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.

Information - Extension Requests / Penalties

Assignment (35%)

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 https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.  

Online Topic Quizzes (5%)

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 https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.  

Mid-Term Exam (20%) and Final Exam (40%)

You are expected to present yourself for examination at the time and place designated in the relevant MAFC Timetable at https://www.mq.edu.au/about/about-the-university/faculties-and-departments/business/study-with-us/macquarie-applied-finance-centre/timetables.

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 https://mafcstudents.mq.edu.au/ for information on the University’s Special Consideration Policy.

CLASSES

Face-to-Face Teaching: Generally 36 hours.

Timetable: Detailed timetable for classes are available at https://www.mq.edu.au/about/about-the-university/faculties-and-departments/business/study-with-us/macquarie-applied-finance-centre/timetables.

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/ORMATERIALS

Text: Bodie, Kane and Marcus, Investments, McGraw Hill, 11TH edition, 2014, ISBN978-1-259-27717-7 (BKM).

Additional Readings:

• Additional readings are available electronically via iLearn.

• Students should assume these readings are examinable unless otherwise advised.

Lecture Notes: Available 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 AFCP8001 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:

• 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.

1. Asset Allocation (2 sessions)

• Introduction to the individual’s investmentproblem
• Asset markets
• Investment valuationbasics
• Forecast risk andreturn
• Risk attitude – risk aversion andutility
• Asset Allocation

2. Asset Pricing Model (2 sessions)

• Review researchmethods
• Active and passivemanagement
• Risk adjusted discountingrates
• Multi factor portfoliomanagement

3. Portfolio Optimization (1 session)

• Review of Markowitzmodel
• MSCI Barra portfolio optimizationplatform
• Topic case study: the argument for international diversification and currency management

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

• Review of marketefficiency
• Anomalies
• Behavioural finance
• Empirical testing

5. Fundamental Stock Analysis (3 sessions)

• Financial statementanalysis
  • The role of financialanalysis
  • The Financial AnalysisToolkit
  • Financial ratioanalysis
  • Applying the du Pont system of ratioanalysis
  • Segmental financial analysis
  • Residual IncomeValuation

• Cash flow analysis and financialmodelling
  • The importance of cash flows in investment analysis and corporate finance applications
  • Cash flows statements for reporting and analysispurposes
  • Applying a cash flow analysisframework
  • Principles of forecasting and financialmodelling

• Valuation principles
  • Key valuation concepts andmethods
  • Discounted Cash Flow approach andWACC
  • Expected cashflows
  • Inflation andvaluation
  • Terminal values
  • Multiples and relativevaluation

6. Derivatives (3 sessions)

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