COURSE INFORMATION
1. Name of Course PRINCIPLES OF INVESTMENT
2. Course Code BUS3232
3. Name(s) of Academic Staff Zanariah Zakaria
4. Semester and Year offered Semester 1 Year 3
5. Prerequisite (if any) Introduction to Finance (BUS2235)
6. Rationale for the inclusion of the course in the This course is designed to provide students with the basic
programme concepts and principles of investment. The course will give
exposure to the students on the overall framework of investment
in Malaysia and understand the modern method of investment
which is needed by all types of businesses as well as for
personal.
7. Course Description The course aims to equip students with basic concept and
principles of investment. It provides an overview of investment
environment and an understanding of economic fundamentals.
Essential theoretical concepts and analysis of securities will be
covered extensively.
8. Credit Value 3
9. Course Outcomes At the end of this course, student will be able to:
1. Explain the concept of financial market and institution,
regulations and the growth of the financial system from
Malaysian perspective. (C2)
2. Interpret the risk and return of an investment, stock valuation
and formulation of portfolio strategy. (C2)
3. Discover the analysis of common stock. (C3)
4. Compute options strategies, forward and futures trading to
modify portfolio risk and return. (C3, A3, P4)
10. Assessment Methods and Types Methods Percentage
Quizzes 10%
Tutorial Exercises 10%
Formative (50%) Group Assignment 15%
Individual Assignment 15%
Summative (50%) Final Examination 50%
Total 100%
11. Content outline of the course Topic
1
TOPIC 1: INTRODUCTION
1. An overview of the Financial Markets
a. Theory and Concept of Investments Physical Assets
b. Financial Asset
2. Investment Objectives
TOPIC 2: THE SECURITIES MARKET
1. Role of securities market
2. Types of securities market
a Primary market
b Initial Public Offering (IPO) c
Private Placement
d Secondary Market Stock Exchanges e
Over the Counter Market (OTC)
3. Trading Mechanics
a. Trading Systems
b. Types of Orders
c. Margin Trading
TOPIC 3: SECURITIES MARKET REGULATIONS AND
EXCHANGES IN MALAYSIA
1. History and the development of security market
in Malaysia
2. An overview the roles/objective of Securities
Commission of Malaysian and Malaysian Derivatives
Standard Board
TOPIC 4: BASIC INVESTMENT CONCEPTS
1. Characteristics of investments
a. Risk
b. Return
c. Liquidity
d. Marketability
2. Types of investments
a. Equity Instruments
i. Common Stock
ii. Preferred Stock
b. Debt Instruments
i. Marketable Securities
ii. Bonds
c. Derivatives Instruments
i. Options
ii. Forwards and futures
d. Mutual Fund
2
TOPIC 5: CONCEPT AND THEORY OF RETURN AND
RISK
1. Concept of Return
a. Average Returns and Expected Returns
2. Nature and Sources of Risk
a. Systematic and Unsystematic Risk
3. Risk Premium Risk and Return Relationship
a. Risk Free Rate
b. Variance
c. Standard deviation
d. Covariance
e. Capital Asset pricing Model (CAPM)
i. Beta
ii. Security Market Line (SML)
TOPIC 6: ANAYLIZING COMMON STOCK
1. Security Analysis
a. P/E ratios
b. Other price-relative procedures
2. Economic Analysis
3. Industry Analysis
TOPIC 7: OPTIONS
1. Definition and Types
2. Characteristics of Puts and Calls
3. Trading Strategies Valuation
TOPIC 8: FORWARD AND FUTURES
Regulatory framework of Malaysian futures
and options industry
a. Introduction
b. Structure of Regulatory Agencies
c. The Futures Industry Act (FIA)
d. BMDB as a Regulator of an
Exchange House
e. BMDC as a Regulator of a Clearing
House
12.Main references supporting the course 1. Gitman, L. & Joehnk, M. (2011), Fundamentals of Investing
, 11th Edition, Boston : Pearson Education
2. Rosalan Ali (2007), Introduction to Malaysian Derivatives,
Revised Edition, University Publication Centre (UiTM)
3
Additional references supporting the course 1. Mayo Herbert B, (2007) Introduction to Investment , 8th
Edition McGraw Hill .
2. Frank K. Reilly, Keith C. Brown, Investment Analysis and
Portfolio Management, 5th edition, Dryden Press
3. Keown, Martin, Petty (2011), Foundations of Finance, 7th
Edition, Pearson Publishing
13. Other additional information Nil
4
5
6
