Principles of investments

"Emphasises asset allocation while presenting the practical applications of investment theory. The authors concentrate on the intuition and insights that will be useful to students throughout their careers as new ideas and challenges emerge from the financial marketplace. It provides a good foundation to understand the basic types of securities and financial markets as well as how trading in those markets is conducted. The Portfolio Management section is discussed towards the end of the course and supported by a web-based portfolio simulation with a hypothetical $100,000 brokerage account to buy and sell stocks and mutual funds. Students get a chance to use real data found in the Wall Street Survivor simulation in conjunction with the chapters on investments. This site is powered by StockTrak, the leading provider of investment simulation services to the academic community. Principles of Investments includes increased attention to changes in market structure and trading technology. The theory is supported by a wide range of exercises, worksheets and problems."--publisher website Contents: Investments: background and issues -- Asset classes and financial markets -- Securities markets -- Managed funds and investment management -- Risk and return: past and prologue -- Efficient diversification -- Capital asset pricing and arbitrage pricing theory -- The efficient market hypothesis -- Bond prices and yields -- Managing bond portfolios -- Equity valuation -- Macroeconomic and industry analysis -- Financial statement analysis -- Investors and the investment process -- Hedge funds -- Portfolio performance evaluation.

Exploring the experiences of embedding Indigenous knowledge and perspectives on teaching practicum through interpretive phenomenology

In this paper, we discuss interpretive/hermeneutic phenomenology as a theoretical approach to explore the experiences of three stakeholder groups in embedding Indigenous knowledge and perspectives on teaching practicum, a project sponsored by ALTC. We begin by asking the phenomenological question ‘what is your experience of practice teaching?’ An open, explorative, phenomenological framework seeks the meanings of experiences, not truths, from the participants’ words themselves. Interpretive phenomenology is particularly suitable to explore educational experiences (Grumet, 1992; M. van Manen, 1990), as it provides rich ground for listening to the stakeholders’ lived experience and documenting it for interpretation. In an interpretive process, perspectives on lifeworlds, worldview and lenses get highlighted (Cunningham & Stanley, 2003). We establish how through various project stages, interpretive phenomenology gets to the essence of practice teaching experience creating a pedagogical ‘understanding’ of the essential nature of shared experience as lived by the participants (M van Manen, 2002). Thereby, it foregrounds voices of agency, dissent, acceptance and resistance. We consider how our research study focuses on the pedagogic voice of Indigenous pre-service teachers and the recognition of complex pedagogic fields in Indigenous education. We explain how this study seeks insights into their evaluation of pedagogic relations with two other education stakeholders – their practicum supervising teachers at schools and university staff involved practicum experience. As such, our study aims to support and develop long term, future-oriented opportunities for Indigenous pre-service teachers to embed Indigenous knowledge in the curricula. We conclude with some projections into the discourse on how Indigenous knowledge (IK) and perspectives might be diversely exemplified in pre-service teachers’ professional works (particularly E-portfolios). We speculate how this change could in turn maximise opportunities for Indigenous pre-service teachers, their supervising teachers and university staff to demonstrate leadership in their field through the creation of future tangible products such as units of work, resources, assessment and reflection tools. The processes contextualising the cultural interface of competing knowledge systems (Nakata, 2007) provide important analytical tools for understanding issues affecting student-teacher-mentor relationships occurring on practicum.

Volatility timing : how best to forecast portfolio exposures

This paper investigates how best to forecast optimal portfolio weights in the context of a volatility timing strategy. It measures the economic value of a number of methods for forming optimal portfolios on the basis of realized volatility. These include the traditional econometric approach of forming portfolios from forecasts of the covariance matrix, and a novel method, where a time series of optimal portfolio weights are constructed from observed realized volatility and directly forecast. The approach proposed here of directly forecasting portfolio weights shows a great deal of merit. Resulting portfolios are of equivalent economic benefit to a number of competing approaches and are more stable across time. These findings have obvious implications for the manner in which volatility timing is undertaken in a portfolio allocation context.

THE quest for alpha : can artificial neural networks help?

The application of artificial neural networks (ANN) in finance is relatively new area of research. We employed ANNs that used both fundamental and technical inputs to predict future prices of widely held Australian stocks and used these predicted prices for stock portfolio selection over a 10-year period (2001-2011). We found that the ANNs generally do well in predicting the direction of stock price movements. The stock portfolios selected by the ANNs with median accuracy are able to generate positive alpha over the 10-year period. More importantly, we found that a portfolio based on randomly selected network configuration had zero chance of resulting in a significantly negative alpha but a 27% chance of yielding a significantly positive alpha. This is in stark contrast to the findings of the research on mutual fund performance where active fund managers with negative alphas outnumber those with positive alphas.

Transformation in educational practices through STEM

The need for strong science, technology and innovation linkages between Higher Education Institutions (HEIs) and industries is a pivotal point for middle-income countries in their endeavor to enhance human capital in socioeconomic development. Currently, the University-Industry partnerships are at an infant stage in Sri Lankan higher education context. Technological maturity and effective communication skills are contributing factors for an efficient graduate profile. Also, expanding internship programs in particular for STEM disciplines provide work experience to students that would strengthen the relevance of higher education programs. This study reports historical overviews and current trends in STEM education in Sri Lanka. Emphasis will be drawn to recent technological and higher education curricular reforms. Data from the last 10 years were extracted from the higher education sector and Ministry of Higher Education Policy portfolios. Associations and trend analysis of the sector growth were compared with STEM existence, merger and predicted augmentations. Results were depicted and summarised based on STEM streams and disciplines. It was observed that the trend of STEM augmentation in the Sri Lankan Higher Education context is growing at a slow but steady pace. Further analysis with other sectors in particular, Industry information, would be useful and a worthwhile exercise.

The value of tail risk hedging in defined contribution plans: What does history tell us

Hedging against tail events in equity markets has been forcefully advocated in the aftermath of recent global financial crisis. Whether this is beneficial to long horizon investors like employees enrolled in defined contribution (DC) plans, however, has been subject to criticism. We conduct historical simulation since 1928 to examine the effectiveness of active and passive tail risk hedging using out of money put options for hypothetical equity portfolios of DC plan participants with 20 years to retirement. Our findings show that the cost of tail hedging exceeds the benefits for a majority of the plan participants during the sample period. However, for a significant number of simulations, hedging result in superior outcomes relative to an unhedged position. Active tail hedging is more effective when employees confront several panic-driven periods characterized by short and sharp market swings in the equity markets over the investment horizon. Passive hedging, on the other hand, proves beneficial when they encounter an extremely rare event like the Great Depression as equity markets go into deep and prolonged decline.

Bioprocess engineering of microalgae to produce a variety of consumer products

Microalgae biotechnology has recently emerged into the lime light owing to numerous consumer products that can be harnessed from microalgae. Product portfolio stretches from straightforward biomass production for food and animal feed to valuable products extracted from microalgal biomass, including triglycerides which can be converted into biodiesel. For most of these applications, the production process is moderately economically viable and the market is developing. Considering the enormous biodiversity of microalgae and recent developments in genetic and metabolic engineering, this group of organisms represents one of the most promising sources for new products and applications. With the development of detailed culture and screening techniques, microalgal biotechnology can meet the high demands of food, energy and pharmaceutical industries. This review article discusses the technology and production platforms for development and creation of different valuable consumer products from microalgal biomass.

Australian stock indexes and the four-factor model

Stock indexes are passive 'value-weighted' portfolios and should not have alphas which are significantly different from zero. If an index produces an insignificant alphan, then significant alphas for equity funds using this index can be attributed solely to manager performance. However, recent literature sugests that US Stock indexes can demonstrate significant alphas, which ultimately raise questions regarding equity fund manager performance in both the US and abroad. in this paper, we employ the Carhart four-factor model and newly available Asian-Pacific risk factors to generate alphas and risk factor loadings for eight Australian stock indexes from January 2004 to December 2012. We ifnd that the initial full sample period analysis does not provide indication of significant alphas in the indexes examined. However, by carrying out 36-month rolling regressions, we discover at least four significant alphas in seven of the eight indexes and factor loading variability. As previously reported in the US, this paper confirms similar issues with the four-factor model using Australian stock indexes and performance benchmarking. In effectively measuring Australian equity fund manager performance, it is therefore essential to evaluate a fund's alpha and risk factors relative to the alpha and risk factors of the appropriate benchmark index.

Investment strategies in retirees' decumulation phase

This thesis consists of three studies on investment strategies for Australian retirees. Specifically, it investigates retirees' preference between alternative drawdown strategies in the presence of government pensions, appropriate management of longevity risk through the use of deferred annuities and asset allocation in retirement. It finds drawdown strategies linked to life expectancy to be the best performers. Deferred annuities are found to improve retirement incomes for risk averse retirees. For retirees who want to meet certain wealth thresholds in retirement, equity dominated portfolios provide superior outcomes for higher threshold levels.

Professional indemnity insurance, performance and pre-emptive negligence: The impact of ‘non-claims’

As part of Australian licensing requirements professional valuers are required to maintain a level of professional indemnity insurance. A core feature of any insurance cover is that the insured has an obligation to notify their insurer of both actual and potential claims. An actual claim clearly will impact upon future policies and premiums paid. Notification of a potential claim, whether or not the notification crystallises into an actual claim, also can have an impact upon the insured’s claims history and premiums. The Global Financial Crisis continues to impact upon business practices and land transactions both directly and indirectly. The Australian valuation profession is not exempt from this impact. One example of this ongoing impact is reflected in a worrying practice engaged in by some financial institutions in respect of their loan portfolios. That is, even though the mortgagor is not in default, some institutions are pre-emptively issuing notices of demand regarding potential losses. Further, in some instances such demands are based only on mass appraisal valuations without specific consideration being given to the individual lot in question. The author examines the impact of this practice for the valuation profession and seeks to provide guidance for the appropriate handling of such demands.

Current ePortfolio Practice in Australia

In order to support innovation and productivity to ensure ongoing national economic development and growth, the current policy environment of the Australian Federal Government seeks to enhance the quality of education, encourage widened access to education opportunities, and stimulate integration between vocational education and training and higher education. There is increasing evidence of the multiple avenues of transition within and between vocational education and training and higher education. ePortfolios offer the potential to be a meaningful medium for convergence and integration of education and training.

On the benefits of equicorrelation for portfolio allocation

The importance of modelling correlation has long been recognised in the field of portfolio management, with largedimensional multivariate problems increasingly becoming the focus of research. This paper provides a straightforward and commonsense approach toward investigating a number of models used to generate forecasts of the correlation matrix for large-dimensional problems.We find evidence in favour of assuming equicorrelation across various portfolio sizes, particularly during times of crisis. During periods of market calm, however, the suitability of the constant conditional correlation model cannot be discounted, especially for large portfolios. A portfolio allocation problem is used to compare forecasting methods. The global minimum variance portfolio and Model Confidence Set are used to compare methods, while portfolio weight stability and relative economic value are also considered.

Measuring drug use patterns in Queensland through wastewater analysis

Estimating the use of illicit drugs in the general community is an important task with ramifications for law enforcement agencies, as well as health portfolios. Australia has four ongoing drug monitoring systems, including the AIC’s DUMA program, the National Drug Strategy Household Survey, the Illicit Drug Reporting System and the Ecstasy and Related Drug Reporting System. The systems vary in methods, but broadly they are reliant upon self-report data and may be subject to selection biases. The present study employed a completely different method. By chemically analysing sewerage water, the study produced daily estimates of consumption of methamphetamine, MDMA and cocaine. Samples were collected in November 2009 and November 2010 from a municipality in Queensland, with an population of over 150,000 people. Estimates were made of the average daily dose and average daily street value per 1,000 people. On the basis of estimated dose and price, the methamphetamine market appeared considerably stronger than either MDMA or cocaine. This paper explains the strengths and weaknesses of wastewater analysis. It considers the potential value of wastewater analysis in measuring net consumption of illicit drugs and the effectiveness of law enforcement agency strategies.

On an unexpected career path? Using Wittgenstein’s Family Resemblance concept to determine the power of projects to transform project management careers

The power of projects has been demonstrated by the growth in their use across an increasing range of industries and workplaces in recent years. Not only has the number of people involved in project management increased, but the qualifications and backgrounds of those people have also broadened, with engineering no longer being the only path to project management (PM). Predicting the career trajectories in Project Management has become more important for both organisations employing project managers and project managers building career portfolios. Our research involved interviewing more than 75 project officers and project managers across a range of industries to explore their career journey. We used Wittgenstein’s family resemblance theory is to analyse the information from the transcripts to identify the extent to which the roles of participants fit with the commonly accepted definition of project management. Findings demonstrate diversity of project manager backgrounds and experiences and relational competencies across these backgrounds that form and shape PM careers.

Portfolio Optimization in a Semi-Markov Modulated Market

We address a portfolio optimization problem in a semi-Markov modulated market. We study both the terminal expected utility optimization on finite time horizon and the risk-sensitive portfolio optimization on finite and infinite time horizon. We obtain optimal portfolios in relevant cases. A numerical procedure is also developed to compute the optimal expected terminal utility for finite horizon problem.