Investments I: Fundamentals of Performance Evaluation from Coursera

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 market efficiency and what it implies for patterns in stock returns and for the asset-management industry

• Understand market multiples and income approaches to valuing a firm and its stock, as well as the sensitivity of each approach to assumptions made

• Conduct specific examples of a market multiples valuation and a discounted cash flow valuation

This course was previously entitled “Financial Evaluation and Strategy: Investments” and was part of a previous specialization entitled "Improving Business and Finances Operations", which is now closed to new learner enrollment. “Financial Evaluation and Strategy: Investments” received an average rating of 4.8 out of 5 based on 199 reviews over the period August 2015 through August 2016. You can view a detailed summary of the ratings and reviews for this course in the Course Overview section.

This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

What's inside

Syllabus

Course Overview

In this module, you will become familiar with the course, your instructor, your classmates, and our learning environment. The orientation also helps you obtain the technical skills required for the course.

Traffic lights

Read about what's good

what should give you pause

and possible dealbreakers

Designed for learners with a foundational understanding of finance

Explores critical principles of risk and return analysis

Develops a toolkit of portfolio optimization and asset pricing models

Provides hands-on practice in Excel for real-world applications

Taught by renowned professors from Gies College of Business, University of Illinois

Can serve as a stepping stone to the second course in the investment finance series

Reviews summary

Fundamentals of performance evaluation & valuation

According to students, this course offers a solid foundation (positive) in fundamental investment finance principles, covering risk-return tradeoffs (neutral), portfolio optimization (neutral), and security pricing (neutral). Learners particularly appreciate the practical applications in Excel (positive) and the focus on real-world examples (positive) for concepts like CAPM and firm valuation. Many find the instructor's explanations clear and engaging (positive). While the course is highly regarded (positive) overall, a few students mention that the pace can be fast (warning), especially without a prior finance background, and some desire more in-depth coverage (warning) on specific advanced topics. It is frequently described as a valuable starting point (positive) for understanding investments.

Focus on real-world examples is appreciated.

"The real-world examples made the concepts much more relatable and applicable to actual financial situations."

"Using examples like Google's IPO for valuation helped connect theory to practice effectively."

"I appreciate how the course ties fundamental concepts to practical scenarios faced by investors and analysts."

Provides a strong base in investment finance.

"This course provided a very solid foundation in investment fundamentals, which is exactly what I needed."

"I feel confident in my understanding of risk-return tradeoffs and portfolio theory after taking this course."

"It covers the essential concepts needed to understand asset pricing and firm valuation, a great starting point."

Instructor explains complex topics clearly.

"Professor Weisbenner explains complex topics clearly and engagingly. His teaching style is excellent."

"The lectures made understanding CAPM and valuation much easier than I expected. Very clear."

"I found the material was presented in a very clear and easy-to-follow manner, making complex ideas accessible."

Hands-on exercises using Excel are highly valued.

"The Excel examples and exercises were incredibly helpful for applying the concepts."

"I really appreciated the focus on practical implementation in Excel throughout the course."

"The hands-on work in Excel solidified my understanding of how to calculate metrics like beta and alpha and perform valuations."

Pace can be fast, some desire more depth.

"Some modules felt a bit rushed, especially when introducing new models like the Fama-French 3-Factor model."

"I sometimes wished for a deeper dive into certain valuation techniques or edge cases."

"Requires focus to keep up, especially if new to finance, but manageable if you put in the time."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Investments I: Fundamentals of Performance Evaluation with these activities:

Create a digital or physical compilation of resources related to investment finance

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Organize and curate a collection of resources to enhance understanding and access to information.

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Identify and gather relevant resources such as articles, websites, videos, and data.
Organize the resources into a logical structure or framework.

Read Fundamentals of Investments by Bradford D. Jordan and Thomas H. Jordan

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Provide a strong foundation in investment principles and concepts that will be covered in the course.

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Read each chapter thoroughly, taking notes on key concepts.
Complete the end-of-chapter exercises to test your understanding.

Watch tutorials on YouTube or Coursera related to investment finance

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Enhance understanding of investment finance concepts through visual and interactive learning.

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Search for tutorials on YouTube or Coursera that cover specific topics.
Watch the tutorials and take notes on key points.
Pause and rewind as needed to ensure comprehension.

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Solve problems using the Capital Asset Pricing Model (CAPM)

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Develop a strong understanding of CAPM and its application in investment analysis.

Browse courses on Capital Asset Pricing Model

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Review the theory behind CAPM.
Find practice problems online or in textbooks.
Solve the problems step-by-step, showing your work.
Check your answers against the solutions provided.

Join a study group with classmates to discuss course material and work on assignments

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Enhance learning through collaboration, peer support, and diverse perspectives.

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Form a study group with classmates who share similar interests or schedules.
Meet regularly to discuss lecture material, assignments, and case studies.
Work together to solve problems and prepare for exams.

Write a blog post or article on a topic related to investment finance

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Demonstrate understanding of investment finance concepts and enhance writing and communication skills.

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Choose a specific topic related to investment finance.
Research the topic thoroughly, using credible sources.
Organize your thoughts and create an outline.
Write the blog post or article, ensuring clarity and flow.
Proofread and edit your writing.

Create a portfolio of stocks using the knowledge gained in the course

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Apply investment principles and make real-world investment decisions to deepen understanding and practical skills.

Browse courses on Portfolio Management

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Determine your investment objectives and risk tolerance.
Research different stocks and industries.
Construct a diversified portfolio that aligns with your goals.
Monitor and adjust your portfolio as needed.

Connect with professionals in the investment finance industry for guidance and insights

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Gain valuable perspectives and practical advice from experienced professionals.

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Identify potential mentors who work in investment finance.
Reach out to them via email, LinkedIn, or industry events.

Career center

Learners who complete Investments I: Fundamentals of Performance Evaluation will develop knowledge and skills that may be useful to these careers:

Portfolio Manager

Portfolio Managers are responsible for making investment decisions and managing investment portfolios for their clients. This course on Investments I: Fundamentals of Performance Evaluation would provide a strong foundation for individuals interested in a career as a Portfolio Manager. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Portfolio Manager

Financial Analyst

Financial Analysts research and analyze financial data to provide investment recommendations to their clients. This course on Investments I: Fundamentals of Performance Evaluation would be very helpful for individuals interested in a career as a Financial Analyst. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Financial Analyst

Investment Banker

Investment Bankers help companies raise capital and advise them on mergers and acquisitions. This course on Investments I: Fundamentals of Performance Evaluation would be very helpful for individuals interested in a career as an Investment Banker. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Investment Banker

Stockbroker

Stockbrokers execute and manage orders for the buying and selling of stocks and other securities. This course on Investments I: Fundamentals of Performance Evaluation would be very helpful for individuals interested in a career as a Stockbroker. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Stockbroker

Hedge Fund Manager

Hedge Fund Managers manage investment funds that use advanced investment strategies to generate superior returns. This course on Investments I: Fundamentals of Performance Evaluation would be very helpful for individuals interested in a career as a Hedge Fund Manager. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Hedge Fund Manager

Private Equity Investor

Private Equity Investors invest in private companies with the goal of generating superior returns. This course on Investments I: Fundamentals of Performance Evaluation would be very helpful for individuals interested in a career as a Private Equity Investor. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which are all essential for success in this role. Additionally, the course emphasizes real-world examples and applications, which will give students the practical skills they need to be successful in the field.

See salaries and explore the career path for Private Equity Investor

Venture Capitalist

Venture Capitalists invest in early-stage companies with the goal of generating superior returns. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Venture Capitalist. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for success in this role. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

See salaries and explore the career path for Venture Capitalist

Actuary

Actuaries use mathematical and statistical techniques to assess risk and uncertainty. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as an Actuary. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of risk and uncertainty. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

See salaries and explore the career path for Actuary

Financial Planner

Financial Planners help individuals and families plan for their financial future. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Financial Planner. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the investment aspects of financial planning. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

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Insurance Underwriter

Insurance Underwriters assess risk and determine the premiums for insurance policies. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as an Insurance Underwriter. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of risk assessment. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

See salaries and explore the career path for Insurance Underwriter

Reinsurance Underwriter

Reinsurance Underwriters assess risk and determine the premiums for insurance policies for insurance companies. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Reinsurance Underwriter. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of risk assessment. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

See salaries and explore the career path for Reinsurance Underwriter

Quantitative Analyst

Quantitative Analysts use mathematical and statistical techniques to analyze financial data and make investment decisions. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Quantitative Analyst. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the quantitative aspects of financial analysis. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

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Credit Analyst

Credit Analysts assess the creditworthiness of borrowers and make recommendations on lending decisions. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Credit Analyst. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of credit analysis. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

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Economist

Economists study the production, distribution, and consumption of goods and services. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as an Economist. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of the economy. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

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Consultant

Consultants provide advice and expertise to businesses and organizations. This course on Investments I: Fundamentals of Performance Evaluation may be helpful for individuals interested in a career as a Consultant. The course covers topics such as portfolio theory, asset pricing, and performance evaluation, which can provide a foundation for understanding the financial aspects of business and organizational decision-making. Additionally, the course emphasizes real-world examples and applications, which may provide valuable insights for those working in the field.

See salaries and explore the career path for Consultant