Delivered at:: Big Data and Information Retrieval School

Course type:: Elective course

When:: 3 year, 3, 4 module

Instructor

Dimova, Elena

Full Syllabus

Abstract

The course studies the fundamentals of investment analysis, investment decisions and strategies. It covers core analytical tools considered ‘industry standard’ in corporate finance and the asset management business. It will provide tools and approaches for an investment projects appraisal as well as for managing portfolios of investment projects. The students will become familiar with core business valuation methods and techniques used to determine the real value of a firm (e.g. for selecting a security for an investment portfolio or M&A deal). The major challenges to venture capital valuation will be considered as well. Students will learn what investors look for in a startup, how to find the value of founder’s ownership before and after additional funding. The course also examines the theoretical foundations of portfolio theory to managing portfolios of financial assets. Students will be able to develop the practical skills of making an investment choice, constructing and managing an investment portfolio.In-class exercises, homework, financial modelling in Excel, individual and group projects will demonstrate real-world applications of investment management concepts.

Learning Objectives

Provide the conceptual background for investment analysis from the point of corporate value creation.
Develop an understanding of the theoretical foundations and practical aspects of the long-term investments decisions made in a corporation.
Develop practical skills in evaluating investment projects, a business venture, and managing investment risks in different context.
Apply portfolio theory for planning, construction, and managing an investment portfolio.

Expected Learning Outcomes

Computing cash flows for an investment project and business valuation.
Be aware of different types of investment risk, risk-premiums and how to estimate the cost of the different sources of capital.
Know how to calculate measures used to evaluate capital projects and the decision rules associated with them. Evaluate and rank alternative investment projects. Describe types of real options relevant to capital investment.
Assess the sensitivity of project value to changes in parameters.
Assess the value of a firm's stock based on fundamental information.
Describe the sources of value creation in mergers and acquisitions. Apply the key approaches to valuing a target company.
Assess a new venture’s financial strengths and viability, calculate and track the unite economics of business.
Build financial models for start-up projects and apply core start-up valuation methods
Calculate and interpret a) major return measures; b) the mean, variance, and covariance (or correlation) of asset returns based on historical data; c) portfolio standard deviation;
Explain the selection of an optimal portfolio, given an investor’s utility (or risk aversion) and the capital allocation line.
Calculate and interpret the expected return of an asset using the CAPM;
Apply the principles of portfolio planning and construction in relation to the investment policy statement.
Calculate and interpret the Sharpe ratio, Treynor ratio, M2, and Jensen’s alpha.

Course Contents

Fundamentals of Investment Analysis
Cash Flow Projections
Investment Risks and Returns
Evaluation of Capital Investment Projects
Company Valuation: The Fundamentals
Valuation Under Mergers and Acquisitions
Valuing Startup Ventures
Visualization Tools for Financial Analysis
A Portfolio Perspective on Investment. Risk and Returns.
Capital Allocation to Risky Assets
Portfolio Planning and Construction
Measuring Portfolio Performance

Assessment Elements

Final Exam (4th module)
Attendance and participation in class discussions
Class and home assignments
Midterm (3d module)

Interim Assessment

2023/2024 4th module
0.4* Final Exam + 0.2 * Midterm 3d module + 0,3 * 3d and 4th modules home, class assignments, group projects, quizzes + 0,1 * Attendance and participation in class discussions

Bibliography

Recommended Core Bibliography

Corporate finance, Berk, J., 2014
Investments, Bodie, Z., 2014

Recommended Additional Bibliography

Corporate finance and investment : decisions and strategies, Pike, R., 2012
Corporate financial management, Arnold, G., 1998

Authors

Dimova Elena Anatolevna
Стоякина Елена Игоревна

Bachelor’s Programme 'Data Science and Business Analytics'

Investment Management for Business