Course in Security Analysis and Portfolio Management

Here goes the call to all the number crunchers, all those wall street wannabes. When you talk finance, to put it simply, IIM Calcutta just cannot be excelled. The different courses take you through the ins and outs of audits and accounts. We make you value your assets, help you minimize the costs and plan the fund flow. At the end of the journey a company balance sheet would be worth a thousand words. An enabled corporate citizen you shall evaluate stocks, play around with the ratios and thus select your own cocktail of equity and debt instruments. As an empowered manager you shall acquire the power to turn-around any company.

1. OBJECTIVE
The academic discipline of Finance was developed in the U.S. during the forties, fifties and sixties with pioneering works by Nobel Laureates Tobin, Markowitz, Modigliani, Miller, Sharpe, and others. Subsequently, a whole range of ideas and models were developed in the theory of Investments- Markowitz model, Capital Asset Pricing Model (CAPM), and Arbitrage Pricing Theory (APT) are among the major works. Relying on such theories and models, trillions of dollars are invested throughout the world.
This is a rigorous course in "Investment Science" based on the text developed by Professor David Luenberger for Masters students at Stanford University. While this book gives the analytical methods, Princeton Professor Dr. Burton Malkiel's classic book on securities markets "A Random Walk Down Wall Street" will provide real world perspective and institutional details.
While this course primarily focuses on modern finance and investments and shows how to manage and create a portfolio, we will also examine traditional methods of security analysis like technical and fundamental analysis. Bond market (which is many times the size of the stock market), term structure of interest rates, and ways of managing a bond portfolio will also be studied in the early part of the course.
This course will make you marketable in many finance careers and help you make wiser personal investment decisions (standard disclaimers apply!). In any decision making, greater reliance on "skill" lessens leaning on "luck." A prudent understanding of Finance and Investments has its own rewards. Moreover, this is the key finance discipline that will help you understand other specialized finance areas like Derivatives, Fixed Income Securities, Corporate Finance, Markets and Institutions, and Bank Management.


2. PREREQUISITES
Dr. Luenberger writes in the Preface: "The book is designed for individuals who have a technical background roughly equivalent to a bachelor's degree in engineering, mathematics, or science; or who have some familiarity with basic mathematics." I expect you to be comfortable with detailed analytical, mathematical, and graphical arguments.


3. COURSE MATERIAL

Required
1) Luenberger, David G., "Investment Science," Oxford University Press, 1998. We will refer this as DL.
2) Malkiel, Burton G., "A Random Walk Down Wall Street," 6e, W.W. Norton and Company, New York, 1996. A classic text written by an academic-practitioner who distills his vast knowledge of markets and combines that with academic research findings to come up with investment strategies. We will refer this as BM.
3) Class Handouts. (problem sets, solutions, article reprints, clarifications of materials, etc.).

Other recommendations
1) The Asian Wall Street Journal, The Economist, Economic Times, Business Week, Barrons, Fortune, Forbes, New York Times (financial pages), Financial Times, etc.
2) Duffie, Darrell, "Dynamic Asset Pricing Theory," 2e, Princeton University Press, New Jersey, 1996. Written by a top academic, this is an extremely difficult, state of the art text on Investments.
3) Lynch, Peter, with Rothchild, John, "One Up on Wall Street, ..." Simon and Schuster, New York, 1989. A legendary money manager shares his insights in his first book in a nice, chatty way.
4) Sease, Douglas, and Prestbo, John, "Barron's Guide to Making Investment Decisions," Prentice Hall, New Jersey, 1994. Two editors of the Wall Street Journal discuss many investments that appeal to common sense.


4. EXAMS AND GRADING
5 or more Problem Sets (4 best will be chosen, 5% each) 20%
Midterm 30%
Final 50%
TOTAL 100%