Unit Guide

General Information

Unit convenor and teaching staff	Unit convenor and teaching staff Unit Convenor / Lecturer Al Clark al.clark@mafc.mq.edu.au Contact via Email Unit Convenor / Lecturer Dan Daugaard dan.daugaard@mafc.mq.edu.au Contact via Email Lecturer Geoff Brianton geoff.brianton@mafc.mq.edu.au Contact via Email
Credit points	Credit points 4
Prerequisites	Prerequisites (Admission to MAppFin or MAppFin(Adv) or GradDipAppFin) and (AFCP810 and AFCP811 and AFCP812 and AFCP813)
Corequisites	Corequisites
Co-badged status	Co-badged status
Unit description	Unit description This unit equips students to apply an advanced body of finance knowledge to a range of contexts. The unit commences with an individual investor's perspective and then progresses to the viewpoint of a professional funds manager. This enables the student to develop the ideas of portfolio theory, asset pricing and behavioural finance. The unit continues with a security analysts’ perspective to address the broad question of how to value enterprises and then drills down to security valuation, financial statement and cash flow analysis. Lastly we shift the focus to that of a derivatives trader to explore the pricing of forwards and options and employing these derivatives to achieve desired asset allocation exposures. The unit emphasises an applied orientation for the major techniques and themes to be further extended and developed across the Masters program. It represents the essential pre-requisite knowledge for all other core units and elective streams.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://students.mq.edu.au/important-dates

Learning Outcomes

On successful completion of this unit, you will be able to:

Explain and apply the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Apply research methods to evaluate investment portfolio construction principles and asset pricing theory.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

General Assessment Information

To pass this unit the student needs to (1) Achieve an aggregate mark of 50 or more, and; (2) Pass the Mid-term and Final Exam.

Assessment Tasks

Name	Weighting	Hurdle	Due
Online Quizzes	5%	No	Refer to iLearn
Mid Term Exam	20%	Yes	Refer to Timetable
Assignment	35%	No	Refer to iLearn
Final Exam	40%	Yes	Refer to Timetable

Online Quizzes

Due: Refer to iLearn
Weighting: 5%

Summary of Assessment Task

Individual / Group: Individual.

Due Date: Refer to the unit's iLearn site.

Submission Method: In iLearn.

Duration: Refer to online quiz instructions.

Extension Requests:

You are expected to make yourself available for assessment during the relevant quiz window.
Students who do not submit this task by the due date and time receive a result of zero. This penalty does not apply when an application for Special Consideration has been made and approved.
Students who do not attempt the quiz receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.
Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time.
Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy.

On successful completion you will be able to:

Explain and apply the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

Mid Term Exam

Due: Refer to Timetable
Weighting: 20%
This is a hurdle assessment task (see assessment policy for more information on hurdle assessment tasks)

Summary of Assessment Task

Individual / Group: Individual.

Due Date: Refer to Timetable at www.mafc.mq.edu.au

Different Class Groups have different deadlines. Students should find the timetable and dates relevant to their group at www.mafc.mq.edu.au

Submission Method: As per MAFC Program Rules at www.mafc.mq.edu.au

Duration: 2 hours plus 10 minutes reading time.

Examination Conditions:

All examinations are closed book. However, permitted materials and aids are:
- A study sheet, prepared by the student (typically one double-sided A4 page).
- Calculators. Permitted calculators are noted under ‘Calculators’ below.
Exam times and locations are noted in the unit timetable at www.mafc.mq.edu.au.
Refer to MAFC Program Rules at www.mafc.mq.edu.au.

Extension Requests:

You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at www.mafc.mq.edu.au.
Deferral of an examination is not permitted unless an application for Special Consideration is made and approved.
Students who do not attend receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.
Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time.
Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy or non-attendance at an examination.

On successful completion you will be able to:

Explain and apply the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

Assignment

Due: Refer to iLearn
Weighting: 35%

Summary of Assessment Task

Individual / Group: A combination of individual and group work (refer to Assignment coversheet).

Due Date: Refer to the unit's iLearn site.

Submission Method: Via Turnitin on iLearn.

Duration: Refer to Assignment coversheet.

Extension Requests:

No extensions will be granted. There will be a deduction of 10% of the total available marks made from the total awarded mark for each 24 hour period or part thereof that the submission is late (for example, 25 hours late in submission incurs a 20% penalty). This penalty does not apply for cases in which an application for Special Consideration is made and approved.
Late submissions will be accepted up to 96 hours after the due date and time.
Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time.
Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy.

On successful completion you will be able to:

Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Apply research methods to evaluate investment portfolio construction principles and asset pricing theory.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

Final Exam

Due: Refer to Timetable
Weighting: 40%
This is a hurdle assessment task (see assessment policy for more information on hurdle assessment tasks)

Summary of Assessment Task

Individual / Group: Individual.

Due Date: Refer to Timetable at www.mafc.mq.edu.au

Different Class Groups have different deadlines. Students should find the timetable and dates relevant to their group at www.mafc.mq.edu.au

Submission Method: As per MAFC Program Rules at www.mafc.mq.edu.au

Duration: 2 hours plus 10 minutes reading time.

Examination Conditions:

All examinations are closed book. However, permitted materials and aids are:
- A study sheet, prepared by the student (typically one double-sided A4 page).
- Calculators. Permitted calculators are noted under ‘Calculators’ below.
Exam times and locations are noted in the unit timetable at www.mafc.mq.edu.au.
Refer to MAFC Program Rules at www.mafc.mq.edu.au.

Extension Requests:

You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at www.mafc.mq.edu.au.
Deferral of an examination is not permitted unless an application for Special Consideration is made and approved.
Students who do not attend receive a mark of zero. This penalty does not apply in cases where an application for Special Consideration has been made and approved.
Note: Applications for Special Consideration must be made within 5 (five) business days of the due date and time.
Refer to MAFC Program Rules at www.mafc.mq.edu.au for information on the University’s Special Consideration Policy or non-attendance at an examination.

On successful completion you will be able to:

Explain and apply the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

Delivery and Resources

CLASSES

Face-to-Face Teaching: Generally 36 hours.

Timetable: Detailed timetable for classes are on the Centre’s website at www.mafc.mq.edu.au

Consultation Times:

Students who wish to contact any of the teaching staff may do so through:

iLearn, in relation to general queries (so that all students may benefit); or
Individual consultation with the lecturer by email in the first instance, if necessary.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS

Text: Bodie, Kane and Marcus, Investments, McGraw Hill, 11^TH edition, 2014, ISBN 978-1-259-27717-7 (BKM).

Additional Readings:

Additional readings are included in the unit notes and/or on iLearn.
Students should assume these readings are examinable unless otherwise advised.

Lecture Notes: Available in printed form and electronically via iLearn.

Study Problems:

Students are required to work systematically through end of chapter problem sets. These problems will not be collected but they will help you prepare for the exams. Answers, but not worked solutions, to set problems are provided in the lecture notes.
Please refer to the Bodie, Kane and Marcus, Investments Solutions Manual for worked solutions.

Pre-course Knowledge: The Gateway units of the Graduate Certificate in Finance represent the pre-course knowledge required to successfully study the advanced applied finance units of the Masters of Applied Finance and the Graduate Diploma of Applied Finance. Please refer to the following page for instructions on reviewing the unit guides for the gateway units:

http://mafcstudents.mq.edu.au/new-to-mafc/pre-course-materials/

Useful References:

McDonald, Derivatives Markets, Pearson
Ross, Westerfield and Jaffe, Corporate Finance, McGraw Hill
Bodie, Kane and Marcus, Investments Solutions Manual, McGraw Hill
Damodaran, Investment Valuation, Wiley
Elton, Gruber, Brown & Goetzmann, Modern Portfolio Theory and Investment Analysis, Wiley.

Calculators:

A financial calculator that can handle time value of money calculations, logs and power functions is required.
The Hewlett Packard calculator hp17bII+ is recommended.
In examinations, hand held calculators are permitted. Mobile phones and computers are not permitted.

Assumed Access:

Access to a computer with word processing and spreadsheet capability is assumed, as is general student computer literacy.
Also assumed is access to a Web browser (e.g. Internet Explorer or Firefox), email software and student’s own connection to an internet service provider.

TECHNOLOGY USED AND REQUIRED

Unit iLearn Site:

Found by logging on to iLearn ilearn.mq.edu.au, then clicking on AFCP801 Portfolio Management and Valuation.
This is where you will find a link to forums, downloadable resources and other important pages.
Forums allow you to communicate with other students and lecturer(s) and may provide supplementary material.
You are requested to post questions to forums at least 24 hours prior to an assignment submission date or examination date. Questions posted after that time may not be answered. Please try to not leave your questions to the last few days.

Important Notice:

It is important that you familiarise yourself with iLearn.
Students should check iLearn regularly (minimum twice a week and prior to all lectures) and look for updates and distribution of materials (including case studies) related to the unit or assessments and, if relevant, participate in forum discussions.

Unit Schedule

1. Asset Allocation (2 sessions)

Introduction to the individual’s investment problem
Asset markets
Investment valuation basics
Forecast risk and return
Risk attitude – risk aversion and utility
Asset Allocation

2. Asset Pricing Model (2 sessions)

Review research methods
Active and passive management
Risk adjusted discounting rates
Multi factor portfolio management

3. Portfolio Optimization (1 session)

Review of Markowitz model
MSCI Barra portfolio optimization platform
Topic case study: the argument for international diversification and currency management

4. Behavioural Finance Overview, Market Efficiency and Anomalies (1 session)

Review of market efficiency
Anomalies
Behavioural finance
Empirical testing

5. Fundamental Stock Analysis (3 sessions)

Financial statement analysis
- The role of financial analysis
- The Financial Analysis Toolkit
- Financial ratio analysis
- Applying the du Pont system of ratio analysis
- Segmental financial analysis
- Residual Income Valuation

Cash flow analysis and financial modelling
- The importance of cash flows in investment analysis and corporate finance applications
- Cash flows statements for reporting and analysis purposes
- Applying a cash flow analysis framework
- Principles of forecasting and financial modelling

Valuation principles
- Key valuation concepts and methods
- Discounted Cash Flow approach and WACC
- Expected cash flows
- Inflation and valuation
- Terminal values
- Multiples and relative valuation

6. Derivatives (3 sessions)

Derivatives Overview
Futures and Forwards - Hedging and Speculation Strategies
Derivative Overlays and Asset Allocation Strategies
Option Introduction
Option Strategies
Put-Call Parity
Black-Scholes Valuation
Portfolio Insurance

Learning and Teaching Activities

Strategy

The Master of Applied Finance degree adopts a deep teaching and learning strategy, in which students acquire and retain knowledge and also are able to make sense of the issues and concepts and apply them in the “real world”. The degree relies heavily on student engagement and participation by: (a) Continuous learning throughout the term. This is encouraged through a combination of students undertaking prescribed reading throughout the units and/or completion of practice problems, case studies, assignments, class presentations etc and interaction via forums in the unit’s iLearn site; and (b) Assessments, which enable the student to demonstrate his/her understanding of the learning objectives achieved through the continuous learning.

Student Participation

Students participate in this unit by: (a) Attending lectures and participating in class discussion; (b) Before each class, completing the recommended readings of notes and text, and working systematically through suggested problem sets; (c) Interacting on the unit’s iLearn site; and (d) Completing all assessment tasks and exams. On average, the unit will require students to complete, for every hour of class time, approximately 3 hours private study.

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central). Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Appeals Policy
Academic Integrity Policy
Academic Progression Policy
Assessment Policy
Fitness to Practice Procedure
Grade Appeal Policy
Complaint Management Procedure for Students and Members of the Public
Special Consideration Policy (Note: The Special Consideration Policy is effective from 4 December 2017 and replaces the Disruption to Studies Policy.)

Undergraduate students seeking more policy resources can visit the Student Policy Gateway (https://students.mq.edu.au/support/study/student-policy-gateway). It is your one-stop-shop for the key policies you need to know about throughout your undergraduate student journey.

If you would like to see all the policies relevant to Learning and Teaching visit Policy Central (https://staff.mq.edu.au/work/strategy-planning-and-governance/university-policies-and-procedures/policy-central).

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/study/getting-started/student-conduct

Results

Results published on platform other than eStudent, (eg. iLearn, Coursera etc.) or released directly by your Unit Convenor, are not confirmed as they are subject to final approval by the University. Once approved, final results will be sent to your student email address and will be made available in eStudent. For more information visit ask.mq.edu.au or if you are a Global MBA student contact globalmba.support@mq.edu.au

Students should also consult the MAFC Program Rules found at http://www.mafc.mq.edu.au

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student enquiry service (MAFC-specific)

For all student enquiries, please contact studentsupport@mafc.mq.edu.au

Student Enquiry Service

For all student enquiries, visit Student Connect at ask.mq.edu.au

If you are a Global MBA student contact globalmba.support@mq.edu.au

Equity Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

Learning Skills

Learning Skills (http://www.students.mq.edu.au/support/learning_skills/) provides academic writing resources and study strategies to improve your marks and take control of your study.

Workshops
StudyWise
Academic Integrity Module for Students
Ask a Learning Adviser

IT Help

For help with University computer systems and technology, visit http://www.mq.edu.au/about_us/offices_and_units/information_technology/help/.

When using the University's IT, you must adhere to the Acceptable Use of IT Resources Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

PG - Discipline Knowledge and Skills

Our postgraduates will be able to demonstrate a significantly enhanced depth and breadth of knowledge, scholarly understanding, and specific subject content knowledge in their chosen fields.

This graduate capability is supported by:

Learning outcome

Explain and apply the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.

Assessment tasks

Online Quizzes
Mid Term Exam
Assignment
Final Exam

PG - Critical, Analytical and Integrative Thinking

Our postgraduates will be capable of utilising and reflecting on prior knowledge and experience, of applying higher level critical thinking skills, and of integrating and synthesising learning and knowledge from a range of sources and environments. A characteristic of this form of thinking is the generation of new, professionally oriented knowledge through personal or group-based critique of practice and theory.

This graduate capability is supported by:

Learning outcome

Critically evaluate the key theories, concepts, and models relevant to portfolio management, derivatives, financial analysis and valuation.

Assessment tasks

Online Quizzes
Mid Term Exam
Assignment
Final Exam

PG - Research and Problem Solving Capability

Our postgraduates will be capable of systematic enquiry; able to use research skills to create new knowledge that can be applied to real world issues, or contribute to a field of study or practice to enhance society. They will be capable of creative questioning, problem finding and problem solving.

This graduate capability is supported by:

Learning outcomes

Apply research methods to evaluate investment portfolio construction principles and asset pricing theory.
Solve problems, through the use of applications, relevant to portfolio management, derivatives, financial analysis and valuation.

Assessment tasks

Online Quizzes
Mid Term Exam
Assignment
Final Exam

PG - Capable of Professional and Personal Judgment and Initiative

Our postgraduates will demonstrate a high standard of discernment and common sense in their professional and personal judgment. They will have the ability to make informed choices and decisions that reflect both the nature of their professional work and their personal perspectives.

This graduate capability is supported by:

Assessment task

Assignment

Important Notice

This Unit Guide may be subject to change. Students will be advised, via an "Announcement' on iLearn, if the Unit Guide is changed.

The latest version is available at https://unitguides.mq.edu.au/.

Students should read the Unit Guide carefully at the start of term. It contains important information about the unit. If anything is unclear, please consult one of the unit lecturers.