29 July 2016
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Essentials of Investment Management
Investment management is an area that has shown a substantial development during the last decades. Scholars developed several models as to evaluate risk and return properties of investments such as stocks and bonds. These models also enabled portfolio managers to design efficient portfolios so that client assets could be managed in a cost effective manner. Understanding these models is important in a world where the amount of managed savings by investment funds and pension funds have been vastly growing.
This course aims to introduce the basics of investment management. Starting off with discussing the role and function of capital markets, students get acquainted with financial assets (for example, stocks and bonds) and their price formation. Once it is clear how they are traded, it is time to study the risk and return patterns associated with financial assets. How can we use risk and return figures to design an investment portfolio which meets the risk level a client tolerates? More generally, the relation between risk and the required rate of return of an investment is discussed. How should you respond if someone offers an investment proposal with guaranteed high rates of future returns?
The return requirement feeds in to the valuation of stocks and bonds. If they become riskier, prices will generally go down. Bonds have the feature to be influenced by the general market interest rates as well. We will look into this relation and show the effects for investors and for pension funds.
Investment risks can be managed by the use of derivatives, such as options and futures. Of course types of derivatives can be used as well to speculate on the direction of financial markets. In designing an investment portfolio, you might want to include these products. But how can you use them? And how do you decide whether they are too cheap or too expensive?
Most financial models assume that markets are efficient and that people act rationally. The last session discusses market efficiency, challenges the assumptions, and introduces behavioral finance.
Although the topics concern mainstream essentials of investment management, special attention will be given to the specifics of the Chinese market environment. For example, we discuss specific regulations concerning short-selling, the difference between different share classes in China, and the volatility of Chinese markets relative to developed markets. In addition, the course aims to introduce students to Chinese firms, for example through a visit to the Shanghai Stock Exchange. Using a stock market simulation, students experience stock market investing in the absence of running risks.
To conclude, this course offers theoretical backgrounds needed to understand financial investing. Using tutorials, students practice with exercises. A stock market game is used to bring the investment practice closer to a student’s life. On top of that, students get acquainted with the Chinese investment practice via either a company visit or a guest lecture.
This course is taught at Fudan University (Shanghai,China) as part of the China Europe International Summer School (CEISS). CEISS is a collaboration between Fudan University (China), Peking University (China), Utrecht University (Netherlands), Freie Universität Berlin (Germany), Università Cattolica del Sacro Cuore (Italy) and Edvance Education International (China), offering summer courses that explore the world's main economic, social and political trends and themes and the way they impact on the economies and societies of Europe and China.
This course can be combined with
- Dynamics of the Chinese Economy (Fudan University, 4 - 15 July 2016)
- Innovation and Entrepreneurship in Europe and China (Fudan University, 4 - 15 July 2016)
- The Chinese Marketplace: Globalization and Local Transformation (Fudan University, 4 - 15 July 2016)
- China, the US, Europe and the Rise of Asia: Ideas, Culture and Perceptions (Peking University, 4 - 15 July 2016)
- Intellectual Property Law and Policy in China (Peking University, 4 - 15 July 2016)
- Highlights of Law and Economics (Utrecht University, 4 - 15 July 2016)
- European Cultures and Identities (Utrecht University, 4 - 15 July 2016)
- European Politics and Economy (Utrecht University, 4 - 15 July 2016)
Dr. Dirk Gerritsen
Students of the social sciences, including economics and business, political sciences, European studies, history, culture studies and sociology, the sciences and engineering at senior undergraduate level with an interest in the working of financial markets. A wide range of interests will help, but no specific expertise is required.
EUR 1645: tuition fees + study materials + accommodation + social programmeRegister for this course
on course website