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FIRE 474. Security Analysis

Credits: 3
Department: Finance, Insurance & Real Estate
Description: Organization of securities markets, risk and return analysis, modern portfolio theory, efficient market theory, fixed income securities, equity securities, and derivative securities.
Prerequisites: FIRE 371, FIRE 373
Semester Offered: Spring
Grading Method: ABCDF

Student Learning Outcomes

1. Explain the general procedure of the investment process, distinguish between two general approaches to the valuation process, and apply the three-step, top-down approach to the valuation of an individual security.
2. Demonstrate the use of the discounted cash flow valuation technique and the relative valuation technique to determine the value of a common stock in addition to the valuation of bonds and preferred stocks.
3. Describe the major results of modern portfolio theory and the construction of efficient frontier of risky assets and be able to compute the covariance of different pairs of assets, portfolio expected return, and portfolio variance.
4. Apply capital market theory, capital asset pricing model, and multifactor models to estimate the return for a portfolio or an individual security.
5. Describe the asset allocation procedure, the various investment instruments in a global market, the organization of functioning of securities markets, the major uses and construction of stock market and bond market indexes, and discuss the importance of asset allocation decision.

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