|
BAD 370 |
PETER ALONZI, Ph.D. |
Spring, 2002 |
Contact Information: by phone or email at: 708-524-6483 or lpalonzi@email.dom.edu
Click here for: Course: [Objectives] [Assessment] [Reading Assignments]
[Homework Assignments]
Office Hours:
|
Day |
Monday |
Wednesday |
Friday |
|
Time |
3:30 p.m.-4:30 p.m. and by appointment |
3:30 p.m.-4:30 p.m. and by appointment |
3:30 p.m.-4:30 p.m. and by appointment |
|
Place |
Fine Arts 211 |
Fine Arts 211 |
Fine Arts 211 |
Texts:
1. Gitman, Lawrence J. & Michael D. Joehnk. Fundamentals of
Investing 8th ed. Boston: Addison Wesley, 2002.
2. Wall Street Journal (see
Professor Alonzi for subscription discounts).
Tools:
1. Financial Calculator,
2. Access to Excel spreadsheets, and
3. Access to the WEB
Objectives: Click here to return home
This course reviews and enhances the student’s facility with the
concepts and principles of financial market institutional arrangements, of the
fundamental tools of finance, and of portfolio theory and then utilizes the
student’s enhanced facility address the mechanics and art of portfolio
construction and portfolio management.
Specifically upon completion of this course, the successful student
will:
Institutional Arrangements:
1. Add many new words to their vocabulary,
2. Understand the structure and functioning of stock and bond markets,
3. Master the fundamental features of common stocks,
4. Master the essential attributes of bonds,
5. Be able to use balance sheet information to evaluate the
condition and prospects of a company,
Financial Tools:
6. Use the tool of time value of money to assess the value a company’s stock, a
company’s bonds,
7. Compute returns generated by a security,
8. Compute risk measures of a security’s returns,
Portfolio Theory:
9. Understand why a portfolio is held,
10.Understand what portfolio is held,
11. Understand what is meant by Modern Portfolio theory and
be able to utilize its major implications,
Application to Portfolio Construction and Management:
12. Demonstrate their ability to integrate the concepts of the institutional
environment, financial tools,
and portfolio theory by participating in a stock market
simulation.
Expectations:
1. That you have
passed (at least with a C) the prerequisite courses: Econ 270 and BAD 350.
* Inform Professor Alonzi immediately if this expectation is unmet.
2. Own & know how to use a financial calculator such as HP 10B ii or
know how to use financial functions in excel.
Expectations: (cont.)
3. At minimum, read
the assignments before coming to class.
4. That you will study effectively: read proactively (previewing--intro
& summary before reading the detail), read selectively (after previewing a
chapter read text skipping all the side bars and extras which are read the next
time through), outline & synthesize, and read with a pencil in hand to
apply concepts.
5. Do 2 for 1--that the student will devote at least 2 hours for every
hour in the class (i.e. study effectively, work problems at end of chapter,
outline, form & be active in a study group or work with a study buddy,
formulate questions for class, do homework tasks…)
6. Students will recognize and identify confusion and ask trim as
opposed to flabby questions.
7. Use office hours without delay when difficulty arises.
Assessment/Assignments Click here to return home
Your performance will be assessed on five criteria: 1. exams, 2. homework problems, 3. progress
assignments based on your participation in a stock market simulation (SIM Game
Assignments), 4. the final report based on
your participation in the stock market simulation (SIM Game
Comprehensive End-of-Game Report), and 5. a 4-6-page paper based on
outside readings. These five criteria
progress from the most fundamental (exams demonstrating facility with concepts)
to the most advanced (outside reading & written paper demonstrating applied
synthesis). The following table relates the course grade earned to the
student’s performance on each criteria.
|
Criteria |
Course Grade: F |
Course Grade: D |
Course Grade: C |
Course Grade: B |
Course Grade: A |
|
Outside Reading/ |
|
|
|
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4-6 page report on Malkiel and Lynch |
|
SIM Game Comprehensive End-of-Game Report |
|
|
Pass* |
Pass* |
High Pass* |
|
SIM Game Assignments |
|
Less than 5 |
5 |
6 |
All 7 |
|
Homework |
Less than 7
submitted* |
Minimum of 7
submitted* |
Minimum of 10 submitted* average pass on best 10 |
Minimum of 12 |
All 13 |
|
Exams |
Average Failing |
Average a Pass |
Average Pass |
Average High Pass all exams |
Average High Pass |
|
*Timeliness and Presentation |
All assignments |
* All assignments on time and presented neatly |
* All assignments on time and presented neatly |
* All assignments on time and presented neatly |
* All assignments on time and presented neatly |
Each
student will enter a formal, individual agreement with Professor Alonzi by
giving him a written memo stating the student’s course grade goal. In the memo the student indicates which column
he/she has selected for their goal. The agreement is that if the student meets
the expectations set forth in the selected column, then the student will
receive the course grade indicated at the head of that column. This memo is due
at the beginning of the third class session January
16, 2002. Should the student change his/her goal later in the
course, another written memo indicating the revised goal must be submitted to
Professor Alonzi.
To
be absolutely clear: to earn his/her stated course grade goal,
the student must demonstrate the expected level of proficiency in the five
criteria indicated in the column they selected. NOTE: the student must meet the expectations for all the
criteria of their course grade goal stated in the above table. Should the
student fail to meet any of the agreed upon expectations, then the course grade
will be determined by the student’s Assessment/Assignments (cont.)
performance level on the most basic, unmet criteria (starting from exams
and working up to outside reading/written report). A specific example will clarify.
Suppose a student agreed with Professor Alonzi to work for a B. Suppose this student accomplished the
following: Averaged High Pass on the exams, averaged a Pass on the 12 homework
problems, averaged a High Pass on 6 SIM Game Assignments, and earned a Pass on
the SIM Game Comprehensive End-of-Game Report.
While the performance on the exams, SIM Game Assignments, and the SIM
Game Comprehensive End-of-Game Report all meet the expectations for a B, the
student would earn a C for the course since the homework performance is at the
C level.
+s and –s are used as deemed appropriate by Professor Alonzi. Among other factors, participation influences the grade of
those on the borderlines. Participation includes attendance, quality of
contribution to discussion, raising questions, using office hours when needed
and subjective factors.
Definition of Pass on Any One Particular
Assignment
|
Grade |
High Pass |
Pass |
Fail |
|
% Range |
100-80% |
80-60% |
Under 60% |
Criteria Explained
Criteria 1: Exams
1. Exams are the
work of the individual student (non-cooperative) and closed book.
2. Format: Multiple choice and true
false.
3. A Make up exam is a privilege not a right.
It is granted by Professor Alonzi if & when dire circumstances
warrant.
4. Make up exams if granted will be held during the final ten days of the
semester at a time to be announced.
Criteria 2: Homework
Problems: Click here to return
home
1. There will be 13
homework problems. The level of
difficulty and time required varies between problems.
2. You may work together on homework; each student should participate fully.
3. Each student must hand in his or her own assignment (written or typed by
his/her self).
4. Two copies of the homework are required: one that is
turned in and the other that the student brings to class but keeps (in their
journal) for reference when homework problems are discussed in class.
5. Homework is due at the beginning of the session date designated in
reading assignments and is to be placed on Prof. Alonzi’s class desk.
6. Homework is to be turned in on time.
Late homework is unacceptable (if you are sick or in dire
circumstances contact Professor Alonzi to arrange for alternate delivery-it can
be sent with a classmate).
7. Each homework should only require one page (maybe front and back). Use both side of a single sheet of paper
rather than stapling two pages together.
8. Homework can be rejected for lack of neatness. One example would be homework written on pages ripped from a
spiral notebook resulting in formerly bound side of the page having an
irregular, tangled edge. Another
example is presentation of work containing crossed out material or insertions
of corrections when such adjustments indicate a general lack of care and
professionalism.
Criteria
#3 & #4: Student Investment Management (SIM) Game
SIM Game provides
the student the opportunity to learn by doing, by reflecting, and by
recording. In the game the student will
be a portfolio manager who selects, manages, and evaluates an actual
portfolio. During this portfolio
management process, the student will reflect upon the experience of portfolio
management through a set of graded assignments. The student will record these assignments in a journal (maintain
the assignments in a ring binder).
The SIM Game graded assignments will help you strengthen your grasp of
the text’s concepts and their importance and applicability to portfolio
management. The SIM Game assignments are explained in complete detailed at the
end of this syllabus. Here it is just
noted that there are three types of assignments:
3a. Initial
one page report on SIM Game, 3b. Seven SIM Game Assignments, 4. SIM Game Comprehensive
End-of-Game Report Due.
Criteria
#3 & #4: Student Investment Management (SIM) Game (cont.)
The SIM Game utilizes a stock market web site that accepts and
tracks orders.
This engine provides a very realistic trading environment. Orders are executed
at actual market prices.
Commissions are charged for
each trade. Trade confirmations are
provided. Orders can be entered to buy,
sell, sell short, or buy to cover. Orders can be market, market on open, market
on close, limit, or stop orders. One can borrow to buy on margin but interest
is charged on the borrowed funds. The engine keeps track of each individual’s
portfolio.
We are able to use this stock market web site at a zero dollar cost. But as Economists we know that “…There ain’t
no such thing as a free lunch.”
Although there is no dollar cost to use this web site, there is the
non-dollar cost of distracting advertising/offers etc. It is assumed that the student will resist
such distractions and that each student acknowledges that Professor Alonzi is
not responsible for the student’s responding to such advertising/offers. It is also understood that by selecting this
trading engine Professor Alonzi neither recommends nor vouches for
the integrity of any advertising/offers etc. found at this site.
If you want to
review the game before it is formally introduced in the course ask Professor
Alonzi for an instruction sheet.
Criteria
#5: Project on Outside Reading and Written Report
Write a report based on the following two books: a) Malkiel, Burton Gordon. A Random Walk Down Wall Street 5th
ed. New York: W.W. Norton 1973 or
more recent edition and b) Lynch, Peter. One Up on Wall Street. New
York: Simon And Schuster, 1989 or more recent edition.
Your report (4-6 pages should be sufficient) needs to:
1. Identify and briefly
explain the two or three major themes/concepts of each book,
2. Contrast the major themes of the two books, and
3. Relate the major themes of the two books to the concepts developed in Gitman
and Joehnk.
If the student wishes to suggest an alternate, substantial project instead of
the reading/report project outlined above see Professor Alonzi by Friday February 1.
*Bonus:
Bonus
percentage points will be added to your exam average if your portfolio exhibits superior performance
on the trading game and if you apply for the points.
You must
apply for the points in your April 26 SIM Game
Comprehensive End-of-Game Report. Your application
makes your case for the points. To
apply you must hand in a memo listing the values for and providing the
computations of your Jensen’s measure, your Holding Period Return, and your
benchmark’s HPR.
|
Ranking |
Jensen’s Measure |
|
Beating Prof.Alonzi’s Jensen
Measure |
Beating Your |
|
1st Place |
1½%% |
|
1% |
1% |
|
2nd Place |
1% |
|
1% |
1% |
|
3rd Place |
¾% |
|
1% |
1% |
|
|
|
|
Anyone beating Professor Alonzi earns 1% |
Anyone beating their benchmark earns 1% |
Superior performance is measured three ways: in terms of 1) Jensen’s Measure, 2)
Jensen’s Measure of Professor Alonzi’s Portfolio, and 3) your benchmark’s
holding period return, See the table below.
The listed percentages will be added to your average exam score.
For example suppose you average 77.75% (i.e. a pass) on the
exams and you come in third in the class in Jensen’s Measure (+¾%), beat
Professor Alonzi’s Jensen measure (+1%), and beat your benchmark (+1%). In this case your exam average will be
raised from 77.75%, which is a Pass to 80.50% (77.75% + ¾% + 1% + 1%) that is a
High Pass on the exams
BAD
370 Planned Reading Assignments as of 01/07/02
Revised
reading assignments will be posted as the need arises. Check the date in the upper left-hand corner
of the reading assignment table to assure you have the most recent
reading assignments
|
Last Revised: 01/07/02 Planned Reading Assignments Click here to return home |
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Session/Date |
Topic |
Reading Assignment |
Homework Problem and |
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#1/Jan 11 Fri |
* Course Organization |
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#2/ Jan 14 Mon |
* Environment |
Ch 1 |
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#3/ Jan 16 Wed |
* Environment |
Ch 2 |
Formal Agreement Due |
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#4/ Jan 18 Fri |
* Environment |
Ch 3 |
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#5/ Jan 21 Mon |
* Exam 1, Ch 1-3 |
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Problems 1 &2: Page 67- P2.3 & P2.7 |
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#6/ Jan 23 Wed |
* Return |
Ch 4 |
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#7 Jan 25 Fri |
* Return/Risk |
Ch 4 |
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#8/ Jan 28 Mon |
* Risk |
Ch 4 |
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#9/ Jan 30 Wed |
* Portfolio Principles: |
Ch 5 |
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#10/ Feb 1 Fri |
* Portfolio Principles: |
Ch 5 |
Problem 4: Page 170- P4.18 |
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#11/ Feb 4 Mon |
* Portfolio Principles: |
Ch 5 |
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#12/ Feb 6 Wed |
Exam 2, Ch 4 & 5 |
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Problem 6: Page 209/10- P5.3 |
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#13/
Feb 8 Fri |
* Set up SIM Game |
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#14/
Feb 11 Mon |
Common Stock: |
Ch 6 |
Initial one page report on SIM Game |
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#15/
Feb 13 Wed |
Common Stock: |
Ch 7 |
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#16/ Feb 15
Fri |
Common Stock: |
Ch 7 |
Problem 8: Page 266- P6.4 |
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#17/
Feb 18 Mon |
Discuss problem 7.8 |
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Problem 9: Page 307- P7.8 |
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#18/
Feb 20 Wed |
Exam 3, Ch 6 & 7 |
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#19/
Feb 22 Fri |
Game Discussion #1 |
|
SIM Game Assignment #1 |
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#20/
Feb 25 Mon |
Common Stock: |
Ch 8 |
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#21/
Feb 27 Wed |
Common Stock: |
Ch 8 |
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#22/
March 1 Fri |
Game Discussion #2 |
|
SIM Game Assignment #2 |
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March
4-8 |
Spring Break |
Spring Break |
Spring Break |
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#23/
Mar 11 Mon |
Common Stock: |
Ch 8 |
SIM Game Assignment #3 |
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#24/
Mar 13 Wed |
Common Stock: |
Ch 8 |
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#25/
Mar 15 Fri |
Exam 4, Ch 8 |
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#26/
Mar 18 Mon |
Bonds: |
Ch 9 |
Problem 10: Page 360-61- P8.4 |
|
#27/
Mar 20 Wed |
Bonds: |
Ch 9 |
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#28/
Mar 22 Fri |
Game Discussion |
|
SIM Game Assignment #4 |
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#29/
Mar 25 Mon |
Bonds: |
Ch 10 |
|
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#30/
Mar 27 Wed |
Bonds: |
Ch 10 |
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* Mar 29 Fri |
Easter Vacation |
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#31/
April 1 Mon |
Game Discussion |
|
Problem 11: Page 408-P9.5 |
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#32/
April 3 Wed |
Bonds: |
Ch 10 |
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#33/
April 5 Fri |
Exam 5, Ch 9 &10 |
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Problem 12: Page 448- P10.1 |
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#34/
April 8 Mon |
Game Discussion |
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SIM Game Assignment #6 |
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#35/
April 10 Wed |
Portfolio Management: |
Ch 12 |
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#36/
April 12 Fri |
Portfolio Management: |
Ch 13 |
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#37/
April 15 Mon |
Game Discussion |
|
SIM Game Assignment #7 |
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#38/
April 17 Wed |
Portfolio Management: |
Ch 13 |
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#39/
April 19 Fri |
Options |
Ch 14 |
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#40/
April 22 Mon |
Options |
Ch 14 |
SIM Game Comprehensive |
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#41/
April 24 Wed |
Options |
Ch 14 |
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#42/
April 26 Fri |
Make up Exams |
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