University of Illinois at Urbana-Champaign
Investments I: Fundamentals of Performance Evaluation
University of Illinois at Urbana-Champaign

Investments I: Fundamentals of Performance Evaluation

This course is part of Financial Management Specialization

Taught in English

Some content may not be translated

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Course

Gain insight into a topic and learn the fundamentals

4.7

(885 reviews)

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95%

Intermediate level
Some related experience required
26 hours (approximately)
Flexible schedule
Learn at your own pace
Progress towards a degree

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Assessments

5 quizzes

Course

Gain insight into a topic and learn the fundamentals

4.7

(885 reviews)

|

95%

Intermediate level
Some related experience required
26 hours (approximately)
Flexible schedule
Learn at your own pace
Progress towards a degree

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There are 6 modules in this course

In this module, you will become familiar with the course, your instructor, your classmates, and our learning environment. The orientation also helps you obtain the technical skills required for the course.

What's included

3 videos10 readings1 quiz

In Module 1, we will build the fundamentals of portfolio formation. After providing a brief refresher of basic investment concepts (our toolkit), a summary of historical patterns of stock returns and government securities in the U.S. is provided. We then consider general examples of portfolio choice to highlight the tradeoffs between “risk” and return. We end the module with a discussion of dominated assets and efficient portfolio formation, emphasizing real-world examples and practice in Excel solving for the optimal portfolio given certain constraints (such as the amount of volatility we will accept in our portfolio).

What's included

24 videos3 readings1 quiz

In Module 2, we will develop the financial intuition that led to the Capital Asset Pricing Model (CAPM), starting with the Separation Theorem of Investments. We will understand that in a CAPM setting, only the market-wide risk of an asset is priced – securities with greater sensitivity to the market are required by investors to yield higher returns on average. We will also learn how to interpret regressions that provide us with both a benchmark to use for a security given its risk (determined by its beta), as well as a risk-adjusted measure of the security’s performance (measured by its alpha).

What's included

21 videos3 readings1 quiz1 peer review

In Module 3, we will discuss different asset-pricing models, the pros and cons of each, and market efficiency. In particular, we will test the effectiveness of the Capital Asset Pricing Model (CAPM) and examine survey data concerning its use by chief financial officers (CFOs) of firms. Predictable patterns in stock returns, such as the size and value effects, will also be examined and the Fama-French 3-Factor Model will be introduced. Market efficiency will be discussed in this module, as well as its implications for the asset-management industry and observed patterns in stock returns.

What's included

18 videos3 readings1 quiz1 peer review

In Module 4, we will learn about the two key approaches to valuing a company or stock: market multiples and discounted cash flow. We will learn how to value perpetuities and will discuss how caution should be exercised in terms of projecting both the growth in long-term cash flows and the riskiness of those cash flows – two key components of the perpetuity formula. Finally, to gain experience with the market multiples approach, we will estimate a value of Google at the time of its initial public offering (IPO) back in 2004 using market data on Yahoo! as a comparable firm.

What's included

27 videos2 readings1 quiz

In this module, we say goodbye to the Investments course as key takeaways from the course are reviewed. A tease is also provided to topics that will be covered in Professor Weisbenner's second course on Investments.

What's included

1 video2 readings

Instructor

Instructor ratings
4.8 (100 ratings)
Gies College of Business, University of Illinois
University of Illinois at Urbana-Champaign
22 Courses105,010 learners

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Recommended if you're interested in Finance

Get a head start on your degree

This course is part of the following degree programs offered by University of Illinois at Urbana-Champaign. If you are admitted and enroll, your coursework can count toward your degree learning and your progress can transfer with you.

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