Course Outline: Security Analysis and Portfolio Management

Credit: 3, Elective Course

Area: Finance
Program: PGDM
Term IV
_______________________________________________________________________
Instructor(s) Monika Chopra Prof. Santanu
Name Das
Room no. 186
Email monika.chopra@imi.edu
Phone (Extn no.) 186
Meeting Hours Tuesday 3.00 p.m. to 4.00 p.m
______________________________________________________________________

1. COURSE DESCRIPTION

Security Analysis and Portfolio Management has a key focus in equipping the students with
knowledge about investment in financial assets. It focuses on the returns and risks of investing in
equity and debt securities. The subject aims at providing insight into the efficiency, role, and
functioning of financial markets, both equity as well as debt as well as various analytical techniques
used in the evaluation of the various investment opportunities. The course also extends these concepts
to the portfolio of securities and the Concept of diversification, management and evaluation of a
portfolio.

2. COURSE OUTCOMES (COs)

After going through the course, the students would be able to:

Course Outcome 1 (CO1):

Understand various types of securities, the Concept of market efficiency, and various inve

Course Outcome 2 (CO2):

Comprehend the conceptual framework of securities valuation and apply the same for com

Course Outcome 3 (CO3):

Understand the recent regulations in investment management and perform equity resea

Course Outcome 4 (CO4): Construct an optimal portfolio using portfolio construction models.

Course Outcome 5 (CO5): Evaluate the performance of a portfolio.

 3. MAPPING OF THE PROGRAM OUTCOMES (POs) AND COURSE OUTCOME (COs)

Program Outcomes (POs) Course Outcomes (COs)

CO1 CO2 CO3 CO4 CO5

PO1: Student should be able to write well organized and

2
grammatically correct business reports and letters.

PO2: Student should be able to make effective oral

presentations.

PO3: Student should be able to demonstrate critical thinking

skills by understanding the issues, evaluating alternatives on
the basis of multiple perspectives and presenting a solution 3 3 3 3 3
including conclusions and implications.

PO4: Student should be to demonstrate problem solving

skills by understanding and defining the problem, analyzing
it and solving it by applying appropriate theories, tools and 3 3 3 3
techniques from various functional areas of management.

PO5: Student should be able to illustrate the role of

responsible leadership in management.

PO6: Student should be able to identify social concerns and

1
ethical issues in management.

PO7: Student should be able to identify challenges faced by

the organization at the global level.

PO8: Student should be able to take decisions in the global

business environment.

4. PEDAGOGY

The pedagogy for this course will be a judicious mix of lectures, numerical problems and investment
analysis of an actual company. Active participation by students is an important feature of the course. To
apply the learning during this course, the students will have regular weekend tasks/activities as well as a
group project for the term.
 5. COURSE EVALUATION COMPONENTS (CECs)

CEC1: Quizzes (30%): The quizzes will be based on the course covered in the previous classes.
Therefore, keeping pace with the course covered will be necessary. There will be n quizzes
spread across the entire system. For the final evaluation best three quizzes will be considered.

CEC2: Group project (25%): Each group is expected to work on the term project allocated by the
instructor. The project will entail launching a fund and seeking notional investments from others. The
investors to the fund can be inside/outside the institute. Each fund will select its philosophy
(Active/Passive) and have a mix of equity, debt, and cash. The fund can be equity or debt, depending on
the major asset allocation. The fund will prepare a fact sheet from time to time and circulate it to its
investors. The fund and hence the group will be evaluated based on its asset allocation (as per its
objectives and no drift over time), the performance of individual securities, exit/entry of investors and
hence the change in AUM as well as overall return in the form of NAV at the end of the term. There will
be fortnightly updates from the groups on their performance

CEC3: Class Participation (5%): Class participation will be awarded based on active participation in
the class. For students who are passive learners, ability to respond when asked about a concept during the
class will be the basis of judgement.

CEC4: End Term (40%): End term exam will include all the topics that will be covered during post
mid-term sessions. The exam will assess subject understanding through the application of concepts to
analyze real life business situations.

6. MAPPING BETWEEN COs, POs and CECs

Course Evaluation Components (CECs)

COs POs Quiz Group Class End term
project participation
CO1 PO3 √
PO4
CO2 PO3 √ √ √
PO4
CO3 PO3 √ √
PO4
CO4 PO3 √ √
PO4
CO5 PO3 √ √
PO4
 7. RESOURCES

7.1 Textbook:
 Bodie, Kane, Marcus (2019), Essentials of Investment, 10th ed., Mc.Graw Hill Education.

7.2 Reference Books:

 Achelis, Steven B. (1995), Technical Analysis from A to Z, Visions Books.

 Elton, Edwin J. & Martin J. Gruber (2002), Modern Portfolio Theory & Investment Analysis, John
Wiley.
 Fisher, Donald E. & Ronald J. Jordan (1995), Security Analysis & Portfolio Management, Prentice
Hall of India.
 Gupta, L.C. (1997), India’s Stock Market Crisis, Society for Capital Market Research &
Development.
 Jones, Charles P. (9th edition), Investments-Analysis and Management
 Reilly Frank K. & Keith C. Brown (2000), Investment Analysis & Portfolio Management, The
Dryden Press
 Sharpe, William F, Gordan. J. Alexander, Jeffery V. Bailey (2002), Investments, Prentice Hall of
India.
 Strong, Robert A. (2003), Portfolio Construction, Management & Protection, Thomson South
Western College Publication

8. SESSION PLAN

Session Session plan Essential Readings & Cases/Comments*

no.
1-2 Introduction to investment: Discussion
about various types of investment options.
An introduction to various investment
philosophies viz. active (including growth
and value investing strategies) vs. passive
investing.
Text: Chapter 1 & 2
Coursera resources: Course name:
Understanding financial markets:
Week 2: Videos:
How much is a company worth on the stock
market? - Part 1 and 2
https://www.coursera.org/lecture/understanding
-financial-markets/how-much-is-a-company-
worth-on-the-stock-market-part-1-4BpZ0

How to follow the stock market? - UBS guest

lecturer
https://www.coursera.org/lecture/
understanding-financial-markets/how-to-follow-
the-stock-market-ubs-guest-lecturer-QUfet

3 Efficient Market Hypothesis:
Introduction to market efficiency,
discussion about weak, semi-strong &
strong form of efficiency and discussion
about its implications for various
investment styles.
4-5 Passive equity investment: Introduction
to passive investment, Index as a
benchmark for investment, index
construction methodologies, tracking
error, smart beta investing.
6-7 Active Investing: EIC analysis,
Discounted cash flow method for equity
valuation
9-10 Active Investing: Discounted cash flow
method for equity valuation
11 Active Investing: use of P/E,
EV/EBIDTA relative valuation ratios for
equity valuation. Blended/Weighted TEV
12 Technical Analysis, basic tenets, tools,
Dow theory, charts and trend lines, Pivot
points, Support & Resistance, moving
averages
How do we rate our equity recommendations?
https://www.coursera.org/lecture/understanding
-financial-markets/how-do-we-rate-our-equity-
recommendations-ubs-guest-lecturer-wMWam
This session will lay down the framework as
well as expectations from the students during
the course.
Text: Chapter 8
Coursera resources: Course name: Biases
and portfolio selection: Week 1
https://www.coursera.org/learn/biases-portfolio-
selection/home/week/1
Post this session the students should be able to
understand market efficiency and the two basic
philosophies viz. passive & active for
investment
Text chapter 2 (2.4)
Additional handouts will be given
The focus of these sessions is to make the
students understand difference between
portfolio performance basis the index selected
Text chapter 7.1 to 7.4 & chapter 13
Perform Moat analysis and valuation of an
actual stock – Britannia Industries limited
Text chapter 7.1 to 7.4 & chapter 13
Perform Moat analysis and valuation of an
actual stock – Britannia Industries limited
Text chapter 13
Conduct relative valuation of Britannia
Industries limited
Text Chapter 9.2
Additional handouts will be given
These sessions will give an insight to actual use
 of technical indicators

13 Technical Analysis: Use of indicators:

MACD, Momentum, RSI, Bollinger Text Chapter 9.2
Bands, Open interest, Put call ratio.
Additional handouts will be given

These sessions will give an insight to actual use

of technical indicators

14 Fixed Income Securities: Bond prices Text Chapter 10

and yields and valuation.

15 Fixed Income Securities: Duration and its Text Chapter 11

use for immunization for bond portfolio
management. The focus of these sessions is on understanding
how price and reinvestment risks can be offset
in a bond portfolio.

16 Portfolio Construction: Risk & return of Text Chapter 5

a single stock vs. portfolio, Concept of The sessions from here will give a perspective
diversification. of risk and reward movement of various
combinations.

17 Portfolio Construction: Markowitz Text Chapter 6

Mean-variance optimization model, Additional handouts will be given
Use of solver for portfolio optimization
18-19 Performance Evaluation of portfolio Handouts will be given
Use of Sharpe ratio, Treynor’s ratio, Text chapter 18
Information ratio and Jensen’s alpha for The course will finally end with a discussion of
portfolio evaluation. evaluation methods of portfolio
20 Technical report writing basics and best Handouts will be given.
practices
*Bloomberg usage is essential for practically understanding almost all the topics of the course. All the
students are required to get themselves registered on Bloomberg.

9. ACADEMIC INTEGRITY & CLASS RULES

a) Plagiarism is the use of or presentation of ideas, works that are not one’s own and which are not
common knowledge, without granting credit to the originator. Plagiarism is unacceptable in IMI
and will invite penalty. Type and extent of penalty will be at the discretion of the concerned
faculty.

b) Cheating means using written, verbal or electronic sources of aid during an examination/ quiz/
assignment or providing such assistance to other students (except in cases where it is expressly
permitted by the faculty). It also includes providing false data or references/list of sources which
either do not exist or have not been used, having another individual write your paper or
assignment or purchasing a paper for one’s own submission. Cheating is strictly prohibited at IMI
and will invite penalty as per policies of the Institute.