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Unformatted text preview: UNIVERSITY OF CALIFORNIA
SANTA BARBARA
Econ 134B
Investments
Fall 2011 N.Mehra
nmehra@econ.ucsb.edu The rationale of this course is to build a framework to evaluate financial theory in the light of
available empirical evidence, as well as to build intuition and clarity of thought. It is an introduction
to the principles of security valuation, portfolio theory, bond valuation and option pricing.
Econ 134a is the prerequisite for this course.
Course Materials
I. Required Text:
Bodie, Kane, and Marcus, Essentials of Investments, 8th Edition (2010).
McGrawHill / Irwin. (BKM) II. Interesting Reading:
(i)
(ii) Burton Malkiel, A Random Walk Down Wall Street. Norton (2011).
Peter Bernstein, Capital Ideas: the improbable origins of wall street (2005) These books will not be covered in class. You are encouraged to read them, especially if
you plan to pursue a career in finance.
Evaluation
Grading is based on two midterms, a final and four homework assignments. The breakdown is as
follows:
Homework:
Two Midterms:
Final: 20% of course grade
40% of course grade
40% of course grade If your performance on the final is better than on the midterms, the final will count for 60% of the
course grade and the higher scoring midterm for 20%.
All homework assignments are to be done in groups.
Late Homework will not be accepted. Administrative Information
Teaching Assistant: Avinash Reddy aureddy@umail.ucsb.edu
Avinash’s office: 2015 North Hall
Avinash’s office hours: Wednesdays 24
Weekly Section: Mondays 6 – 6:50, Phelps 2516
GauchoSpace: https://gauchospace.ucsb.edu
Please check here for lecture notes, problem sets, solutions, updates and additional course information.
Professor Mehra’s office hours: Tuesdays, Thursdays, 1112 and by appointment
Professor Mehra’s office: 3020 North Hall
Course Outline and Reading List
THURSDAY SEPTEMBER 22 2011
Introduction. The Arithmetic of Finance
Time Value of Money: revision
TUESDAY SEPTEMBER 27 2011
Introduction. The Arithmetic of Finance
Time Value of Money continued
THURSDAY SEPTEMBER 29 2011
Financial Instruments, the Investment Environment,
Rates of Return
BKM, Chapters 1, 2, 3,4
PROBLEM SET 1 is due Tuesday, October 4th in class
TUESDAY OCTOBER 4 2011
Diversification and Portfolio Theory:
An Introduction to Risk and Return
BKM, Chapters 5, 6 THURSDAY OCTOBER 6 2011
Diversification and Portfolio Theory
An Introduction to Risk and Return
BKM, Chapters 5,6
TUESDAY OCTOBER 11 2011
The Capital Asset Pricing Model
BKM, Chapter 7 up to and including section 7.4
THURSDAY OCTOBER 13 2011
The Capital Asset Pricing Model
BKM, Chapter 7 up to and including section 7.4
PROBLEM SET 2 is due Tuesday, October 13, in class
THURSDAY OCTOBER 18, 2011 MIDTERM 1: Covers BKM Chapters
THURSDAY OCTOBER 20 2011
Bond Portfolio Management: Pricing and Yields
BKM, Chapter 10
TUESDAY OCTOBER 25 2011
Bond Portfolio Management: Duration and Immunization
BKM, Chapter 11
THURSDAY OCTOBER 27 2011
Equity Valuation
BKM, Chapter 13
TUESDAY NOVEMBER 1 2011
Equity Valuation continued
BKM, Chapter 13 PROBLEM SET 3 is due Thursday, November 3rd in class
THURSDAY NOVEMBER 3 2011
Practical Asset Allocation and Portfolio Evaluation
BKM, Chapter 18
TUESDAY NOVEMBER 8 2011: MIDTERM II
THURSDAY NOVEMBER 10 2011
Markets/Market Anomalies
Market Efficiency
BKM, Chapters 8,9
TUESDAY NOVEMBER 15 2011
Markets/Market Anomalies
Market Efficiency
BKM, Chapters 8,9
THURSDAY NOVEMBER 17 2011
Option Pricing
BKM, Chapters 15,16
TUESDAY NOVEMBER 22 2011
Option Pricing
BKM, Chapters 15,16
THURSDAY NOVEMBER 29 2011
Option Pricing
BKM, Chapters 15,16
PROBLEM SET 4 is due Tuesday, November 29th in class
THURSDAY DECEMBER 1 2011
Option Pricing
BKM, Chapters 15,16
FINAL EXAM: Thursday, December 8th 47 pm, in class. ...
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This note was uploaded on 12/05/2011 for the course ECON 134b taught by Professor Johnhartman during the Fall '11 term at UCSB.
 Fall '11
 JohnHartman

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