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Investments – BBUS 454-A School of Business University of Washington Bothell Winter 2013 Instructor: Ying Li, Ph.D.

in Finance Office location: UW2-322 Office phone: 425-352-3413 Email address: YLi@uwb.edu Office hours: Tuesday/Thursday, 3:15-3:45pm, or by appointment Class meets Tuesdays and Thursdays, 1:15-3:15 pm Description This course will cover the nature and pricing of particular securities, especially equity and fixed income securities, and the use of these securities in the construction of portfolios to achieve targeted short-term and long-term investment goals. Options, institutional investors including mutual funds and hedge funds, as well as the efficient market hypothesis will be discussed to expand students’ understanding of the world of investments.

Prerequisites/Technology: Prerequisites: a: minimum grade of 1.7 in B BUS 350; b: working knowledge of financial accounting concepts; c: quantitative skills at the level of intermediate algebra; d: working knowledge of the use of Microsoft Excel; e: regular access to an e-mail account and the Web and f: possession of a financial calculator. I will use a TI financial calculator in class discussion. Our course is on the Canvas (canvas.uw.edu), the UW version of Blackboard, and you will be able to find syllabus, readings, have online discussions, register grades and provide homework problem sets and other course material. Instructor: Ying Li (Ph.D. Finance) Office: UW2-322 Phone: 425-352-3413 E-mail: YLi@uwb.edu Class meets: Tu/Th 1:15-3:15pm Office hours: Tu/Th 3:15-3:45pm Required:
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Read Ch1 and Warren Buffett case (I). 10th edition. prepare for Dimensional Fund Advisors case Read WSJ articles assigned 2/5 2/7 Dimensional Fund Advisors case Efficient markets and anomalies 9 Problem set on Topic 3: Efficient markets and anomaly 2 . Hirt and Block. be prepared for questions Problem set on Topic 2: Equity 1/29 1/31 Warren Buffett Case (II) Financial statement analysis 8 Read Ch8. HP is also OK if you know how to use it.harvard. why it is so important to be ethical and disciplined? Chapter After-class Work Be clear about the expectation based on the syllabus. be prepared for questions Problem set ON Topic 1: Intro 1/10 The investment setting 1 1/15 1/17 1/22 1/24 Warren Buffett case (I) Participating in the market Investment companies Valuation of the individual firm 3 4 7 Read Ch3 Read Ch4 Read Ch7. Warren Buffett case (II).hbsp. Read handouts distributed in class. Recommended: Wall Street Journal Tentative class schedule: Date 1/8 Syllabus Topic Investments and ethics.Textbook: Fundamentals of Investment Management.edu/cbmp/access/16848607 Financial calculator: Texas Instrument is preferred as I could help you with it. McGraw-Hill Irvine Harvard case link: https://cb.

prepare for Enron’s weather derivative case Read Ch14 3/5 3/7 Enron’s weather derivative case Derivative Products 14 Problem set on Topic 5: Derivatives. 5) Problem set helps you grasp the main skills taught in class and prepare for the tests. prepare for Walt Disney bond case Problem set on Topic 4: Fixed income securities 2/26 2/28 Duration and bond portfolio management 18 Read Ch18. 14.2/12 Review. 8. 12. 4. 3 . 3. Grade distribution: Participation 10% (In-class discussion. 2. problem set Prepare for midterm exam covering Ch1. both quality and quantity) 5 cases 20% (Per instructions under "assignments") 2 Quizzes 10% (randomly given) Midterm 30% (Feb 14. Prepare for AQR’s Momentum Funds case Read Ch21 3/12 3/14 3/19 AQR’s Momentum Funds case Alternative investments. covering Ch11. topics 1. topics 4. 3) Final 30% (Mar 19. 7. review 21 Final Exam. 9 2/14 2/19 Midterm exam for a total of 300 points Fixed income and leveraged securities Principals of bond valuation and investment Walt Disney bond case 11 Read Ch11 2/21 12 Read Ch12. 18. 21 for a total of 300 points.

Other courses I have taught here include Investments (undergraduates) and Financial Management (MBA students). Wall Street Journal is my source of information for business news and tips. I spend most of my time doing research. etc. This will be my 4th year with UW Bothell School of Business and will be the 12th time that I will be teaching BBUS350. like hedge funds. please feel free to ask! 4 . European Financial Management. Journal of Futures Markets. in finance from University of Massachusetts at Amherst and have taught at Indiana University before I came to UW Bothell. Journal of Alternative Investments. their impact on corporate decisions. Besides teaching. I received my Ph. mutual funds.Introduction of your instructor: I am a full time assistant professor at UW Bothell. My interest is in institutional investors. If you have further questions about me. I have learned quite something from reading the journal.D. risk and performance tradeoff. I have published multiple papers in prestigious journals like Journal of Business Ethics.D. after got my Ph.

An SAC spokesman declined to comment. Titan invests about $3 billion of client money in hedge funds. said clients who received phone calls from Titan. Fox told the Journal in 2006. said Marisel Lieberman of the Florida International University Foundation. executive director of the Fire & Police Employees' Retirement System of the City of Baltimore." said Tom Taneyhill. which is facing regulatory scrutiny. an SAC spokesman declined to comment." Mr. At the time.In-class reading:   MARKETS December 21." New York-based Titan was founded in 2001 by Mr. speaking of Mr. several years after Mr. capitalizing on the sinking price of many securities around the collapse of the hedge-fund Long-Term Capital Management. and we sure don't. 21 saying that it had money with SAC and was monitoring the situation. The Wall Street Journal reported earlier this month. Titan's departure is significant given SAC's long-standing relationship with one of Titan's founders. SAC and Mr. also decided to pull its money from SAC. Titan sent an email Nov. Société Générale SA. "They've told us they still think SAC is a good firm but Titan doesn't need the headline risk. Cohen. a Titan client that handles the 5 . Titan Advisors LLC recently told clients that it had decided to withdraw its entire investment from SAC. Fox. Thomas Holliday and Douglas Herman and invests money for clients including wealthy individuals and pensions. Cohen started what became the firm in 1992. which has client money in SAC through its Lyxor asset-management arm. according to a March securities filing. It is unclear how much Titan is withdrawing. Cohen and the firm "are confident that they have acted appropriately and will continue to cooperate with the government's inquiry. Titan didn't respond to requests for comment. "people began to realize he had something special going on. 2012. according to a securities filing. are facing a broad investigation by securities regulators and federal criminal authorities in New York. 5:39 p. When SAC trounced its peers in 1998 by posting returns of 49.m. on Friday. Titan co-founder George Fox began investing in SAC in the mid-90s. An SAC spokesman has said Mr.2%. Cohen's SAC Capital Advisors LP has decided to withdraw its money from the hedge-fund firm. known for posting some of the hedge-fund industry's best returns. Cohen. ET Titan to Withdraw Money From SAC By JULIET CHUNG Another investor in Steven A.

criminal prosecutors charged a former portfolio manager with an SAC affiliate with trading ahead of drug-trial results in the stocks of two pharmaceutical companies in what authorities called the most lucrative insider-trading case ever charged. is innocent of all these charges. —Michael Rothfeld contributed to this article. Conn. the Stamford. The trades allegedly resulted in $276 million in profits and avoided losses. Martoma hasn't yet entered a plea. she said. on page B2 in the U. "They were extremely proactive in reaching out" over the last several weeks. she said. Lieberman said. We didn't ask them to redeem. "They wanted to avoid all of the press." Mr. edition of The Wall Street Journal.com A version of this article appeared December 22.chung@wsj. Taneyhill said the Baltimore pension plan for police and firefighters has been invested in Titan since 2011 and has been happy with its performance.-based firm has told investors." Ms." his lawyer. president of the foundation. said in a statement. More recently Titan officials called to say the firm had decided to pull entirely from SAC. SAC is also facing possible civil charges related to the alleged scheme. Charles Stillman. Cohen would shoulder any fines or disgorgement of profits stemming from the insider-trading probe.university's endowment. Martoma and the SAC affiliate in which he worked face similar civil allegations from the Securities and Exchange Commission. was indicted by a grand jury Friday on charges of securities fraud and conspiracy. "Mathew Martoma didn't trade on inside information. and we look forward to his ultimate vindication. Howard Lipman. Last month. Mathew Martoma. with the headline: Titan to Withdraw Money From SAC. 2012. Write to Juliet Chung at juliet. 6 . Mr." She added she has been pleased with Titan's performance and its handling of the matter. SAC has said Mr. Mr. "It was a decision that they made as a fund. said in a statement the foundation's exposure to SAC was "minimal.S. The former portfolio manager.

according to people familiar with the matter. But Morgan Stanley has declined to forgive and forget. Jennings breached the securities firm's 22-page code of conduct. A Morgan Stanley spokeswoman said the firm doesn't comment on specific instances or individuals but that "the clawback provisions in our compensation model allow us to take action where appropriate. A brief letter to him didn't go into much detail. William Bryan Jennings's confrontation with a taxicab driver on the way home from a Morgan StanleyMS +3." People close to Mr.12% holiday party last December never happened. citing "clawback" provisions that allow the company to withhold or seize pay from employees who hurt Morgan Stanley. Since the financial crisis. ET A Banker's Costly Cab Ride Morgan Stanley Tries to 'Claw Back' Millions After Violent Taxi-Fare Dispute In the eyes of the law. including Chairman and Chief Executive James Gorman and Chief Legal Officer Eric Grossman. Now the banker. two weeks before the criminal case died. Despite a whirlwind of tabloid headlines unleashed after the 46-year-old investment banker pulled a pen knife out of his briefcase over a disputed fare. Jennings was a free man. 7 . He was fired in early October.  LAW Updated December 19. who goes by "Bryan. depending on how the payout is calculated. 2012. Officials at the firm believe it owes him nothing. "The issue is Morgan Stanley's conduct. rather than just outright fraud or financial misstatements. prosecutors dropped assault and hate-crime charges against him." said a spokesman for the former Morgan Stanley banker." The position taken by Morgan Stanley goes all the way to the top. "The issue is not Mr. Jennings accumulated during his 19-year career at the New York company. Jennings say Morgan Stanley refused to give him a deferred-compensation payment in June and has frozen as much as $5 million or more. Mr. Jennings' conduct.m. Morgan Stanley and other firms have expanded such policies to cover behavior that contributed to outsize losses or reputational harm. according to people familiar with the matter. Jennings was victimized and still fired him and still kept his money." and his former bosses are in a tug of war over millions of dollars in deferred compensation that Mr. 12:03 a. but Morgan Stanley officials have said Mr. Morgan Stanley knew Mr.

Jennings claimed he thought he was being abducted.000 from the sale of memorabilia and neckties that previously belonged to former Chairman and CEO John Mack and other company officials. according to his statement to police. Jennings has said cabdriver Mohamed Ammar asked for $294. people at the firm said. "How would my action appear as a headline in tomorrow's newspaper?" is one of five questions Morgan Stanley employees are told in its code of conduct to "consider…before you act. He oversaw at least 50 of the firm's top corporate-bond bankers. according to people involved in the talks. What happened next is in dispute. Morgan Stanley executives are troubled by even undisputed details about Mr. Jennings's firing was a reminder that embarrassing the company can cost employees as much as poor job performance. Conn. Jennings's behavior last Dec. people familiar with the matter said. Mr.. regulatory records show. people close to him say. Mr. Mr. Mr. Mr. Ammar locked the doors and says he was looking for police to help settle the spat. The incident drew considerable publicity.Cab driver Mohamed Ammar received six stitches in his hand after a dispute with a banker. When his town-car service didn't show up for the 40-mile ride home to Darien. and was in regular contact with officials at Morgan Stanley's blue-chip corporate clients. Mr. The investment banker wanted to negotiate a lower price. The banker's clash with the cabdriver was described in police and court documents and in interviews with people involved in the case. especially since the driver ran stop signs and said they were 8 . 21. Mr. Mr. Jennings enjoyed several beers at the auction and a Morgan Stanley holiday party afterward at a swanky hotel bar. sometimes arriving at 6 a. Jennings could file an arbitration claim against the firm. he said in the statement. Jennings raised about $50. Jennings ever worked since getting his business degree. Morgan Stanley was the only place Mr. Ammar told police he sought $204. Mr. Jennings earned $3 million or more. at an afternoon charity auction he hosted. but he hasn't reached a decision and the two sides have held discussions about resolving the dispute in recent weeks. That day." In his best years. Jennings is mad that Morgan Stanley left all his personal belongings from the office piled up in boxes in his driveway.m.. Mr. Jennings climbed into a cab and dozed off. Mr.

Jennings's house. Jennings. requiring six stitches. and charged him with second-degree assault and "intimidation by bias. but Morgan Stanley officials suggested a leave of absence until the mess blew over. a police report says.going back to New York. and threatened Mr. Mr.lucchetti@wsj. The driver's right hand was cut. says the delay happened because Mr. Mr. but Mr. Mr. Jennings came forward after a local-news website published an article about the incident. Ammar didn't find the knife in his taxi until afterward. The case against Mr. The two men scuffled inside the cab about a mile from Mr. Jennings has stayed in touch with some former clients and colleagues and is thinking about his next job. 29. Jennings got out of the cab and ran home. Jennings. according to people familiar with the situation. Ammar reported the incident to police. Jennings pulled out his pen knife. according to police reports. Meantime. The driver's lawyer. Jennings left with his wife and two children to a vacation home in Vermont. Ammar. Hassan Ahmad. Write to Aaron Lucchetti at aaron." He went to work the next day. Prosecutors dropped the charges in October. Mr. but didn't know the passenger's name or how to find his house on the unfamiliar street. Feeling besieged by television trucks and headlines. Mr. usually used to open Christmas presents. Jennings began to unravel after prosecutors discovered the driver had Mr.com 9 . Jennings's pen knife for months before giving it to police. On Feb. Mr. Ammar's lawyer says his firm has been retained to pursue a civil lawsuit against Mr. Darien police arrested Mr.