investments fin 4432 · f all semester 2012 · s - the Sorrell College of ...

PROFESSOR
INVESTMENTS
TROY UNIVERSITY
FIN 4432 · FALL SEMESTER 2012 · SECTION 01
Dr. Charod D. Dodd
OFFICE 108-C Bibb Graves Hall, Troy, Alabama 36082
OFFICE PHONE
OFFICE HOURS
E-MAIL
334.808.6482 (Office) and 334.670.3599 (Fax)
Tuesday & Thursday 8:00 – 10:00 AM / 1:00 – 2:30 PM / 4:00 - 5:30 or by Appointment
cddodd@troy.edu
CLASSROOM Bibb Graves Hall 147
CLASS TIME TTH 11:30 AM – 12:45 PM, August 16, 2012 – December 4, 2012
TEXTBOOK
PREREQUISITES
OFFICIAL
DESCRIPTION
OBJECTIVE
REQUIRED
RESOURCES
L. Gitman, M. Joehnk, and S. Smart, Fundamentals of Investing, 11 th Edition, Pearson Prentice
Hall, Boston, MA, 2011. ISBN: 978-0-13-611704-9.
Managerial Finance 3332 – Strictly Enforced
Three hours lecture. This course studies the concepts, institutions, and processes that are
employed in the management of financial investments. Financial analysis of investments
includes markets and instruments with an emphasis on security analysis, portfolio analysis, and
financial planning. Focus is directed toward the quantitative methods used in the analysis of
investment instruments.
This objective of this course is to develop within students the knowledge needed to: 1) interpret
the activity in the financial markets as discussed by the media and by business associates. 2)
make informed and responsible decisions about the investment choices commonly encountered
in the contemporary environment. Upon completion of the course the students should:
- Measure and analyze the relationship between risk and return.
- Compute and discuss the risk and return concepts from the perspective of an individual
asset and a portfolio.
- Analyze portfolios using several multifactor models.
- Apply theories of valuation and relative-valuation techniques, including the mechanics of
fundamental and technical analysis.
- Analyze a market, industry, and company using basic industry and economic-analysis
(forecasting) techniques.
- Explain and value bonds, including portfolios, and duration.
- Evaluate portfolio performance using the Treynor, Jensen, and Sharpe performance
measures.
- Discuss option trading strategies and the Black-Scholes option pricing model.
- Discuss the invest merits of derivatives.
- Be familiar with different investment securities.
- Know the types of stock market transactions available to individual investors.
- Be familiar with the tenants of the efficient market hypothesis.
- Understand the purpose and benefits of investment companies.
- Understand the advantages and disadvantages of international investing.
- Be able to develop a list of do and don'ts to assist in developing an investment strategy.
A Texas Instruments BA II Plus or a Texas Instruments BA II Plus Professional financial
calculator is required and will be used throughout the class. Students may not share calculators
with others. Students must also have access to a computer with an internet connection and a
certified copy of Microsoft Excel with all Financial Add-Ins activated.
Students will be encouraged and required to read and bring a copy of the Wall Street Journal,
New York Times, Business Weekly, Forbes, Economist, or Barron’s to each class meeting. The
Sorrell College of Business participates in the Academic Partnership Program, and students may
pick up a copy of the New York Times at locations throughout Bibb Graves Hall or at the campus
library.

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
ACADEMIC
INTEGRITY
POLICY
IMPORTANT
DATES
STUDENT
ASSISTANCE
EXAM
POLICY
ASSIGNMENT
POLICY
GRADING
POLICY
FINAL GRADE
POLICY
Academic dishonesty is not tolerated. All occurrences of academic misconduct will be addressed
in accordance with guidelines and procedures outlined in the ORACLE: Student Handbook and
Troy University approved Honor Code that applies to all students. The code is as follows:
"As a Troy University student I will conduct myself with honor and integrity at all times. I will
not lie, cheat, or steal, nor will I accept the actions of those who do."
Upon accepting admission to Troy University, a student immediately assumes a commitment to
uphold the Honor Code, to accept responsibility for learning, and to follow the philosophy and
rules of the Honor Code. Students will be required to state their commitment on examinations,
research papers, and other academic work. Ignorance of the rules does not exclude any member
of the Troy University community from the requirements or the processes of the Honor Code.
Plagiarism, cheating, or dishonesty will cause a student to get a course grade of “F” and may
result in suspension from the university for a specific or indefinite period of time.
Monday, August 20, 2012 – Last day to drop, add a class, or withdraw without financial penalty.
Friday, October 19, 2012 – Last day to drop a course or withdraw without academic penalty.
Tuesday, December 11, 2012 – Final Exam, 147 Bibb Graves Hall, 2:00 PM – 4:00 PM.
Students can meet with me during scheduled office hours listed above or arrange an appointment
via e-mail. I will generally respond to e-mail messages within 24 hours. Please be specific when
asking questions via e-mail.
There will be three exams and a cumulative final exam administered during the course. All
exams will be held during regular class hours or exam dates noted in the class schedule. Exam
dates are fixed and will not be changed unless the University is closed.
Each student is expected to adjust his or her schedule to fit these exam times. A missed exam
will result in a zero for the exam unless the student presents a legitimate, university approved
excuse at least 24 hours prior to the scheduled exam. If the excuse is verifiable and falls under
the university’s policy, the cumulative final exam will substitute for the missed exam.
Homework assignments, quizzes, discussion, and an Investment Project will be administered
during the semester. Assignment may require that the student read the textbook in advance to the
material being covered in class. Moreover, each assignment may cover textbook material which
will not be presented in class. Each assignment will be graded for accuracy. Additional details
will be provided on the first day of class.
There are 600 total points in the course. Four exams account for 100 points each. Quizzes allow
for 105 points, discussion topics allow for 40, and the Investment Project allows for 55 points.
Letter grades are assigned by the total points earned, not percentages: 540+ is an A, 480–539 is a
B, 420–479 is a C, 360–419 is a D, and below 359 is an F.
Please note that all final grades are calculated on a cumulative point system, not a percentage
system. That is, there are 600 available points in the course. If a student has accumulated a total
of 539 points (89.83 percent) at the end of the course, the final grade will be recorded as a B.
Unless there is an error in your final grade calculation, do not contact me after the final exam to
request that your letter grade be changed. I will not give an extra assignment or change grades
for any reason except in cases where there is an error in the calculation of the final grade. No
exceptions. Students who ignore this policy will forfeit one letter grade.
PAGE 2 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
ADDITIONAL
REQUIREMENTS
AND POLICIES
CELL PHONE
POLICY
ADA
POLICY
DISCLAIMER
A business-like demeanor is expected of all students in all aspects of the course, e.g., attendance,
tardiness, preparation, class discussion, assignments, examinations.
Students are not permitted to use a recording device (audio or video) in class.
Students may not wear headgear of any kind during an exam. Students who must wear headgear
for medical reasons are exempt from this policy upon written documentation of medical
necessity from a qualified medical physician.
Students who miss a class, for whatever reason, should obtain all notes and assignments from a
fellow classmate. I do not give out my lecture notes to anyone for any reason. In addition, I do
not support cramming, thus I will not answer questions about homework on the day it is due. I
also require evidence of your work on an assignment before providing direction or advice.
Unless you have prior approval for a specific class day, please turn off all cell phones when you
enter the classroom. Violations of this policy will not be tolerated. If a student’s cell phone rings
during a lecture he or she will be excused from class for the remainder of the class day.
Cell phones and Bluetooth devices should not be visible during an exam. If the instructor sees or
hears a student’s cell phone during an exam the student will be excused from the exam with a zero.
Students who have special needs as addressed by the Americans with Disabilities Act should
speak with the instructor, contact the Office of Adaptive Needs Program (Wright Hall 226), or
call 334.670.3220/3221. Various accommodations are available through the Adaptive Needs
Program.
The faculty in the School of Business makes every effort to accommodate unique and special
needs of students with respect to speech, hearing, vision, seating, or other possible disabling
conditions. Please notify the instructor as soon as possible of requested accommodations or
ways to help.
The instructor reserves the right to modify this syllabus as necessary.
PAGE 3 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
MODULE 1: PREPARING TO INVEST & IMPORTANT CONCEPTUAL TOOLS
Thursday August 16 Introduction Course Introduction
Tuesday August 21 Chapter 1 The Investment Environment I
Thursday August 23 Chapter 1 The Investment Environment II
Tuesday August 28 Chapter 2 Securities Markets and Transactions I
Thursday August 30 Chapter 2 Securities Markets and Transactions II
Tuesday September 4 Chapter 3 Investment Information and Securities Transactions I
Thursday September 6 Chapter 3 Investment Information and Securities Transactions II
Tuesday September 11 Chapter 4 Return and Risk I
Thursday September 13 Chapter 4 Return and Risk II
Tuesday September 18 Chapter 5 Modern Portfolio Concepts I
Thursday September 20 Chapter 5 Modern Portfolio Concepts II
Tuesday September 25 Exam I Exam I: 11:30 AM – 12:45 PM
MODULE 2: INVESTING IN COMMON STOCK & INVESTING IN FIXED-INCOME SECURITIES
Thursday September 27 Chapter 6 Common Stocks I
Tuesday October 2 Chapter 6 Common Stocks II
Thursday October 4 Chapter 7 Analyzing Common Stocks I
Tuesday October 9 Chapter 7 Analyzing Common Stocks II
Thursday October 11 Chapter 8 Stock Valuation I
Tuesday October 16 Chapter 8 Stock Valuation II
Thursday October 18 Group Project Group Project Work Day
Tuesday October 23 Chapter 10 Fixed-Income Securities I & II
Thursday October 25 Chapter 11 Bond Valuation I
Tuesday October 30 Chapter 11 Bond Valuation II
Thursday November 1 Exam II Exam II: 11:30 AM – 12:45 PM
MODULE 3: PORTFOLIO MANAGEMENT & DERIVATIVE SECURITIES
Tuesday November 6 Chapter 12 Mutual Funds: Professionally Managed Portfolios
Thursday November 8 Chapter 13 Managing Your Own Portfolio
Tuesday
Thursday
November 13
November 15
Chapter 14
Chapter 14
Tuesday November 20 Troy Campus Fall Break
Thursday
Tuesday
November 22
November 27
Holiday
Project
Options: Puts and Calls I
Options: Puts and Calls II
Thanksgiving
Project Deadline
Tuesday November 27 Chapter 15 Commodities and Financial Futures
Thursday November 29 Exam III Exam III: 11:30 AM – 12:45 PM
MODULE 4: COMPREHENSIVE FINAL EXAM
Tuesday December 4 Review Final Exam Review
Tuesday December 11 Exam IV Comprehensive Exam IV: 2:00 PM – 4:00 PM
END OF COURSE
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DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
THIS PAGE WAS INTENTIONALLY LEFT BLANK
PAGE 5 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
PROJECT
OVERVIEW
ADDITIONAL
POLICIES
DEADLINES
COMPENSATION
SCHEME
INVESTMENT CONSULTING PROJECT
TROY UNIVERSITY
REAL ESTATE 4432 – FALL SEMESTER 2012 – SECTION 01
Congratulations, you have just completed your degree at Troy University and you have accepted a
position as a research analyst in the equities division of Dodd Financial, a regional financial
services firm providing financial consulting services to investors in the southeastern United States.
A national equities investment company recently approached Dodd Financial seeking to make a
sizeable investment in Alabama. While our client is a major equities and fixed income securities
investor for pension funds, your analysis should be based on the attractiveness of the stock as a
stand-alone asset. That is, ignore any portfolio or corporate objective issues. The client faces a
28% marginal tax rate, prefers more wealth to less, is risk averse, and has no passive income.
As research analysts in the equities division you will identify three suitable stocks. Each student
shall select a stock according to the first letter of their last name. You will then conduct a detailed
analysis of the stock and make a recommendation to our client in the form of a written, formal
report. The ultimate question to be answered by your analysis is as follows: Under the current
market conditions we strongly recommend our client to purchase the securities?
The essay part of the project must be typed and double-spaced using word processor (Microsoft
Word or Pages) and consists of the name of the stock, the ticker symbol, industry, and the stock
market where the stock is traded. The following four sections should make up the body of the
report: SECTION IV: An Overview, SECTION V: Competition, SECTION VI: Financial
Characteristics and Profitability, SECTION VII: Future Prospect
The results of your analysis must be presented in a formal feasibility report using the outline
provided on the following page. Analysts are expected to make full use of the tools and techniques
discussed in typical Finance principles and Investments courses, as well as your own creative and
analytical abilities.
Each research analyst is expected to make this a professional document of the highest standard,
and plagiarism will result in dismissal from the firm. Using double-spaced typed pages, figures,
and tables, please contain your remarks to 5–10 pages exclusive of the cover page, table of
contents, and executive summary.
Remember that the company places a priority on accuracy of your analysis but we also reward
creativity, professionalism, and insightful analysis. The compensation you receive will be
determined by how well you meet these expectations. A copy of your report will be provided to the
listing agent and owners of the property you evaluate. You may legitimately access any
professional sources willing to assist you.
Hastily-prepared reports, plagiarized reports, reports with excessive grammatical errors, and
reports without all of the required components will not be accepted.
Final drafts of the reports are due on Tuesday, November 27, 2012 by 11:30 AM. Submit a printed
and bound copy of your final report in a sealed envelope addressed to Dr. Dodd using the contact
information at the top of this syllabus.
Creativity and Professionalism:
Content Accuracy:
Analysis and Application:
Total Points Available:
15 Points
15 Points
25 Points
55 Points
PAGE 6 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
All investment research reports for Dodd Financial contain the following sections:
I. Cover Page
II. Table of Contents for All Report Sections, Tables, and Figures, References
III. Executive Summary of Important Facts and Conclusions
IV.
Brief history
V. Analysis
1. Economic Analysis
The economic analysis is the first step in the traditional analysis.
The following economic factor effects on each stock chosen, should be discussed
here:
Business cycle
GDP
Industrial production
Overall Savings Vs. Consumption
Taxes
Government Spending
Debt Management
Money Supply
Interest Rates
Inflation
Consumer Spending
Business Investments
Foreign Trade and Foreign Exchange rates
Refer to textbook pages 250 – 254.
PAGE 7 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
2. Industry Analysis
The first step in the industry analysis is to establish the competitive position of a particular
industry in relation to others. Then, identify companies within the industry that hold
particular promise.
The following are discussion question that you would want to discuss in this section:
a. Financial makeup, basic characteristics, financial ratios about performance
of the company as compared to the industry
b. What is the nature of the industry? Is it monopolistic, or are there many
competitors? Do a few set the trend for the rest, and if so, who are those
few?
c. To what extent is the industry regulated? If so, how “friendly” are the
regulatory bodies?
d. What role does labor play in the industry? How important are labor
unions? Are there good labor relations within the industry? When is the
next round of contract talks?
e. How important are technological developments? Are any new
developments taking place? What impact are potential breakthroughs
likely to have?
f. Which economic forces are especially important to the industry? Is
demand for the industry’s goods and services related to key economic
variables? If so, what is the outlook for those variables? How important
is foreign competition to the health of the industry?
g. What are the important financial and operating considerations? Is there an
adequate supply of labor, material, and capital? What are the capital
spending plans and needs of the industry?
Refer to textbook pages 254-258.
PAGE 8 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
3. Fundamental Analysis
Fundamental analysis is the study of the financial affairs of a business for the purpose of
better understanding the company that issued the common stock. In the fundamental analysis
the value of the stock is influenced by the performance of the company that issued the stock.
The following should be discussed in this section:
a. the competitive position of the company.
b. Its composition and growth in sales.
c. Profit margins and the dynamics of company earnings.
d. The composition and liquidity of corporate resources (the company’s asset
mix).
e. The capital structure of the company.
f. Financial statements
g. Financial ratios
a. Liquidity Measures
b. Activity Measures
c. Leverage Measures
d. Profitability Measures
e. Common Stock Measures
Refer to textbook pages 258-276
Recommendation
VI.
VII.
VIII.
Future Prospect
Discussion of new goods, services or products, managements direction, and your professional opinion about the
growth or lack there of in the firm. Discuss a forecast of future cash flows, EPS, dividends, and stock price.
Discuss any international opportunities for growth.
Summary of Conclusions and Final Recommendation
References
PAGE 9 OF 10

DR. CHAROD D. DODD
INVESTMENTS
PROFESSOR OF FINANCE FIN 4432 – SECTION 01
SORRELL COLLEGE OF BUSINESS FALL SEMESTER 2012
THIS PAGE WAS INTENTIONALLY LEFT BLANK
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