Investment Account 2400-FIM2RI
The course consists of three thematic blocks. In every block students prepare and present group project.
Block A: Portfolio optimization – Markowitz model
Scientific objective: Construction of an optimal portfolio based on 5 companies indicated by the lecturer. The analysis based on the Warsaw Stock Exchange companies, based on historical records.
Operational objective: learning to find the financial data (e.g. www.gpwinfostrefa.pl), data transformation, determining returns and evaluating their correlations, matrix operations, using Solver tool
Actions:
- valuation of companies and sectors, expected changes on Stock Exchange
- analysis of historical data of stock prices: variance-covariance matrix (in time window), correlation of returns, beta
- portfolio optimization using Solver in MS Excel, finding weights in portfolio
Students are expected to present short report on inversing in selected companies.
Block B: Building a business-plan
Scientific objective: Create a one-year business plan for the bakery, IT company etc. (optional), which operates in Warsaw - to understand in practice what are: Balance Sheet, Profit and Loss Account, Cash Flow, to determine the price, investigate the costs, combine this information and evaluate the financial aspects of the project
Operational objective: to learn to evaluate data from other businesses, to learn in Excel built-in functions: NPV, IRR, payback period, to understand how to use the existing template of financial statements available on-line
Actions:
- Determine the conditions of setting the company
- Construction of the balance sheet and profit and loss account, Cash Flow
- Assessment of basic financial indicators
- Assessment of the quality of the project, project profitability forecast
Within this unit, students prepare a short report on the created business plan.
Block C: Firm valuation with use of discounted cash flow method
Scientific objective: learning to use of DCF, understanding and determining the WACC and discounting, understanding the principles of forecasting and sensitivity analysis
Operational objective: valuation of Polish company listed on the European securities market (eg. In London or Frankfurt)
Actions:
- firm assessment and its business environment
- forecasts for company and sector
- historical analysis – average price in quarters
- prospective analysis – determinants of firm’s Cash Flow
- firm valuation: finding CF, WACC estimation, residual value estimation, firm valuation, recommendation
Students are expected to present short report – recommendation on possible investment in given company.
Type of course
Course coordinators
Learning outcomes
Upon the course completion a student:
- collects and analyses stock exchange data, economic and financial data
- selects information and prepares synthetic report
- critically examines and compares financial statements
- recommends financial investments
- runs quantitative analyses in spreadsheet
KW01, KW002, KW03, KW04, KW05, KU01, KU02, KU03, KU04, KK01, KK02, KK03
Assessment criteria
- Each thematic block ends with a report presentations in groups - each person can present only once during the semester (students are expected to give a presentation and give a report of the max. 2-3 pages). Both presentation and report are evaluated with regard to their completeness, compliance with the expectations and deadlines.
- Working in groups of 3 persons (may be the same composition in each project)
- Sending reports to 23:59 on the day of the presentation
- Each report gives max. 30 points. The total number of points is 3 * 30 points + max. 10 points for the portfolio disposed of at the last class = 100 points
- No presentation = -5 points, delay in sending report up to 1 week = -5 Points, delay in sending the report longer than 1 week = -10 points
- Evaluation scale (relative max.90 points): 50%-60%=3, 60%-70%=3+, 70%-80%=4, 80%-90%=4+, 90%-95%=5, 95%-100%=5!
- Any absence requires write the short work on given topic (provided by lecturer).
- Anti-plagiarism procedure: A sentence copied from the Internet erases all points of the thematic block and students are required to re-take Intellectual Property Protection course.
Bibliography
David G. Luenberger, Investment Science, 2013, Oxford University Press
Simon Benninga, Financial Modeling, 2014, The MIT Press; fourth edition
John Tjia, Building Financial Models, 2009, McGraw-Hill, Finance & Investing
Additional information
Additional information (registration calendar, class conductors, localization and schedules of classes), might be available in the USOSweb system: