University of Malta

Study-Unit Description
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TITLE Fundamental Tools for Investing

LEVEL 04 - Years 4, 5 in Modular UG or PG Cert Course


DEPARTMENT Banking and Finance

DESCRIPTION The study-unit will focus on the steps taken to build a well-diversified portfolio. Starting from a mix of top-down and bottom up approaches on both a macro and micro level to decide which assets will benefit in a current economic environment, to the valuation of the different assets (fixed income and equities) and the measurement of risk.

The study-unit will also focus on the building up of an Investment Policy Statement in order to understand what a client's needs are and how to achieve those targets through portfolio diversification.

The unit will also aim at identifying the advantages and disadvantages of mutual funds as well as a thorough understanding of UCITS funds and the rigorous monitoring put in place when managing these funds.

Study-unit Aims:

Students taking this unit should expect to learn the nature and workings of financial markets and their use by corporations, investors and others.

They will acquire some skills in modern valuation techniques, including the pricing of fixed-income and equities. They will also learn about the principles of finance, including market efficiency, asset pricing models and portfolio theory.

From the point of view of investors, individual as well as institutional, we will consider the principles of security valuation, portfolio selection and management, and risk control.

The study-unit also aims to assist students in appreciating different types of funds with a thorough understanding of UCITS funds and the rigorous monitoring put in place when managing these funds.

Learning Outcomes:

1. Knowledge & Understanding:

Valuation - be able to value a company and the differences between valuing a bond and an equity. This will determine whether the asset is undervalued or overpriced and how it will contribute to a portfolio.

Risk - measure the risk of an asset in order to be able to decide which clients can benefit from this asset.

Diversification - understand how diversification can mitigate risk rather than looking at the risk reward of one asset by itself and how diversification of a portfolio will 100 stocks can be achieved with a much lower amount of constituents.

IPS - comprehend how to build an investment policy statement in order to better understand a client's needs.

Mutual Funds - understand different types of mutual funds and a thorough understanding of UCITS funds and the rigorous monitoring put in place when managing these funds.

2. Skills:

Valuation skills - how to value different asset classes - mainly equity and bonds

Risk analysis skills - how to measure risk and different measurements of risks used.

Portfolio construction tools - how to add different asset classes together in a portfolio in order to achieve the desired risk reward.

Investment Policy Statement - know how to build an IPS in order to understand a client's needs and risk/reward.

Rules used to manage UCITS funds - the rules a Manager needs to know in order to manage a UCITS funds and the difference between different types of funds.

Main Text/s and any supplementary readings:

- Financial Markets and Corporate Strategy - by Grinblatt−Titman.
- Essentials of Investments - by Zvi Bodie and Alex Kane and Alan Marcus.
- Fundamentals of Corporate Finance - by Stephen Ross and Randolph Westerfield and Bradford Jordan.

STUDY-UNIT TYPE Lecture and Tutorial

Assessment Component/s Resit Availability Weighting
Examination (2 Hours) Yes 100%

LECTURER/S Kristian Camenzuli

The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints.
Units not attracting a sufficient number of registrations may be withdrawn without notice.
It should be noted that all the information in the study-unit description above applies to the academic year 2017/8, if study-unit is available during this academic year, and may be subject to change in subsequent years.
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