INTERNATIONAL ISLAMIC UNIVERSITY MALAYSIA COURSE OUTLINE

Kulliyyah

Economics and Management Sciences

Department

Department of Finance

Programme

Undergraduates

Name of Course

Investment Analysis

Course Code

FIN4020

Name (s) of Academic staff / Instructor(s)

Dr. Razali Haron Office : A 432 Phone : 03-6196 4647 Email : razaliharon@yahoo.com The course covers investments in securities such as stocks, bonds (sukuk), unit trusts, embedded options and provides an understanding of how to analyse these securities, how to manage them and how to determine if they are attractive investments based on risk-return profile. The course will also cover Islamic contracts related to Shariah compliance securities.

Rationale for the inclusion of the course / module in the programme

Semester and Year Offered Semester 1, 2012/2013

Status Level

Specialization course Undergraduate

Face to Face
Assessments Independent Learning

Total Guided and Independent Learning

42 Credit Value (hours) Pre-requisites (if any) Co-requisites (if any) Nil 3

Lecture

Total Student Learning Time (SLT)

70

120

The objectives of this course are to: 1. To acquaint students with a good foundation in portfolio analysis and capital markets (also Islamic Capital Market) that should equip them with the knowledge to manage investments prudently. 2. To discuss the Islamic contracts related to Shariah approved securities. 3. To expose students to investment choices available from financial markets in Malaysia. 4. To equip students with the tools to value securities. Upon completion of the course, the students will be expected to: 1. 2. 3. 4. develop an investment process for a client determine whether a security is Shariah compliant, compute the risk and return of a portfolio based on CAPM and APT value stocks and bonds and assess their management strategies and to evaluate the performance of portfolio Skills Transferable Skills: Practical Skills Research Skills Communication How they are developed Class exercises and examinations Case studies Class discussions Assessment method Mid-Term Exam & Final Exam Group assignment Group assignment

Course Objectives

Learning Outcomes

Type of Assessment Teaching-Learning / assessment strategy Assignments/Term Paper Lectures

Description Independent study, group discussion In-class discussion

2

Course Synopsis

The course covers investments in securities such as stocks, bonds, unit trusts, derivatives and provides an understanding of how to analyse these securities, how to manage them and how to determine if they are good investments. The course will also cover the Islamic contracts and techniques on evaluating fund performance. Lecture, Class Discussion, Assignment LO 1,2,3 1,2, Method Assignments/Group Presentation Mid-Term examination Final Examination TOTAL % 40 10 50 100

Mode of Delivery

Assessment Methods and Type/Course Assessment

1,2,3

Mapping of course / module to the Programme Learning Outcomes

Learning Outcome of the course

1. 2. 3 4

Programme Outcomes
01 02 03 04 05 06 07 08 09

determine whether a security is Shariah compliant compute the risk and return of a portfolio based on CAPM and APT value stocks and bonds and assess their management strategies evaluate the performance of the portfolio

Content outline of the course / module and the SLT per topic Task/Reading (author/page)

Weeks

Topics

Risk and Return - Types of Risk - Measurement on Risk - Risk - Standard Deviation, Coefficient of Variation Risk and Return - Measurement of Return - Expected Return, Arithmetic Return, Geometric Return Holding Period Return Bursa Malaysia Market Report

Charles P. Jones. Investments (2010). Chapter 6

3 4

The STAR Business Section Bursa Malaysia Market Report

8&9

10

Theory of Portfolio Management - Portfolio Risk - Portfolio Expected Return - Minimum Variance Portfolio - Efficient Frontier - Combining Risk Free Rate and Risky Asset Portfolio - Portfolio Optimization Islamic Capital Market - Syariah Approved Securities - Methods of Determining Syariah Approved Securities by SAC of SC - Case Study Asset Pricing Model - Single Factor Model - CAPM - Multiple Factor Model - APT Model Fixed Income Securities (Bonds) - Current Yield - Capital Gains Yield - Impact of Interest Rates on Bond Prices - Convexity - Coupon Bias, Maturity, Interest Rates Level - Duration - Computation of Duration - Estimation on Bond Price Volatility from Duration Asset Securitization - Asset Securitization Structure - Arguments Supporting the Permissibility of Asset Securitization - The Mal Principle, BaiDayn, The Rahn Principle - Opinions of Past Islamic Jurists on Cash Flow as collateral - Wathiqah Dayn - Sukuk

Charles P. Jones. Investments (2010). Chapter 7

Syariah Approved Securities Screening Process (SC of Malaysia)

Charles P. Jones. Investments (2010). Chapter 9

Charles P. Jones. Investments (2010). Chapter 17

Capital Market Products According to Islamic Jurisprudence (SC of Malaysia)

11

12

13

Options (Embedded Options) - Warrants - Call Warrants - Arguments Supporting the Permissibility of Warrants/Call Warrants - Athar as a Basis - Holding Rights in Sales and Purchases - The Mal Principle - The Haq Maliy and Haq Tamalluk Principle - Bai Madum, Gharar as Illah Bai Madum - Bai Urbun - Al-Khiyarat - Opinions of Past Islamic Jurists Options (Embedded Option) Valuation - Call Value - Intrinsic Value - Time Value - Option Moneyness - Valuation Model (BSOPM, Leland) Efficient Market Hypothesis - Weak Form - Semi Strong Form - Strong Form Efficiency from Islamic Perspective Portfolio Performance Measurement - Unit Trust (Mutual) Funds - Sharpe - Treynor - Jensen - Other Measures

Capital Market Products According to Islamic Jurisprudence (SC of Malaysia) Obiyathulla Ismath Bacha (2011). Financial Derivatives. Markets and Applications in Malaysia. (3rd ed.). Mc Graw Hill. Chapter 6 & 9

Charles P. Jones. Investments (2010). Chapter 12

14

Journal Articles

Required references supporting the course 1. Charles P. Jones. Investments (2010). Principles and Concepts (11th Edition). Wiley

1. 2. 3. 4.

Recommended references supporting the course Obiyathulla Ismath Bacha (2011). Financial Derivatives. Markets and Applications in Malaysia. (2nd ed.). UPM Press. Capital Market Products According to Islamic Jurisprudence (SC of Malaysia) Syariah Approved Securities Screening Process (SC of Malaysia) Journal Articles