Investment

Topics: Risk aversion, Investment, Utility / Pages: 14 (3292 words) / Published: Jun 29th, 2013
FNCE30001 Investments
Semester 2, 2011

Introduction and L1: Risk Aversion and Capital Allocation

Subject Administration Issues
See the Study Guide on LMS for details! Lectures given in two streams: Wednesdays, 12:00pm - 2:00pm (The Spot, Basement Theatre) Fridays, 10:00am - 12:00pm (The Spot, Basement Theatre) First five lectures (on stocks) given by Dr Joachim Inkmann Consultation time: Fridays, 1:00pm – 3:00pm Remaining six lectures (on bonds) given by Professor Rob Brown Consultation time: Tuesdays, 1:00pm – 3:00pm The Tutorials start in the second lecture week. See the Study Guide on how to enroll in tutorials.
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Subject Administration Issues
Assessment: • One 1-hour mid-term exam covering the first 5 lectures (20%) • One 3-hour “end-of-semester” exam covering all lectures with greater weight given to those lectures not covered by the mid-term exam (70%) • Two assignments (due 30 August and 14 October) (2 x 5%) Textbook: Bodie, Ariff, da Silva Rosa, Kane and Marcus: Investments, 1st edition, McGraw-Hill, 2007. All materials (except the textbook) are available on the LMS web site.

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1.3

Introduction to Investments
• Who cares about investments? … Almost everyone! – Private investors like households save for retirement. • In principle, they could accumulate retirement wealth in their bank account. Using investment theory, they are likely to achieve a higher expected return on their savings for their given risk appetite. – Institutional investors like insurance companies and superannuation funds invest the fee income from their clients. • Using investment theory, they should be able to achieve a higher expected return on their fee income for their given risk appetite. • This lecture gives an introduction to investment theory. We will see how to optimally allocate financial wealth to different asset classes (securities) like stocks, bonds, and a money market account.
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Introduction to Investments

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