COURSE NUMBER: EWMBA
233-1
COURSE TITLE: Investments
UNITS OF CREDIT: 3
units
INSTRUCTOR:
Christine A. Parlour
E-MAIL ADDRESS: parlour@haas.berkeley.edu
MEETING DAY/TIME: Mondays,
6:00PM-9:30PM
PREREQUISITE(S): EWMBA
Core Curriculum
CLASS FORMAT: Lectures
+ discussion
REQUIRED READINGS: Course
reader
BASIS FOR FINAL GRADE: Midterm,
Final and group assignments
ABSTRACT OF COURSE'S CONTENT AND
OBJECTIVES:
This field uncovers relationships between financial assets. This is NOT a
class about how to pick stocks. It is, however a course about how to pick
portfolios. You can use your understanding of portfolio theory to make
investments that are on average the best ones.
The philosophy behind Investment Analysis is the following: Markets are informationally efficient. Roughly speaking, this
means that there is no such thing as a free lunch. Do not despair! If you
understand pricing models and the logic of creating substitutes (two assets
with identical cash flows), you can use your knowledge to identify and take
advantage of arbitrage situations (on the rare occasions they arise). By
understanding the risk/return trade--off you will see how the return to each
asset is made up of the return to each type of risk that the asset is exposed
to. Theoretical pricing models let you figure out what the important risks are
and how much they are worth.
By the end of this class you will know how to construct a well--diversified portfolio. You will be able to price
perfect substitutes, both in the fixed income (bond market) and the equity
markets. Not only will you learn tools in this class, you will always learn how
to think like a financial economist about practical problems and situations.
These skills are important for jobs in the finance sector. They are also
important for your own personal investing objectives.
BIOGRAPHICAL SKETCH:
Christine
A. Parlour specializes in microstructure: the study of market design
and trading strategies. She has worked at both the SEC and has been a member of
the Nasdaq Economic
Advisory board.