Michael J. Coles College of Business

Kennesaw State University

Fixed Income Securities FIN4320

Dr. Stefano Mazzotta, Department of Economics and Finance

 

Room: Burruss Building 350

Office Hours: After class or by appointment

Phone:  (770) 423-6341

Fax:    (770) 499-3209

 E-mail:  smazzott@kennesaw.edu

www.mazzotta.info

 

 

Course Description

This is an elective advanced finance class. It provides the business undergraduate students with a working knowledge of the fixed-income markets.  Fixed income securities represent the largest global financial markets, even larger than equities. Good knowledge of fixed income securities is also useful for the corporate sector, as companies often raise funds in the form of bonds. This course helps with the Chartered Financial Analysts (CFA) examination, which involves many questions on fixed-income markets.
The course is based on lectures and computer demostrations. The workload for this course is heavy, and at the same time focused on practical applications. 
Prerequisites: Business Majors: Sophomore GPA Requirement and FIN 3100; Non business Majors: 60 credit hours including FIN 3100 and permission of the department chair. Given the quantitative nature of the topics, the student needs to proficient in calculus, stats and elementary finance at the college level. Students taking this course understand that failure is likely for those who are not fluent in the topics in this prerequisites list.

Outline and Downloads

Textbook

 Martellini, L., Priaulet, P. and Priaulet, S., 2003, Fixed-Income Securities: Valuation, Risk Management and Portfolio Strategies, The Wiley Finance Series. ( MPP)

Other Suggested Readings

Suresh Sundaresan, Fixed Income Markets and Their Derivatives, 3nd edition, Southwestern. ISBN-13: 978-0123704719

Pietro Veronesi, Fixed Income Securities: Valuation, Risk, and Risk Management ISBN : 978-0-470-10910-6

Learning Objectives

This course covers topics such as bond valuation, yield-to-maturity, forward rates, discount factors, term structure theories, durations, convexities, and hedging strategies. It also introduces interest-rate risk management, and some notions related to derivative products. Students also learn advanced spreadsheet skill as they apply to financial analysis.

Web page: I will use my web page to distribute class notes and other relevant material.


E-mail policy: I will only use your KSU official e-mail address to disseminate information or to contact you. Your e-mails will receive the highest priority if you write in the subject FIN4320, and immediately after the subject of your message. Messages that do not show FIN4320 in subject line may be automatically deleted. D2L email is not allowed.

March 2 (W) Last Day to Withdraw Without Academic Penalty
May 2 (M) Last Day of Classes


Course Expectations and Policies

Exams: The Term Exams are computerizied on line tests.  They can consist of problems, multiple choice questions, short answer, true/false statements, and short essays. The content of the computer applications is part of the testing material. As the general rule, there will be no make-up exams.  In cases of well-documented circumstances beyond your control, you need to inform the instructor by e-mail prior to the exam and discuss the possibility of alternative arrangements. Possible alternatives include but are not limited to alternative evaluation instruments, oral examination, re-weighting of remaining work, or other types at the instructor’s discretion.

General Information about Exams: You can use a financial calculator or a spreadsheet. .If asked by the instructor, must be able to show how you obtained the answer following procedures covered in class when solving similar problems.

General Information about group project: The group project is meant to introduce students to the financial crisis of 2008. This part of the course includes documentaries showing as a general introduction to the topic and group work. Students will select one or more specific issue as the theme for their report and compile a report of about 5 pages double space professionally formatted. More detailed information about the project specifications will be made available during the course.

Assigned problems for the course: Assignments and problems from textbook are suggested for every lecture and are published on the course webpage. Solutions will be made available to you. You are encouranged to work on the assigments in a timely fashion. You are also welcome to show me your home work after seeing the solutions and discuss all remaining issues.


Group work: You are strongly encouraged to work in groups, especially on the home works and the lab reviews. However, there will be no formal assessment of work done in groups.

Attendance: Attendance in this course is mandatory.

GRADING 

 

Term Exam I              250  points

Term Exam II             250  points

Term Exam III            250  points

Group Project           250  points

 

The absolute letter grade for the course is given by the sum of all the graded work and the following scale  

 

A         900-1000        points                                       

B         800-899.99     “                                            

C         700-799.99      “                               

D         550 -699.99      “                                           

F          below 549.99   “    

 

The relative letter grade for the course is given by the sum the following standardzation scheme

                 

Letter Grade  
A N >= Median + .75 * IQR
B Median + .25 * IQR <= N < Median + .75 * IQR
C Median - .85 * IQR<= N < Median + 0.25 * IQR
D Median - 1* IQR<= N < Median -0.85 * IQR
F N< Median -1 * IQR

Where N is the total of grade points earned during the semester, Median is the class median, IQR is the interquartile range (i.e. Q(3)-Q(1)). No additional extra credit opportunities at the end of the semester will be offered. To allow student to gauge progress towards their final grade, Median and IQR for the class will be released for each of the term exams.

The grade for the course is the highest between the absolute and the relative letter grade.

Expectations 
You are expected to:  

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Be proficient in algebra, calculus, analytic geometry, and stats at the college level in line with the prerequisites.

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Download and read prior to each class lectures notes and bring them to class. Also, you are expected to download all materials posted for this class from the web

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After each lecture, review the material from the notes, double check with material from the book and apply the concepts to solving the assigned problems

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Work the assigned problems and questions in a timely manner. You should work these problems at least two times to make sure you understand the process.

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Allocate sufficient time to study outside the classroom.

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Be on time

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Frequently check the course web page and download the material

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Check your KSU e-mail. I will sometimes communicate with the entire class via e-mail

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Actively participate to the computer exercises and review the material and procedures covered

What it takes to get an A in this course?
The short answer: Complete mastery of the the topics discussed in class. How to get there? Read the material in advance, work on the assigned problems in a timely fashion (same day of the lecture), redo the problems and labs several times, and most importantly develop a critical thinking and active learning approach to the class. A good understanding of the economics, as well as the math of the material is essential to do well in the course.


ADA notice: The Americans with Disabilities Act of 1990 (ADA) requires KSU to provide a reasonable accommodation to any individual who advices us of a physical or mental disability.  If you have a physical or mental limitation that requires an accommodation or an academic adjustment, please arrange a meeting with me at your earliest convenience (if have not already done so). You should also contact Carol Pope at (770) 423-6443.
Academic Integrity: Every KSU student is responsible for upholding the provisions of the Student Code of Conduct, as published in the Undergraduate and Graduate Catalogs. Section II of the Student Code of Conduct addresses the University’s policy on academic honesty, including provisions regarding plagiarism and cheating, unauthorized access to University materials, misrepresentation/falsification of University records or academic work, malicious removal, or destruction of materials, malicious/intentional misuse of computer facilities and/or services, and misuse of student identification cards. Incidents of alleged academic misconduct will be handled through the established procedures of the University Judiciary Program, which includes either an “informal” resolution by a faculty member, resulting in a grade adjustment, or a formal hearing procedure, which may subject a student to the Code of Conduct’s minimum one semester suspension requirement. The students agrees that the inability to reproduce own test answers when asked by instructor will be sufficient proof of scholastic dishonesty. Moreover, the student waive any right to appeal grades that may have been modified based on in person scheduled or unscheduled verifcations and inteviews that may occur at the sole discretion of the instructor.


Updated 1/12/2016 - Relative gading scheme edited 1/20/2016