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FIN3080 Personal Investment Planning 1

Advanced · 1 credit · BIT - Business, Admin, Finance and IT

Description
Students are introduced to the capital market and the available securities when building a personal investment portfolio. Students research and analyze a variety of securities, including equities, fixed income and mutual funds.
Prerequisite
None
Parameters
Access to an appropriate computer work station and the Internet.
Supporting courses
FIN1010: Personal Financial Information FIN2060: Personal Taxation FIN3030: Capital Accounting

Outcomes The student will:

  • 1 demonstrate knowledge of investment terminology and concepts

    • 1.1 explore what is meant by the term “asset allocation” and describe each component; e.g., cash/cash equivalent, equities, fixed income

    • 1.2 evaluate and identify “personal tolerance” for risk

    • 1.3 explore and analyze sources of investment advice

    • 1.4 describe the business cycle in terms of an expanding market versus a recession; e.g., bull market versus bear market

    • 1.5 explain the term “stock exchange”

    • 1.6 investigate and compare stock exchanges in Canada, the United States and other markets around the world

    • 1.7 interpret stock quotes

    • 1.8 define debt securities

    • 1.9 list and describe the different debt securities available on the market; e.g., corporate bonds, provincial bonds, Canada Savings Bonds, debentures, treasury bills, guaranteed investment certificates

    • 1.10 describe fixed-income securities in terms of risk and return; e.g., safety, income, return of principal

    • 1.11 identify the components of a bond including:

      • 1.11.1 maturity date

      • 1.11.2 principal or face value

      • 1.11.3 interest rate; e.g., coupon

    • 1.12 describe and compare bond yields for a variety of bonds

    • 1.13 evaluate bonds in terms of when to buy and when to sell; e.g., interest rates, a company’s financial outlook, bond yield

    • 1.14 interpret bond quotes

    • 1.15 define and describe the cash or cash equivalent portion of an investment portfolio

    • 1.16 identify cash equivalents; e.g., savings accounts, term deposits, money markets

    • 1.17 distinguish basic differences between stocks, bonds and mutual funds

    • 1.18 describe common types of mutual funds; e.g., money market, fixed income, growth or equity, balanced, ethical, global or foreign, index, specialty

    • 1.19 define equity securities

    • 1.20 define and use basic terminology related to equity securities

    • 1.21 describe equities in terms of:

      • 1.21.1 size; e.g., small cap or large cap

      • 1.21.2 style; e.g., growth, value, income, high-quality

      • 1.21.3 geographic location; e.g., Canadian, American, Asian, European

    • 1.22 describe equities in terms of the sector they are in including:

      • 1.22.1 interest sensitive; e.g., banks, insurance, utilities, real estate, pipelines

      • 1.22.2 consumer; e.g., merchandise, communication, media

      • 1.22.3 industrial; e.g., technology, transportation, conglomerates

      • 1.22.4 resources; e.g., oil and gas, metals, minerals, paper and forestry, gold, other precious metals

    • 1.23 describe what a diversified equities portfolio would look like; e.g., varies in style, size, geographic location and sector

  • 2 assess and compare three corporations competing within the same sector

    • 2.1 assess and compare the overall positions of three companies competing in the same sector by:

      • 2.1.1 identifying the style of the stock

      • 2.1.2 identifying the sector

      • 2.1.3 identifying the type of products and/or services sold

      • 2.1.4 finding and comparing the price-earnings ratio (P/E Ratio)

      • 2.1.5 finding and comparing the dividend yields

      • 2.1.6 identifying risk and return of each stock

      • 2.1.7 using the rule of 72 to calculate how many years it will take for the stock to double

      • 2.1.8 explaining what you would invest in

  • 3 analyze, pick and track stocks and/or bonds to meet a specific goal and financial objective

    • 3.1 explain why an investor might allocate a portion of his or her portfolio to cash or cash equivalents

    • 3.2 research and select fixed-income securities that meet particular goals and objectives

    • 3.3 create a diversified equities portfolio to track over a specific period of time

    • 3.4 analyze the diversified portfolio on a daily, weekly or monthly basis, buying and selling as necessary to meet a specific goal or objective

  • 4 research and compare a variety of mutual funds

    • 4.1 compare different mutual funds and describe their makeup or contents in terms of asset allocation

    • 4.2 list the advantages of investing in mutual funds; e.g., affordability, diversification, liquidity, professional management, flexibility in amounts, recordkeeping

    • 4.3 list the disadvantages of investing in mutual funds; e.g., management fees and expenses, loss of control over investment decisions, managers’ mistakes, tax efficiency

    • 4.4 describe the fees associated with mutual funds; e.g., management expense ratio, sales commissions such as front-end versus back-end versus no-load

    • 4.5 analyze investment styles of mutual fund managers including:

      • 4.5.1 growth managers—focus on stocks with high earning potential

      • 4.5.2 value managers—bottom-up strategy with focus on undervalued companies

      • 4.5.3 growth at a reasonable price managers—avoid extremes of either growth or value investing

      • 4.5.4 core managers—combination of growth and value

  • 5 demonstrate basic competencies

    • 5.1 demonstrate fundamental skills to:

      • 5.1.1 communicate

      • 5.1.2 manage information

      • 5.1.3 use numbers

      • 5.1.4 think and solve problems

    • 5.2 demonstrate personal management skills to:

      • 5.2.1 demonstrate positive attitudes and behaviours

      • 5.2.2 be responsible

      • 5.2.3 be adaptable

      • 5.2.4 learn continuously

      • 5.2.5 work safely

    • 5.3 demonstrate teamwork skills to:

      • 5.3.1 work with others

      • 5.3.2 participate in projects and tasks

  • 6 create a transitional strategy to accommodate personal changes and build personal values

    • 6.1 identify short-term and long-term goals

    • 6.2 identify steps to achieve goals

Program of Studies 2009. Source document, © Alberta Education.