Lecture_01

Lecture_01 - FINE441InvestmentManagement Fall2010...

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FINE 441 Investment Management Fall 2010 Ruslan Goyenko Faculty of Management  McGill University
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What is This Course About? Risk and returns of different financial instruments Diversification and how it reduces portfolio risk Asset pricing models and implications to investors Examining the performance of fund managers Bonds’ yield-to-maturity and meaning to the investing  community Derivative instruments and payoffs associated with  various option positions 
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Marketable Financial Securities Financial Instruments Direct Investments       Indirect Investments Money Market Instruments      Capital Market Instruments       Derivative Instruments Fixed Income Instruments        Equity Instruments
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Basic Setting Objective Develop a practical theory of asset pricing Assets Generally viewed as a legal claim to a (possibly uncertain) future stream of money payments Investors Prefer more to less – maximize expected returns Risk averse – minimize risk Environment Competition: all market participants are price takers (no monopoly) Informational efficiency: prices of traded assets reflect all relevant public information
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The Foundations of Finance: 3 Nobel-Prize-Winning Insights Harry Markowitz: Optimal portfolio selection. “Don’t put all your eggs in one basket.” William Sharpe: Capital Asset Pricing Model (CAPM): In equilibrium, riskier assets have higher returns Robert Merton, Myron Scholes: No arbitrage and pricing of derivatives (options)
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This note was uploaded on 02/28/2012 for the course FINE 441 taught by Professor Ruslangoyenko during the Spring '08 term at McGill.

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Lecture_01 - FINE441InvestmentManagement Fall2010...

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