ELIZABETHTOWN COLLEGE

BA424A INVE$TMENT$ SYLLABUS

FALL 2005 (Monday, 29 August—Tuesday, 13 December)

Instructor: Dr. Trostle, Department of Business

101 Alpha Hall, trostler@etown.edu, 361.1393

Required
Readings: Charles P. Jones, Investments: Analysis and Management, 9th
edition, John Wiley & Sons, Inc., 2004.

Burton G. Malkiel, A Random Walk Down Wall Street, 8th edition, W.W.
Norton & Co., 2003.

Please read “the daily diary of the American dream,” The Wall Street
Journal.

Calculator: Texas Instruments, BA-35 Solar Business Analyst (recommendation)

Prerequisite: BA325 Business Finance

Grade Determination:
1. Portfolio Performance 10% as of Friday, Dec 9
2. Industry Analysis Paper 15% Due Thursday, Oct 13
3. Company Analysis Paper 20% Due Thursday, Nov 10
4. Mid-Term Examination 20% Thursday, Oct 20
5. Final Examination 25% Tuesday, Dec 13, 7:30am

General Information:
Office Hours: Continuous; please call 1393 or 1181 for appt.

Attendance: Class attendance and class participation are greatly

encouraged and appreciated. Ask questions.

Academic Integrity:
The practices followed in this course are based on the principles
discussed in the publication Academic Integrity at Elizabethtown College, current
edition. Fair and honest scholarship requires that work be either the product of a
scholar’s independent effort or properly attributed to its source. It is assumed
that anyone submitting work implicitly offers it as meeting this standard.

Disabilities:
If you have a documented disability and need reasonable
accommodations to fully participate in course activities or meet course
requirements, you must (1) contact the Director of Disability Services at 1227 or
deichesa@etown.edu, and (2) meet with me, the instructor, within two weeks of
receiving a copy of the accommodation letter from Disability Services to discuss
your accommodation needs and their implementation.
BA424, Page 2

COURSE OUTLINE

Topics Readings: Jones Malkiel

1. Introduction & Preview Chapters 1,2 1,2

2. Securities Markets 3,4 3,4

Market Analysis 5,6

3. Economic Analysis 13 5

4. Industry Analysis 14 6

5. Company Analysis 15 7

6. Common Stocks 10,11 8

7. Efficient Markets 12 9

8. Portfolio Theory 7,8 10

Capital Market Theory 9

9. Bond Basics 17 11

10. Bond Valuation & Analysis 18 12

11. Warrants & Convertibles 19B,17A 13

12. Options: Puts & Calls 19 14

13. Futures 20 15

14. Portfolio Mgmt & Evaluation 21,22

“An investment in knowledge always pays the best interest.”

--Ben Franklin
BA424, Page 3

OUTLINE FOR
INDUSTRY & COMPANY ANALYSIS PAPERS

1. Industry Analysis Paper (7 to 9 pages)*

Due: Thursday, October 13, 2005

Select an industry whose member-firm you will analyze in-depth

later in the company analysis paper.
A. Permanence and history of the Industry
B. Growth of the Industry
--evolution of production technology
--evolution of consumers tastes and preferences for the
industry’s products/services
C. Stability of Industry Sales and Earnings
D. Competitive Conditions
--domestic
--global
E. Labor Relations (unions, unionization, etc.)
F. Governmental Attitudes (laws, regulations, etc.)
G. Outlook for Sales and Earnings
--this year
--next 5-7 years
H. Given your evaluation of the industry, what companies might
be appropriate investment choices? Justify your choices
carefully.
BA424, Page 4

2. Company Analysis Paper (10-12 pages)*

Due: Thursday, November 10, 2005

A. Basic Indicators (Common Stock)

1. 10-year EPS listing
Averages: 10 years, 5 years.
2. 10-year DPS listing
Averages: 10 years, 5 years.
3. P-E Ratio and Dividend Yields for past 10 years
4. Compound annual growth rates of Sales, EPS, and
DPS for past 10 years and past 5 years
5. Rating and Reputation: Moody’s, S&P, Value Line
6. Market-price record for past 10 years (including
current price): high, low, average.
7. Capital Structure; Book Value history
8. Financial Ratios for past 3 years
9. Number of Stockholders;
Number of Institutional Holders and number of shares
they own.

B. Analysis of the Firm

1. Size, leadership, dominance of the firm in the industry
2. Product lines, diversification
3. Product development and research
4. Brands, patents, goodwill
5. Profit margins, costs, overhead
6. Sales outlook/forecast—next 5 years
7. Stability of Sales and Earnings
8. Working Capital position and Cash Flow
9. Return on Equity (ROE)

C. Intrinsic Value Calculation(s)—calculate the intrinsic value of

the common stock using at least one of the methods we
discussed in class

D. Conclusions
1. Future earnings (estimates)
2. Future dividends (estimates)
3. Future price (estimates)
4. Recommendation: Buy, Sell, Hold? WHY?
BA424, Page 5

*NOTES:

1. Be sure to include the following in your papers:

a. Title Page
b. Footnotes or Endnotes (proper citations)
c. Bibliography

2. Papers will be graded by the following criteria:

a. Content: be sure to follow outlines on pages 3 and 4.
b. Spelling, grammar, presentation, etc.
c. Late papers are subject to a penalty of one letter grade per
day.

SUGGESTED REFERENCES & READINGS:

BARRONS

BUSINESS WEEK, 2005 Special Double Issue, December 2004

BUSINESS WEEK, Outlook 2005: America’s Key Industries, January 2005
BUSINESS WEEK, The Best Performers: The Business Week Fifty,
Spring 2005

DUN AND BRADSTREET

FORBES, The Best Big Companies, January 2005

FORBES, The Top 500 Companies in America, April 2005
FORBES, 500 Top Paid CEOs, May 2005
FORBES, Investment Guide, June 2004

FORTUNE

MOODY’S INVESTOR SERVICE INC

ROBERT MORRIS ASSOCIATES ANNUAL STATEMENT STUDIES

STANDARD & POOR’S

VALUE LINE INVESTMENT SURVEY