Investment Management Course Outline

for Session 2015-16

Batch: PGDM 2014-16

Term: IV

Course (Finance Elective): INVESTMENT MANAGEMENT

Credits: 2.5

Course Instructors: Prof D N Panigrahi and Prof J S Matharu

1. Objectives of the course:
The course inputs are designed to accomplish the following objectives.
1) To introduce the students to the needs and concepts of investments in various asset classes (both
financial and non-financial), but focus mostly on equity investments and fixed income (or debt)
securities.
2) To familiarize the students with the dynamic function of analyzing and evaluating individual securities (both
equity and debt) by applying traditional methods of security analysis like fundamental and technical analysis
as well as efficient market hypothesis and how to construct, manage, protect and evaluate a portfolio of
securities in terms of the desired objectives of an investor or group of investors based on their return
expectations and risk tolerance.
3) To develop knowledge and skills of the students to make equity research reports based on economy, industry,
company and technical analysis with the help of various databases like Capitaline, Prowess and Bloomberg
and software like Excel.
4) To study and analyze bond market (which is many times the size of the stock market), term structure of
interest rates (yield curves) and strategies of managing a bond portfolio.
5) To have a brief overview of derivative contracts like options and futures.

2. Course Outline:
This course mainly focuses on two areas :
a. Security Analysis
b. Portfolio Management.
The Course will have three modules :
a. Introduction to Investment, Financial Markets & Instruments.
b. Security Analysis.
c. Portfolio Management.
Each module has several components within it. Please refer to the session-wise plan and readings for details.

3.A Pre-requisites:
This course assumes a basic knowledge of Accounting and Finance (like financial statement analysis and time value
of money) and basic mathematics like elementary algebra, calculus, graphs and elementary statistics.

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM

3.B Link to other Subjects:

a. Banks on the basic understanding of Financial Accounting, Management Accounting and Financial
Management/Corporate Finance.
b. This is the key finance discipline that will help you understand other specialized finance topics like Derivatives,
Risk Management, Fixed Income Securities, Treasury Management, Financial Markets & Institutions and Bank
Management etc.
4. Students Learning Outcomes/Goals
On sincere and successful completion of the course, the students will be able to:
LO1: Understand and appreciate the distinguishing features of investments in various asset classes and their suitability
to different investors/investor groups based on their needs, goals, planning horizon and risk tolerance etc. They will
also understand the impact of external environment like inflation, interest rates, taxes, domestic and global market and
geo-political conditions, economic policies like monetary and fiscal policies on the investment portfolio. PLG3
LO2: Analyze and evaluate the stocks with the help of fundamental analysis and technical tools. PLG3
LO3: Prepare an equity research report based on Economy-Industry-Company (EIC) analysis and communicate to
investors/investor groups. - PLG2.
LO4: Construct portfolios and evaluate their performance. PLG3.
LO5: Analyze fixed income securities like bonds using fundamental analysis and manage bond portfolios. PLG3.
Program Level Goals (PLGs)
PLG2. Develop effective communication skills and abilities.
PLG3. Demonstrate decision making skills in solving business problems.
5. Basic Text Book
Chandra, Prasanna, Investment Analysis & Portfolio Management (IAPM), 4/e Tata McGraw Hill 2012.
6. Reference Books:
1)
2)
3)
4)
5)
6)
7)
8)

Reilly, Frank K and Brown, Keith C, Investment Analysis and Portfolio Management (IAPM), 10 th Edition,
Cengage.
Damodaran, A., Damodaran on Valuation, Wiley-India
Jones, Charles P., Investment Analysis and Management, Eleventh Edition, Wiley India, 2012.
Fischer, Donald E. and Jordan, Ronald J., Security Analysis and Portfolio Management, Pearson Education,
2004.
Sharpe, William F., Gordon J. Alexander and Jeffery V. Bailey, Investments, Prentice Hall, 2002
Bodie, Zvi, Alex Kane, Alan J Markus and Pitabas Mohanty, Investments, McGraw-Hill 8 th Edition, 2009.
Security Analysis (Text Book & Work Book) By ICFAI
Portfolio Management (Text Book & Work Book) By ICFAI

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM

7. Magazines, Newspapers and Electronic Media

Capital Market
Dalal Street Investment Journal
Economic Times, Business Standard, Business Line
Watch CNBC-TV18, ETNOW, Bloomberg TV, Zee Business and CNBC Awaz Business News Channels regularly
to gain real insights into the subject.
8.
1)
2)
3)
4)
5)

E-resources/databases:Bloomberg
Capital Line
Prowess
Meta Stock
Websites like investopedia.com

9. Session Plan:
Session
No

Topics

Pre class preparations/

Assignments

Introduction to Investments, Financial Markets and

Instruments
a. Overview of Investment Process /
Investment Setting
b. Investment Alternatives / Asset Classes and
Financial Instruments

Chandra, Chapters 1, 2

Asset Allocation Decision:

Individual Investors Life Cycle

Reilly & Brown, Chapter 2

Lecture Notes

a. Securities Markets and Indexes Local and

Chandra, Chapters 3, 5

Global
b. Review of basic Maths and Stats for
investments:
Time Value of Money, Mean, Variance,
Standard Deviation, Downside Semi
Variance, Coefficient of Variation,
Covariance, Correlation, Linear Regression,
Graphs and equations of straight lines,
simple algebra and calculus like log,
matrices, derivatives etc.

Security Analysis
Investment Risk and Return:
impacts of tax and inflation, different measures of
return and risk including Downside semi-variance,
shortfall probability, expected shortfall, Value at

Chandra, Chapters 4, 8
Mini Case

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM

Risk, Tracking Error etc., models of asset returns,

Market/single index model for single security,
security characteristic line, beta of a security, Capital
Asset Pricing Model and Security Market Line for
single security,
5

6& 7
8

Fixed Income Securities:

Bond basics, Analysis and Valuation of bonds, Bond
Prices and Yields, Bond value theorems, bond risks,
yield curves

Chandra, Chapter 11

Equity return and valuation models

Chandra, Chapter 13
Mini Case
Chandra, Chapters 14, 15

Fundamental Analysis:
(Economy/Market Analysis, Industry/Sector Analysis
and Company Analysis) Equity and Bond

Mini Case

Mini Case

Guest Lecture on Technical Analysis

Chandra, Chapter 16

10

Portfolio Management
Efficient Market Hypothesis and Behavioral Finance
concepts

Chandra, Chapters 9, 10

11
12

Mid Term Exam

Modern Portfolio Theory:
Risk and return of a portfolio, Investors policy
statement, portfolio selection and construction,
Markowitz model: efficient frontier and portfolio
diversification

13

Single Index Model, Sharpes optimal portfolio,

Capital market theory, Capital Market Line, Capital
Asset Pricing Model and Security Market Line,
Arbitrage Pricing Theory

Chandra, Chapters 7, 8

Portfolio Management and Evaluation:

Portfolio review and revision/rebalancing, passive
and active portfolio management

Chandra, Chapters 22, 23

14

Institutional Investing and Professional Money

Management:
Portfolio Management Schemes, Hedge Funds,
Mutual Funds

15

16 & 17

Bond Portfolio Management Strategies:

Passive and Active
Duration and Convexity and interest rate risk

Chandra, Chapter 7

Mini Case

Mini Case

Chandra, Chapter 24

Chandra, Chapter 12
Mini Case

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM

Immunization
18 & 19

20

Basics of Derivatives:
Options, Forwards and Futures
Hedging, arbitrage and speculation

Chandra, Chapters 17, 18

Guest Lecture

10.Pedagogy:
The pedagogy or teaching methodology will be a balanced mix of lectures/class discussions, In-class
computational exercises, spreadsheet exercises, take-home exercises, Case studies and analyses, group work and
presentations, and industry guest lectures etc.
11.Evaluation Scheme:
Sr. No.

Components

Weightage

Learning Outcomes

Class Activities/ Quizzes

20

1 through 5

Group
Project/Assignment
Mid Term Exam Pen
and Paper Based
End Term Exam Pen
and Paper Based

20

2, 3

20

1, 2 and part of 5

40

1 through 5

3
4

12. Career Focus:

This course will open up job opportunities in (i) Brokerage Firms (ii) Mutual Fund houses as Financial
Analyst/Equity & Debt Market Researcher (iii) Wealth Manager/Financial Advisers/Private Bankers in Banks,
MF houses, Brokerages, Insurance Companies etc. (iv) Stock Exchanges & Depositories and other Capital Market
Intermediaries.
13. Expectations from Students:
Students must go through the pre-class preparations/reading materials, complete the assignments
and exercises, if any and come well prepared for the class. If not, faculty reserves the right to debar
defaulting students from attending the specific session(s) for which student has not done his/her
homework.
Class room sessions should be used for discussion on real life examples/cases/applications.
Students are expected to participate and interact FULLY AND CONSTRUCTIVELY in all classroom
activities and discussions.
Academic code does not allow students to resort to any form of plagiarism in any part of their academic
work including projects, presentations, assignments etc. Students are supposed to access read/access
materials beyond those of books, through online mode, print and electronic media.
Students are expected to display professional conduct in the class and be punctual and sincere in all the
activities.
14. Any other Remarks:

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM

CALCULATOR & EXCEL CAPABILITY: Every student should bring his/her Scientific calculator to the
class without which nobody will be allowed to sit in the class. It is crucial that you are familiar with your
calculator by the time we begin Chapter 2. Please note that in the Class test, Mid and End Term
examination, Interest and Annuity Tables will Not be supplied, you will be allowed to use your Scientific
Calculator only, but No Financial Calculator. Once you are familiar with the formulas, you are expected to
develop Excel capability for solving investment problems.

Course Outlines-IvM-AY-2014-15/Course Instructors: Prof. DNP and Prof. JSM