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Course Prerequisites
FIN 3310. It is also preferred that, in addition to the FIN 3310, the student has completed all Business
Foundation Courses.
Course Description: This course:
• Studies the nature of securities, the determinants of the securities prices, the mechanics and basic
costs of trading, and the ways in which the securities markets operate.
• Applies risk-return analysis in making decisions to buy or sell assets.
• Involves a 14-weeks long project in which students select, construct, follow and analyze the
performance of individual and a portfolio of investments, accompanied by written analysis.
Course Materials
Required: Fundamentals of Investing, 14th ed., Scott B. Smart and Chad J. Zutter, Pearson (2020), ISBN


  1. • Material covered in this course is found as shown below in the weekly schedule.
    • Calculator: not required.
    • Software: Required: Excel or equivalent (Google Spreadsheets or Numbers)
    • Software not required, but can be used: R, Stata, Eviews, Tableau, StatPlus, etc
    Program Learning Outcomes (PLOs) for the Finance and Accounting Management (FAM) Program are
    listed at https://cps.northeastern.edu/additional-resources/student-learning-outcomes.
  2. Entrepreneurship: Complete a strategic management analysis of an entrepreneurship or innovation
    challenge in a business setting.
  3. Accountability: Apply the process, tools, and concepts of financial reporting, financial statement
    analysis, and valuation used by investors and analysts to complete a real-world deliverable.
  4. Institutional Environment: Examine the foundational principles, concepts, and measurement theories
    relating to financial reporting and stewardship in both the internal and external environment.
  5. Global: Assess the structure and functions of the U.S. and international financial markets and
    institutions. This course specifically addresses this Program Learning Objective.
  6. Business Ethics: Develop and justify a position and/or an approach to an issue pertaining to business
    ethics and corporate social responsibility by dissecting a relevant case study.
  7. Relationship Management: Integrate management best practices and tools to analyze a management
    problem in a given organization or community considering both the institutional and global
    environment

Course Learning Outcomes
In this course you will have the opportunity to:
• Explain the roles and structure of security markets and their participants
• Apply economic and industry analysis
• Determine the equity value of the individual stock
• Explain the role and structure of mutual funds
• Explain the efficient markets hypothesis.
Expectations
• Workload: for a three-credit course, students should expect 2.5 hours a week of classroom or faculty
instruction and a minimum of 5 hours of out of class student work for a 15-week course
Attendance Policy
• Most weeks run from Monday through Sunday. In addition, each week, complete Weekly Assignments
and participate in the Discussion Board with due dates as described below.
Policy on late work
• Late assignments and board discussions will only be accepted subject to a grade penalty, except if
accompanied by a medical excuse.
• All assignments and discussions are due at 11:59 pm ET of the date indicated.
• Submissions within one week after the deadline will suffer a penalty of 25% of the potential grade;
submissions more than one week after the deadline will receive an automatic grade of 0%.
• No make-up work (homework, discussion board posts, quizzes, etc) will be permitted.
• Extra credit assignments are not available.

Course Methodology. Each week, you will be expected to:

  1. Review the week’s required materials posted on Canvas and the relevant learning objectives.
  2. Complete all assigned readings and watch all assigned recordings.
  3. Review all prior week’s lecture materials.
  4. Participate in the weekly Discussion Board (12 weeks).
  5. Complete and submit any assignments by the due dates.
    Evaluation Standards
    Your grade will be determined based on assignments, one final project / exam and your discussion board
    participation, as follows

The objective of this course assessment includes studying Discussion Board postings by your colleagues and adding new
information and analysis. Thus, you are also required to comment on your colleague’s postings with at least one
secondary posting.
It is insufficient to merely acknowledge or compliment another student entry without providing value added
supplementary comments. Students are to study and review all Discussion Board postings submitted by all students in
addition to their own postings. Both primary and secondary responses should be substantive in nature and show both
the knowledge of the relevant course materials as well as evidence of reading beyond the assigned material.
Plan on participating in Discussion Boards as follows:

  1. Post a primary response to each week’s question (s), due Thursday (11:59 pmET) of that week.
  2. Post at least one secondary response, due by the end of Sunday of that week. Additional responses are optional
    and can be made beyond this deadline.
  3. Required responses tardy up to one week are reduced 25%of grade; after that, 100%.
  4. Responses are to be within the guidelines stated above.
  5. Participation in the Discussion Board will be 30% of your grade.
  6. Quotes are not required, and responses must be your own words and thoughts. Any citations must be
    referenced in line
    Students are expected to review the online postings on a regular basis even after they have posted theirown
    minimum required postings. Please treat your classmates and the instructors with the utmost respect.
    Inappropriate posts willbe removed immediately. The instructor reserves the right to penalize students for
    repeated violations of the participation policy (and/or Academic Integrity Policy) within a course.
    Substantive nature of participation: In the discussion board and in class, high quality contributions advance
    the class discussions and do not simply summarize the material that was assigned. Quality contributions
    consider not only the instructor’s questions but also yourclassmates’ contributions. Please be mindful that the
    Discussion Board is a space for academic exchanges. As a result, students are accountable for using proper
    and exacting punctuation, spelling, and grammar; and reference all outside sources incorrect citation format.
    It is crucial that all participants maintain a high regard for proper decorum in the DiscussionBoard.
    Please keep in mind that your primary response should be well thought out to receive full credit (i.e.,
    incorporating readings from the course as well as outside sources). Your initial responses should be two–five
    paragraphs (depending on the question) not exceeding 800 words. Each paragraph should contain at least 3-4
    sentences. Your secondary response should be substantive and related to the discussion contribution(s) of
    your class colleagues. It should not exceed 600 words and be at least 2 paragraphs in length to count as
    substantive. Other / subsequent responses are valuable and will help (subject to substance of the responses)
    in achieving a higher-grade score on required engagements.
    Assignments:
    You will be required to complete seven (7) assignments which will be assigned in line with the course materials
    covered prior to the due date of the assignment. You will find the assignments in the Assignment section of
    Canvas and these will be linked in the Modules section of the course.
    Please use the questions at the end of each assignment as a guideline to write your analysis. Be sure that you
    are identifying the major issue(s); determining the scope of the problem; and analyzing the issue(s) and the
    outcome(s) (do you agree; do you have alternate recommendations etc.). It is recommended that you
    incorporate course material and additional readings (i.e., journal articles, books, etc.) into your analysis to
  7. strengthen the content of your paper. It is a good idea to organize your assignments responses in at least 3
  8. sections:
  9. Identify the scope of the problem.
  10. Summarize the data used in the analysis, and analyze the issue/outcome.
  11. Answers / Recommendations that follow from and are supported by (2) above.
    Your analysis should be a minimum of 1 page in length (not including cover and reference page), be written in
    APA format, and should contain a cover page (with your name and student ID) and reference page. In addition
    to the assignment write up, you should enclose a data and data analysis file (Excel or Google Spreadsheet)
    when such are applicable. Each Assignment is worth 5 points, approximately distributed as follows:
    • Answers to the questions – 1.0 points
    • APA formatting/grammar – 0.25 points
    • Identifying the major issue and scope of the problem – 0.75 points
    • Analysis of the issue(s) and or explanations of the answers – 3 points.
    Project:
    • You will have one project assignment (final) worth 35 points or 35% of the overall grade.
    • The project assignment will be a take-home, with deliverables required for completion as follows:
    excel spreadsheets with worked out results; and a paper (or equivalent) discussing the results.
    • You must use at least five outside sources (not including the textbook) and two of the five sources
    must be scholarly. The paper should summarize the major points of your research and consist of at
    least 10 slides (not including cover and reference slides).
    • Project description and all deliverables are listed below.
    This is a four-part Project offering you the opportunity to demonstrate mastery of the knowledge and skills
    gained in this course. Each of the three deliverable assignments for this project is due by 11:59 p.m. Eastern
    Time on the due date. After that, they are considered late. Late Project assignments will be marked down 10%
    per day. Read the entire Project instructions before starting. This Project is 35% of your final grade for the
    course (35 points out of 100).
    Part 1. Initial selection of stocks. Due date: end of Week 3, May 30. (This Part is of 10% of your Project grade or 3.5
    points).
    Assume that you have $1,000,000. You will use this to form a hypothetical large-cap (each with at least $10 Billion in
    Market Capitalization) diversified stock portfolio by investing it in five stocks chosen from five different industries. Be sure
    to pick companies that pay dividends. No short sales, fractional shares, or margin trades are permitted. To determine how
    much you have invested in any particular stock, multiply the stock price by the number of shares you buy. You must use at
    least $900,000. Any funds left over will be held as cash, earning no interest. Dividends and other cash distributions will be
    added to cash, not reinvested.
    Trades are not permitted except in extraordinary situations, with my specific approval beforehand. Should I allow a trade,
    you need to notify me about the exact trade you make within 24 hours by e-mail

Deliverables:

  1. Spreadsheet that includes the number of shares you purchased for each stock and the closing prices as of the end of
    Week 2, May 23, of your stocks. Report the last dividend paid date and amount as well as the expected next ex-dividend
    and paid dates. Also, include your total investment and the amount held in cash. To get stock price information, go to
    www.google.com or www.yahoo.com and click on “Finance.” Enter the ticker symbol of your stock and click on historical
    prices. Use the column that contains closing prices.
  2. Conduct an analysis of the stocks, telling me why you chose these particular stocks based on your analysis. The analysis
    (3 to 6 pages plus spreadsheets) should include the following:
    a) Give a brief history of the companies and their products. Briefly discuss where the company is heading (new products,
    ventures). Identify who each company’s competitors are and what each company’s ranking is amongst its competitors.
    b) Find the reported beta and the adjusted beta of the companies. Report your source and describe how they calculated
    the betas including frequency of observations, as methods vary. Explain what the beta tells you about each company.
    Project Part 2. Valuation of your portfolio and companies. Due date: Saturday of Week 8, July 3. (This Part is of 25% of
    your Project grade or 8.75 points).
    Deliverables:
  3. Calculate historical beta and adjusted beta for each stock in your portfolio and the portfolio as a whole, based on the
    data for 5 years, 3 years and 1 year prior to the end of the week of May 23, 2021.
  4. Using the stocks in your initial portfolio, prepare a valuation of each stock and the initial portfolio using zero, constant
    or variable growth models with a market return at 8% and at 12%. [Note that the growth rate must be less than the
    required rate of return.] Make sure you list the date of the valuation and the closing share price of your firm’s stock. Each
    firm’s required rate of return will depend on its beta.
  5. Is the stock of each of these companies over or undervalued?
  6. What is the expected return using the CAPM model?
  7. Map risk-returns relationships for 1 year and 3 year returns to each stock and your portfolio, relative to the benchmark
    (S&P 500) returns.
    Project Part 3. Track your portfolio and companies throughout the term and on the Discussion Board, describing the
    stocks and their performance. Part 3 is due end of Week 12, Sunday, August 1, 11:59pm. Also discuss would there be
    any changes you have made in your portfolio. (This Part is 25% of your Project grade or 8.75 points).
  8. Prepare a ratio analysis (liquidity, activity, debt, and profitability), covering 3 years pre-January 1, 2021, 1 year
    pre-January 1, 2021 and the period from January 1, 2021 through July 25, 2021.
  9. Identify any events during the period that may have caused the stocks’ prices to increase or decrease, explaining
    how these events affect the stocks’ prices.
  10. Relate your analysis in (1) and (2) above to your expected returns to each stock and the portfolio as outlined in
    your investment case in Part 1 of the project.
    Project Part 4, Final Project Submission: Assessment of your portfolio. Due: Week 15, August 18, 11:59 pm ET. (This Part
    is worth 40% of your Project grade or 14 points).
    For this Part, you will be making a report to your investment committee that discusses and summarizes the performance
    of your portfolio. Use closing prices as of Sunday of Week 13, August 8, to calculate your returns. What is the final market
    value of your portfolio (including dividends received and added to non-interest earning cash)? If the final market value of
    your portfolio is less than $1,000,000, your portfolio lost money

Provide a graph of the daily stock prices (high, low, and closing) for each of your stocks. Include the volume on each
graph, with the scale shown on the right side of the graph. Be sure to label the graphs!
Provide a graph of the value of your portfolio and the value of the closing S&P 500 if $1,000,000 were invested in that
initially. This is the normalized value. By normalized, you have scaled the S&P 500 closing prices so that its price on the
first day ($1,000,000) is the same as the portfolio’s closing price on that first day.
In the final section of your report, recommend for or against the inclusion of each of these stocks in the portfolio and
defend your recommendation. Use the information you have obtained in Part 1 Deliverable 2 to support your argument.

Calculations: Use the closing price of your stocks on Sunday of Week 13, August 8, to calculate your returns.

  1. Report the “purchase” and “sale” price of your stocks from the beginning and end of the semester along with any
    dividends you might have received. Calculate the buy-and-hold return of each stock [(MVend – MVbeginning + DIV) /
    MVbeginning] and the buy-and-hold return on your portfolio.
  2. Determine the final market value of your portfolio (including dividends received). If the final market value of your
    portfolio is less than $1,000,000, your investment lost money.
  3. Calculate the market value of
    a. Your portfolio for each day (including cash). I suggest that you do this by adding up the daily closing market values of
    your assets held and the cash you hold, including the total dividends received up to date.
    b. The S&P 500 index portfolio over this same period assuming you keep the same amount in cash. We are using the S&P
    500 index as our proxy for the market.
  4. Plot the daily market value of your portfolio and the daily market value of the S&P 500 using your calculations in #3.
  5. Using the market values you calculated in #3, calculate the daily returns (percent) for
    a. your portfolio
    b. The S&P 500 index portfolio.
  6. Using your calculations in #5, calculate
    a. The average daily return and the standard deviation of daily returns for both the S&P 500 index and your portfolio.
    b. your portfolio’s beta by calculating the covariance of your portfolio’s daily returns with the S&P 500’s daily returns and
    dividing that by the variance of the S&P 500.
  7. Plot risk-return relationships for your portfolio and S&P500 benchmark for 1 year prior to August 8, 2021 and for the
    holding period since May 23, 2021. Discuss any changes that took place in terms of your portfolio relative performance
    compared to S&P500. What, in your view, explains these changes?
    Write-up: Assume that you are preparing a relatively short report (maximum of 10 pages double-spaced) for your
    investment committee. You will be graded on the quality of your writing as well as the quality of your analysis. Do not
    simply answer the following questions – this should be financial report! These questions are intended to provide
    guidance.

Introduction:

  1. Comment on the individual and portfolio returns and on any information/events (market-wide or firm-specific) that
    may have contributed to the performance of your stocks. Describe and explain any trades you made. (Suggested length: a
    short, concise paragraph for each stock).
  2. From your calculations, if you held the S&P 500 instead of your stocks, how much money would you have ended up
    with? Would you have been better or worse off to hold the index? Analyze the reasons for any differences.
  3. Based on your calculations for standard deviation and beta, how risky was your portfolio compared to the index? Again,
    analyze the causes of the differences
  4. Finally, what are your plans going forward? That is, if this class continued and you had the chance to alter your portfolio
    holdings now, would you choose to sell any of your stocks
    or would you want to keep holding them? What will you tell the investment committee? Be explicit.
    Deliverables:
  5. Your report (8 – 10 pages double-spaced, 12 pt. font) plus graphs.
  6. Spreadsheet of returns and calculations, and market value plots – make it neat and readable