Advanced investments
Mr Brendan O'Connell
6 points
* 3 hours per week or equivalent
* Caulfield, Sydney,
Singapore, Hong Kong, in-house (not offered in all locations in all semesters)
* Prerequisite: Completion of an acceptable undergraduate degree.
Objectives On completion of this subject students should be able to explain the basic nature and workings of derivative financial instruments such as swaps, options and futures; appreciate the specific application of derivative instruments to hedging an investment portfolio; be familiar with the determinants of share prices and the conditions under which it is possible to predict prices in the share market; calculate measures of performance for portfolios; appreciate the various theories developed; explain the term structure of interest rates; calculate the duration of a security and the duration gap of a portfolio and use the latter to manage the interest rate risk of a portfolio.
Synopsis Financial deregulation and instability in global economies; volatility of asset prices and consequent risks to investors; financial exposures; measuring risk (including interest rate risk) and awareness of the tools available for removing or modifying such risks including futures, forwards, options and swaps.
Assessment Assignment: 30%
* Examination (3 hours): 70%
Prescribed texts
Haugen R A Modern investment theory 3rd edn, Prentice-Hall, 1993.
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