Investments I: Fundamentals of Performance Evaluation
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Course overview
- Provider
- Coursera
- Course type
- Free online course
- Level
- Mixed
- Deadline
- Flexible
- Duration
- 27 hours
- Certificate
- Paid Certificate Available
- Course author
- Scott Weisbenner
Description
In this course, we will discuss fundamental principles of trading off risk and return, portfolio optimization, and security pricing. We will study and use risk-return models such as the Capital Asset Pricing Model (CAPM) and multi-factor models to evaluate the performance of various securities and portfolios. Specifically, we will learn how to interpret and estimate 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). Building upon this framework, market efficiency and its implications for patterns in stock returns and the asset-management industry will be discussed. Finally, the course will conclude by connecting investment finance with corporate finance by examining firm valuation techniques such as the use of market multiples and discounted cash flow analysis. The course emphasizes real-world examples and applications in Excel throughout. This course is the first of two on Investments that I am offering online (“Investments II: Lessons and Applications for Investors” is the second course).The over-arching goals of this course are to build an understanding of the fundamentals of investment finance and provide an ability to implement key asset-pricing models and firm-valuation techniques in real-world situations. Specifically, upon successful completion of this course, you will be able to:
• Explain the tradeoffs between risk and return
• Form a portfolio of securities and calculate the expected return and standard deviation of that portfolio
• Understand the real-world implications of the Separation Theorem of investments
• Use the Capital Asset Pricing Model (CAPM) and 3-Factor Model to evaluate the performance of an asset (like stocks) through regression analysis
• Estimate and interpret the ALPHA (α) and BETA (β) of a security, two statistics commonly reported on financial websites
• Describe what is meant by mark
