20503 Investment Analysis and Risk Management
Warning: The information on this page is indicative. The subject outline for a
particular session, location and mode of offering is the authoritative source
of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject.
Subject handbook information prior to 2025 is available in the Archives.
Credit points: 6 cp
Subject level:
Undergraduate
Result type: Grade and marksRequisite(s): 25300 Fundamentals of Business Finance
There are course requisites for this subject. See access conditions.
Description
This subject develops a set of tools for making investment and risk management decisions. It introduces the pricing of financial securities and derivatives and provides a foundation for analysing risk and return of financial assets. The topics covered include risk and risk aversion, portfolio optimisation, the pricing of equities, bonds, and derivative contracts. Students learn to use derivative contracts to manage investment risks.
Subject learning objectives (SLOs)
| 1. | explain the working of key financial markets |
|---|---|
| 2. | demonstrate valuing a range of asset types |
| 3. | analyse investment portfolios and their performance |
Contribution to the development of graduate attributes
This subject provides a basic understanding of the pricing of financial products, including equities, bonds, futures, and options. It introduces risk management applications using derivative contracts. The subject encourages critical analysis and develops financial and quantitative skills. On completion of the subject students will be equipped with the knowledge and skills to analyze real world investment and risk management decisions.
Teaching and learning strategies
The subject will be taught using a combination of large lectures and smaller tutorials. The lectures provide the structure of the topic area, discussion of the theory and some practical examples. Tutorials provide an opportunity to discuss ideas, issues and make practical application of the theory, as well as encouraging students to think in a creative manner to solve real world problems. Use is made of the UTS web-based communication tool Canvas, which will be used to share information, provide feedback and encourage interaction between staff and students.
Content (topics)
- Financial products and trading
- Risk and risk aversion
- Portfolio optimization
- CAPM and APT
- Market efficiency
- Bond pricing and yield
- Futures and options contracts
- Hedging with derivatives
Assessment
Assessment task 1: Portfolio Analysis Assignment (Individual and Group)
| Objective(s): | This addresses subject learning objective(s): 2 and 3 |
|---|---|
| Weight: | 40% |
| Length: | The completed group assignment should be 2000 words in length. Word limits not including any tables, figures, references or appendices. |
Assessment task 2: Final Exam (Individual)
| Objective(s): | This addresses subject learning objective(s): 1, 2 and 3 This addresses program learning objectives(s): .1, .2 and .3 |
|---|---|
| Weight: | 60% |
| Length: | 2 hours plus 10 minutes reading time |
Minimum requirements
Students must achieve at least 50% of the subject’s total marks.
Required texts
Z. Bodie, A. Kane, and A. Marcus, Essentials of Investments, Global Ed., McGraw-Hill/Irwin, 2013
References
- Z. Bodie, A. Kane, and A. Marcus, Investments, 9th Ed, McGraw-Hill/Irwin, 2011.
- E. J. Elton, M. J. Gruber, S. J. Brown and W. Goetzmann, Modern Portfolio Theory and Investment Analysis, 8th Ed, John Wiley and Sons, 2009.
- J. Hull, Options, Futures and Other Derivatives, 8th Ed., Prentice Hall, 2011.
- P. L. Bernstein, Capital Ideas: The Improbable Origins of Modern Wall Street, Free Press, 1992.
- B. G. Malkiel, A Random Walk Down Wall Street, 7th Ed., W. W. Norton & Company, 1999.
Other resources
Consultation Times
The lecturer(s) will be available for consultation at certain times throughout the week. These consultation times will be made available on Canvas.
The Canvas Discussion Board
The Canvas discussion board is a forum for students to post subject-related inquiries, discuss topics, and exchange ideas with classmates. If you are struggling with a tutorial problem, we recommend that you post a query on the discussion board. It is quite likely that one of your classmates will be able to assist you. Please note that the discussion board is a great tool for discussion between students and will be monitored regularly by the lecturer and tutors and you are encouraged to make good use of it.
Assistance with Mathematics and Statistics for students in the Faculty of Business
All UTS students are welcome to seek assistance with Mathematics and Statistics from the Mathematics Study Centre Drop-in Service, located in CB04.03.331. The room is staffed by tutors, lecturers, and some third year volunteers, and is open during semester Monday to Friday, usually 11am to 5pm. The timetable and list of tutors’ expertise is posted on the Maths Study Centre website during week 2 each session. http://www.uts.edu.au/current-students/science/study-resources/maths-study-centre.