FIN 321-01

Fall 2015

*Roosevelt University*

INVESTMENTS

SYLLABUS

Instructor: Donald W. Swanton

Contact Information: office Wabash 1112Z, telephone (312) 281-3278, fax (312) 281-3290, email dswanton@roosevelt.edu, web site http://blogs.roosevelt.edu/dswanton/. My web site has information about office hours *etc*. Google “Swanton Roosevelt” to find me most easily.

Time: Tuesday-Thursday 12:30-1:45

Location: WB 1015

Text: There is no **required** text. I will be handing out my *Notes on Investments* (S) in class as the semester progresses. Recommended are *The Psychology of Investing* 4^{th} ed. By John R . Nofsinger Prentice Hall ISBN-13: 978-0-13-611703-2 and especially *A Random Walk Down Wall Street * 11^{th} ed. 2015 by Burton Malkiel (M). Get this one cheap in whatever format from Amazon.com. The Kindle version is fine. It’s a good read, and we will be discussing it and looking at some of the graphs.

Prerequisites: ECON 101-102, MATH 116 or 121, ENG 101-102, ECON 234 or MATH 217, and FIN 311.

Goals: In this course students look at long-term investment situations, such as retirement planning, and we use the theoretical tools of modern finance to explore the trade-offs between risk and return.

Homework: I will assign homework each week due the next Tuesday. Much of Tuesday will be spent discussing the problems as assigned and then augmenting them. I will collect but not grade homework assignments, but that does not mean that you can afford to not at least try them before Tuesday. The problems will come back in modified form in the quizzes. Finance is not a spectator sport.

Student Learning Objectives: business discipline principles, quantitative techniques.

Grades: Grades will be determined by an equally weighted average of the best three out of the four quiz grades and the retirement planning project. Quizzes and the project will receive the numerical version of letter grades, A = 4.00, A/B = 3.50, B = 3.00 B/C = 2.50, *etc. *I will send out sample quizzes the week before each quiz. To receive an A a student needs an average of at least 3.51, for a B an average of at least 2.51, *etc.*

Attendance: I do not always take attendance, but I may sample the class on Tuesdays. See the homework point.

Plagiarism: Please review Roosevelt’s policy on plagiarism. www.roosevelt.edu/plagiarism.

Religious Holidays: Roosevelt’s policy is to accommodate students who will be celebrating religious holidays. Talk to me in the first couple of weeks, and we will work something out.

http://www.roosevelt.edu/~/media/Files/pdfs/Policies/HumanResources/ReligiousHoliday.ashx

Notes: My *Notes on Investments* currently consist of:

S1 Risk and Return

S2 Real and Nominal Returns

S3 Retirement Planning

S4 Efficient Markets

S5 Event Studies

S6 The Two Fund Separation Theorem

S7 Bond Risk and its Measurement: Duration

S8 The Term Structure of Interest Rates

S9 Interest Rates and Bond Prices

S10 The Theory of Interest

The following schedule is tentative. We may get ahead of it at some points and will probably fall behind at others. Revised schedules will always be on my web page.

SCHEDULE

*As of November 2, 2015*

*Date Notes Topics*

Aug 25 S1, S9 Introduction, risk and return, interest rates and bond prices

**That is correct. We will begin two weeks BEFORE Labor Day September 7.**

Sep 1 S2 Real and Nominal Returns

Sep 8 S2, S3 Real and nominal again, retirement planning

Sep 15 S4, M14 Retirement planning and life cycle investing

Sep 22* M1-7, S4 Efficient markets, technical and fundamental analysis

Sep 29 M8, M9 Modern Portfolio Theory intuitively

Oct 6 /// Review of probability and statistics, correlation

Oct 13* S6 The Capital Asset Pricing Model

Oct 20 S6, M10-11 More

Oct 27 S6 More

*. Last day to apply for a W*

Nov 3 S6 Finish up the CAPM

Nov 10* S8-10 Interest rates and bonds

Nov 17 S10 The theory of interest

Nov 24 //// *Thanksgiving Vacation*

Dec 1 S8, S9 Bond risk and its measurement: duration

* Projects Due December 1, 2015*

Dec 8* //// *Last Quiz*

The asterisk * denotes a quiz on the Thursday of that week, including the last quiz during final exam week.

THE RETIREMENT PROJECT

*Standard Project*

You are a financial planner. You have clients who are just beginning to think about planning for retirement. They are both thirty five years old and have $80,000 in a company retirement plan which they can roll over into their own plan. They want to retire at 67 but are wondering what effect retiring a year or two earlier or later will have on their retirement. Their combined income is $100,000 per year, and they want to finance the same income in retirement in real terms. When they retire they can purchase a two-life annuity with an expected second death at age 87. They need retirement and portfolio planning.

They have not taken any finance courses, and their last mathematics course was many years ago. They will not understand equations, formulas, or finance jargon. Large tables will make their eyes glaze over. Charts and graphs may be helpful. You must explain your recommendations to them in simple, ordinary language. Prepare a plan with some alternative rates of return and retirement dates and explain what annual contributions they must make to the plan to make their retirement what they want. Talk in depth about the trade-off between risk and high expected return. Suggest some mutual fund portfolios for them. Make your own assumptions about social security by the time they retire.

*Alternative Retirement Project*

Use yourself as the client, with your own present situation. This client differs from the real you, because he/she has not taken any finance courses and does not know any more than the clients in the First Choice project.

General Information

- Library Services – http://www.roosevelt.edu/library

- Student Services – http://www.roosevelt.edu/StudentServices.aspx

- Withdrawing from the Class – http://www.roosevelt.edu/Registrar/Courses/Withdraw.aspx

- Student Code of Conduct/Academic Integrity – http://www.roosevelt.edu/Policies/CodeOfConduct.aspx

- Americans with Disabilities Act – http://www.roosevelt.edu/StudentServices/Disability/Discrimination.aspx

- Blackboard Support – http://www.roosevelt.edu/ITS/ServiceCatalog/Blackboard.aspx

**Roosevelt Policies**

The university’s three overall learning goals for both undergraduate and graduate students are:

Goal: Effective communication.

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Goal: Knowledge of disciplined-focused content.

Goal: Awareness of social justice and engagement in civic life.

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**Academic dishonesty**: The university’s policies on issues such as plagiarism, recycling, cheating and other forms of academic dishonesty can be found in the student handbook, which is available as a link here: http://www.roosevelt.edu/CurrentStudents.aspx . Additional guidelines for avoiding plagiarism are available here: http://www.roosevelt.edu/Provost/Faculty/AcademicIntegrity.aspx

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**Disability**: Roosevelt University complies fully with the Americans with Disabilities Act. Details about ADA and Roosevelt’s policies and practices are found in the following link: http://www.roosevelt.edu/StudentSuccess/Disability/Discrimination.aspx If you have a condition or disability that requires reasonable accommodation, please alert your instructor or the Academic Success Center as soon as possible, certainly before any assignment or classroom activity that requires accommodation. The Academic Success Center is located in AUD 128 in Chicago, and the phone number is 312-341-3818. In Schaumburg, the office is in room 125, and the phone number is 847-619-7978. Email Nancy Litke at nlitke@roosevelt.edu or Danielle Smith at dsmith51@roosevelt.edu .

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**Withdrawal date**: The final date for an official withdrawal from this class (meaning a “W” would appear on your transcript) is Tuesday, Oct. 27. After that, if you want to withdraw, you’ll need to petition the registrar. Petitions are granted only for non-academic reasons after the deadline. If you receive financial aid, it’s best to check with your counselor to assure that aid isn’t affected by withdrawing from a class. The complete withdrawal policy is here: http://www.roosevelt.edu/Registrar/Registration/Drop.aspx

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**Religious holidays**: Please let your instructor know as soon as possible if you will miss class because you are observing a religious holiday. Roosevelt University policy requires written notification to me within the first two weeks of the term. Any work you miss because of a religious holiday can be made up. You can see the full policy here: http://www.roosevelt.edu/Policies/ReligiousHolidays.aspx

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**Student Code of Conduct**: Students enrolled in the university are expected to conduct themselves in a manner compatible with the university’s function as an educational institution. http://www.roosevelt.edu/StudentSuccess/Conduct.aspx

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