Investment Management

Code: 28C00300
Credits: (4 cr / 6 ECTS)
Status of the Course: Bachelor’s program – compulsory for Finance students
Lectured: First period of Spring 2006
Lecturer: Markku Kaustia

General

The course objective is to introduce the key theories and observations in the area of financial markets. This course, along with Corporate Finance, has one of the highest workloads in finance courses. Investment Management is nowadays lectured in a single period format, while the scope remains approximately the same, which means that it will require a lot of work from the students. It is highly recommendable to prepare for the lectures by reading the course book beforehand, as the lectures are not just repetition of the book reading, but are based on the students having read the book.

The exercises and the investment game account for 50% of the grade. There are roughly 8 exercise sets of 3 to 5 questions each that are done in groups. The time required to finish one exercise set varies, but one exercise set takes approximately from two to four hours of intensive work. The investment game requires playing the Kauppalehti’s Nettisijoittaja game and reporting trades and fund performance. As such playing the Nettisijoittaja game will not necessarily require much time, but doing the reports and analyzing your performance takes some time.

Investment management requires some basic mathematics and knowledge of differential calculus may help in the understanding of concepts and solve optimization problems. Similar to Corporate Finance, many of the exercise problems are easier with (read: require) Excel.

Material

The book (Bodie, Kane, and Marcus, Investments 6th edition. Also the older 4th and 5th editions can be used) is necessary for this course. There are no other assigned readings like scientific articles. The course website has a table of the respective readings in the older editions. As this course is compulsory for all finance students, there are a lot of copies going around. So ask fellow students for them if you don’t want to spend 60+ euros for the book.

Objective

If you want to become an expert in financial investments, this course gives you a base on which you will build your expertise. The course however does not get on the expert level with any topic, since there are so many topics to be covered. For those of you who do not plan to study investment in more detail, the instructors recommend remembering two things: 1) most of the time the markets collectively know more than most experts, and you understand the practical implications of this; 2) you should expect risk and return to be positively related, although in hindsight they often are not.