Indian Institute of Management, Kashipur

Post Graduate Program in Management

Investment Management
Term IV, 2019

Credit: 1
Instructor: K. N. Badhani
Contact Info: knbadhani@iimkashipur.ac.in
Office Hours: Students can come to my office any time. No prior permission is required.

Course Prerequisites: (i) Financial Reporting and Analysis and (ii) Corporate Finance (both
with passing grades)
Participants are strongly advised to enrol for “Business Valuation” course, unless they a fair
understanding valuation model.

Course Description:

This course is designed to familiarise the students with financial markets, instruments, and
investment strategies. The students will learn how securities are traded, and how those are
priced. How macro-economic, industry and corporate events affect security prices. They will
appreciate how changing technology and regulations are making markets more and more
efficient and why it is difficult to make profits in an efficient market. They will also learn how
behavioural imperfections will not allow markets to become fully efficient. They also learn to
apply standard models of financial economics to problems of portfolio optimization, and risk
management.

Course Objectives

The main objectives of this course are:

 To familiarize students with security trading system and market structure (PLO1 a/b).
 To familiarize students with basic approaches of security analysis – fundamental and
technical (PLO1 a/b).
 Helping the students to develop necessary skills for security analysis. They will be able
to analysis the impact of macro-economic, industry, corporate events on security prices
(PLO1 f/g).
 To familiarize students with the concept of market efficiency, its implications,
limitations and developments in the field of behavioural finance (PLO1 a/b).
 To familiarize students with modern portfolio theory and portfolio management (PLO1
a/b).
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  To develop necessary skills for financial modelling in Excel and R (PLO1 f/g).

Required Textbook:
1. Bodie, Kane, Marcus and Mohanty – Investments, 10th Ed., TMH (BKMM)
2. B Malkiel, – A Random Walk Down the Wall Street, W.W. Norton

Reference Books:
1. Reilly and Brown (RB) – Investment Analysis and Portfolio Management,10 TH Ed.,
Cengage Learning
2. Graham and Dodd – Security Analysis, Tata McGraw Hill
3. Edward and Magee – Technical Analysis of Stock Trends, 10 th Ed., CRC Press.
4. D G Luenberger - Investment Science, Oxford
5. L Harris – Trading and Exchanges, Oxford
6. Michael M Pompian – Behavioral Finance and Wealth Management, 2 nd Ed., Wiley.
7. H Schefrin – Beyond Greed and Fear, Oxford
8. N N Taleb - The Black Swan: The Impact of the Highly Improbable, Random House

Pedagogy
For pedagogical reasons the course is divided in five modules which covers both the traditional and
modern techniques of investment analysis. The thrust of the pedagogy adopted would essentially be
learn and apply. The participants will get opportunity to apply the concepts in the form of assignments.
They will also be encouraged to actively participate in the class discussions on various issues.

Assignment:
Fundamental and Technical Analysis: This will be a group assignment. A group will have ideally three
members. Each group will select one industry and will conduct in-depth economy and industry analysis
for that industry. Then each member of the group will select one company from that industry and will
do company analysis for the same. The end result of this analysis must be a valuation model for that
company. He/she will also conduct a technical analysis using at least three technical indicators and will
generate trade advice based on this analysis. The group will make presentation on 8 th, 9th and 10th
session of the course. The groups will continue the analysis and may revised the trading advises based
on new insight they have gained. They will submit a final report before 20th session. In 20th session
we will again have discussion on this assignment. Out of 20% weight given to assignment in
evaluation; 10% weight is for group assessment and 10% for individual assessment. This is the
responsibility of the group to involve every member in group activities (analysis, discussions and
making inferences). The group score will depend on involvement of group as well as the quality of the
output.

Grading
Quizzes (n-1) 20%
Assignments and Presentations 20%
Class Participation 10%
Mid - Term 20%
End - Term 30%

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Session Plan

Session Topic Learning Objectives/ Coverage Reading

Module I: Investment Environment

An overview of investment, its process and
Process of Investment
management – Objectives of & Challenges
Management Macro- BKMM :
1 before Investment Management. Financial
Environment of Chapter 1 & 2
Markets, Instruments and Participants and
Investment
ongoing trends in Investment Environment
BKMM:
Micro-Environment of Chapter 3;
2-3 Investment- Market How securities are traded in the market? Harris – Trading
Microstructure and Exchanges,
Part I –IV.

Module II: Security Analysis

Fundamental Analysis:
Relationship between macroeconomic BKMM :
4 Macroeconomic
variables and financial markets Chapter 17
Analysis

Industry Life-Cycle; Business Cycles and

BKMM :
5 Industry Analysis Industries; Analysis of Competition in the
Chapter 18
Industry, Technological Changes and Industry

BKMM :
Company Analysis and Analysis of Financial Statements and Basic
6 Chapter 19 &
Stock Valuation Valuation Models
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7 Technical Analysis Major Technical Trading Rules and Indicators RB

Participants’ Presentation
Applying Fundamental and Technical Analysis
8-10 on Fundamental and
in the Company of Participants' Choice
Technical Analysis

MID TERM EXAM

Module III: Market Efficiency

BKMM:
Chapter 11, A
Efficient Market Market Efficiency - Various Forms and Random walk
11
Hypothesis Testing, Implications. Down the Wall
Street Chapter
1-7
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 Limits of Arbitrages, Heuristics and Biases, BKMM :
12 Behavioural Finance
Implications Chapter 12

Module IV: Modern Portfolio Theory

Risk Defined, Risk Aversion, Benefits of
BKMM:
Portfolio Theory and Diversification, Markowitz Risk-return
13-14 Chapter 5, 6 &
Portfolio Optimisation optimization with and without short selling
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constraint. Black- Litterman Model
Market Model, Separation Theorem, The
Capital Assets Pricing CAPM CML and SML, Empirical tests of BKMM:
15-16
Model CAPM, Limitations of CAPM and Market Chapter 8 & 9
Anomalies
Multifactor Models and
Arbitrage Pricing Theory (APT), Multifactor BKMM :
17 Arbitrage Pricing
Models, Fama-French Model Chapter 10
Theory
Module V: Portfolio Management
Portfolio Construction Passive vs. Active Portfolio Management, BKMM :
18
and Management Asset Allocation Strategies Chapter 27

The conventional theory of performance

Portfolio Performance evaluation Composite Portfolio performance BKMM :
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Evaluation measures (Treynor; Sharpe; Jensen; and Chapter 24
Information ratio performance measures)

Discussion on Assignment by Students and

20 Summing Up
Summing Up

Course Policies

1. Responsibility for Course Materials: You are responsible for all material covered in
class. If you are absent, you are responsible for obtaining the information you missed.
2. Classroom Behavior: We expect you to participate in class activities in a mature and
appropriate manner. Disruptive or otherwise unacceptable behavior will not be
tolerated.
3. Use of Mobile and Laptop: Mobiles are not permitted in the classroom. In the class,
you must carry your laptop and keep it down unless asked by the instructor.
4. Academic Conduct: All members of the academic community at IIM Kashipur are
expected to practice and uphold standards of academic integrity and honesty. Academic
integrity means representing oneself and one’s work honestly. Misrepresentation is
cheating since it means students are claiming credit for ideas or work not actually
theirs and are thereby seeking a grade that is not actually earned. Following are some
examples of academic dishonesty:
i. Cheating on quizzes and examinations. This includes using materials such as
books and/or notes when not authorized by the instructor, copying from
someone else’s paper, helping someone else copy work, substituting another’s
work as one’s own, theft of exam copies, or other forms of misconduct on
exams.
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 ii. Plagiarizing the work of others. Plagiarism is using someone else’s work or
ideas without giving that person credit; by doing this students are, in effect,
claiming credit for someone else’s thinking. Whether students have read or
heard the information used, they must document the source of information.
When dealing with written sources, a clear distinction should be made between
quotations (which reproduce information from the source word-for-word within
quotation marks) and paraphrases (which digest the source of information and
produce it in the student’s own words). Both direct quotations and paraphrases
must be documented. Even if students rephrase, condense or select from
another person’s work, the ideas are still the other person’s, and failure to give
credit constitutes misrepresentation of the student’s actual work and plagiarism
of another’s ideas. Buying a paper or using information from the World Wide
Web or Internet without attribution and handing it in as one’s own work is
plagiarism.
iii. Falsifying records or providing misinformation regarding one’s
credentials.
iv. Unauthorized collaboration on computer assignments and unauthorized
access to and use of computer programs, including modifying computer files
created by others and representing that work as one’s own.
v. Unless they specifically indicate otherwise, instructors expect individual,
unaided work on homework assignments, exams, lab reports and computer
exercises, and documentation of sources when used. If instructors assign a
special project other than or in addition to exams, such as a research paper, or
original essay or a book review, they intend that work to be completed for that
course only. Students must not submit work completed for a course taken in the
past or for a concurrent course unless they have explicit permission to do so
from both faculty members.
Any academic misconduct will automatically result in a failing grade for the
class and the student will be reported to the committee on academic
misconduct for further disciplinary action.
4. Attendance: As far as I am concerned, you are an adult and it is your decision whether
or not you attend class. However, your decision not to attend a class may have negative
consequences for your class grade. (Please consult PGP Participants’ Handbook for this
purpose).
If you decide to attend a class, you must come to the class and take your seat
sufficiently before the beginning of the class time. Under no circumstances you would
be allowed in once the class has started. You are expected to sit through the class
unless you have a prior permission from the instructor to leave the classroom before
the end of the class.
5. Late submission: Any late submission beyond the deadline (even by few seconds)
will result in 0 point. Except in case of emergencies, with a doctor's note, any
questions about late submission will not be entertained.
6. Missed exam: There is no make-up for the missed exams unless the student has
discussed and made an arrangement with the instructor for a valid reason beforehand.
In all other instances, the student must produce a valid doctor's note for the day the
student missed the exam. Such doctor's note must be produced in the same week the
student missed the exam.
7. Grade Discussion: It is the student’s responsibility to monitor his or her own grades
and raise any questions s/he may have within one week of the grades assigned.
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 8. Extra Credit: No Extra credit shall be given to make-up for missed quizzes,
assignments, exams, project, or poor performance in the course.
Learning Accommodations

To provide equal access to the educational programs and opportunities, IIM Kashipur is
dedicated to providing appropriate accommodations to students with documented disabilities
such as attention deficit-hyperactivity disorders, physical disabilities, sensory impairments,
and psychiatric disorders in order to help them achieve their academic and personal potential.
These academic accommodations are provided to students at no cost.

Inclusivity Statement

IIM Kashipur believes that diversity and inclusiveness are essential to excellence in education
and innovation. Our community represents a rich variety of backgrounds, experiences,
demographics, and perspectives. IIM Kashipur is committed to fostering a learning
environment where every individual is respected and engaged. To facilitate a dynamic and
inclusive educational experience, we ask all members of our community to:
• be open to the perspectives of others
• appreciate the uniqueness of their colleagues
• take advantage of the opportunities to learn from each other
• exchange experiences, values, and beliefs
• communicate in a respectful manner
• be aware of the individuals who are marginalized and involve them
• keep confidential discussions priva

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