International Finance
Bachelor	TR-NQF-HE: Level 6	QF-EHEA: First Cycle	EQF-LLL: Level 6

General course introduction information

Course Code:

FNS304

Course Name:

Investment and Portfolio Management

Course Semester:

Spring

Course Credits:

Theoretical	Practical	Credit	ECTS
3	0	3	6

Language of instruction:

Course Requisites:

Does the Course Require Work Experience?:

Type of course:

Compulsory

Course Level:

Bachelor

TR-NQF-HE:6. Master`s Degree

QF-EHEA:First Cycle

EQF-LLL:6. Master`s Degree

Mode of Delivery:

Face to face

Course Coordinator :

Dr.Öğr.Üyesi TURGAY MÜNYAS

Course Lecturer(s):

Dr.Öğr.Üyesi TURGAY MÜNYAS

Course Assistants:

Course Objective and Content

Course Objectives:

The objective of this course is to introduce the specifics of investment environment; overview of financial instruments; security trading; initial public offerings; market orders; buying on margin; short sales; investment companies; open-end funds; closed-end funds; risk and return; risk premium; risk aversion; capital allocation line; portfolios of risky and risk-free assets; the capital market line; optimal risky portfolios; diversification; portfolios of two risky assets; minimum variance portfolio; the Markowitz portfolio selection; capital asset pricing model; arbitrage pricing theory; factor models; market efficiency; simulation application.

Course Content:

Investment environment; overview of financial instruments; security trading; initial public offerings; market orders; buying on margin; short sales; investment companies; open-end funds; closed-end funds; risk and return; risk premium; risk aversion; capital allocation line; portfolios of risky and risk-free assets; the capital market line; optimal risky portfolios; diversification; portfolios of two risky assets; minimum variance portfolio; the Markowitz portfolio selection; capital asset pricing model; arbitrage pricing theory; factor models; market efficiency; simulation application.

Learning Outcomes

The students who have succeeded in this course;

Learning Outcomes

1 - Knowledge
Theoretical - Conceptual
1) • Discuss the financial environment in terms of portfolio management.
2) • Discuss whether the financial markets are efficient.
3) • Build a diversified portfolio and assess portfolio performance.
2 - Skills
Cognitive - Practical
3 - Competences
Communication and Social Competence
Learning Competence
Field Specific Competence
1) • Determine expected values and variances of financial assets and portfolios.
Competence to Work Independently and Take Responsibility

Lesson Plan

Week	Subject	Related Preparation
1)	Introduction of the course • Realization of real and financial assets • Understanding the relationship between financial markets and economy • Explaining the basic features of money markets • Explanation of key features of bond markets • Explanation of the basic features of stock markets • Discussion of stock and bond market indices • Explanation of basic features of derivatives markets • syllabus • Presentation of financial markets • Discussion of consumption timing, risk allocation, ownership and management separation, corporate governance and corporate ethics issues within the framework of investments • Discussion of the money markets and bond markets • Explanation of options and futures contracts.	None
2)	• Analysis of the Markowitz Portfolio Model • Optimal portfolio and normal non-distributed returns • Risk pool and risk sharing in long-term investments • Illustrative example of effective diversification • Classification of portfolio statistics • Analysis of the smallest variant limit of risky assets • Analysis of the effective limit of risky assets • Creating the smallest variance portfolio • Discussing the power of diversification in portfolio strategies • Portfolio statistics	Review of the course.
3)	• Explaining the relationship between diversification and portfolio risk • Explanation of portfolios consisting of two risky asset groups • Explanation of portfolios with the smallest variance • Discussion of asset allocation within the framework of stock, bond and treasury bill options • Defining the Markowitz Portfolio Model • Systematic and non-systematic risk • Elimination of non-systematic risk through asset diversification • Investigation of the correlation between portfolio debt-capital instruments • Relationship between investment weights and yield • Creation and analysis of the portfolio with the smallest variance • Discussion of the smallest variance limit	Review of the course.
4)	Explaining the concepts of risk and risk avoidance • Identification of risk-free assets • Explanation of capital allocation to risk-free and risk-free (government bonds only) • Explanation of the capital allocation line • The difference between the concepts of risk, speculation and gambling • To explain the concept of risk avoidance within the framework of benefit analysis • Distinguishing risk-avoiding, risk-loving and risk-neutral communities. • Average-variance criterion and portfolio indeterminate curve • Elements of risky portfolio • Content and discussion of the concept of risk-free assets. • Investment opportunities in portfolios of risk free assets (asset groups) at a risk • Identify the effect of borrowing and lending rates on the capital allocation curve.	Review of the course.
5)	Explaining the share supply. • Explanation of securities trading transactions • Understanding the structural differences of financial markets in different countries • Explaining the types of investment trusts • Explaining the properties of investment funds • Discussion on investment banking and public offering • Stock market orders (market orders / conditional orders) • Mechanism of stock transactions • Comparison of various stock markets in the world. • Border / margin purchase and short sales.	Discussion of views. Lecture.
5)	• Explaining the relationship between risk and asset allocation (portfolio allocation) • Passive strategies: Capital Market Line • St. Explaining the St. Petersburg Paradox • Explaining the expected benefit function • Benefit from benefit maximization for capital allocation to risky assets • Capital allocation to risky assets for various degrees of risk aversion • The relationship between the St.Petersburg Paradox and the expected benefit function • Implications for the passive portfolio strategy	Review of the course.
6)	• Explaining the relationship between diversification and portfolio risk • Explanation of portfolios consisting of two risky asset groups • Explanation of portfolios with the smallest variance • Discussion of asset allocation within the framework of stock, bond and treasury bill options • Defining the Markowitz Portfolio Model • Systematic and non-systematic risk • Elimination of non-systematic risk through asset diversification • Investigation of the correlation between portfolio debt-capital instruments • Relationship between investment weights and yield • Creation and analysis of the portfolio with the smallest variance • Discussion of the smallest variance limit	Review of the course.
7)	• Explanation of determining the level of interest • Comparison of returns on different investment periods • Explaining the concepts of risk and risk premium • Time series analysis of historical returns • Inferences and risk measurement to ensure that returns are not normally distributed • Comparison of historical returns of various portfolios (stocks, long-term bonds, etc.). • Distinction of real and nominal interest rates • Relation between tax rates and real returns • The relationship between annual compound interest and continuous compound interest • Differences between return on investment, expected return, standard deviation, excess return and risk premium. • Comparison and analysis of historical returns.	Review of the course.
8)	Midterm Post-exam responses (depending on time).	None
9)	Explanation of single factor model • Explaining the relationship between normal distribution and systemic risk • Definition of single index model • Estimation of alpha and beta coefficients • Creation of a Single-Index Model correlation matrix • Elements of the Markowitz Model • Single-factor model equation • Single-Index Model regression equation • Discussion of Single-Index Model and risk-covariance relationship	Review of the course.
10)	Single-Index Model and portfolio creation • Index Portfolio and investment assets analysis • Discussing pptimum risky portfolio within the framework of Single-Index Model • Explanation of sector application in index models • Alpha coefficient and securities analysis • Creating an optimal risk portfolio • edited beta coefficient • Evaluation of index models	Review of the course
11)	Explanation of Capital Asset Pricing Model (SVFM) • Comparison of SVFM and Index-Model • Discussing the applicability of SVMF • Explanation of various SVMF models • Explanation of the relationship between liquidity and SVMF model • Marketable securities market • SVMF: Actual and expected returns • Index model: Actual and expected returns • Empirical findings for SVMF	Review of the course
12)	Explanation of multi-factor models • Explain the Arbitrage Pricing Model (AFM) • Explanation of the relationship between individual assets and AFM model • Definition of multi-factor AFM • Comparison of multi-factor SVMF and AFM • Multi-factor models • Equity allocation in multi-factor models • Arbitrage and risk arbitrage • Comparison of SVMF and APT • Fama-French 3 factor model	Dersin tekrarı.
13)	• Explanation of random walking • Explaining the Effective Market Hypothesis (EPH) • Expression of tests (weak and strong) for market activity • Fund management and market efficiency • Effective Market Hypothesis • Empirical implications for EPH • Active and passive portfolio management within the framework of EPH • Debate analysts, discussion of EPH within the framework of fund managers	Review of the course.
14)	Course Review	None
15)	Evaluation of the students by final exam	None

Sources

Course Notes / Textbooks:	INVESTMENTS Zvi Bodie-Alex Kane-Alan J. Marcus, 9th ed., 2011 ISBN 978-0-07-353070-0
References:	INVESTMENTS Zvi Bodie-Alex Kane-Alan J. Marcus, 9th ed., 2011 ISBN 978-0-07-353070-0

Course-Program Learning Outcome Relationship

Learning Outcomes	1	3	4	2
Program Outcomes
1) Explain the essential body of knowledge in the area of banking and insurance, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models.
1) -explain the essential body of knowledge in the area of banking and insurance, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models.
2)  employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions.
2) Employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions.
3)  recognize and assess legal environment in banking and insurance industries
3) Recognize and assess legal environment in banking and insurance industries.
4) Explain ongoing operational and managerial methods in banking and insurance industries.
4)  explain ongoing operational and managerial methods in banking and insurance industries.
5) Discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures.
5)  discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures.
6)  develop the capacity to assess current global economic issues.
6) Develop the capacity to assess current global economic issues.
7)  express he role of international capital markets in the global economy; accordingly define the concept of risk in terms of measurement and management.
7) Translate and explain the content of the documents written in English related to the field .
8)  translate and explain the content of the documents written in English related to the field .
8) Express he role of international capital markets in the global economy; accordingly define the concept of risk in terms of measurement and management.
9) Identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society.
9)  identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society.

Course - Learning Outcome Relationship

No Effect	1 Lowest	2 Low	3 Average	4 High	5 Highest

	Program Outcomes	Level of Contribution
1)	Explain the essential body of knowledge in the area of banking and insurance, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models.
1)	-explain the essential body of knowledge in the area of banking and insurance, including evolution of the discipline, the state-of-the-art concepts, scientific methodology, theories and models.
2)	 employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions.	5
2)	Employ the appropriate tools and analytical techniques to collect and analyze quantitative and qualitative data in the related areas, interpret results and propose solutions.	5
3)	 recognize and assess legal environment in banking and insurance industries	4
3)	Recognize and assess legal environment in banking and insurance industries.	4
4)	Explain ongoing operational and managerial methods in banking and insurance industries.
4)	 explain ongoing operational and managerial methods in banking and insurance industries.
5)	Discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures.
5)	 discover and create entrepreneurial opportunities and expertise to successfully establish and develop their own ventures.
6)	 develop the capacity to assess current global economic issues.	5
6)	Develop the capacity to assess current global economic issues.	4
7)	 express he role of international capital markets in the global economy; accordingly define the concept of risk in terms of measurement and management.
7)	Translate and explain the content of the documents written in English related to the field .
8)	 translate and explain the content of the documents written in English related to the field .
8)	Express he role of international capital markets in the global economy; accordingly define the concept of risk in terms of measurement and management.	4
9)	Identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society.
9)	 identify standards of personal, professional, social and business ethics, evaluate the ethical implications of various practices in the related areas, and be aware the importance of ethical behavior in adding value to the society.

Learning Activity and Teaching Methods

Expression
Individual study and homework
Lesson
Group study and homework
Homework
Project preparation

Assessment & Grading Methods and Criteria

Written Exam (Open-ended questions, multiple choice, true-false, matching, fill in the blanks, sequencing)
Oral Examination
Homework

Assessment & Grading

Semester Requirements	Number of Activities	Level of Contribution
Midterms	1	% 40
Final	1	% 60
total		% 100
PERCENTAGE OF SEMESTER WORK		% 40
PERCENTAGE OF FINAL WORK		% 60
total		% 100

Workload and ECTS Credit Grading

Activities	Number of Activities	Workload
Course Hours	16	48
Study Hours Out of Class	1	6
Homework Assignments	4	8
Midterms	15	45
Final	15	64
Total Workload		171