Documente Academic
Documente Profesional
Documente Cultură
Intermediate Investments
Lecture 1 Review of the Syllabus & Course Overview,
& A Classroom Simulation of Investments
Yingying LI
Sep 2, 2016
Outline of Todays Lecture
Review of the Syllabus
Course Overview
2
Outline of Todays Lecture
Review of the Syllabus
Course Overview
3
What Will You Do With $1,000?
Imagine one day you wake up and find that you are
$1,000 richer
4
Investments
What is an investment?
5
This Course: FINA 3103
How to invest wisely in an uncertain environment
(Not how to predict the future!)
6
Course Outline
Main Topics
7
1. The Basics
Financial Assets
Equity
Fixed-income securities
Derivatives (futures and options)
Financial Markets
Why do we need financial markets?
How do we trade securities?
8
2. Money Allocation
Money allocation across different assets/securities
How to invest money wisely
The risk-return relationship:
High expected return, high risk
Not how to get rich quickly the fastest way is
gambling, which also is the fastest way to lose
Prof. Harry
Diversification to Markowitz,
reduce risk Nobel
Laureate
1990
9
3. Asset Pricing
Determine the fair price of a security
An important concept:
Arbitrage
11
4. Market Efficiency
Example
HSBC is trading at $ 37.20 (Closing price on Sep 1)
Suppose you know the true price is $50.
What should you do?
Buy HSBC!
What will happen?
HSBC share price will increase to $50
13
5. Other Securities
Fixed-income securities
Government bonds
Corporate bonds
A portfolio of fixed-income securities
Derivatives
Futures
Options
15
Outline of Todays Lecture
Review of the Syllabus
Course Overview
16