FINE 6200 F 3.

00: Investments
Course Outline
Winter 2016
Tuesdays, 11:30 a.m. - 2:30 p.m., beginning on January 12
SSB W-133

Instructor
David Yu, CFA
(416) 736-2100 ext. 44557
dyu@schulich.yorku.ca
Office hours: By appointment only, please email the
instructor

Assistant
Lucy Sirianni
SSB N204A
416-736-2100 ext. 55072
mfin@schulich.yorku.ca

David Yu has over 40 years of investment management experience for personal and
institutional clients. He has also provided investment consulting services to pension funds. He
holds the Chartered Financial Analyst designation and the Master of Electrical Engineering
degree from McGill University.
Brief Description
This is an introductory course to investments. It begins with an overview of the structure of
financial markets in Canada and in the United States, followed by a more in-depth analysis of
some key investment topics. These topics include portfolio theory, evaluation of portfolio
performance, the capital asset pricing model, term structure of interest rates, valuation of
stocks and bonds, portfolio management, capital market efficiency, and behavioural finance.
This course serves as a useful introduction to the Chartered Financial Analyst (CFA) curriculum
(http://www.cfainstitute.org/cfaprog/).
Prerequisites:

None

Contents
Course Learning Outcomes ........................................................................................................................... 2
Deliverables at a Glance................................................................................................................................ 2
Course Material............................................................................................................................................. 2
Student Preparation for Class and Class Participation: Expectations ........................................................... 4
Class-by-Class Syllabus .................................................................................................................................. 4
Written Assignments/Projects and Exam[s]: Descriptions ........................................................................... 6
Calculation of Course Grade ......................................................................................................................... 8
General Academic Policies: Grading, Academic Honesty, Accommodations and Exams ............................. 8

FINE 6200 3.0 F p. 2

Course Learning Outcomes

1. Understand the structure and functions of financial markets from the perspectives of an
investor and investment manager.
2. Master the fundamental theories of financial security returns and theories of security
valuation.
2. Understand the implications of market efficiency. Be able to apply theories of securities
returns and valuation to the real financial markets.

Deliverables at a Glance
Students are expected to read the assigned chapters, prepare the assigned end-of-chapter
problems, complete written homework assignments, and prepare for the midterm and final
exams. In the table below, the impact of each task on your final grade for the course is
indicated in the % weight column.
Assignment/Task
Class Participation
Midterm exam
Stock-Trak group report
Final exam

Quantity
1
1
1
1

%
Total
Weight %
5
5
30
30
20
20
45
45
100%

Author
Individual
Individual
Group
Individual

For details, see Written Assignments/Projects and Exam[s]: Descriptions (p. 8) and
Evaluation of Written Assignments/Projects and Exam (p. 9).

Course Material
Reading material for the course has been organized in four main locations: a textbook, online
SmartBook (via Connect), lecture notes posted on Schulichs Course Materials Database (CMD),
and financial media. Not every source is needed for each class. Every week, you should check
the Session-by-Session Syllabus below for readings and their locations (see pp. 5-8).
Required reading for this course includes the following textbook. It is available for purchase
from the York University Bookstore (http://bookstore.blog.yorku.ca):
Investments, 8th Canadian edition - Bodie, Kane, Markus, Perrakis, and Ryan
McGraw-Hill Ryerson, 2014.
Alternative eBook option with Connect:
Connect Access Code for Investments, 8th Canadian edition, by Bodie, can be purchased
separately at the York Bookstore. Connect access can also be purchased online when you
register at the Connect course URL.

FINE 6200 3.0 F p. 3

Connect contains the online interactive eBook for Investments, 8 th Canadian edition, by Bodie,
plus LearnSmart, SmartBook, Self-Quiz & Study Quizzes and other study resources, including
Appendix A - Quantitative Review, Appendix B - Solutions to Concept Checks and Formula
Sheets.
For a short video introduction and overview of Connect, LearnSmart and SmartBook, visit
www.improveyourgrades.ca.
FINE 6200 Winter 2016 Connect Section Web Addresses:
David Yu Section F: http://connect.mheducation.com/class/d-yu-winter-2016
Connect Registration using your access code or purchase online:
1. Go to the Connect Web Address for this course.
2. Click on Register Now.
3. Enter your email address (this will become your Connect username). If you already have a
McGraw-Hill account, you will be asked for your password and will not be required to create a
new account.
4. Enter a registration code or choose Buy online to purchase access online. Courtesy access
only for a limited time only.
5. Follow the on-screen directions.
6. When registration is complete, click on Go to Connect Now.
7. You are now ready to use Connect.
Student Support for Connect:
Visit http://www.connectstudentsuccess.com/ for Connect registration instructions,
Connect Student Q&A and Searchable Q&A, troubleshooting and system requirements.
To submit a support ticket with the Canadian McGraw-Hill Care Centre, visit
www.mheducation.ca/support or call 1-800-565-5758.
Your McGraw-Hill Education Learning Consultant: Michele Peach:
Michele.peach@mheducation.com
Course Materials Database:
Materials posted on the Course Materials Database (CMD) include lecture notes used in each
class, solutions to assigned end-of-chapter problems, and additional supplementary reading
material. Check the CMD regularly for updates, correction and announcements (at least twice a
week).
Business News and Financial Calculator
Daily reading of the business section of The Globe & Mail or the National Post is also a
requirement. Examination questions may require students to relate financial concepts to

FINE 6200 3.0 F p. 4

current events. The BusinessWeek, the Economist and the Wall Street Journal are additional
useful sources.
Every student should have a hand held calculator with basic scientific functions. A financial
calculator is also required.

Student Preparation for Class and Class Participation: Expectations

Research on learning has shown that students learn the most when they are actively involved in
the classroom process. This course is intended to help you develop skills that will contribute to
your success in the business world. Accordingly, it is in your interest to prepare for class so as to
maximize the benefits from your education. Slides will be posted on the CMD in advance of
class.
You must complete the required reading and attempt the discussion problems for each class.
You should be ready to comment on and contribute to problem solutions during the class.
Solutions to all problems for the chapters assigned will be posted on the CMD. In addition to
textbook readings, the outline includes additional readings which supplement the text. These
readings are provided to allow interested students to explore selected topics in depth. Most of
the additional readings will be placed on the course CMD.
Preparation. Be prepared to put in at least 6 hours of prep work outside the classroom time
each week. You are expected to have read all the assigned material listed in the Class-by-Class
Syllabus ahead of each class.
Class Participation. Students are expected to prepare thoroughly for every class. Participation
will be evaluated on the basis of factors including advance preparation, responses that show an
understanding of the topic, questions that stimulate deep discussion or aid other students
learning, and willingness to engage thoughtfully in classroom exercises. Quantity does not
substitute for low quality, thus students should be sensitive to whether they are monopolizing
classroom discussion, repeating information that has been stated earlier, or making comments
that do not add to the learning environment. Further, the onus is on students to ensure they
are fully identified by prominently displaying their name on a tent card during each class (and
to make sure the instructor can see it) and, if necessary by prefacing comments or questions
with their name. I expect students will attend every class, with exceptions permitted only for
medical reasons (doctors note required) or by prior arrangement with me. A full percent will be
deducted for missing a class, up to a maximum of 5%.

Class-by-Class Syllabus
Topics, readings, and other preparations for every class are listed below

FINE 6200 3.0 F p. 5

Note: If any changes in this schedule become necessary, notifications will be

posted on the course CMD, and when changes need to be announced between
classes, an email will be sent to students Lotus Notes email accounts, notifying
them of the change.
End-of-chapter appendices in the textbook can be excluded, unless otherwise stated. Additional
material will be distributed in class, or posted on the course CMD. Students must do the
readings before every class.

I. Introduction to Portfolio Management and Financial Markets

January 12
January 19

Chapters 1, 2, 22.1-22.2
Chapters 3, 23

Useful websites:
American Stock Exchange (http://www.amex.com)
Toronto Stock Exchange (http://www.tse.com)
Securities Exchange Commission (http://www.sec.gov)
Ontario Securities Commission (http://www.osc.gov.on.ca)
The Investment Funds Institute of Canada (http://www.ific.ca)
II. Return and Risk
January 26
February 2

Chapter 4, 5
Chapter 5, 6

Stock-Trak Project begins..

Useful websites:
http://www.tdcanadatrust.com/mutualfunds/pdf/mut_app.pdf
http://bmo.com/mutualfunds/ps/matchmaker_test.html
http://www.waterhouse.com/planning/investment_basics/time_vs_risk.html
Useful references:
Rubinstein, Mark, 2002, Markowitzs Portfolio Selection: A Fifty-Year Retrospective,
Journal of Finance, vol.57, no.3, pp.1041-1045.
Lettau, M., J.Y. Campbell, B.G. Malkiel, Y.Xu, 2001, Have Individual Stocks Become
More Volatile? An Empirical Exploration of Idiosyncratic Risk, Journal of Finance, vol.56,
no.1, pp.1-43.

III. The Capital Asset Pricing Model

February 9 Chapter 7.1 - 7.2
February 16 Chapter 8.1 - 8.2

FINE 6200 3.0 F p. 6

February 23 - NO CLASS (Reading Week)

March 1 Mid-Term Test

(1 hours, closed book)

IV. Performance Measures and Technical Analysis

March 8

Chapters 21, 10.2 -10.5

V. Valuation of Equities
March 15

Chapters 15, 16, Appendix 16 A

Useful references:
Hooke, Jeffrey C., Security Analysis on Wall Street, Wiley Frontiers in Finance, 1998.
Vuolteenaho, Tuomo, 2002, What Drives Firm-Level Stock Returns?, Journal of
Finance, vol.57, no.1, pp.233-264.
VI. Valuation of bonds
March 22
March 29

Chapter 12
Chapter 13

Stock-Trak Project ends

Useful websites:
http://www.waterhouse.com/planning/investment_basics/yield_curve.html
http://www.dbrs.com
VII. Managing Bond Portfolios
April 5

Chapter 14

April 12 Final Exam

Stock-Trak Group Report due

(3 hours, closed book, covers the whole term)

Written Assignments/Projects and Exam[s]: Descriptions

There is a Stock-Trak group project assignment, a midterm exam and a final exam. Details of
these requirements are provided below.
Stock-Trak is a stock market simulation game that gives students the opportunity to gain handson experience in trading and portfolio management. For more information, see
http://www.stocktrak.com.

FINE 6200 3.0 F p. 7

The game starts on Monday, January 25, 2016, and ends on Friday, March 25, 2016. Students
should form groups, with 5 students per group. Please submit names of students in your group.
You must register by Friday, January 22, 2016.
In the group report, you are expected to:
1. Provide a detailed explanation on how you executed your investment strategy, based
upon the goal of maximizing your portfolio value at the end of the game.
2. Highlight your best and worst trades and discuss each in depth.
3. Evaluate your track record using standard portfolio performance measures.
The above three items and your groups ranking in the class (based on the performance of your
portfolio at the end of the game) carry equal weight. Your report must NOT exceed 12 pages,
which include all graphs, tables and references. The cover page is not counted in the 12-page
limit. Three marks will be deducted for each extra page (out of the twenty-mark total) if this 12page limit is not followed.
Your group report is due at the beginning of the last class on Tuesday, April 5, 2016. Note that
late reports will not be accepted. No faxed or e-mailed reports will be accepted.

The following are useful websites and databases for your research:
Standard and Poors Market Insight (http://emi.compustat.com)
Bloomberg (terminal in the business library)
Datastream (terminal in the business library)
SEDAR (http://www.sedar.com)
Other popular sites for financial news e.g., CNNfn, Globe Investor, WSJ,etc.

Examinations
The midterm and final exams may consist of a combination of multiple choice questions,
short essay questions (that usually require no numerical calculation), and longer
questions (which usually require numerical calculation and analysis). The midterm and
final exams will be 90 minutes and 3 hours long, respectively. Both are closed-book
exams, with all necessary formulas provided by the instructor. The midterm exam will
take place during regular class hours and the final exam will take place during the
regularly scheduled examination period after the last day of class. Students should not
make plans to be away from Toronto during any portion of the announced examination
period until the dates for their specific examinations have been announced.

FINE 6200 3.0 F p. 8

Calculation of Course Grade

In this class, final course grades will be determined by the overall numerical grades combining
all graded components:
Assignment/Task
Class participation
Midterm exam
Stock-Trak group report
Final exam

Quantity
1
1
1
1

%
Total
Weight %
5
5
30
30
20
20
45
45
100%

Author
Individual
Individual
Group
Individual

The overall numerical grades will be converted into letter grades (e.g., A+, A, etc), with the class
grade point average belled to the range between 5.2 and 6.2. The conversion is not based on a
fixed scale (e.g., 90-100% = A+) as the Schulich School does not have a standard policy for
translating percentages into letter grades. Instead, the median numerical grade will be
converted to a letter grade of either B or B+, at the instructors discretion. A bell curve is then
applied to the remaining numerical grades so that the letter grades for the entire class
resemble a normal distribution.

General Academic Policies: Grading, Academic Honesty, Accommodations and Exams

Grades at Schulich are based on a 9-value index system. The top grade is A+ (9) and the
minimum passing grade is C- (1). To keep final grades comparable across courses, sections of
required core courses are normally expected to have a mean grade between 5.2 and 6.2.
The Schulich School does not use a percentage scale or prescribe a standard conversion formula
from percentages to letter grades. Conversions within a course are at the discretion of the
instructor.
For more details on the index, grading policy, and grade point average (GPA) requirements, see
the Student Handbook or the Student Services & International Relations website:
http://www.schulich.yorku.ca/client/schulich/schulich_lp4w_lnd_webstation.nsf/page/Enrolm
ent+Grades+and+Convocation!OpenDocument#tabs-2
Academic honesty is fundamental to the integrity of university education and degree programs,
and applies in every course offered at Schulich. Students should familiarize themselves with
York Universitys policy on academic honesty, which may be found in the Student Handbook
and on the Student Services & International Relations website:
http://www.schulich.yorku.ca/client/schulich/schulich_lp4w_lnd_webstation.nsf/page/Academ
ic+Honesty!OpenDocument

FINE 6200 3.0 F p. 9

Accommodations. For accommodations sought due to exam conflicts, religious reasons,

unavoidable absences or disabilities, please refer to the Student Handbook or contact Student
Services.
For counseling & disability services, contact Student Services or see http://www.yorku.ca/cds/.
Exams (Absence from)
Mid-term. Students who miss a mid-term examination must contact their course instructor
within 24 hours and provide the course instructor with documentation substantiating the
reason for the absence. A copy of the documentation must also be submitted to Student
Services; it will be placed in the students file.
Final. Within 24 hours of missing a final examination, students must contact the Director of
Student Services, at (416) 736-5060 and must also contact their course instructor. Formal,
original documentation regarding the reason for missing the exam must be submitted to the
Director of Student Services (SSB Room W262) within 48 hours of missing the final exam.
Students who miss a final exam due to illness must have their doctor complete an Attending
Physicians Statement. For more details, see:
http://schulich.yorku.ca/client/schulich/schulich_lp4w_lnd_webstation.nsf/page/Enrolment++MBA+Exam+Schedule?OpenDocument