JAWAHARLAL NEHRU TECHNOLOGICAL UNIVERSITY HYDERABAD

Course Objective

To understand the investment process, investment alternatives, Valuation of debt

and equity.

Learning Outcome

Students will be able to understand a) Indian Investment Environment b)

Portfolio Analysis c) Bond valuation and management d) Equity valuation of Cash market and derivatives e) Performance evaluation of Portfolios.

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UNIT - I: Introduction to Investment - Investment, Speculation and Gambling, Features of

Investment, Investment Avenues, Investment Process. The Investment Environment – Securities Market of India, – Securities Trading and Settlement – Types of Orders - Margin Trading.

UNIT - II: Portfolio Analysis

Risk and return Analysis - Markowitz Portfolio Theory, Mean- variance

approach, portfolio selection - efficient portfolios, Single Index model - Capital Asset pricing model, Arbitrage Pricing Theory.

UNIT - III: Bond Valuation

Classification of Fixed income securities, Types of bonds, Interest rates,

Term Structure of interest rates, measuring bond yields, Yield to Maturity, Yield to Call, Yield to Maturity, Holding Period Return, Bond pricing theorems, bond duration, Active and Passive bond management Strategies, bond immunization, bond volatility, bond convexity.

UNIT - IV: Equity Valuation

a) Equity Analysis & Valuation, Equity Valuation Models, Relative

Valuation techniques – Earnings Multiplier Approach, Valuation using P/E ratio, Price to Book Value, Price/sales ratio, Economic value added approach.

• b) Fundamental Analysis, Technical Analysis, Efficient Market Hypothesis.

UNIT - V: a) Derivatives

Overview of Indian derivatives Markets, Option Markets, Option Strategies

and Option Valuation, Forward & Future markets, Mechanics of Trading, Strategies.

• b) Performance Evaluation: Mutual Funds, Types of Mutual Funds Schemes, Structure, Trends in Indian Mutual Funds, Net Asset Value, Risk and Return, Performance Evaluation Models- Sharpe Model, Treynor Model, Jensen Model, Fama’s Decomposition.

Suggested Readings:

• William. F. Sharpe, Gordon J Alexander & Jeffery V Bailey: Fundamentals of Investments, Prentice Hall, 2012.
• ZVI Bodie, Alex Kane, Alan J Marcus, Pitabas Mohanty Investments, Mc Graw Hill, 11 e,2019
• Donald E Fischer, Ronald J Jordan: Security Analysis and Portfolio Management, 6th Edition, Pearson.
• Charles P. Jones, Investments Analysis and Management, 9e, Wiley, 2004.
• Shalini Talwar, Security Analysis and Portfolio Management, Cengage Learning, 2016.
• Prasanna Chandra: Investment analysis and Portfolio Management” 4th Edition, TMH, 2013.
• Punithavathy Pandian, Security Analysis &Portfolio Management, Vikas, 2014