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Minutes Course Meeting ECON046

The document summarizes key details regarding the Common Pool of DSE Financial Economics course offered by the Department of Economics at University of Delhi. It outlines the learning objectives, outcomes, syllabus, topics, textbooks, and other administrative details such as date, time, venue and conveners of the course. Key points of discussion and decisions made in the meeting are also summarized regarding exam structure, internal assessment, practical components and optional reading materials.

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OSHI JOHRI
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86 views4 pages

Minutes Course Meeting ECON046

The document summarizes key details regarding the Common Pool of DSE Financial Economics course offered by the Department of Economics at University of Delhi. It outlines the learning objectives, outcomes, syllabus, topics, textbooks, and other administrative details such as date, time, venue and conveners of the course. Key points of discussion and decisions made in the meeting are also summarized regarding exam structure, internal assessment, practical components and optional reading materials.

Uploaded by

OSHI JOHRI
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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DEPARTMENT OF ECONOMCS

UNIVERSITY OF DELHI

Subject: Common Pool of DSE


Sem.: IV
Course & Code: Financial Economics ECON046
Duration (per week): 4 (3 lectures + 1Practical)
Date & Time 23/01/2024 at 4.00 PM
Venue: 104, Department of Economics, Delhi University
Convenor: Satyendra Gupta, Reetika Garg
College Teachers
Animesh Naskar Hansraj College

Chhavi Gautam SRCC

VAIBHAV PURI SGGSCC

Learning Objectives
• To equip students with essentials tools for understanding Finance at undergraduate level.
• To enable students to use modelling techniques to solve Financial Economics concepts.
• To develop necessary skill and knowledge for financial problem solving

Learning outcomes
• After studying this course, students would be able to understand the basic concepts of
finance and financial variables
• They would develop an understanding of basics of finance including interest rates,
annuity, and cash flow.
• The analytical approach adopted in this paper will strengthen and channelise their skills
for more advance approaches in finance.

Following points were discussed and agreed upon.

• There is a need to organize one half-day workshop for the college teachers to get hands-
on experience on the practical component of the course. Professor Animesh Naskar and
professor Vaibhav Puri kindly agreed to organise this. Department will share a google
form to collect interest from the college teachers.
• Professor Animesh Naskar and Professor Vaibhav Puri have kindly volunteered to
prepare a set of relevant - end of the chapter- practice problems, which will be shared
with the college teachers by__.
• Regarding the End Semester (Final) Exam (90 marks) the weightage of Unit 1, Unit 2,
Unit 3, and Unit 4 was decided to be 20, 30, 30, 10 respectively; students will be required
to attempt 5 out of 7 questions.
• Regarding the Internal assessment (30 marks), it was decided to conduct two tests of 12
marks each and 6 marks will be for attendance.
• Continuous assessment (40 marks) will be as per University Rules.
• Following topics are recommended as optional reading (*) for the current academic year.
- Unit 3 Bodie, Kane, Marcus, Chapter 10 (Arbitrage pricing theory)
- Unit 4 Bodie, Kane, Marcus Chapter 11 (Efficient market hypothesis) and 12
(Behavioral finance and technical analysis)
• From the Practical Component, following topics are recommended as optional (*) for
practice
- 3 (Multiple IRR),
- 5 (Continuous compounding),
- 6 (Analysis cash flows by NPV and IRR).
• In Unit 1 it was decided to cover section 15.1 and 15.2 only from Chapter 15 of Bodie,
Kane, Marcus

SYLLABUS OF DSE: FINANCIAL ECONOMICS

Unit 1. Deterministic cash-flow streams (12 Hours)


Basic theory of interest; discounting and present value; internal rate of return; evaluation criteria;
fixed income securities; bond prices and yields; interest rate sensitivity and duration;
immunisation; the term structure of interest rates; yield curves; spot rates and forward rates.

Berk, DeMarzo
Chapter 4: Time Value of Money (all sections)
Chapter 6: Valuing Bonds (all sections)
Chapter 7: Investment Decision Rules (all sections)

Brealey, Richard A., Myers, Stewart, C., Allen, Franklin:


Chapter 5: Net Present Value and Other Investment Criteria (Section 5.3, pages 107-115)

Bodie, Kane, Marcus


Chapter 14: Bond Prices and Yields (Section 14.1-14.3, Pages 445-460,
Chapter 15: Term Structure of Interest Rate (Section 15.1-15.2, Pages 487-504)
Chapter 16: Managing Bond Portfolios (Section 16.1, 16.3, Pages 515 —525, 535 — 543)
Unit 2. Single-period random cash flows (12 Hours)
Random asset returns; portfolios of assets; portfolio mean and variance; feasible combinations of
mean and variance; mean — variance portfolio analysis; the Markowitz model; risk-free assets

Bodie, Kane, Marcus


Chapter 7: Optimal Risky Portfolio (Section 7.1 —7.3, 7.4 Pages 205-218 till Example 7.3, 220
—228)

Berk, DeMarzo
Chapter 11: Optimal Portfolio Choice and CAPM: (Sections 11.1 — 11.6, pages 351 — 378)

Unit 3. Capital Asset Pricing Model (CAPM) (12 Hours)


The capital market line; the capital asset pricing model; the beta of an asset and of a portfolio;
security market line; use of the CAPM model in investment analysis and as a pricing formula.
Arbitrage pricing theory(APT) and multi-factor model of risk and return.

Bodie, Kane, Marcus


Chapter 9: Capital Asset Pricing Model (Section 9.1, Pages 291-300)
Chapter 10: Arbitrage pricing theory(APT) and multi-factor model of risk and return.*

Berk, DeMarzo
Chapter 11: Optimal Portfolio Choice and CAPM: (Sections 11.7 — 11.8 , pages 379 - 399)

Brealey, Richard A., Myers, Stewart, C., Allen, Franklin


Chapter 8: Portfolio Theory and the Capital Asset Pricing Model (Section 8.4, pages 199-203)

David G. Luenberger:
Chapter 7: The Capital Asset Pricing Model (Section 7.3 & 7.7, Pages 177 — 179, 187 - 190)

Unit 4. Market Efficiency & Behavioural Finance (09 Hours)

Bodie, Kane, Marcus


Chapter 11: Efficient Market Hypothesis (Sections 11.1-11.2, 11.4, Pages 349 — 357, 362-63)*
Chapter 12: Behavioural Finance & Technical Analysis*

Brealey, Richard A., Myers, Stewart, C., Allen, Franklin


Chapter 13: Efficient Markets & Behavioral Finance (Sections 13.2, 13.5, Pages 314 — 318,
329-333)
Practical Component (30Hours)
1. Present Value and Net Present Value
2. Internal Rate of Return and Loan Tables
3. Multiple Internal Rates of Return*
4. Future Values and Applications
5. Continuous Compounding*
6. Analyzing the Cash Flows by NPV or IRR*
7. Portfolio Models
8. Calculating Efficient Portfolios When There Are No Short-Sale Restrictions

Reference for Practical:


Simon Benninga, Financial Modelling, MIT Press, Third Edition, 2008:
Chapter 1: Basic Financial Calculations (Sections: 1.2, 1.3, 1.4, 1.6, 1.8)
Chapter 7: The Financial Analysis of Leveraged Leases(Sections: 7.1, 7.2, 7.3)
Chapter 8: Portfolio Models
Chapter 9: Calculating Efficient Portfolios When There Are No Short-Sale Restrictions

Essential/recommended readings
Bodie, Kane & Marcus, Investments McGraw Hill 10th Edition, 2014
Berk, DeMarzo, Corporate Finance, Pearson, 3rd Edition, 2014
Brealey, Richard A., Myers, Stewart, C., Allen, Franklin, Principles of Corporate Finance,
McGraw Hill 10th Edition, 2011
David G. Luenberger, Investment Science, Oxford Press, 1998
Simon Benninga, Financial Modelling, MIT Press, Third Edition, 2008

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