Finance 412: Investment Management – University of Alberta

Finance 412, offered at the University of Alberta’s Alberta School of Business, delves into the core principles and practical applications of investment management. It’s a popular upper-level course for finance majors and other students seeking a solid foundation in portfolio construction, asset valuation, and market analysis.

Course Content

The curriculum generally covers a broad spectrum of investment topics, including:

• Investment Environment: This section introduces different asset classes (stocks, bonds, real estate, alternative investments), market participants, and the regulatory framework governing investment activities.
• Security Valuation: A significant portion of the course focuses on the valuation of securities, particularly stocks and bonds. Students learn various valuation models, including discounted cash flow analysis, relative valuation techniques, and fundamental analysis. Understanding financial statements is crucial for this section.
• Portfolio Theory: This covers the theoretical foundations of portfolio construction, including the concepts of risk and return, diversification, and the efficient frontier. Students learn how to measure portfolio risk and return and how to construct portfolios that maximize return for a given level of risk.
• Asset Pricing Models: The course explores asset pricing models like the Capital Asset Pricing Model (CAPM) and the Arbitrage Pricing Theory (APT), used to determine the required rate of return for different assets.
• Market Efficiency: Students examine the concept of market efficiency and its implications for investment strategies. They learn about different forms of market efficiency (weak, semi-strong, and strong) and how to test for them.
• Fixed Income Securities: The course covers the characteristics, valuation, and risk management of fixed income securities, such as government bonds and corporate bonds.
• Derivatives (Optional): Depending on the instructor and course focus, there might be an introduction to derivative securities like options and futures, and their use in hedging and speculation.
• Portfolio Management: This section synthesizes the concepts learned throughout the course to discuss the process of portfolio management, including setting investment objectives, asset allocation, security selection, and performance evaluation.

Learning Outcomes

Upon successful completion of Finance 412, students are expected to:

• Understand the key concepts and principles of investment management.
• Analyze and value different types of securities.
• Construct and manage investment portfolios.
• Evaluate the performance of investment portfolios.
• Apply their knowledge to real-world investment decisions.

Assessment

Typically, the course assessment includes:

• Midterm Exams: Testing understanding of core concepts.
• Final Exam: Comprehensive assessment of the entire course material.
• Assignments: Practical exercises involving security analysis, portfolio construction, or investment strategy development.
• Projects: May involve creating a simulated investment portfolio or analyzing a specific company or industry.
• Class Participation: Encouraging active engagement with the material.

Prerequisites and Recommended Background

Finance 412 usually requires introductory finance and accounting courses as prerequisites. A strong understanding of financial statements, basic valuation techniques, and statistical concepts is highly beneficial. Students should be comfortable with quantitative analysis and problem-solving.

Career Relevance

Finance 412 is a valuable course for students interested in careers in investment banking, asset management, financial analysis, portfolio management, and other finance-related fields. The knowledge and skills gained in this course provide a strong foundation for pursuing professional designations such as the Chartered Financial Analyst (CFA).