Portfolio Management (BAN 473) Chapter 1: Introduction What is portfolio management? Phases of portfolio management: 1. Security analysis 2.

Portfolio analysis 3. Portfolio selection 4. Portfolio revision 5. Portfolio evaluation Role of portfolio management Chapter 2: Investment Meaning of investment Financial and economic meaning of investment Characteristics of investment: Return Risk Safety Liquidity Objectives of investment Investment Vs Speculation: Risk Capital gain Time period Investment Vs Gambling Chapter 3: Securities Market Financial market Segments of financial market Types of financial market Participants in the financial market Regulatory environment Primary market/new issues market: 1. Origination 2. Underwriting 3. Distribution Methods of floating new issues: Public issue Rights issue

 Private placement Principal steps in floating a public issue: 1. Pre-issue tasks 2. Opening and closing of the issue 3. Post-issue task Book Building Role of primary market Chapter 6: Risk Meaning of risk Elements of risk Systematic risk: Interest rate risk Market risk Purchasing power risk Unsystematic risk: Business risk Financial risk Measurement of risk: Expected return Risk Measurement of systematic risk Math: examples & exercises Chapter 9: Share Valuation Concept of present value Share valuation model: One year holding period Multiple-year holding period Constant growth model Multiple growth model Discount rate Multiplier approach to share valuation: P/E ratio Math: examples & exercises Chapter 12: Efficient Market Theory Random walk theory The efficient market hypothesis Forms of market efficiency

Empirical tests of weak form efficiency: Serial correlation test Run test Filter tests Distribution pattern Empirical tests of semi-strong form efficiency Tests of strong form efficiency Chapter 13: Portfolio Analysis Expected return of a portfolio Risk of a portfolio Reduction of portfolio risk through diversification: Security returns perfectly positively correlated Security returns perfectly negatively correlated Security returns uncorrelated Portfolios with more than two securities Math: examples & exercises Sheet: Diversification and portfolio risk Portfolios of two risky assets Reward-to-volatility (Sharpe) ratio Chapter 14: Portfolio Selection Feasible set of portfolios Efficient set of portfolios Selection of optimal portfolio Limitations of Markowitz model Single index model Measuring security return and risk under single index model Measuring portfolio return and risk under single index model Multi-index model: only theory, not math Math: examples and exercises under single index model Chapter 15: Capital Asset Pricing Model (CAPM) Assumptions of CAPM Efficient frontier with introduction of lending The capital market line The security market line CAPM SML and CML

Pricing of securities with CAPM Math: examples and exercises Chapter 16: Portfolio Revision Need for revision Constraints in portfolio revision: Transaction cost Taxes Statutory stipulation Intrinsic difficulty Portfolio revision strategies Chapter 17: Portfolio Evaluation Need for evaluation: Self evaluation Evaluation of portfolio managers Evaluation of mutual funds Evaluation perspective: Transaction view Security view Portfolio view Meaning of portfolio evaluation: Sharpe ratio Treynor ratio Math: problems and exercise on Sharpe and Treynor ratio only.