Lecture Notes in Investment

This is an introduction to an investment course that focuses on basic models used in the financial industry for investment and decision making. The course begins with an overview of the investment environment in developed markets, followed by a more in-depth analysis of key investment topics. These topics include modern portfolio theory, asset pricing models, term structure of interest rates, stock and bond portfolio management and evaluation of portfolio performance. Modern finance extensively uses the concept of arbitrage, or rather the lack of it in financial markets, and the course highlights such uses in different circumstances.The course takes a hands-on approach with the aid of a software package, Maple™, the details of which will be explained during the first lecture. Consequently, most lectures will be divided between a theoretical lecture and a lab — a practical implementation of the theoretical material of the lecture. The use of the Maple™ software in this course simulates, to a certain extent, a professional environment. It allows visualizations of different concepts, minimizes tedious algebraic calculations and the use of calculus while equipping students with intuitive understanding. This is facilitated by the symbolic power of Maple™ and its excellent graphic and animation capabilities.Institutional material is surveyed very concisely, so the reader gets an appreciation of the investment 'lay of the land'. It is enhanced by an eLearning unit, self-administrated quizzes as well as a stock market game, utilizing StockTrack™. StockTrack™ introduces students to trading in the real world by practicing different types of orders as well as introducing conventions common in the investment community.Contents: IntroductionA Basic Model of Bond MarketsNo Arbitrage Condition and the Term Structure, its Estimation and SmoothingDuration and ImmunizationPortfolio Choice Under Uncertainty: The Mean–Variance FrameworkThe Feasible Set: A General FormulationThe Capital Asset Pricing Model: CAPMThe Security Market Line, Estimations and Single Index ModelsMulti-Index Models and Arbitrage Pricing Theory
Readership: Undergraduates studying basic models used in financial industry for investment and decision making.Equality Markets;Bond Markets;Investment Fundamentals0Key Features: Concise introduction to investments Covers the main models of equity markets Minimize the use of calculus while conveying an intuitive understanding of equity markets