integrity of Capital Markets, and Standard VII Responsibilities as a CFA Institute Member or CFA Candidate (CK4, CIP2)

Lecture
Discussion
Group exercise on applying the standards to cases

Reading:
CFA Code of Ethics and Standards of
Professional Conduct (p.6-226).
50

Global Investment Performance Standards (GIPS)

  1. Explain the purpose and applicability of GIPS(CK4,CIP2)
  2. Explain the purpose and construction of composites in performance reporting (CK4, CIP2)

Lecture
Discussion
Group exercise on applying the GIPS to cases

Reading:
Introduction to GIPS, GIPS (p.227-292).
 Total Hours  75 hours

9. TEXTBOOKS AND REFERENCES

Textbooks

  1. CFA Program Curriculum: Equity Investments and Portfolio Management – Level I Part I, CFA Institute, 2019/2020
  2. Damodaran A. (2012). Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, 2nd Edition, Wiley  Finance.
  3. Bodie, Kane & Marcus (2019) Investments, 11th Edition, McGraw Hill.
  4. Reilly, F. & Brown, K. (2016) Analysis of Investments & Management of Portfolios, 10th Edition, South-Western, Cengage Learning.

Additional References

  1. CFA Institute, Introduction to the Global Investment Performance Standards, 2018.
  2. CFA Institute, Global Investment Performance Standards, 2018.
  3. CFA Institute, Code of Ethics and Standards of Professional Conduct Standards of Practice Handbook, Eleventh Edition
  4. CFA Institute, Guidance for Standards I–VII Standards of Practice Handbook, Eleventh Edition
  5. Videos: https://www.khanacademy.org/economics-finance-domain/core-finance
  6. Valuation: Measuring and Managing the Value of Companies, McKinsey & Company: T. Koller, M. Goehart, and D. Wessels, 5th edition, 2010
  7. Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, A. Damodaran, 3rd edition, 2012
  8. The Dark Side of Valuation: Valuing Young, Distressed, and Complex Businesses, A. Damodaran, 2nd edition, 2009

Note: A financial calculator capable of performing operations with amortizing payments and uneven cash flows (e.g., Texas Instruments BA II Pus, Hewlett Packard 12C, etc.). You could use an app on your smartphone but it will not be allowed during exams. Please bring your calculator to each class.

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