COURSE UNIT TITLE

: INVESTMENT ANALYSIS

Description of Individual Course Units

Course Unit Code Course Unit Title Type Of Course D U L ECTS
FIN 4233 INVESTMENT ANALYSIS ELECTIVE 3 0 0 5

Offered By

BUSINESS ADMINISTRATION (English)

Level of Course Unit

First Cycle Programmes (Bachelor's Degree)

Course Coordinator

ASSOCIATE PROFESSOR EFE ÇAĞLAR ÇAĞLI

Offered to

BUSINESS ADMINISTRATION (English)
Economics (English)

Course Objective

This course aims to introduce the students to the investment process, risk and return calculations, investment in common stock, bond, derivatives and hybrid securities, efficient market hypothesis, behavioral finance, modern portfolio theory and management, macroeconomic and industry analysis, and equity valuation models.

Learning Outcomes of the Course Unit

1   Describe the investment environment pointing out types of financial markets and instruments, and sources of financial information.
2   Select forwards, futures, options, warrants and convertibles in order to use them in investing activities.
3   Employ basic portfolio management tools and strategies in order to monitor and modify portfolios.
4   Calculate the value of basic securities pointing out the determinants of value and their relationships.
5   Appraise risk and return characteristics of investment assets using spreadsheet applications in order to select them for investment.
6   Construct an optimal two-asset portfolio, applying portfolio and capital market theories using spreadsheet applications.
7   Differentiate the basics of the efficient market hypothesis and behavioral finance discipline.
8   Conduct macroeconomic and industry analysis and apply equity valuation models.

Mode of Delivery

Face -to- Face

Prerequisites and Co-requisites

FIN 2002 - BUSINESS FINANCE

Recomended Optional Programme Components

None

Course Contents

Week Subject Description
1 The Investment Environment & Sources of Information
2 Asset Classes and Financial Instruments
3 Risk & Return
4 Risk & Return
5 Capital Allocation to Risky Assets
6 Optimal Risky Portfolios Portfolio Assignment / 1st report of Marketwatch
7 Optimal Risky Portfolios
8 Asset Pricing
9 Asset Pricing
10 The Efficient Market Hypothesis
11 Behavioral Finance
12 Macroeconomic and Industry Analysis
13 Equity Valuation Models
14 Options, Futures, and Other Derivatives 2nd report of Marketwatch

Recomended or Required Reading

1. Bodie, Z., Kane, A., Marcus, A.J., Investments, 13th Edition, 2024
2. CIVELEK, M. A. & DURUKAN M. B., (2011), Investments, 3rd ed., EFIL Publications, Ankara.
3. Borsa Istanbul A.Ş., Yayınlar, (https://www.borsaistanbul.com/sayfa/29)

Planned Learning Activities and Teaching Methods

1. Lecture
2. Problem Solving
During lectures, the theory will be explained with a comprehensive example.
3. Portfolio Assıgnment (Marketwatch)
The portfolio game played within a 10 week period will enable the students to apply what they learn in class with real time data.
The students will be competing at a virtual stock exchange game. They will form groups of 2-3 and each group is obligated to carry out a transaction at least once in two weeks. They will submit 2 stock reports, one before the mid-term exam and the other one before the final exam. In this report they will explain their transactions and the strategies they followed. They evaluate their performance and comment on what they have learned.

Assessment Methods

SORTING NUMBER SHORT CODE LONG CODE FORMULA
1 MT Midterm
2 ASS Assignment
3 FN Final
4 FCG FINAL COURSE GRADE MT * 0.35 +ASS * 0.25 + FN * 0.40
5 RST RESIT
6 FCGR FINAL COURSE GRADE (RESIT) MT * 0.35 + ASS * 0.25 + RST * 0.40


Further Notes About Assessment Methods

None

Assessment Criteria

1. Different types of financial markets and instruments will be classified.
2. Different indexes as sources of information will be searched and classified based on how they are calculated.
3. Information on financial instruments (stocks, bonds, futures, options, warrants and convertibles) as presented in the financial press will be used to explain their characteristics.
4. Futures will be used for a long and a short hedge.
5. Options pay offs and values will be calculated in relation to their holders and writers.
6. Stocks and bonds will be valued and an investment decision will be reached.
7. Effect of interest rates on bond valuation will assessed using duration.
8. An asset will be chosen among alternative assets by calculating risk and return.
9. An asset will be classified as undervalued or overvalued based on the capital asset pricing model.
10. An optimal two asset portfolio will be constructed by using the correlation coefficient and its risk and return will be calculated.
11. Markowitz approach to investing and the efficient frontier will be explained.
12. Portfolios will be monitored and modified using the Treynor and Sharp indexes.

Portfolio Assignment Evaluation Criteria
1- Investment Strategy Specification (20 points)
Clear articulation of investment objectives, risk tolerance, time horizon, and overall strategy.
Demonstrates understanding of different investment styles (e.g., value, growth, momentum) and rationale behind chosen strategy.

2- Portfolio Diversification and Risk Management (20 points)
Diversification across different asset classes (common stock, ETFs, ADRs) and industries.
Consideration of correlation between assets' returns and risk mitigation strategies.
Evidence of risk management techniques, such as stop-loss orders, limit orders, and margin trading, to protect against downside risk.

3- Active Trading and Execution Strategy (20 points)
Consistent engagement in trading activity at least twice a week. Effective utilization of trading orders (e.g., market orders, limit orders, stop-limit orders) discussed in class. Justification of trading decisions based on market analysis, news, or fundamental/technical factors.

4- Application of Modern Portfolio Theory (25 points)
Construction of an efficient frontier following Markowitz's mean-variance framework. Comparison of portfolio weights suggested by Markowitz's framework to the actual portfolio positions. Understanding and application of concepts such as risk-return tradeoff, covariance, and expected returns.

5- Performance and Profitability (15 points)
Evaluation of overall portfolio performance in terms of profit generated over the semester. Comparison of portfolio returns to benchmark indices or peer performance. Analysis of factors contributing to portfolio returns and adjustments made based on performance evaluation.

For each criterion, rating scale is as follows:
This particular element is absent or falls short of expectations, and /or it is completely out of place within the given context. Poor (0%)
This particular element is somewhat absent and does not entirely fit the context. Fair (40%)
This particular element is developed satisfactorily and fits the context at an acceptable standard. Good (60%)
This particular element is developed in a good and professional way and fits into the context. Very good (80%)
The way this particular element is developed is noteworthy and fits perfectly into the context. Excellent (100%)

Language of Instruction

English

Course Policies and Rules

1. It is obligatory to attend at least 70% of the classes.
2. Violations of Plagiarism of any kind will result in disciplinary steps being taken.
3. The instructor reserves the right to give quizzes at any time. The grades from the quizzes will be incorporated into the mid-term and final exam grades.

Contact Details for the Lecturer(s)

Doç. Dr. Efe Çağlar ÇAĞLI
e-mail: efe.cagli@deu.edu.tr

Prof. Dr. M. Banu Durukan Sali
e-mail: banu.durukan@deu.edu.tr


Office Hours

By appointment - E-mail

Work Placement(s)

None

Workload Calculation

Activities Number Time (hours) Total Work Load (hours)
Lectures 14 3 42
Preparations before/after weekly lectures 10 2 20
Preparation for midterm exam 1 10 10
Preparation for final exam 1 20 20
Preparation for quiz etc. 2 3 6
Preparing assignments 2 3 6
Field study 10 2 20
Midterm 1 2 2
Final 1 2 2
TOTAL WORKLOAD (hours) 128

Contribution of Learning Outcomes to Programme Outcomes

PO/LOPO.1PO.2PO.3PO.4PO.5PO.6PO.7PO.8PO.9PO.10PO.11PO.12PO.13PO.14
LO.132
LO.25
LO.35
LO.45
LO.55
LO.65
LO.755555555555555
LO.855555555555555