FINS3641 Security Analysis and Valuation - 2021

FINS3641
Undergraduate
Term 2
6 Units of Credit
On Campus
Banking & Finance
This course outline is for the current term. To view outlines from other years and/or terms, visit the archives

1. Course Details

Summary of Course

​FINS3641 explores techniques, models and industry practices in equity analysis and valuation. Both quantitative and fundamental analyses are covered to illustrate the work and research behind the trade recommendation reports prepared by financial analysts.

Teaching Times and Locations

Please note that teaching times and locations are subject to change. Students are strongly advised to refer to the Class Timetable website for the most up-to-date teaching times and locations.

View course timetable

Course Policies & Support

Course Aims and Relationship to Other Courses

​This course aims to equip students with working knowledge and hands-on experience in equity analysis and valuation. It helps students to prepare for a career in brokerage, security analysis and fund management. Students who are keen to participate in the CFA Institute Research Challenge (a UNSW recognised co-curricular activity since 2015) will find this course useful.

The pre-requisite for the course is FINS2624 Portfolio Management. Students are also expected to be familiar with financial statement analysis and reporting. The course complements other fund management courses such as FINS3640 Investment Management Modelling and FINS3623 Venture Capital, and corporate finance courses such as FINS3625 Applied Corporate Finance.

2. Staff Contact Details

Position Title Name Email Location Phone Consultation Times
Lecturer-in-chargeDrHenry YipRoom 347, Business School building – Ref E12+61 2 9385 5870Monday 10:30 AM to 11:30 AM AEST

To make an appointment to meet with Henry online or in person, follow the instructions provided in the course Moodle page under 'Consultation with staff'.

Apart from consultation times, there are discussion forums in the course Moodle page for students to post enquiries. Students are encouraged to follow the conversational threads regularly and welcome to respond to the enquiries of fellow classmates.

For email communication, DO NOT reply to messages sent to you via Moodle announcements. These emails are from a "no-reply" address. DO NOT use the email facility of Moodle which is pretty rudimentary. USE UNSW email account instead.

3. Learning and Teaching Activities

Approach to Learning and Teaching in the Course

​The philosophy underpinning this course is best summarised by the following list of guidelines extracted from Guidelines on Learning that inform teaching at UNSW.

  • Effective learning is supported when students are actively engaged in the learning process.
  • Students become more engaged in the learning process if they can see the relevance of their studies to professional, disciplinary and/or personal contexts.
  • Clearly articulated expectations, goals, learning outcomes, and course requirements increase student motivation and improve learning.
  • Effective learning is facilitated by assessment practices and other student learning activities that are designed to support the achievement of desired learning outcomes.
  • Meaningful and timely feedback to students improves learning.

Learning Activities and Teaching Strategies

To help students learn the art of equity valuation, we use lectures to discuss and illustrate the process of valuation with real world examples. With the foundation laid, we ask students to work in teams to implement the process and apply knowledge to determine the fair value of an actual company listed on the ASX.

In tutorials, student teams take turn to present the team's work, ask the presenting team follow-up questions and offer the presenting team positive and constructive feedback. Students will also peer-assess the quality of work produced by another team and peer-evaluate the contribution to teamwork by members of their own team. These group-based activities are intended to help students develop teamwork, leadership and communication skills that are highly sought after by the employers.

Tutorials are an integral component of this course. Failure to engage in tutorial activities will put you at risk of falling behind and burden your teammates unfairly. There is little point in continuing with the course if you have no intention to embrace diversity and inclusion, prepare for homework, contribute to teamwork and participate actively in tutorial activities.


5. Course Resources

​The website for this course is on Moodle.

The prescribed textbook for this course is:

  • Pinto, J.E., E. Henry, T.R. Robinson and J.D. Stowe, Equity Asset Valuation, CFA Investment Institute Series, 3rd edition, John Wiley & Sons - Links provided by UNSW Bookshop: Print, Digital
The following textbooks are highly recommended:
  • Damodaran, Aswath, 2012, Investment Valuation (University Edition), 3rd edition, John Wiley & Sons - Links provided by UNSW Bookshop: Print, Digital
  • Koller, T., M. Goedhart D. Wessels, et.al. Valuation – Measuring and Managing the Value of Companies , 7th edition, McKinsey & Company - Links provided by UNSW Bookshop: Print
  • Lundholm, R. and R. Sloan, Equity Valuation and Analysis, 5th edition - Links provided by UNSW Bookshop: Print

6. Course Evaluation & Development

Feedback is regularly sought from students and continual improvements are made based on this feedback. At the end of this course, you will be asked to complete the myExperience survey, which provides a key source of student evaluative feedback. Your input into this quality enhancement process is extremely valuable in assisting us to meet the needs of our students and provide an effective and enriching learning experience. The results of all surveys are carefully considered and do lead to action towards enhancing educational quality.

​The current structure and organisation are due in part to the LIC’s involvement in the digital uplift of this course in 2018, role as academic advisor for the CFA Institute Research Challenge from 2013 to 2020, and continuing reflection on UNSW graduate attributes, UNSW Assessment Design and Implementation Procedures, what the employers want from the graduates and student learning experience and feedback.

Since 2019, we have lengthened the duration of tutorials to one and a half hours to facilitate team-based activities to help students develop and improve teamwork, leadership and communication skills, and provide students with timely feedback. In 2020, we dropped the mid-term test and the final exam for the first time and placed a greater emphasis on student engagement in tutorial activities.

In response to the feedback received in 2020, this time around, there will be additional resources to better prepare students for peer assessment. We have also enriched the tutorial by assigning every team a meaningful role to play in every tutorial. Last but not least, we are asking students to produce a (more meaningful and comprehensive) trade recommendation report instead of a final assignment (that was based narrowly on the very last lecture topic).

7. Course Schedule

Note: for more information on the UNSW academic calendar and key dates including study period, exam, supplementary exam and result release, please visit: https://student.unsw.edu.au/new-calendar-dates
Week Activity Topic Assessment/Other
Week 1: 31 MayLecture
  1. Course overview and organisation
  2. Cost of equity

 

Reference:

  • Pinto et al. Ch 2 (main)
  • Damodaran Ch 7 and Ch 8 (complementary)

 

Tutorial

Tutorial overview and organisation

Tutorial Activities:

  • Get to know one another
  • Understanding, sharing experiences and setting the standard for peer assessment of performance and peer evaluation of teamwork
  • Q&A about tutorial organisation and activities
Week 2: 7 JuneLecture

Cost of capital

Reference:

  • Damodaran Ch 7 and Ch 8 (main)
  • Pinto et al. Ch 2 (complementary)

 

Tutorial

Cost of equity

(In-class) Tutorial contribution & team assignment:

  • Team (TM) 1 to lead (the discussion), present (work) and respond (to fellow teams' questions and feedback)
  • TM2, TM3 & TM4 to peer-assess (the performance of) TM1
  • TM2, TM3 & TM4 to ask TM1 follow-up questions, give them positive and constructive feedback respectively

(Post-class) Assignment: TM1 to submit their 1st assignment (i.e., written answers to the tutorial questions) no later than Friday, 9 am AEST

Week 3: 14 JuneLecture

Dividend discount model

Reference: Pinto et al. Ch 5

Tutorial

Cost of capital

Tutorial contribution & team assignment:

  • TM2 to lead, present & respond
  • TM3, TM4 & TM1 to peer-assess TM2
  • TM3, TM4 & TM1 to ask TM2 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM2 to submit their 1st assignment no later than Friday, 9 am AEST

Week 4: 21 JuneLecture

Free cash flow measurement

Reference: Pinto et al. Ch 6

Tutorial

Dividend discount model

Tutorial contribution & team assignment:

  • TM3 to lead, present & respond
  • TM4, TM1 & TM2 to peer-assess TM3
  • TM4, TM1 & TM2 to ask TM3 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM3 to submit their 1st assignment no later than Friday, 9 am AEST

Week 5: 28 JuneLecture

Free cash flow valuation

Reference: Pinto et al. Ch 6

Tutorial

Free cash flow measurement

Tutorial contribution & team assignment:

  • TM4 to lead, present & respond
  • TM1, TM2 & TM3 to peer-assess TM4
  • TM1, TM2 & TM3 to ask TM4 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM4 to submit their 1st assignment no later than Friday, 9 am AEST

Week 6: 5 JulyNone

Flexibility week - no classes to attend and no work to submit

None

Week 7: 12 JulyLecture

Residual income valuation

Reference:

  • Pinto et al. Ch 8
  • Lundholm & Sloan Ch 10
Tutorial

Free cash flow valuation

Tutorial contribution & team assignment:

  • TM1 to lead, present & respond
  • TM2, TM3 & TM4 to peer-assess TM1
  • TM2, TM3 & TM4 to ask TM1 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM1 to submit their 2nd assignment no later than Friday, 9 am AEST

Week 8: 19 JulyLecture

Financial ratio analysis

Reference: Koller et al. Ch 4, 7 and 8

Tutorial

Residual income valuation

Tutorial contribution & team assignment:

  • TM2 to lead, present & respond
  • TM3, TM4 & TM1 to peer-assess TM2
  • TM3, TM4 & TM1 to ask TM2 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM2 to submit 2nd assignment no later than Friday, 9 am AEST

Week 9: 26 JulyLecture

Market-based valuation

Reference: Pinto et al. Ch 7

Tutorial

Financial ratio analysis

Tutorial contribution & team assignment:

  • TM3 to lead, present & respond
  • TM4, TM1 & TM2 to peer-assess TM3
  • TM4, TM1 & TM2 to ask TM3 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM3 to submit 2nd assignment no later than Friday, 9 am AEST

Week 10: 2 AugustLecture

Summary and conclusion

Tutorial

Market-based valuation

Tutorial contribution & team assignment:

  • TM4 to lead, present & respond
  • TM1, TM2 & TM3 to peer-assess TM4
  • TM1, TM2 & TM3 to ask TM4 follow-up questions, give them positive and constructive feedback respectively

Assignment: TM4 to submit 2nd assignment no later than Friday, 9 am AEST

Week 11: 9 AugustFinal Assessment

Trade recommendation report

All teams to submit their trade recommendation reports no later than Friday, 9 am AEST

8. Policies and Support

Information about UNSW Business School protocols, University policies, student responsibilities and education quality and support.

Program Learning Outcomes

The Business School places knowledge and capabilities at the core of its curriculum via seven Program Learning Outcomes (PLOs). These PLOs are systematically embedded and developed across the duration of all coursework programs in the Business School.

PLOs embody the knowledge, skills and capabilities that are taught, practised and assessed within each Business School program. They articulate what you should know and be able to do upon successful completion of your degree.

Upon graduation, you should have a high level of specialised business knowledge and capacity for responsible business thinking, underpinned by ethical professional practice. You should be able to harness, manage and communicate business information effectively and work collaboratively with others. You should be an experienced problem-solver and critical thinker, with a global perspective, cultural competence and the potential for innovative leadership.

All UNSW programs and courses are designed to assess the attainment of program and/or course level learning outcomes, as required by the UNSW Assessment Design Procedure. It is important that you become familiar with the Business School PLOs, as they constitute the framework which informs and shapes the components and assessments of the courses within your program of study.

PLO 1: Business knowledge

Students will make informed and effective selection and application of knowledge in a discipline or profession, in the contexts of local and global business.

PLO 2: Problem solving

Students will define and address business problems, and propose effective evidence-based solutions, through the application of rigorous analysis and critical thinking.

PLO 3: Business communication

Students will harness, manage and communicate business information effectively using multiple forms of communication across different channels.

PLO 4: Teamwork

Students will interact and collaborate effectively with others to achieve a common business purpose or fulfil a common business project, and reflect critically on the process and the outcomes.

PLO 5: Responsible business practice

Students will develop and be committed to responsible business thinking and approaches, which are underpinned by ethical professional practice and sustainability considerations.

PLO 6: Global and cultural competence

Students will be aware of business systems in the wider world and actively committed to recognise and respect the cultural norms, beliefs and values of others, and will apply this knowledge to interact, communicate and work effectively in diverse environments.

PLO 7: Leadership development

Students will develop the capacity to take initiative, encourage forward thinking and bring about innovation, while effectively influencing others to achieve desired results.

These PLOs relate to undergraduate and postgraduate coursework programs.  Separate PLOs for honours and postgraduate research programs are included under 'Related Documents'.

Business School course outlines provide detailed information for students on how the course learning outcomes, learning activities, and assessment/s contribute to the development of Program Learning Outcomes.

RELATED DOCUMENTS

 

UNSW Graduate Capabilities

The Business School PLOs also incorporate UNSW graduate capabilities, a set of generic abilities and skills that all students are expected to achieve by graduation. These capabilities articulate the University’s institutional values, as well as future employer expectations.

UNSW Graduate CapabilitiesBusiness School PLOs
Scholars capable of independent and collaborative enquiry, rigorous in their analysis, critique and reflection, and able to innovate by applying their knowledge and skills to the solution of novel as well as routine problems.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 7: Leadership development

Entrepreneurial leaders capable of initiating and embracing innovation and change, as well as engaging and enabling others to contribute to change
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 6: Global and cultural competence
  • PLO 7: Leadership development

Professionals capable of ethical, self-directed practice and independent lifelong learning
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 5: Responsible business practice

Global citizens who are culturally adept and capable of respecting diversity and acting in a socially just and responsible way.
  • PLO 1: Business knowledge
  • PLO 2: Problem solving
  • PLO 3: Business communication
  • PLO 4: Teamwork
  • PLO 5: Responsible business practice
  • PLO 6: Global and cultural competence

While our programs are designed to provide coverage of all PLOs and graduate capabilities, they also provide you with a great deal of choice and flexibility.  The Business School strongly advises you to choose a range of courses that assist your development against the seven PLOs and four graduate capabilities, and to keep a record of your achievements as part of your portfolio. You can use a portfolio as evidence in employment applications as well as a reference for work or further study. For support with selecting your courses contact the UNSW Business School Student Services team.





Academic Integrity and Plagiarism

Academic Integrity is honest and responsible scholarship. This form of ethical scholarship is highly valued at UNSW. Terms like Academic Integrity, misconduct, referencing, conventions, plagiarism, academic practices, citations and evidence based learning are all considered basic concepts that successful university students understand. Learning how to communicate original ideas, refer sources, work independently, and report results accurately and honestly are skills that you will be able to carry beyond your studies.

The definition of academic misconduct is broad. It covers practices such as cheating, copying and using another person’s work without appropriate acknowledgement. Incidents of academic misconduct may have serious consequences for students.

Plagiarism

UNSW regards plagiarism as a form of academic misconduct. UNSW has very strict rules regarding plagiarism. Plagiarism at UNSW is using the words or ideas of others and passing them off as your own. All Schools in the Business School have a Student Ethics Officer who will investigate incidents of plagiarism and may result in a student’s name being placed on the Plagiarism and Student Misconduct Registers.

Below are examples of plagiarism including self-plagiarism:

Copying: Using the same or very similar words to the original text or idea without acknowledging the source or using quotation marks. This includes copying materials, ideas or concepts from a book, article, report or other written document, presentation, composition, artwork, design, drawing, circuitry, computer program or software, website, internet, other electronic resource, or another person's assignment, without appropriate acknowledgement of authorship.

Inappropriate Paraphrasing: Changing a few words and phrases while mostly retaining the original structure and/or progression of ideas of the original, and information without acknowledgement. This also applies in presentations where someone paraphrases another’s ideas or words without credit and to piecing together quotes and paraphrases into a new whole, without appropriate referencing.

Collusion: Presenting work as independent work when it has been produced in whole or part in collusion with other people. Collusion includes:

  • Students providing their work to another student before the due date, or for the purpose of them plagiarising at any time
  • Paying another person to perform an academic task and passing it off as your own
  • Stealing or acquiring another person’s academic work and copying it
  • Offering to complete another person’s work or seeking payment for completing academic work

Collusion should not be confused with academic collaboration (i.e., shared contribution towards a group task).

Inappropriate Citation: Citing sources which have not been read, without acknowledging the 'secondary' source from which knowledge of them has been obtained.

Self-Plagiarism: ‘Self-plagiarism’ occurs where an author republishes their own previously written work and presents it as new findings without referencing the earlier work, either in its entirety or partially. Self-plagiarism is also referred to as 'recycling', 'duplication', or 'multiple submissions of research findings' without disclosure. In the student context, self-plagiarism includes re-using parts of, or all of, a body of work that has already been submitted for assessment without proper citation.

To see if you understand plagiarism, do this short quiz: https://student.unsw.edu.au/plagiarism-quiz

Cheating

The University also regards cheating as a form of academic misconduct. Cheating is knowingly submitting the work of others as their own and includes contract cheating (work produced by an external agent or third party that is submitted under the pretences of being a student’s original piece of work). Cheating is not acceptable at UNSW.

If you need to revise or clarify any terms associated with academic integrity you should explore the 'Working with Academic Integrity' self-paced lessons available at: https://student.unsw.edu.au/aim.

For UNSW policies, penalties, and information to help you avoid plagiarism see: https://student.unsw.edu.au/plagiarism as well as the guidelines in the online ELISE tutorials for all new UNSW students: http://subjectguides.library.unsw.edu.au/elise. For information on student conduct see: https://student.unsw.edu.au/conduct.

For information on how to acknowledge your sources and reference correctly, see: https://student.unsw.edu.au/referencing. If you are unsure what referencing style to use in this course, you should ask the lecturer in charge.



Student Responsibilities and Conduct

​Students are expected to be familiar with and adhere to university policies in relation to class attendance and general conduct and behaviour, including maintaining a safe, respectful environment; and to understand their obligations in relation to workload, assessment and keeping informed.

Information and policies on these topics can be found on the 'Managing your Program' website.

Workload

It is expected that you will spend at least ten to twelve hours per week studying for a course except for Summer Term courses which have a minimum weekly workload of twenty to twenty four hours. This time should be made up of reading, research, working on exercises and problems, online activities and attending classes. In periods where you need to complete assignments or prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities.

We strongly encourage you to connect with your Moodle course websites in the first week of semester. Local and international research indicates that students who engage early and often with their course website are more likely to pass their course.

View more information on expected workload

Attendance

Your regular and punctual attendance at lectures and seminars or in online learning activities is expected in this course. The Business School reserves the right to refuse final assessment to those students who attend less than 80% of scheduled classes where attendance and participation is required as part of the learning process (e.g., tutorials, flipped classroom sessions, seminars, labs, etc.).

View more information on attendance

General Conduct and Behaviour

You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class.

View more information on student conduct

Health and Safety

UNSW Policy requires each person to work safely and responsibly, in order to avoid personal injury and to protect the safety of others.

View more information on Health and Safety

Keeping Informed

You should take note of all announcements made in lectures, tutorials or on the course web site. From time to time, the University will send important announcements to your university e-mail address without providing you with a paper copy. You will be deemed to have received this information. It is also your responsibility to keep the University informed of all changes to your contact details.




Student Support and Resources

The University and the Business School provide a wide range of support services and resources for students, including:

Business School Learning Support Tools
Business School provides support a wide range of free resources and services to help students in-class and out-of-class, as well as online. These include:

  • Academic Communication Essentials – A range of academic communication workshops, modules and resources to assist you in developing your academic communication skills.
  • Learning consultations – Meet learning consultants who have expertise in business studies, literacy, numeracy and statistics, writing, referencing, and researching at university level.
  • PASS classes – Study sessions facilitated by students who have previously and successfully completed the course.
  • Textbook access scheme – To support the inclusion and success of students from equity groups enrolled at UNSW Sydney in first year undergraduate Business programs.

The Nucleus - Business School Student Services team
The Nucleus Student Services team provides advice and direction on all aspects of enrolment and graduation. Level 2, Main Library, Kensington 02 8936 7005 / https://nucleus.unsw.edu.au/en/contact-us

Business School Equity, Diversity and Inclusion
The Business School Equity, Diversity and Inclusion Committee strives to ensure that every student is empowered to have equal access to education. The Business School provides a vibrant, safe, and equitable environment for education, research, and engagement that embraces diversity and treats all people with dignity and respect. BUSEDI@unsw.edu.au

UNSW Learning & Careers Hub
The UNSW Learning & Careers Hub provides academic skills and careers support services—including workshops, individual consultations and a range of online resources—for all UNSW students. See their website for details.
Lower Ground Floor, North Wing Chancellery Building.
learningcentre@unsw.edu.au
02 9385 2060

Student Support Advisors
Student Support Advisors work with all students to promote the development of skills needed to succeed at university, whilst also providing personal support throughout the process.
John Goodsell Building, Ground Floor.
advisors@unsw.edu.au
02 9385 4734

International Student Support
The International Student Experience Unit (ISEU) is the first point of contact for international students. ISEU staff are always here to help with personalised advice and information about all aspects of university life and life in Australia.
Advisors can support you with your student visa, health and wellbeing, making friends, accommodation and academic performance.
International.student@unsw.edu.au
02 9385 4734

Equitable Learning Services
Equitable Learning Services (formerly Disability Support Services) is a free and confidential service that provides practical support to ensure that your health condition doesn't adversely affect your studies. Register with the service to receive educational adjustments.
Ground Floor, John Goodsell Building.
els@unsw.edu.au
02 9385 4734

UNSW Counselling and Psychological Services
Provides support and services if you need help with your personal life, getting your academic life back on track or just want to know how to stay safe, including free, confidential counselling.
Level 2, East Wing, Quadrangle Building.
counselling@unsw.edu.au
02 9385 5418

Library services and facilities for students
The UNSW Library offers a range of collections, services and facilities both on-campus and online.
Main Library, F21.
02 9065 9444

Moodle eLearning Support
Moodle is the University’s learning management system. You should ensure that you log into Moodle regularly.
externalteltsupport@unsw.edu.au
02 9385 3331

UNSW IT
UNSW IT provides support and services for students such as password access, email services, wireless services and technical support.
UNSW Library Annexe (Ground floor).
02 9385 1333



FINS3641