Financial analyst program

Yüklə 36.8 Kb.
ölçüsü36.8 Kb.

FIN 377-3: SECURITY ANALYSIS (Spring 2009)

Instructor: Dr. Kamm, Department of Finance, GSB 5.124C


T.A.s: Brittany Braden and Josh Brown, contact information on blackboard

Section number 03055: 8 to 9:30 MW in CBA 4.330

Office Hours, Major Assignments, and Spreadsheets: posted on blackboard

Course Notes: GSB Copy Center on the 3rd Floor of the GSB

Required Reading Packet: Packet of Case Studies at the University COOP

Suggested Subscription: WSJ (subscribe); helpful in stock research & short papers

Financial Calculator Required: Financial Calculator HP 10b11 or 17b11

Financial Software: Bloomberg, Stock-Trak stock, bond, and other asset simulation
MBA Investment Fund:
The Financial Analyst Program is a yearlong program designed for outstanding finance juniors who will be participants in this academic / applied investment program for the next year and a half. The program is an opportunity for students to develop their skills and experiences as financial analysts. It is an intensive, “hands-on” experience in financial analysis and valuation in corporate, investment, and financial service settings. The program requires that students integrate and apply previously acquired skills in finance, accounting and economics.
Students selected for the program learn to assess the operating, financing and investing performance of a company as well as make financial projections relative to both the company’s recent operating performance and its peer group of competitors. Participants learn to compare and interpret live data by way of financial software in the EDS trading and technological center, a center that is equipped with real-time data feed of financial information. Students use Bloomberg and First Call as well as spreadsheets to demonstrate the comprehensive company financial analysis they have undertaken for the midterm and final projects. In groups the undergraduates also set up a portfolio in Stock-trak that is diversified across industry groups and asset groups.
Moreover, undergraduate analysts work as researchers for the MBA Investment Fund managers. The MBA Investment Fund is the first legally constituted, private investment fund to be managed by students. There are two styles of stock funds—the growth fund and the value fund. Undergraduate analysts assist the Fund managers in a number of functions. Undergraduates help monitor stocks held in the growth and value funds and undertake one stock pitch per term to MBA Fund Managers. As part of the stock pitch, undergraduate research assistants will include: company profile, industry and competitive positions, financials (key ratios as well as historical financials and projected), investment merits compared to investment risks, and finally a valuation analysis.
In this course a combination of methods is utilized with special emphasis on student involvement and teamwork. The professor reviews financial terms and theory, asks questions, demonstrates techniques, assigns problems and guides students in their case preparation. Students take a very active part in the Financial Analyst Program; individuals must be able to make a clear commitment of time and energy. Attendance and prompt arrival is absolutely essential. Much of the learning in this course will take place outside of the classroom particularly in your groups. The emphasis on student involvement encourages learning by doing and further develops the attributes of self-motivation and leadership.


Some of the objectives of this course include:

  • Hands-on research for MBA Fund Managers.

  • Better understanding of Portfolio objectives and management as well as stock selection.

  • Improved ability to analyze and value companies in different industries using skills of finance, accounting and economics.

  • Greater understanding of the business strategy and financial ratios of well-known companies in various industries.

  • Review of major accounting and finance principles. Improved forecasting and valuation skills.

  • Improved ability with Excel tools and better familiarity with financial data programs.

  • Improved presentation, communication, and analytical skills. Improved ability to work in a team.

  • Greater understanding of the financial issues and problems occurring at the current time.

Final grades will be determined as follows:
Multiple Choice Tests (Individual Grade) 40%

There will be two multiple-choice tests. The first counts for 20% and the second for 20% of the final grade. The tests will evaluate students’ understanding of the material covered to date. The tests primarily cover material only in that unit; to the degree that the material builds the tests include such material. The in-class tests include theory questions, problems requiring application and interpretation (including working with a spreadsheet, financial statement, or trading center handout) and current events questions. You may bring a financial calculator and a sheet with notes. Each test has twenty-five questions and each question is worth four points.

Two Papers – Stock Analysis and Alternative Investments (Group Grade): 25%

In the FAP undergraduates work as research assistants to the MBA Managers for the growth and value stock funds and for the MBA REIT fund managers. In working with the MBA students, undergraduates specialize in one area (real estate; technology; consumer stocks; financial, energy & industrial; healthcare). It is important that all students become more familiar with holdings across the three main funds—the MBA growth fund, MBA value fund, and the MBA REIT fund. Therefore, all students will participate in a stock-trak portfolio simulation project that includes positions in stocks from various sectors and REITS. This will allow all students exposure and experience to all sectors and asset classes. The first paper is 8 pages written plus the same number of exhibits. In this paper students shall in an introductory paragraph discuss the nature of a growth fund, value fund, and a fund focused on REITS. Primarily in the paper students should focus on reviewing various holdings, reasons for asset selection, and the performance of the various assets.

The second paper is an update and expansion relative to the first paper; in the second paper more focus is placed on asset and portfolio performance. Also, in the second paper students shall focus on the stock that they have been assigned to debate. The assigned stock will be an asset currently held in either the MBA Growth or Value Fund. Students shall undertake a comprehensive financial analysis and valuation of a stock and conclude with a buy or sell recommendation. The second paper is weighted 10% and the second one 15%.

Two Stock Pitches With Supporting Investment Thesis / Quantitative Work 15%

There are two presentations given in the spring term as a member of the FAP. One stock valuation and analysis shall have been assigned by the MBA Managers and presented to them at a time outside this class. Submit a copy of the valuation and / or power points slides used for credit in this class as part of your role in the FAP. MBA Fund Managers will evaluate this component.

The second group presentation is given near the end of the term in the form of a debate and is focused on a stock currently held in the MBA Growth or Value Fund. This is the same stock highlighted in the second paper. The two groups present opposing sides. One side presents financial models and information supporting the position that the stock is undervalued and a “good buy.” The other side argues that the stock is overvalued and should be rated as a “sell.” Students shall use power-point slides to outline their position and supporting evidence. Presentations will be graded on strength of analysis, level of interest, and presentation skills. The two presentations are equally weighted in determining the grade.

Assignments, Professor Evaluation, MBA & Peer Review (Individual Grade) 20%
Periodically the instructor may give group homework assignments involving application of investment theory using financial data from Bloomberg. Homework may count for 5 to 10% of the overall participation grade. The rest depends on the professor, MBA and peer review. The professor’s evaluation is based on attendance and class preparation as well as on the quality of your participation in all aspects of the financial analyst program. You will be working closely in one group throughout the term producing analyses that will aid Fund managers. The success of the Financial Analyst Program depends, in part, on your efforts and your approach to dealing with others. In this portion of the grade, the Professor evaluates feedback from your peers, senior FAP students and the MBA Investment Fund managers. For most students, participation works like a slight curve. An “objective grade” is run based on all other graded items. Then, students with good participation may receive a several point curve. Inconsistent attendance or limited effort in working with your group will result in a lowering of the participation grade below the objective grade.
** Please note: Due to the applied investment aspect of the financial analyst program, there is a much higher level of responsibility on the part of each member. Students are encouraged to work together within their teams and across teams to help ensure a successful and rewarding year. Please contact me if you are having any difficulties. If a student is not able to meet the obligations of the FAP at a high level, I shall contact said student to discuss various alternatives including withdrawal from the program.

Date Material Covered During Class

Material to be prepared or completed at home

W, Jan 21 Review of Syllabus / Introduction to Class

Bring Financial Calculator to next class, Read Bond Math Case

M, Jan 26 First Problem Set / Bond Math – Term Structure Theory

Read Fixed Income Case / Finish problems from problem set and Bond Math case

W, Jan 28 Fixed Income Valuation / Begin Forming Groups

Finish problems from Fixed Income/ Read The Income Statement and The Balance Sheet

M, Feb 2 Overview of Income Statement and Balance Sheet

Read 2 Cases: The Income Statement and The Balance Sheet

W, Feb 4 Trading Center – Spreadsheet Work with Income St. & Balance Sheet

One member register group in Stock-Trak using Fund Name instead of student name

Achieve full investment in Stock-Trak by Friday, Feb 6
M, Feb 9 Overview of Cash Flow Statement & Free Cash Flow

Read Cases on Cash Flow Statement and Free Cash Flow

W, Feb 11 Trading Center - Spreadsheet Work on Forecasting FCF and DCF

Read & prepare Note on Value Drivers

M, Feb 16 Overview of Value Drivers / P to B ratio and EVA

Recommended for group to try a DCF on a stock held in portfolio

W, Feb 18 Trading Center – Beta, Valuation Multiples, EVA

Read & prepare Introduction to Valuation Multiples

M, Feb 23 Overview of Introduction to Valuation Multiples / the PEG Ratio

Read & prepare Introduction to Valuation Multiples
W, Feb 25 Trading Center Multiples Valuation … P/E, PEG, EV/EBITDA

Study for 1st Test / Bring financial calculator, pencil, 8 by 11page of notes (1 side only)

M, Mar 2 1st Multiple Choice Test (25 questions)
W, Mar 4 2nd Problem Set - In-Class Problems on convertible bonds, EPS forecast

Read & prepare in the Year 2000

M, Mar 9 Overview of in the Year 2000

Read Introduction to Financial Ratios and FS Analysis for after spring break

W, Mar 11 Trading Center Assessing Amazon’s Financial Health post-2000

Read Introduction to Financial Forecasting for after spring break

Mar 16-20 No Class - Spring Break – Have a good one
M, Mar 23 Introduction to: Financial Ratios& F.S. Analysis / Financial Forecasting

Work on 1st Paper to submit by Friday, March 27, 2 p.m. Finance Department

W, Mar 25 Trading Center – Financial Forecasting Spreadsheet Work

Submit 1st paper by Friday, March 27, 2 p.m. Finance Department

Read Bond Ratings Case and The Corporation’s Cost of Capital
M, Mar 30 Overview of Bond Ratings, Cost of Capital and Required Returns

3rd Problem Set - Cost of debt, cost of equity, WACC, DDM

Read The Market Risk Premium
W, April 1 Overview of The DDM and the PE Multiple

Read 3 Short DDM Cases (DDM, IBM, Coke) and Valuing a Business or Earnings …

M, April 6 Dividend Discount Model, IBM and Coca Cola: Case Review

Overview of Valuing a Business or Earnings Stream

W, April 8 Trading Center – WACC, Bloomberg DDM and multiples

4th Problem Set - Bloomberg DDM, DCF, Multiples

M, April 13 At home assignment in place of class: Complete Problem Set 4

Prepare for Valuation Debate

W, April 15 Wrap Up of DDM, DCF, Multiples Valuation

Prepare for Valuation Debate

M, April 20 Valuation Debate 1 & Evaluation of Debate

Prepare for Valuation Debate

W, April 22 Valuation Debate 2 & Evaluation of Debate

Research: Find and read relevant current events articles for Final Paper
M, April 27 Current Financial Events & Catch-Up / 5 Example Problems Distributed

Research: Find and read relevant current events articles for Final Paper

W, April 29 Valuation Debate 3 & Evaluation of Debate

Suggestion: Put together Bibliography for Final Paper

M, May 4 Valuation Debate 4 & Evaluation of Debate

Study for Second Test

W, May 6 2nd Multiple Choice Test (25 Questions)

Write Final Group Paper to be turned in at the Finance Dept. on W, May 13
W May 13 Turn in Final Group Paper, 4p.m., Finance Dept.
* NOTE REGARDING SYLLABUS: Please note that current events and other in class activities will be added when the schedule allows. The above schedule is meant to be approximate. At times we may be slightly ahead of or slightly behind schedule. Trading center dates may need to be moved. Necessary changes regarding times, assignments, and other matters will be announced in class.
**NOTE REGARDING TESTS: Please make every effort to attend tests. If illness or something prevents your attendance, I request that you contact me ahead of time and provide me with necessary documentation. In the event that the absence is valid, the missed test score will be made up with a comprehensive exam.

Information Regarding Scholastic Dishonesty, Class Web Sites and Student Privacy
I. Scholastic Dishonesty – I follow university policy on scholastic dishonesty and include for your benefit a review of the Policy Statement on Scholastic Dishonesty for the McCombs School of Business. It says, “By teaching this course, I have agreed to observe all of the faculty responsibilities described in that document. By enrolling in this course, you have agreed to observe all of the student responsibilities described in that document. If the application of that Policy Statement to this class and its assignments is unclear in any way, it is your responsibility to ask me for clarification. Policy on Scholastic Dishonesty: Students who violate University rules on scholastic dishonesty are subject to disciplinary penalties including the possibility of failure in the course and / or dismissal from the University. Since dishonesty harms the individual, all students, and the integrity of the University, policies on scholastic dishonesty will be strictly enforced. You should refer to the Student Judicial Services website at or the General Information Catalog to access the official University policies and procedures on scholastic dishonesty as well as further elaboration on what constitutes scholastic dishonesty.”

II. Class Web Sites and Student Privacy: Please know that I use Blackboard to post your course packet and relevant course documents and I use egradebook to post grades where each student in the class is able to check his or her grade privately. I also use the email list provided me in Blackboard to send out occasional class emails. From the Fall 2001 Course Schedule the following paragraph may help you determine any related privacy issues. It states, “Password-protected class sites will be available for all accredited courses taught at the University. Syllabi, handouts, assignments, and other resources are types of information that may be available within these sites. Site activities could include exchanging email, engaging in class discussion and chats, and exchanging files. In addition, class e-mail rosters will be a component of the sites. Students who do not want their names included in these electronic class rosters must restrict their directory information in the Office of the Registrar, Main Building, Room 1. For information on restricting directory information, see”

Verilənlər bazası müəlliflik hüququ ilə müdafiə olunur © 2016
rəhbərliyinə müraciət

    Ana səhifə