Advanced Investment Theory and Applications

In this course, we examine financial tools that portfolio managers use to make informed investment decisions in depth. We begin with the basics of debt securities and markets: bond prices and yields, and the term structure of interest rates. We build on these to analyze bond characteristics, ratings, default risk and sensitivity of bond prices to interest rate changes, and yield curves. These lay the foundation for the formation of active and passive bond portfolios. Next, we analyze equity securities in the context of investment management and analyze macroeconomic factors that affect security prices and understand the roles of fiscal and monetary policy in influencing the economy. We then cover various fundamental techniques of equity valuation, including the dividend discount model, comparable trading and acquisition multiples methods and Discounted Cash Flow model, as well the useof financial statements to perform ratio analysis. Last, we analyze portfolio management in practice and investigate portfolio performance evaluation, hedge funds and theories and evidence on active portfolio management. Students study theories and analysis of active portfolio management and develop a thorough understanding of the various hedge fund strategies and fund styles.

Fall, Spring, Summer