Investments and Fixed Income

This course is designed to introduce the student to investments and fixed-income securities. Topics include the identification and analysis of investment opportunities, portfolio analysis and optimization, the identification and execution of investment strategies, and the professional responsibilities of financial advisers and asset managers. While the equity markets often get more attention in the popular media, the fixed-income world is much larger in terms of both outstanding issues and annual issuance. Consequently, we will cover fixed-income duration and portfolio construction.

Although offered as one course, there are two tracks. Both tracks will cover the fundamentals of investments and fixed-income securities. Students will self-select into either track and will have access to all the learning materials in both tracks. Students in each track will have separate material assignments but will meet in a common class time each week. The Personal and Private Wealth Management (PPWM) track will focus more on investment problems faced by individual investors, including retirement planning and spending. The Institutional Asset Management (IAM) track will focus more on investment problems faced by institutional asset managers, including various alpha generation strategies.

Student Learning Objectives

By the end of this course students will be able to:

Explain the basic institutional environment of professional investment management and private wealth management
Calculate the risk of a portfolio with multiple risky assets
Optimize asset allocation using Excel
Value equity and fixed-income securities
Construct and analyze an equity portfolio and its performance
Construct and analyze a bond portfolio that meets credit quality and duration targets
Summarize the basics of trading equities and fixed income
Derive the Capital Asset Pricing Model (CAPM)
Understand strengths and weaknesses of the CAPM and multiple factor models
Calculate the impact of changing interest rates on bonds and bond portfolios using duration and convexity
Discuss the construction and application of structured products including mortgage-backed securities and synthetic securities
Assess the use of so-called “alternatives assets” including real estate, timber, farmland, and digital assets in portfolio management
Describe ethical responsibilities of managers regarding fiduciary obligations, confidentiality of information, and insider trading.

Click Here for Video Transcript

JAMES ANGEL: Welcome to Investments. Here we are at the New York Stock Exchange, the epicenter of the stock market. When people think of investments, this is what they often think of. But investments is a lot more than stocks. It’s a lot more than stocks and bonds. It consists of other asset classes. It consists of many other important details. So in this course, what we’re going to do is we are going to learn about the history of the market. We’ll learn about different investment strategies. We’ll go into more depth into portfolio theory that you’ve already seen, but we’ll get into it in more depth. Then we’re going to talk about the market mechanics, what is actually going on this floor. You’ll have a better understanding, not only of what happens here, but what happens inside the computers.

Were going to talk about the fixed income world, which is even bigger than the equity space. You’ll learn about how we can build structured products, how we can build asset securities, how we can take relatively unattractive loans like credit card loans and turn them into attractive securities for investors. We’ll also learn about how to measure investment performance. We will learn about your fiduciary obligation as an asset manager, and we’ll study how to stay out of jail by not committing insider trading. This course will make you a better investor. You’ll have a better understanding of what to invest in, how to invest, and how to measure your investment performance.

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