Troy State University Montgomery

Division of Business

Finance 4432

                                                                 

 

Instructor:  Dr. Michael A. S. Guth, Ph.D., J.D.

Office Hours: 9 AM – 12:00 noon Monday - Friday

Telephone: 865-483-8309

E-mail   mike @ michaelguth.com

Prerequisites: FIN 3331

Text: (Required) Robert A. Strong, Practical Investment Management, 2^nd Ed., (Southwestern/Thomson, 2001), ISBN 0324019149

Course Credits: 3 semester hours

 

Course Description :  An introduction to the essentials of financial markets with practical coverage of all important areas of investments. Emphasis is on financial analysis, financial market analysis, and portfolio managements.  Focuses on decision making that maximizes the value of a firm for shareholders and analyzing the impact of each major financial decision on the value of the investment portfolio.  Includes and explanation of risk-return tradeoffs.

 

Course Requirements : During the course, students will be required to post to the discussion board a report consisting of a short summary and commentary of an article in the investments or asset valuation area from the Wall Street Journal.  Each week, students will be expected to post an average of three substantive comments to the discussion board.  Students are encouraged to comment on other students’ postings, and not limit themselves to replying only to the topics posted by the instructor.  There will be a quiz every week covering the material assigned for that week.  The weights for the final course grade are as follows:

                       

        Discussion Board Participation                 30%       Weekly + special WSJ reports

        Quizzes                                                        70%       Weekly

                       

                       

Evaluation Standards:

     A- 90% and above

     B- 80% to 89%

     C- 70% to 79%

     D- 60% to 69%

     F- Below   60%   

 

Wall Street Journal  Reports

 

A summary of an article in the WSJ will be required of each student once or twice during the course.  These reports must be posted to the discussion board no later than Thursday of that week.  The summary should be one-half to one page, double-spaced.

 

    

Course Objectives

 

After completing this course, students should have a thorough knowledge of:

 

Course Schedule

Week 1

Chapter 1:  The Concept of Investing

Chapter 2:  Understanding Risk and Return

Chapter 3:  The Marketplace

Post three substantive comments to the discussion board.  Complete the quiz for Week 1 by Sunday.

 

Week 2

Chapter 4:  Bond Fundamentals

Chapter 5:  Common Stock

Post three substantive comments to the discussion board.  Complete the quiz for Week 2 by Sunday. 

Week 3

Chapter 6:  Market Mechanics

Chapter 7:  Fundamental Stock Analysis

Post three substantive comments to the discussion board.  Complete the quiz for Week 3 by Sunday. 

Week 4

Chapter 8:  Beyond Fundamental Analysis

Chapter 9:  Market Efficiency

Post three substantive comments to the discussion board.  Complete the quiz for Week 4 by Sunday. 

Week 5

Chapter 10:  Gathering Investment Information

Chapter 11:  Market Indexes

Chapter 12:  Convertible Securities

Post three substantive comments to the discussion board.  Complete the quiz for Week 5 by Sunday. 

Week 6

Chapter 14:  Why Diversify?

Appendix:  Arbitrage Pricing Theory

Chapter 15:  The Role of Derivative Assets

Appendix:  Option Pricing

Post three substantive comments to the discussion board.  Complete the quiz for Week 6 by Sunday. 

Week 7

Chapter 16:  Managing the Equity Portfolio

Appendix:  Index Overwriting

Chapter 17:  Managing the Fixed Income Portfolio

Post three substantive comments to the discussion board.  Complete the quiz for Week 7 by Sunday. 

Week 8

Chapter 18:  Mortgage-Backed Securities

Chapter 19:  Investment Companies

Appendix:  Tax Considerations

Post three substantive comments to the discussion board.  Complete the quiz for Week 8 by Saturday (last week of class). 

 

PIPS (People in Profit System) Investments
State banking regulators have deemed private investment clubs that promise huge returns for risking very little money are illegal Ponzi schemes, in which money from later investors are used to pay off initial investors, until this speculative bubble bursts. The get-rich-quick schemes, called the "People in Profit System," or PIPS, asks members to "loan" it, e.g., $400, and agree to repay these loans with interest depending on what risk-reward traadeoff the investors choose. These clubs say they will invests the money in various investment vehicles and promise outlandish interest payments, with a $400 loan returning as much as $8,000 in two years. When something sounds too good to be true, it usually is. PIPS investments appear to be classic Ponzi schemes. The bubble will eventually burst when not enough new investors are gullible enough to fuel the growth in the clubs and loan them money. In general, PIPS clubs are selling securities, and their misrepresentations about who is ultimately paying the interest amounts to securities fraud. The public should beware of these investment scams. Many states have found that the PIPS "2 percent plan," where investors are promised a 2% return on their investment per day, are sold through fraudulent misrepresentation.