Katipunan Avenue, Loyola Heights

ATENEO DE MANILA UNIVERSITY Quezon City, Philippines 1108

P.O. Box 154, Manila, Philippines
JOHN GOKONGWEI SCHOOL OF MANAGEMENT PHONE (+632) 426 6001 ext. 5511
TELEFAX (+632) 426 6076
DEPARTMENT OF FINANCE AND ACCOUNTING URL jgsom.ateneo.edu
COURSE SYLLABUS

Course Catalog: FIN 129 School Year: 2016 2017

Course Title: Special Topics in Investment Analysis Term: Second Semester
Credit: 3 units Instructor: James Kang
Pre-requisite FIN101/102/103/105

A. COURSE DESCRIPTION

Special Topics in Investment Analysis (FIN 129) is a three-unit introductory course on derivatives.
This course builds the conceptual framework for understanding the basic derivative securities, their
valuation, unique risk-return characteristics, and markets. The course will also discuss how
derivatives are traded and used in risk management.

The course has a strong but not exclusive quantitative focus. Course assessments require
computations. Moreover, some of the course contents may overlap with those of other derivative
courses. Please discuss with me if it is unclear whether the course fits your needs.

B. LEARNING OUTCOMES

At the end of this course, the students should be able to

1. Describe forwards, futures, and options.
2. Explain the features of various standardized exchanges and differentiate these exchanges from
the over-the-counter derivatives market.
3. Utilize a sound no-arbitrage argument to determine the price of a derivative security.
4. Determine the value of a derivative security to the holder and to the respective counterparty,
at various points during the life of the contract.
5. Describe various option trading strategies and their respective payoffs at expiration.
6. Enumerate and explain the Greek Letters and their significance in option valuation.

C. COURSE OUTLINE

This course covers the following chapters of the primary text. The order in which they are discussed
in class may differ.

Chapter 0: Course preliminaries

Chapter 1: Introduction
Chapter 2: Mechanics of futures markets
Chapter 5: Determination of forward and futures prices
Chapter 8 (optional): Securitization and the credit crisis of 2007
Chapter 9: Mechanics of options markets
Chapter 10: Properties of stock options
Chapter 11: Trading strategies involving options
Chapter 18: The Greek letters

D. READINGS

Hull, John C. Options, Futures, and Other Derivatives, 8th ed. Boston: Prentice Hall, 2012.
E. COURSE REQUIREMENTS

Exams 75%
Quizzes and Homework Assignments 15%
Professionalism 10%

EXAMS

This course requires three (3) equally-weighted major exams throughout the semester. Each of the
said exams will be conducted in class, during official class hours. Primary course materials to be
tested are the lecture topics discussed in class leading up to the exam. Note, however, that I reserve
the right to include in an exam any course material tested on a prior exam, should I deem it necessary.
Therefore, it is advised that you consider each exam as a comprehensive, cumulative assessment of
the topics covered in the course.

As forewarned, this course has a strong quantitative focus. Understand that computations are
necessary in any course requirement, including the major exams. This provision necessitates you to
bring one handheld calculator to an exam because without one, you will be significantly
disadvantaged. As to the type and build of your calculator, there are no restrictions. Financial
calculators are suggested for those taking the CFA exam, but in no way are they required.

Although quantitative assessment is a key component, it is not the exclusive focus of this course.
Qualitative assessments in the form of short answers and essays need similarly be expected in any
course requirement. This critically implies that blind recourse to mathematical equations presented in
lectures is insufficient if not futile for the purposes of this course.

I will try my best to grade and return your exams as soon as I feasibly can; expect a minimum of 1
week as a time frame between when you take the exam and when the exam is graded and returned.
Each exam will be personally graded with utmost care, provided they were completed with reasonable
effort. Despite my efforts, there may be rare occasions when human error gets ahead of my
assessment of your exam. In such cases, you may request an appeal for regrading by submitting your
graded paper with a succinct and unemotional note attached on the front page of the graded exam
detailing how your paper was incorrectly graded. Within one week of submission, I will return your
appeal with changes to your grade, should there be any. All appeals must be submitted within one
week of when the paper is graded and returned.

Finally, in any course assessment, you are allowed to bring one (1) sheet of paper on which you may
write anything (back-to-back, colored, printed, or whatever; I dont mind). My personal goal is to
mold you into a critical thinker, not a person who memorizes obscure facts and formulas.

QUIZZES AND HOMEWORK ASSIGNMENTS

Preceding each major exam is a quiz or a homework assignment. Quizzes are designed to help prepare
you for the major exam that follows. Thus, the style, difficulty, and length of each quiz will be
identical to that of a major exam. Also, quizzes are to be held in class, during official class hours.

There may be times when holding a quiz in class may be infeasible due to the pace of lectures. In such
cases, a homework will be assigned instead of an in-class quiz. The nature of this course lends itself
well to the uniqueness of homework assignments, which means that each student can (and will) have
something distinct to work on for each homework assignment.

Similar to major exams, there will be three (3) equally-weighted quizzes/homework assignments
throughout the semester. The previously described regrading policy applies all the same.

PROFESSIONALISM

As should already be evident to you, FIN129 is a course taught in the school of management, which
holds its students to a high standard when it comes to professionalism. As such, 10% of your grade
will be based on the sense of professionalism you display in class.
As long as you submit your index card (see below), your default grade for this grade component is
10%. For each infringement of class policy and/or code of professionalism instituted by the school,
you will receive a 1% deduction to your final grade. Should you receive a deduction for
unprofessional behavior, you will be duly notified.

Being rude, uncivil, or overly aggressive is not allowed in this course. Socially crossing the line will
merit you a grade of 0% in the professionalism grade component.

INDEX CARD

Please submit a 3 by 5 index card with your full name, nickname, and e-mail address. Attach a 1
by 1 ID photo at the top-right corner.

F. GRADE EQUIVALENTS

A [92%, 100%]
B+ [87%, 92%)
B [82%, 87%)
C+ [76%, 82%)
C [68%, 76%)
D [60%, 68%)
F [0%, 60%)

G. CLASSROOM POLICIES

1. Attendance:
Since this is a 3-unit course, students are allowed at most 9 hours worth of cuts. A late is
equivalent to a 1-hour cut. Going beyond this said norm will merit the student a final
grade of W. There is no distinction between an excused and unexcused absence.
While in class, students are expected to actively participate in discussions and group
activities and not just listen to lecture. Outside class time, students are expected to spend
hours of preparation, which will include reading assignments, homework preparations,
research, and group meetings.

2. Classroom Behavior:
Students are expected to behave in a manner that befits a student belonging to an
academic institution.
Mobile phones and any other use of electronic gadgets are strictly discouraged during
class time. They are to be turned off or placed on silent mode.
Eating and drinking are not allowed inside the classroom.
Students are expected to adhere to the Dress Code set by the JG School of Management.

3. Class Participation: Each learner is expected to actively participate in discussions on the

assumption that each brings a wide range of experiences to the learning process. Active
participation may include asking thoughtful questions, being willing to consider new ideas,
helping the class understand complex ideas, having a cooperative attitude and a sense of humor,
and helping others comprehend the material.

4. Quizzes: Latecomers risk not being allowed to take the quiz. Long exams are also to be taken
as scheduled. A student who fails to take a quiz for no justifiable reason automatically gets a
grade of zero (0) for that particular quiz.

5. ACADEMIC INTEGRITY POLICY: Every student is responsible to know the standards of

conduct and expectations of academic integrity that apply to undertakings. Academic
 dishonesty will not be tolerated and will result in the maximum penalty as defined in the
Student Handbook:
Cheating during exams
Copying another students work including assignments and reports
Receiving assistance from anyone else with quizzes or assignments
Fabrication of data
Plagiarism

H. CONSULTATION HOURS

Mondays, Wednesdays, and Fridays: 2PM to 4PM.

The instructor reserves the right to make changes to this syllabus as the pace and environment of the
class dictates.