Course Syllabus - Fall 2007
University of Florida

        (a)    how security markets function,
        (b)    what influences a stock’s rate of return, and
        (c)    how to develop investment strategies.

Though we consider the viewpoint of corporate investment professionals and institutional equity money managers at times, the primary focus in this course centers on personal financial decisions related to picking stocks and/or equity mutual funds. With the general trend towards defined contribution pension plans in the U.S., most of us will be forced to choose from an array of investments including stocks, bonds, money market funds, and mutual funds. As we move through the material in this course, it’s a good idea to ask yourself, "How would what we’re talking about in class affect my real-world investment portfolio?"

Lecture Notes
These notes will serve as my overlays during the semester. Lecture notes act as a general guide to our in-class discussions, but are intentionally incomplete. There are things that we will talk about in class that are not in the lecture notes and that will show up on exams.  You can download the class notes by clicking here.

Solutions to Old Homeworks, Quizzes, Projects and Exams
We all know that sororities, fraternities, and other groups have copies of my old homeworks, quizzes, and exams. So in an effort to maintain a level playing field, I have made all of these available on the web under solution sets.  Some of the homework, quiz, and exam questions will be very similar to the old versions that you have been provided--I highly recommend that you study this material.

Press Clippings
In about a third of our classes, I will hand out an article and ask you to read it during the break. We will usually discuss these right after the break, and I encourage you to pay attention to these digressions. When you read these articles, try to apply some of the concepts that we cover in class to these real-world situations.

Videos
Most of our classes will include watching a video that is usually between 5 and 15 minutes long.  We will discuss the video afterwards.  Material covered during the videos and subsequent discussions are fair game on exams.

Financial Calculator
You need a calculator of some sort, preferably a financial one. What you used in FIN 3403 is fine.

I’ve placed a very specific example of how grades are computed on the FIN 4504 home page. If you are obsessed with grades, look at the grading example page carefully. I also have a grade look-up page on the web that reports the curves for exams along with a Gator-link interface where students can download their individual scores.  I don't know what the final grade distribution for the class will be since it depends on how well the whole class performs. As a general rule of thumb for exams, the bottom 10 percent of scores will receive a grade of D or E. Most of the time these scores can be brought up with diligent work on homeworks, quizzes, projects, and subsequent exams. Please understand however that if there are 100 students in the class and you rank 92 (i.e., you got the 92nd highest score on the exam), you should expect to get a high D for the test.

Homework: The purpose of homework is to prepare you for quizzes and exams by providing information about both format and content. Most students typically do very well on the homework, so homework grades usually end up on a straight scale (90%-100% A, 80%-90% B, etc.). Blowing off the homework makes it nearly impossible to get an A in the course (and Bs get much tougher as well). We will have three homework assignments. All three homeworks will be equally-weighted to give an overall homework score. Each homework set will effectively be an extended practice test to give you a feel for what the exams will look like. For each of the homeworks, I will officially grade only a subset (perhaps 20%) of the problems. However, I will check to see that you’ve made an honest attempt to answer all of the questions. Solutions to the graded homework problems will be posted to the FIN 4504 home page very shortly after they're due. Late homework will not be accepted unless you make prior arrangements with me at least one week before the due date or you have an extraordinarily good excuse (these policies apply to computer projects as well). You can work on regular homeworks in groups (max of three people) if you wish, but each student must turn in his/her own homework. Also, please indicate who you worked with on your homework.

Regular Quizzes: The purpose of regular quizzes is to motivate students to not fall behind. We take three regular quizzes during the semester (one before each exam), and only the highest two quiz scores count towards the overall regular quiz grade. Quizzes are given at the beginning of class and generally last about 15 to 20 minutes. There aren't make-up quizzes. Each quiz consists of only two or three questions. We'll talk about the specific material covered by each quiz as we get closer to their respective dates.

Current Events Quizzes: The purpose of these quizzes is to reward students for carefully reading and understanding the articles provided on the WSJ page on the course website.  Reading the financial press is important preparation for job interviews and to understand how class material applies in the real world.  We take seven current events quizzes during the semester, and only the highest six quiz scores count towards the overall current events quiz grade.  Quizzes are given at the beginning of class and generally last 5 to 10 minutes.  There aren't make-up quizzes.  Each quiz consists of four or five questions.  We'll talk about the specific material covered by each quiz as we get closer to their respective dates, but you can find out the material covered by each quiz by clicking here. 

Optimizer project: You will retrieve some historical data on individual stocks using Yahoo!'s finance page.  With this data, you will do some basic analysis, such as computing betas, average returns, standard deviations, and tracing out an efficient frontier. You will also need to answer some questions related to your results.  We will also build a rudimentary stock optimizer.  You must turn in a hardcopy of all your calculations and graphs. Each person must turn in a separate project, but you can work in groups of two. If you choose to work with a partner, please indicate who your partner is on your project.

Exams: We will have three exams. The midterms will not be cumulative (except for core concepts), but Exam #3 will be comprehensive (though weighted towards the final four chapters). Midterms will be given during regularly scheduled class times in the same classroom. There won’t be any make-up midterms, and the grading component for the missed midterm will accrue to Exam #3. If you plan to be out of town on any of the exam dates, let me know as soon as possible.  The general policy for a missed exam is that those points accrue to the Exam #3.

Each student is responsible for maintaining the current value of his or her portfolio (no teams are allowed). You may find the 'portfolio manager' function at moneycentral.msn.com helpful in keeping track of your holdings. The prices at which stocks can be initially bought or sold are reported in The Wall Street Journal on the next business day.

Reading the appropriate sections of the textbook before coming to class is helpful and will make classroom discussions more interesting and meaningful. Providing lecture notes should not be construed as an invitation to skip class—it’s just that I’d like your energies focused on understanding the most important concepts and on listening to and digesting the lecture, not busily writing down what was said a few minutes ago. I encourage you to write down additional notes to help you decipher what my notes are supposed to mean.

Most of the topics in FIN 4504 can serve as the basis of interesting in-class discussion and I want to encourage you to get involved so that lectures become more of an active experience.

My general exam philosophy is that there be a few surprises about the questions you get on the test, but to not allow an inordinate amount of time to think about how to approach each problem. This helps to ensure that the students who study the most get the best grades. Students who don’t put in serious study time will probably be pressed for time in my tests. For my exams, it is possible that time will be a important factor.

To do well on the exams, I give the following advice. A good portion of exam questions will be mathematical problems. Your best indication of exam problems will be from your homework assignments and occasional comments that I make in class (such as "you should pay special attention to problem #13 from Homework #1"). It is very important to solve all of the mathematical problems by yourself (without looking at the answer sheet). If you can solve all of the homework problems and other problems that I mention in class, you will do very well on the mathematical part of the exams. Some exam questions will be conceptual in nature. For these, class discussions and class notes are the best indicators. Reading the summaries at the back of each chapter will also prove marginally helpful. Make sure you understand each of the major points of the lectures (the 6 or 7 that we do each class). You should thoroughly memorize and understand the core concepts (I promise that they will appear quite frequently on exams). Finally, I’ll ask a couple of "picky" questions from either class discussions or the text to reward diligence.