PURPOSE
To acquire the applicable knowledge, understanding and application possibilities of contemporary views with regard to Investment Management.
LEARNING OUTCOMES
• Demonstrate a clear understanding of how to calculate the required rate of return as well as the relationship between risk and return.
• Distinguish between various types of securities brokers and brokerage accounts and financial assets, calculate initial and maintenance margins and comprehend the workings of short sales.
• Understand the importance of investor objectives, constraints and strategies.
• Understand the financial statements holistically, the uses thereof and the linkages between them.
• Understand the advantages and drawbacks of mutual fund investing, the different fund types, the operations, as well as the expense structure of mutual funds, the two major groups of mutual funds, the closed-end funds and the exchange-traded funds.
• Demonstrate knowledge of performance information reported in the financial press for selecting open-end mutual funds.
• Distinguish between the different markets (NYSE, NASDAQ and JSE) and how they operate.
• Calculate an index return.
• Conduct a fundamental analysis be valuing ordinary shares using any of the valuation models as well as price ratio analysis by applying the different price ratios.
• Understand the foundations and implications of market efficiency, as well as stock market anomalies, bubbles and crashes means for market efficiency.
• Understand the various methods to predict future share price movements.
• Comprehend the importance of interest rates (nominal and real) as well as the term structure of interest rates.
• Understand the basics of bonds, the relationships among yield measures, interest rate risk and Malkiel’s Theorem.
• Describe the different types of corporate bonds and the importance of bond credit ratings.
• Calculate expected returns, variances and standard deviations for a security and a portfolio for portfolio diversification.
• Comprehend the concept of the efficient frontier.
• Distinguish between the different types of risks, as well as calculate and interpret the expected return using the SML, portfolio returns, portfolio betas, Sharpe ratio, Treynor ratio and Jensen Alpha.
CORE CONTENT
• A brief history of risk and return.
• Buying and selling securities.
• Overview of security types.
• Projecting cash flow and earnings.
• Mutual funds.
• The stock market.
• Valuation of ordinary shares.
• Share price behaviour and market efficiency.
• Behavioural finance and the psychology of investing.
• Interest rates.
• Valuation of fixed interest securities.
• Diversification and risky asset allocation.
• Portfolio management.
Evaluation criteria
100% Continuous assessment:
• 2x Semester tests (Final mark weight = 40%)
• 3x Tutorials (Final mark weight = 15%)
• 1x Assignment (Final mark weight = 15%)
• End of module assessment (Final mark weight = 30%)
MODERATION
Internal.
Prerequisites
• Accounting 1A (RV101) OR Business Accounting 1A (RNCV111)
• Accounting 1B (RV102) OR General Accounting 1B (RGV102) OR Business Accounting 1B (RNCV112)
Evaluation criteria
100% Continuous assessment:
• 2x Semester tests (Final mark weight = 40%)
• 3x Tutorials (Final mark weight = 15%)
• 1x Assignment (Final mark weight = 15%)
• End of module assessment (Final mark weight = 30%)