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    Theory of financial asset valuation and selection. The valuation of financial securities. Portfolio management.

    This paper introduces students to the principles of valuation of financial securities and their uses in a portfolio of assets. We look at equity (stock/shares), debt (fixed income/interest) and derivatives. We analyse asset pricing models and financial markets. Occasionally, ethical issues will be raised. This paper aims to set the foundations of future finance studies and is a prerequisite for further finance studies.

    About this paper

    Paper title Investment Analysis and Portfolio Management
    Subject Finance
    EFTS 0.15
    Points 18 points
    Teaching period(s) Semester 1 (On campus)
    Semester 2 (On campus)
    Domestic Tuition Fees ( NZD ) $937.50
    International Tuition Fees Tuition Fees for international students are elsewhere on this website.
    (BSNS 102 or BSNS 112) and (BSNS 108 or BSNS 114) and FINC 102
    Schedule C
    Teaching staff

    Semester one: Olena Onishchenko

    Semester two: Anindya Sen

    Paper Structure
    The paper is purposefully designed to expose the student to a large range of challenging core financial concepts. The class has a significant increase in difficulty compared to 100-level papers, and thus only students with a genuine interest in finance should enrol. Nearly 50% of the learning will be independent, and the majority of assessments will be mostly problem based in nature - underlying theory and mathematics is your responsibility to learn.
    Teaching Arrangements

    This paper is taught via lectures and tutorials.


    Bodie, Z., Kane, A. and Marcus, A. (2019). Essentials of Investments, 11th edition. N.Y. : McGraw-Hill Irwin.

    Course outline

    View the latest course outline here

    Graduate Attributes Emphasised
    Communication, Critical thinking, Information literacy, Self-motivation.
    View more information about Otago's graduate attributes.
    Learning Outcomes
    • Basic understanding of securitisation, products and trading platforms
    • Distinguish between a price-weighted and value-weighted index
    • Calculate the level and returns of value and price-weighted indices
    • Discuss the three forms of market efficiency and their implications
    • Explain why it is important to have efficient markets
    Portfolio Theory:
    • Derive the efficient frontier for the two-asset case
    • Explain how having a riskless asset affects portfolio choice
    • Derive the minimum variance set when all assets are risky
    • Understand the efficient frontier with multiple risky and one riskless asset
    • Derive and understand the implications of CAPM and the Capital Market Line
    • Compute the expected return on a security using CAPM
    • Determine if a security is over- or under-priced using CAPM
    • Understand the relevance of macroeconomic indicators and how these factors affect equity valuation
    • Understand and use the dividend discount model for pricing equities
    • Understand ways of estimating growth rate and terminal value
    • Dividend valuation model with investment opportunities
    • Price to earnings ratio in equity valuation
    Fixed Income:
    • Compute the price of a bond and yield
    • Compute forward rates given the current spot rates
    • Calculate duration of a bond
    • Explain how duration measures interest rate risk
    • Differentiate convexity from duration
    • Introduction to derivatives and payoff diagrams


    Semester 1

    Teaching method
    This paper is taught On Campus
    Learning management system


    Stream Days Times Weeks
    L1 Tuesday 10:00-11:50 9-13, 15-22
    Thursday 12:00-13:50 9-13, 15-16, 18-22


    Stream Days Times Weeks
    Attend one stream from
    T1 Tuesday 09:00-09:50 10-13, 15-22
    T2 Tuesday 14:00-14:50 10-13, 15-22
    T3 Wednesday 09:00-09:50 10-13, 15-22
    T4 Wednesday 11:00-11:50 10-13, 15-22

    Semester 2

    Teaching method
    This paper is taught On Campus
    Learning management system


    Stream Days Times Weeks
    L1 Wednesday 15:00-16:50 29-35, 37-42
    Friday 11:00-12:50 30-35, 37-42


    Stream Days Times Weeks
    Attend one stream from
    T1 Tuesday 11:00-11:50 30-35, 37-42
    T2 Tuesday 15:00-15:50 30-35, 37-42
    T3 Monday 11:00-11:50 30-35, 37-42
    T4 Monday 15:00-15:50 30-35, 37-42
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