ROGER WILLIAMS UNIVERSITY

GABELLI SCHOOL OF BUSINESS

FNCE 325.02 – Principles of Investments

Monday & Thursday 3:30 PM – 4:50 PM
GSB Room 100
Fall 2024 Course Syllabus

Instructor: Dr. Michael R. Melton

Professor of Finance and Director, Center for Advanced Financial Education
Office: SB 201, 2nd floor, Gabelli School of Business (across from elevator)
Telephone: Office: 401.254.6138 / Cell Phone: 401.649.2115
Email: mmelton@rwu.edu
Office Hours: Mondays 2:00 to 3:00 p.m. / Tuesdays 1:00 to 2:00 p.m. / Thursdays 2:00 to
3:00 Other times by appointment.

Text and Other Materials

1) Fundamentals of Investing; ISBN10: 1264412819 | ISBN13: 9781264412815
Authors: by Jordan, Miller, Dolvin: McGraw Hill, 10th Edition (Text is required)
2) STOCK-TRAK Portfolio Simulation Game. Go to http://www.stocktrak.com and
register. You will be provided this information in the first week.

Other
A financial calculator is required. The Texas Instruments BAII Plus is preferred. You must
bring your calculator to every class session.

Course Description
Study of short-term and long-term decision making by investment managers. The approach
we will adopt will use financial securities, such as equities, bonds, and other, to study
short- and long-term investment decision making. Daily reading of the Yahoo Finance &
FinViz is required.

Prerequisites
The prerequisite for this course is FNCE 301 with a grade of “C” or better. If you have not
met this prerequisite please see your professor.

Course Objectives
The key objectives of this course are:
1) To achieve a deep understanding of security markets, while applying this knowledge
to portfolio and risk analysis.
2) To apply current theories to portfolio management.

1
Individual Student Responsibilities

Participation and Attendance

Students are required to attend class and participate. This is a lecture-oriented class
where student involvement is critical to discussion of current and relevant topics. Students
must be committed to attending class with a willingness to participate. Grades will be
weighted on the success of the student’s ability to answer questions in class pertaining to
the material being covered as well as the level of effort put forth on the final project as
determined by his/her peers. Please note that if a student misses more than 5 classes
he/she will receive a Failing grade (F) for the class.

Worth 10% of the student’s grade

Quizzes, Homework and Written Assignments

Periodically the class will be given quizzes to verify if the students have remained current
on assigned reading and homework. In addition, homework will be collected on a random
basis for grading. Students will be allowed to drop their lowest grade whether it is a Quiz,
Homework Assignment, or a missed Quiz or Homework which resulted in a grade of zero.

In addition, at the end of selected classes we will discuss a topic from the Wall Street
Journal. Students will either select an article of interest or be assigned an article, and
write a one-page summary of how this information may affect investors’ portfolios or
markets over time.

Worth 10% of the student’s grade

Exams

EXAM I Worth 20% of student’s grade

EXAM II Worth 20% of student’s grade
FINAL EXAM Worth 20% of student’s grade

Absolutely no make-up exams will be given under any circumstances. The final exam will be
re-weighted to adjust for a missed exam. A student does not want to intentionally miss any
exam.

The exams will be based on homework questions and lecture. The quizzes and exams may
consist of problems, multiple-choice, true/false, and short answer/essay questions. There
will be no formula sheets provided for the exams.

Stock-Trak / Final Paper / and Final Report

The other purpose of this class is to provide the resources for business students to manage
a portfolio of investments with the following objectives:
1) To introduce "real world" applications to academic programs.
2) Provide "hands-on" training in securities analysis and portfolio management
utilizing computerized methodology.
3) Developing skills fundamental to the investments industry.
4) Increasing exposure to career opportunities within the investments industry.
5) Provide a more meaningful and valuable learning experience.
6) Promote the placement of Roger Williams graduates in the securities industry.

2
Stock-Trak Game – Begins Thursday, September 5th and ends Thursday, November,
21st

[RWUFA2024330]

https://www.stocktrak.com/members/register?sessionid=317119
As groups, student will play the Stock-Trak Investment Game. Students will manage two
portfolios:
1) Passive Portfolio [Excel Driven]
- 20 initial trades, no reallocation of portfolio
- This exercise addresses the topic of uneducated investing

2) Active Portfolio [Stock-Trak]

- Students will invest in stocks, bonds, and mutual funds
- At least 150 trades, with long and short positions

Every other Thursday, the group will turn in a one-page report discussing the investment
philosophy and return for the prior two weeks. The report should contain any relevant
comments (for example, an article from the WSJ) that caused the group to reallocate the
portfolio. The group should include a return for the two-week period and since the
beginning of the game (to include a comparison to the DJIA and S&P).

Portfolio Simulation Game

You will register for the Stock-Trak game using the information given to you in class. The
game is a realistic trading game that allows purchase of stocks, stock options, mutual
funds, index options, and bonds. You can even buy on margin (borrow). There are no
requirements I will set on investing (other than the game limit of $1,000,000 to invest).

Investment Report

There will be an Investment Report assigned that will consist of describing and defining an
investment strategy, finding research to support your strategy, and selecting investments
using your strategy. The group’s investment time horizon depends on the portfolio’s
objective/strategy, and the group should evaluate the investment to hold throughout the
period. Your group should turn in a one-page memo to me (date to be announced) that
explains your investment strategy chosen and the stocks the group selected using this
strategy initially based on your understanding of the strategy. The Final Paper is due by
the end of class on (date to be announced).

The Final Report will be graded on the following:

Note: The Report will be 10 to 12 pages

1. Explanation of strategy including when/how it has been used and how the selection
of investments works using the strategy chosen.
2. Completeness of the Report. Do you tell me everything I need to know?
3. Use of timely information from a variety of sources. You must be sure to cite 1) an
academic journal (e.g. Journal of Finance), 2) a periodical such as Business Week or
WSJ, 3) a text or book written by an investment professional, and 4) a web site.
Missing one of these is a -10 per violation and not citing the source is -10 per
violation. Cite using as acceptable style such as the Chicago Manuscript or MLA
style.
4. Organization of Report. There should be heading bolded and numbered and
subheadings italicized and numbered similar to:

3
 2. The Theory of Value Investing
2.1 Selecting Stocks based on Price-to-Earnings Ratios

The total contents of the report, including title (cover) page, graphs and tables, should not
exceed 12 pages (I will grade only the first 10 pages, one of which should be the title page).
Use a 12-point font. The text should be double-spaced and the cover page should only have
your group’s name, class title and course number on it. Failure to follow the guidelines will
result in penalties. Pay careful attention to presentation, style and grammar, as you will be
graded on this as well.

Presentation

Groups will be responsible for reporting their respective portfolio results to the rest of the
class. This presentation is to include a Microsoft Power Point presentation of no less that
10 slides as well as handouts for the class. Additional information concerning this
presentation will be distributed to students as the semester progresses. Please note that
each student’s contribution, as defined by his/her group, will be included into this grade.

Final Report worth 10% of student’s grade

Final Presentation worth 10% of student’s grade

In summary:

Item Percent
Participation and Attendance (to include peer evals) 10%
Homework, Quizzes & Written Assignments 10%
Exam I (Chapters 1, 2, 5 & 19) 20%
Exam II (Chapters 4, 6, 11 & 12) 20%
FINAL Exam (Chapters 13, 7 & 8, as well as semi- 20%
comprehensive)
Final Paper 10%
Final Presentation 10%
Total 100%

Grading Policy:

The assignment of letter grades will be given only at the end of the course on the basis of
cumulative points. The following fixed scale will be used:
Percentage Grade Description
93 % - 100 % A Excellent
90 % - 92.99 % A-
87 % - 89.99 % B+ Good
83 % - 86.99 % B
80 % - 82.99 % B-
77 % - 79.99 % C+ Average
73 % - 76.99 % C
70 % - 72.99 % C-
67 % - 69.99 % D+ Passing
63 % - 66.99 % D
60 % - 62.99 % D-

4
 Below 60 % F Failure

Student Professionalism

I strongly believe in student professionalism and you are expected to act in a professional
manner in the classroom. Please be on time for the class and refrain from disruptive or
inconsiderate behavior.

Policy on Academic Integrity

Any form of cheating, plagiarism, or any other form of academic misconduct will receive all
the penalties under University guidelines. Be sure to review the student handbook
regarding policies about plagiarism and other forms of academic dishonesty and cheating.

http://rwu.edu/academics/academic-affairs/academic-standards

Turnitin Anti-Plagiarism

Students agree that by taking this course all required papers may be subject to submission
for textual similarity review to vericite.com for the detection of plagiarism. All submitted
papers will be included as source documents in RWU’s Turnitin reference database solely
for the purpose of detecting plagiarism of such papers at the institution. The institutional
repository remains the property of the institution and is not shared.

Cell Phones and Personal Computers

Cell Phones are to be turned off during lecture. If a student’s cell phone disrupts a lecture
the entire class will have a Pop-Quiz.

Students will refrain from Emailing, Texting, Google searching, Game Playing, or any other
activity on their laptops / computer terminals while a lecture is in progress. Any such
activity will result in a Pop-Quiz. In summary, please pay attention and take notes.

Late Assignments

Homework or quizzes will be turned in on the specific date and time noted by the
professor. Failure to do so will result in failing grade. Again, students are allowed to drop
their lowest grade so they may choose not to hand in one assignment understanding that
all the others will be graded.

Some Important Points

COVID-19 Classroom Protocols

As stated by the University, individual faculty can require masking in their classrooms or
labs with advanced notice. Masking may be occasionally required in the classroom
depending on current health conditions across campus.

Masking:

Mask wearing (high quality N95 or KN95) in indoor settings is considered an effective and
recommended practice by the Centers for Disease Control and the American College
Health Association and has been proven effective at RWU. The University reserves the

5
right to require mask wearing in any indoor setting when deemed necessary, and I support
any individual who chooses to wear a mask to protect themselves or others.

A Note re: Response Times

 Responding to student questions, emails, inquiries within 24 – 36 hours.

 Returning submitted work graded with comments and feedback to the student in a
timely fashion, ideally within a week of submission.

Students with Disabilities

“The University has a continuing commitment to providing reasonable accommodations for

students with documented disabilities. Students with disabilities who need
accommodations in order to fully participate in this class are urged to contact Student
Accessibility Services, as soon as possible, to explore the arrangements needed to be made
to assure access. During the Fall 2021 semester, the Student Accessibility Services office
can be reached at sas@rwu.edu and 401-254-3841. SAS is open Monday through Friday
from 8:00AM to 5:00PM.

For more information about SAS, visit

https://www.rwu.edu/undergraduate/academics/student-academic-success/student-
accessibility-services-sas

Title IX at RWU

Roger Williams University faculty are committed to supporting students and upholding the
University’s non-discrimination policy. Under Title IX, discrimination based upon sex and
gender is prohibited. If you experience an incident of sexual misconduct or gender-based
discrimination, you are encouraged to report it. While you may wish to share this with a
faculty member, academic instructors are required to report such disclosures to the
campus Title IX Coordinator. If you would like to report the situation confidentially, the
following resources are available for you:
 The RWU Counseling Center – 401-254-3124
 Health Services – 401-254-3156
Additional information regarding your rights and resources are available at: RWU Title IX

Chosen Name Policy

Roger Williams University recognizes that some members of the campus community may
prefer to identify themselves by a first name other than their legal first name. For this
reason, the University provides students and employees with an opportunity to use a
Chosen Name where possible in the course of University business and education.
Individuals may request the use of a chosen name online via RogerCentral. A student’s
Chosen Name should then repopulate through many university systems and will replace
their legal name in some regards such as class rosters. The University is legally required to
use legal names in some instances such as official transcripts, financial aid documents, etc.
Students who request a Chosen Name can also have their Student ID and Email Display
Name changed as well. Additional instructions and information about RWU’s Chosen Name
Policy can be found here. Should students have any questions or concerns, please reach out
to the Registrar’s Office or our Assistant Director of Queer & Trans Initiatives - Jamie Wire
(jwire@rwu.edu).

Spiritual Life

Students seeking accommodations for class and lab assignments, attendance, or other
course requirements and deadlines due to religious observances should notify the professor
well in advance with such requests.

6
The following link is a list of holy days observed by many students, faculty, and staff
members in our community. The list, while exhaustive in its inclusion of traditions
represented on our campus, is not complete. Please direct suggestions for additions to the
list of religious days of observances to the Office of Student Life, rwustudentlife@rwu.edu.

Emergency Response and Evacuation

Roger Williams University's Emergency Response Program is designed to maximize human

safety and preserve property, minimize danger, restore normal operations of the University
and assure responsive communication to all appropriate parties. This program is also
intended to ensure compliance with applicable local, state and federal regulations, as well
as cooperation with relevant public agencies charged with disaster control. For more
information please visit:

https://www.rwu.edu/who-we-are/administrative-offices/environmental-health-safety/
emergency-response-evacuation

Information on tutorial services

The Tutoring Center, which is comprised of the Math, Science, Writing and Modern
Languages Centers, is located on the second floor of the Library on the Bristol campus. The
Center provides walk-in peer and faculty tutoring at no charge. You are encouraged to visit
the Center to ask questions, whether it’s about course-specific in-person tutoring or to
make an appointment for Zoom tutoring.

In addition, the Writing Center also offers an email tutoring system at this website:
https://rwu.edu/go/email-writinghelp. The WritingHelp email system is not in-person
tutoring (for in-person help, please come into the Writing Center); it provides an email
address to send your paper to a tutor for help.

The Tutoring Center offers assistance Monday – Thursday 9 am – 8 pm; Friday 9 am – 3 pm;
Sunday 2 pm – 8 pm. For additional information about the Centers, including tutor
schedules, please see

https://www.rwu.edu/tutoring

Important dates for dropping the course

Aug 28 Wed First Day of Classes

Sept 4 Wed Last day to add a class without instructor permission
Sept 11 Wed Last day to add a class with instructor permission
Sept 25 Wed Last day to drop a class without a W grade
Oct 21 Mon Fall 2024 Warning Grades are Due
Oct 31 Thurs Last day to drop a course with a W grade

7
Final Exam Time:

Monday, December 16th, 2024: 2:45 PM – 4:45 PM

Textbook Problems

Problems will be assigned for each chapter the week prior to discussion. They are to aid in
your understanding of the material. These problems may be graded.

8
 Course Outline
INTRODUCTION & MARKETS
Chapter 1 A Brief History of Risk and Return
Chapter 2 The Investment Process
Chapter 3 Overview of Security Types (Read Only)
Chapter 5 The Stock Market

Exam I Chapters 1, 2, 3 & 5

ASSET SELECTION AND PORTFOLIO CONSTRUCTION

Chapter 4 Mutual Funds

Chapter 6 Common Stock Valuation
Chapter 11 Diversification and Risky Asset Allocation
Chapter 12 Return, Risk, and the Security Market Line

Exam II Chapters 4, 6, 11 & 12

PORTFOLIO MANAGEMENT & ADDITIONAL TOPICS

Chapter 19 Global Economic Activity and Industry Analysis

Chapter 13 Performance Evaluation and Risk Management
Chapter 7 Stock Price Behavior and Market Efficiency
Chapter 8 Behavioral Finance

Final Exam Chapters 19, 13, 7 & 8 (semi-comprehensive)

Important Note:

The above outline is intended to give you an idea of the sequence of topics and is not exact.
It is essential that you attend class in order to obtain the reading and problem assignments.
The above schedule is only designed to give you a rough idea of the topics and the rate at
which they will be covered. Some of the above topics will be covered in greater detail than
others; the professor will indicate the relative importance of each topic. Some of the
material presented in class is not in the text. It is essential that you keep up with the
material as it is presented. Lectures will be conducted on the assumption that students
have read and at least partially understood the assigned materials. This, unfortunately, is
not one of those classes in which it is possible to catch up at the last minute. In particular,
it is important to do the problems as the material is presented.

9
 Course Schedule

Date Chapter Assignments

Week 1 Chapter 1
A Brief History of Risk and Homework Chapter 1
Return Quiz Chapter 1
Week 2 Chapter 2 Homework Chapter 2
The Investment Process
Week 3 Chapter 2 Quiz Chapter 2
The Investment Process
Week 4 Chapter 3
Overview of Security Types Homework Chapter 5
(Read Only)
Chapter 5
The Stock Market
Week 5 Chapter 4 Quiz Chapter 4
Mutual Funds
Week 6 Chapter 6 Homework Chapter 6
Common Stock Valuation Quiz Chapter 6
Week 7 Chapter 11
Diversification and Risky Homework Chapter 11
Asset Allocation
Week 8 Chapter 12
Return, Risk, and the Homework Chapter 12
Security Market Line
Week 9 Chapter 13 Exam #2
Performance Evaluation and
Risk Management
Week 10 Chapter 7 Debates
Stock Price Behavior and
Market Efficiency
Week 11 Thanksgiving

Week 12 Chapter 19
Global Economic Activity
and Industry Analysis
Week 13 Chapter 8 Tech Analysis
Behavioral Finance
Week 14 Review of Final Project and Group Presentations
Presentation
Technical Analysis
Week 15 Group Presentations

12/16/2023 FINAL EXAM 2:45 PM – 4:45 PM

Semi-Comprehensive

10