Course objective:

The aim of this module is to introduce students to the leading financial platforms used in the financial industry. In particular, the module will seek to provide students with a general understanding of the structure, type of data and functionality of the Bloomberg Professional platform. The module will also seek to provide the students with a general understanding of how financial platforms such as the Bloomberg Professional are used in the industry to solve financial problems and how data extracted from the Bloomberg Professional platform can be interpreted so as to solve real-life financial problems.

Learning outcomes:

After completing the course, students should be able to:

• understand the structure of data on the Bloomberg Professional terminals,

• understand how to access and extract data from Bloomberg Professional terminals,

• analyse and interpret data extracted from the Bloomberg Professional terminals so as to solve real-life financial problems,

• synthesise, summarise and report the results of problems solved.

Textbooks:

There is no particular text book to accompany this course. Notwithstanding this, the following textbooks are particularly useful:

• Johnson S.R. (2014) Equity Markets and Portfolio Analysis Bloomberg Financial Series (ISBN: 978-1-118-20268-5). This book provides a thorough overview of the main financial issues discussed during the course and provides details of how the Bloomberg Professional terminal can be used to address such financial issues.

• Jones P.C. (2012) Investments: Analysis and Management John Wiley & Sons Inc. 12ed (ISBN: 978-1118363294). This is a purely finance textbook and provides an overview of the financial issues discussed in the module.

• Wilson D. (2012) Visual Guide to Financial Markets Bloomberg Financial Series (ISBN: 978-1-118-20423-8). This book provides an overview to the Bloomberg Professional platform.

Moreover, given that this module is largely practical, where the emphasis is on how the use of a financial platform such as Bloomberg Professional may address real-life financial issues you will find the help files available on the Bloomberg Professional terminal particularly useful. To access the help function, you need to enter any word/phase and press the help button. Moreover, 24 hour global Bloomberg support is available by clicking the help button twice.

Lecture Outline:

The module lectures will cover the following topics:

Section #1: Course Administration and Overview of the Financial System

This lecture provides a general overview of how the course will be administered, the lab groups and assessment details. Moreover, it will provide an overview of the financial system, an introduction to Bloomberg Professional and introduce Bloomberg Markets Concept.

Required readings:

• Bloomberg (2012) Getting started guide for students

• Bloomberg (2012) Bloomberg Started Cheat Sheet with Essential codes

Recommended readings:

• Johnson S.R. (2014) Equity Markets and Portfolio Analysis Bloomberg Financial Series (ISBN: 978-1-118-20268-5). Chapter 2

• Wilson D. (2012) Visual Guide to Financial Markets Bloomberg Financial Series (ISBN: 978-1-118-20423-8). This book provides an overview to the Bloomberg Professional platform. Chapter 3

Section #2: Investment Funds and Intermediate Securities

This lecture will provide a general overview of indirect investment products common in the financial markets. In particular, during this lecture different types of funds, fund characteristics, Exchange Traded Funds (ETFs) and issues around investing in foreign equity markets will be discussed. The lectures during this week, will also provide students with an overview of the data for these instruments available in Bloomberg, how such data may be extracted and downloaded to Excel and how it may be analysed.

Required readings:

• Vanguard (2014) The case for index-fund investing

Recommended readings:

• Investment Company Institute (2014) 2014 Investment Company Fact Book – A review of trends and activities in the US investment Company Industry 54 ed.

• Johnson S.R. (2014) Equity Markets and Portfolio Analysis Bloomberg Financial Series (ISBN: 978-1-118-20268-5). Chapter 5 Jones P.C. (2012) Investments: Analysis and Management John Wiley & Sons Inc. 12ed (ISBN: 978-1118363294). Chapter 3

• Wilson D. (2012) Visual Guide to Financial Markets Bloomberg Financial Series (ISBN: 978-1-118-20423-8). This book provides an overview to the Bloomberg Professional platform. Chapter 11

Section #3: Risk and Return

In this lecture the nature of risk as it relates to stocks will be examined. It will provide a discussion of security’s expected return and risk statistically by examining return distributions and characteristics and will conclude by examining the relations between expected return and risk for a stock.

Required readings:

• Fama F. E. and French R.K. (2004) The Capital Asset Pricing Model: Theory and Evidence Journal of Economic Perspectives Vol. 18 No. 3 pp 25-46

Recommended readings:

• Jones P.C. (2012) Investments: Analysis and Management John Wiley & Sons Inc. 12ed (ISBN: 978 1118363294). Chapter 9

• Johnson S.R. (2014) Equity Markets and Portfolio Analysis Bloomberg Financial Series (ISBN: 978-1 118-20268-5). Chapter 6

Section #4: Applied Fundamental Analysis

This lecture will introduce the role of fundamental analysis in determining the stock’s equilibrium price or intrinsic value. We will look at the two most common approaches used by fundamentalists to value stocks, i.e. the discounted cash flow (DCF) and the multiplier approach. Moreover, we will briefly discuss the role of qualitative analysis in complementing quantitative fundamental analysis.

Required readings:

• Beaver, W. and Morse, D. (1978) What determines price-earnings ratios? Financial Analysts Journal Vol. 34 No.4 pp 65-76

• Liu, J., D. Nissim, and J. Thomas, 2002. Equity valuation using multiples. Journal of Accounting Research Vol. 40 pp 135-172.

• Ball, R. and P. Brown, 1968. An empirical evaluation of accounting income numbers. Journal of Accounting Research 6 pp 159-178

• Palepu, K., P. Healy, and E. Peek, 2013, Business Analysis and Valuation: IFRS edition – Text and Cases, 3rd edition, Cengage Learning. Chapter 7.

• Penman, S., 2013, Financial Statement Analysis and Security Valuation, 5th edition, McGraw-Hill. Chapters 3, 4 & 5.

Recommended readings:

• Koller, T., Goedhart, M. and Wessels, D. (2010) Valuation: Measuring and Managing the Value of Companies 5th ed. [ISBN: 0470424656]

• Johnson S.R. (2014) Equity Markets and Portfolio Analysis Bloomberg Financial Series (ISBN: 978-1-118-20268-5). Chapter 15

• Jones P.C. (2012) Investments: Analysis and Management John Wiley & Sons Inc. 12ed (ISBN: 978-1118363294). Chapter 9

• Alford, A., 1992. The effect of the set of comparable firms on the accuracy of the price-earnings valuation method. Journal of Accounting Research 30 pp 94-108.

• Beaver, W., 1968. The information content of annual earnings announcements. Journal of Accounting Research 6 pp 67-92.

• Bhojraj, S. and C. Lee, 2002. Who is my peer? A valuation-based approach to the selection of comparable firms. Journal of Accounting Research 40 pp 407-439

• Liu, J., D. Nissim and J. Thomas, 2007. Is cash flow king in valuations? Financial Analysts Journal 63(2) pp 56-68.

• Young, S. and Y. Zeng, 2015. Accounting Comparability and the Accuracy of PeerBased Valuation Models. The Accounting Review 90(6) pp 2571-2601.