Département de finance

École des sciences de la gestion

Université du Québec à Montréal

Syllabus

FIN 5521 Securities Analysis I

Session: Fall 2021

Professor: Haibo Jiang, PhD Group: 065

Tel (office): 514 987-3000, poste5521 Schedule: Monday, 2pm to 5pm
Email: jiang.haibo@uqam.ca Classroom: DE-2550

Course description

Financing in a market economy is greatly facilitated by the existence of a secondary market for
securities issued by companies and governments. Securities analysis makes the financial market much
more efficient and thus increases its ability to properly fulfill its role in the economy. The price is
mainly based on the analysis of the common shares of the companies whose shares are traded on the
stock exchange. Other types of securities such as bonds, options, futures and foreign exchange
agreements will also be presented.

CONDUCT OF THE COURSE

• Invest on average a total of 6 hours per week for this course.

• Attend classes and do the personal and / or team work. Read the chapters and solve the
recommended exercises.
• It is strongly recommended to work the exercises in teams of 2 or 3 students. Write the work
respecting the deadlines.
• Consult the lesson plan and Moodle regularly. Be punctual and present in class or online.
• Prepare clear questions during consultations.
1
Calendar and Topics Covered each Week

Week 1 (Sep. 13, 2021) Introduction to financial markets, their Chapters 1 and 2
operations and participants

Week 2 (Sep. 20, 2021)
Week 3 (Sep. 27, 2021)
Week 4 (Oct. 4, 2021)
Week 5 and 6 (Oct. 18
and 25, 2021)
Week 7 (Nov. 1, 2021)
Week 8 (Nov. 8, 2021)
Organization and operation of markets, Chapters 3 and 4
IPOs, market orders, margin purchases and
short sales, mutual funds, ETFs and other
types of funds
Return, CAPM risk, cost of capital Chapter 5 (basics)
Macroeconomic and industrial analysis, Chapters 17
Sustainable development, Introduction to
ESG factors
Equity valuation models: valuation by Chapter 18
comparables, DDM, etc.
Financial statement analysis Chapter 19
Midterm exam (chapters 1, 2, 3, 4, 5,
17,18,19)

Week 9 (Nov. 15, 2021)
Weeks 10 and 11 (Nov.
22 and 29, 2021)
Week 12 (Dec. 6, 2021)
Week 13 (Dec. 13, 2021)
Week 14 (Dec. 20, 2021)
Technical analysis: basic concepts and Chapter 12
applications, Behavioral finance
Team Session Work 1st part DUE on Nov.
15, 2021
Fixed-income securities: Bond prices and Chapters 14, 15, and 16
yields; the term structure of interest rates;
managing bond portfolios
**www.evaluation.uqam.ca Chapters 20
Derivatives: Options Team Session Work
2nd part DUE on Dec. 6, 2021
Derivatives: Futures; Chapter 22
Final exam (chapters 12, 14,15, 16, 20, 22)

** 20 to 30 minutes will be reserved at the end of the session for online evaluation. Students will be able to
complete the evaluation questionnaire by accessing the evaluation site by using a laptop or tablet
(www.evaluation.uqam.ca) or via the student portal. 'UQAM Mobile using a smartphone or tablet.

Teaching materials
Mandatory volume
(BKM) Bodie, Kane, Marcus, Switzer, Boyko, Panasian, and Stapleton « Investments » 9th Canadian
Edition, McGraw-Hill Ryerson Ltd., 2019
The electronic version of the book is less expensive. Additional material is available on Moodle with purchase of the book.
If you choose to purchase the 8th Edition, the theory is similar, but the chapters, list of issues and references to tables will
not match. You will need to borrow the 9th edition to identify the tables and the corresponding issues.

2
 Prerequisites

It is essential to have a good understanding of financial mathematics before taking FIN5521. The
FIN3500 course is a prerequisite.
Assessment of learning

 Midterm exam: 35% of the points. Individual exam

 Final exam: 35% of the points. Individual exam
 The student must have a minimum average of 55% on the exams to pass the course.
 Team session work of 3 to 5 students (two parts): 30% of the points (15% each part). You will
also need to assess the individual contribution of team members for each work submitted and
upload it as a pdf file to Moodle. The teacher reserves the right to adjust the grade of students
who do not contribute enough.

Evaluations and Dates

Works and exams Timeline Weights
Team session work November 15, 2021 (week 9) 15%
(1st part)
Team session work December 6, 2021 (week 12) 15%
(2nd part)
Midterm exam November 8, 2021 (week 8) 35%
Final exam December 20, 2021 (week 14) 35%

RATING SCALES - DEPARTMENT OF FINANCE

Undergraduate

A+ = 89.5 and higher A = 84.5 to 89.4 A- = 79.5 to 84.4 B+ = 76.5 to 79.4

B = 72.5 to 76.4 B- = 69.5 to 72.4 C+ = 66.5 to 69.4 C = 62.5 to 66.4

C- = 59.5 to 62,4 D+ = 56.5 to 59.4 D = 54.5 to 56.4 E = 54.4 and lower

Make-up exams

There is no make-up exam unless there are serious reasons.

In the event of absence from an examination for a major or unforeseeable reason, the student must
contact his / her teacher within 24 to 48 hours following the absence or, if possible, before the
exam. The original of supporting documents must be brought to the Department of Finance as
soon as possible for verification purposes. Upon completion of the audit, the Department of
Finance will contact the student and the teacher to inform them of the follow-up of the file and
the date of the make-up exam if applicable.

3
 EVALUATION OF TEACHINGS - POLICY NO. 23
FIRST CYCLE

Policy # 23 provides for the assessment to be conducted online, but in a 20 to 30 minute time slot
for this purpose within a class session which, for scheduled classes, would be either Week 12 of the
quarter, which is the 13th week of the quarter.

Students will be able to complete the evaluation questionnaire by accessing the evaluation site by
using a laptop or tablet (www.evaluation.uqam.ca) or via the student portal. 'UQAM Mobile using a
smartphone or tablet.

ÉVALUATION DES ENSEIGNEMENTS - POLITIQUE NO 23

PREMIER CYCLE
La politique no 23 prévoit que l’évaluation se réalise en ligne, mais dans un moment de 20 à 30 minutes
réservé à cette fin à l’intérieur d’une séance de cours qui, pour les cours à horaire régulier, entre la 12e
semaine du trimestre et la 13e semaine du trimestre.

Les étudiantes et étudiants pourront remplir le questionnaire d’évaluation en accédant au site d’évaluation
des enseignements à l’aide d’un ordinateur portable ou d’une tablette (www.evaluation.uqam.ca) ou encore
via le portail étudiant d’UQAM Mobile à l’aide d’un téléphone intelligent ou d’une tablette.

Ethics and integrity

Whether it is teamwork or exams, it is the student's duty to behave with integrity and ethics. Thus,
teamwork must be done in a team, with the exclusive participation of team members, in a fair and
equitable manner for everyone. Exams will be conducted on an individual basis only. On the other
hand, one must always appropriately mention the precise source whenever an author is quoted or when
one draws the ideas from a book, an article or any other literary text. Regulation No. 18 of the
University contains specific provisions that apply in the event of plagiarism, fraud, copying, cheating
or falsification of documents.

4
 SESSION WORK
EVALUATION OF AN ORDINARY COMPANY SHARE LISTED ON THE STOCK EXCHANGE

The project aims to prepare future financial analysts for the practice of corporate equity valuation
by developing the following skills:

a) Analyze its socioeconomic investment context. Develop a systemic business analysis approach.
b) Evaluate the value of a share. Use the appropriate models for the evaluation of companies in a
context of sustainable development.
c) Make a decision: buy, hold or sell the analyzed security.

Valuation of a listed common company share among those below

Rogers Cogeco Canadian tire Métro

Dollarama Couche-Tard Loblaws Saputo
CN Québecor Sobeys Bell Canada

You can choose another company with the approval of the teacher. In such a case, it will be your
sole responsibility to ensure the availability of the data necessary to perform the work

General guidelines

Consult the annual report for the last 5 years of the company. Available on the company’s website
or at www.sedar.com.

Make sure, when writing your session work, to use the concepts and notions seen during the lessons
and in your readings.

Document (with appropriate references) your work using the sites below or other sources. Put
calculations in appendix and summary table, graphs and analysis in the text.

Write the name of the company and all teammates on the first page.

Font size should be a minimum of 12 with a minimum line spacing of 1.5. Use a beautiful
presentation especially using graphics and tables.

Use correct English language. Be consistent, concise and clear, take note of your assumptions.

Each part of the work should be 8-10 pages plus appendices.

Integrate the work well to avoid repetitions and contradictions.

Submit the work online on Moodle in PDF format

5
(1st part) Analysis of the socio-economic context of the company (15%)

Choose a common share of a company to analyze. Choose the stock that is traded regularly. Explain
briefly your choice.

1) Analysis of the economic context

Analysis of the economic context: current situation and short and medium term prospects. (Chapter
17). Consult the websites provided in the course outline to analyze the North American socioeconomic
context (using the various economic indicators required to complete this task).

2) Industry Analysis
a) Description of the industry
b) Analysis according to Porter's model
 Competitors
 The strength of potential entrants
 The bargaining power of suppliers
 The bargaining power of customers
 Presence of substitute
c) Identify the characteristics of your industry

3) Analysis of the company

a) Description (history, organizational chart, products, financial advisors, accounting

methods used, etc.)
b) Competitive position of the firm in the industry (leader or latecomer depending on market
share)
c) Profitability and financial situation (current, past and sensitivity to business cycles)
d) Make a SWOT of the company and comment

4) Sustainable development and ESG factors

What type of goal and accountability practices?
How does your business compare to its competitors?

5) Financial analysis of the company (Chapter 19)

You need to have the data and calculate the ratios on your own. Presenter all tables and graphic
summaries in the work. The table of data provided and the details of the ratio calculations must
be presented in the appendix.

a) Calculate the ROE and its decomposition of ratios according to DuPont for the last 5 years. Use
annual and non-quarterly data. Compare with industry and comment.
• Corporate taxation
• Profitability of sales
• Interest coverage
• Asset rotation
• Financial leverage

6
 b) Add any other ratio relevant to your industry or your business. For example, analyzing liquidity
c) Analysis of EPS and dividends paid for the last 5 years
d) Forecast of EPS and dividends paid for the 5 years
These requests must be on the findings of each section of this work. Explain your assumptions
and don't use constant growth for those 5 years. Use profits before extraordinary items.

5) Summary of your results

6) In conclusion, answer these questions:

 What was the most difficult part of the job?

 What is the next stage of your work?
 If you can do it again, what would you do differently?
 What did you learn from this work?

The work will consist of 8 to 10 pages

Make sure, when writing your session work, to use the concepts and concepts seen during the course
and in your readings.

(2nd part) Evaluation of the stock and decision-making (15%)

1) Assessment of the ordinary share

a) Evolution of the share price, the industry price and the S & P / TSX over 5 years.

b) Rate of return to be demanded. Estimate the cost of equity with CAPM.

Use the most recent Canadian market risk premium on the Damodaran website.
Find at least two different sources for your business beta. It must be positive.
Use the Bank of Canada's 5-year risk-free rate.

c) Intrinsic value according to Gordon's model (chapter 18)

Use the projection of profits made for the next 5 years in the first part of the work and calculate the
growth per year. The growth in EPS and dividends will be the same. Use annual and non-quarterly
dividends therefore in the annual income statement. Growth should vary for the first few years and
then become constant after a few years. The geometric mean of the growth of the first 5 years will

7
 give you the constant g to use in 5 years. Make sure the g is smaller than the yield so you can use
Gordon. Thoroughly explain your assumptions that come from your analysis of the economy, the
industry and the stock in Part 1. Then, find the intrinsic value by doing the present value of the
dividends and the price obtained with Gordon.
Example :
P2021 = D2022/(1+r) + D2023/(1+r)2 + D2024/(1+r)3 + D2025/(1+r)4 + D2026/(1+r)5
+P2026/(1+r)5P2026 = D2026(1+g)/(r-g)
See chapter 18 for more details.

d) Multiples method
Find historical P / E. Use the projection of profits made for the next 5 years in the first part of the
work. Multiply the average P / E by the estimated EPS for the next few years to find stock price
estimates.

2) Technical analysis (chapter 12)

Present all tables and summary graphs in the work. Details of the calculations must be presented in
the appendix.
a) Put / call ratio
b) Relative strength
c) Moving average

3) make a decision
a) Recommendation
Based on the results of parts 1 and 2, do you recommend buying this title?
b) Important assumptions and limitations of each method used in 1 and 2.

4) In conclusion, answer these questions

a) What was the most difficult part of the job?

b) If you can start over, what would you do differently?
c) What did you learn from this job?

The work will consist of 8 to 10 pages

Make sure, when writing your session work, to use the concepts and concepts seen during the course
and in your readings.

8
Highly recommended sites

Students of the course can not well perform without the sources of Canadian and international
financial information.

Newspapers:

The Globe and Mail - The National Post - La Presse - Les Affaires - The Financial Times of
Canada - The Wall Street Journal – Barrons - Investor’s Business Daily…

Links to search data and financial information

http:// www.tmx.com/ Toronto Stock Exchange website.

http://www.reuters.com/ Site containing a multitude of financial information.
http://moneycentral.msn.com/home.asp
Site containing a multitude of financial information.
http://ca.finance.yahoo.com/ or http://www.google.ca/finance
Site to find stock quotes and other financial information.
http://www.sedar.com/
Database providing access to the annual report of Canadian companies.
http://www.sec.gov/
Database giving access to the annual report of American companies.
http://argent.canoe.com/
Canadian site containing a multitude of financial information.
http://www.bloomberg.com
Financial information website around the world.
http://www.investorama.com
Directory of investment websites.
https://www.ic.gc.ca/
Financial Performance-Industry Statistics.
https://economics.td.com/
TD site offering TD Economics and Economic Studies.
https://economics.bmocapitalmarkets.com/economics
BMO website offering economic analysis and studies.
http://strategis.ic.gc.ca/frndoc/main.html
Canadian site offering a wide range of economic and sectoral studies.
https://www.desjardins.com/a-propos/etudes-economiques/index
Desjardins site offering economic analysis and studies.
https://www.ecb.europa.eu/stats/html/index.en.html
Website of the Central Bank of the European Union
http://www.rbc.com/economie/index.html
Royal Bank site offering economic analysis and studies.
http://www.stat.gouv.qc.ca/
Website of the Institut de la Statistique du Québec.
https://fpadvisor.infomart.com
Financial Post financial database (access via the UQAM library site)
http://www.lesaffaires.com/
Quebec site offering economic, stock market and financial news

9
PARAGRAPHE CONCERNANT LES DEMANDES DU ASESH
Dans le but de mieux encadrer les mesures d’aménagements, puis de mieux cibler les besoins spécifiques
liés à la déficience de l’étudiant, il serait souhaitable que les plans de cours incluent la mention suivante :

Les étudiants qui ont une lettre signée de leur conseillère ou conseiller de l’Accueil et de soutien aux
étudiants en situation de handicap, dans laquelle il est fait état de leur inscription au ASESH à titre
d’étudiant en situation de handicap sont invités à remettre ce document à leurs professeurs et chargés de
cours dès le début de la session, afin que les aménagements dans le respect des exigences académiques
soient déterminés de concert avec chacun des professeurs et chargés de cours. Les étudiants qui une
déficience et qui ne seraient pas inscrits au ASESH sont priés de se présenter au AB-2300.

Étudiants ayant une déficience de type visuelle, auditive, motrice, trouble d’apprentissage, trouble
envahissant du développement et trouble de santé mentale
Les étudiants qui ont une lettre d’Attestation des mesures d’aménagements académiques obtenue auprès d’un
conseiller de l’Accueil et soutien aux étudiants en situation de handicap (ASESH) doivent rencontrer
leur professeur au début de la session afin que des mesures d’aménagements en classe ou lors des évaluations
puissent être mises en place. Ceux qui ont une déficience ou une incapacité mais qui n’ont pas cette lettre
doivent contacter l’ASESH au 514-987-3148 ou se présenter au local AB-2300 le plus tôt possible.

Students who have a signed letter from their Home and Support Advisor to Students with
Disabilities, in which their ASESH registration as a student with a disability is reported, are
welcome to submit. this document to their professors and lecturers from the beginning of the
session, so that the arrangements in respect of the academic requirements are determined in
concert with each of the professors and lecturers. Students with disabilities who are not
registered with ASESH are asked to attend the AB-2300.

Students with Visual, Auditory, Motor, Learning Disability, Pervasive Developmental Disorders and
Mental Health Disorders
Students who have a Letter of Attestation of Academic Accommodation measures obtained from a Reception
Advisor and Support to Students with Disabilities (ASESH) must meet with their teacher at the beginning of
the session so that measures can be taken. in-class facilities or assessments can be put in place. Those who
have a disability or disability but do not have this letter should contact ASESH at 514-987-3148 or report to
local AB-2300 as soon as possible.

10
Politique no 16 visant à prévenir et à combattre le sexisme et les violences à caractère sexuel

Les violences à caractère sexuel se définissent comme étant des comportements, propos et
attitudes à caractère sexuel non consentis ou non désirés, avec ou sans contact physique, incluant
ceux exercés ou exprimés par un moyen technologique, tels les médias sociaux ou autres médias
numériques. Les violences à caractère sexuel peuvent se manifester par un geste unique ou
s’inscrire dans un continuum de manifestations et peuvent comprendre la manipulation,
l’intimidation, le chantage, la menace implicite ou explicite, la contrainte ou l’usage de force.
Les violences à caractère sexuel incluent, notamment :
• la production ou la diffusion d’images ou de vidéos sexuelles explicites et dégradantes, sans
motif pédagogique, de recherche, de création ou d’autres fins publiques légitimes;
• les avances verbales ou propositions insistantes à caractère sexuel non désirées;
• la manifestation abusive et non désirée d’intérêt amoureux ou sexuel;
• les commentaires, les allusions, les plaisanteries, les interpellations ou les insultes à
caractère sexuel, devant ou en l’absence de la personne visée;
• les actes de voyeurisme ou d’exhibitionnisme;
• le (cyber) harcèlement sexuel;
• la production, la possession ou la diffusion d’images ou de vidéos sexuelles d’une personne
sans son consentement;
• les avances non verbales, telles que les avances physiques, les attouchements, les
frôlements, les pincements, les baisers non désirés;
• l'agression sexuelle ou la menace d’agression sexuelle;
• l’imposition d’une intimité sexuelle non voulue;
• les promesses de récompense ou les menaces de représailles, implicites ou explicites, liées
à la satisfaction ou à la non-satisfaction d’une demande à caractère sexuel.

Toute personne membre de la communauté universitaire contribue à maintenir une culture du

respect et du consentement, notamment, en participant aux activités de formations obligatoires
sur le sexisme et les violences à caractère sexuel.

Pour plus d’information :

https://instances.uqam.ca/wp-content/uploads/sites/47/2019/04/Politique_no_16_2.pdf

Les personnes victimes, témoins ou informées d’une situation de sexisme, de violence à

caractère sexuel, ou pour en apprendre plus sur ces enjeux, peuvent consulter le
Bureau d’intervention et de prévention en matière de harcèlement (BIPH)
514 987-3000, poste 0886 ; harcelement@uqam.ca; harcelement.uqam.ca
Soutien psychologique (Services à la vie étudiante)
514 987-3185 ; vie-etudiante.uqam.ca
Service de la prévention et de la sécurité :
514 987-3131

11
12
Politique no42 sur le respect des personnes, la prévention et l’intervention en matière de
harcèlement (extraits)

L’Université́ reconnaît à toutes les personnes membres de la communauté́ universitaire le droit d’être
traitées avec dignité, équité et respect mutuel.
L’Université considère le respect mutuel, l’égalité, l’écoute et l’entraide comme des valeurs importantes qui
favorisent l’épanouissement personnel ainsi que l’établissement de rapports harmonieux entre les personnes
et entre les groupes, et qui permettent la mise en place d’un milieu sain et propice à la réalisation individuelle
ou collective de sa mission universitaire.
L’Université est consciente que les situations de harcèlement ou pouvant mener à du harcèlement résultent
de l’interaction de facteurs individuels, sociaux et liés au milieu de travail et d’études. Compte tenu de ces
facteurs, l’Université croit que la prévention constitue le meilleur moyen pour assurer un milieu exempt de
toute manifestation de harcèlement et donne ainsi priorité à la prévention.

Le « harcèlement » inclut notamment : le harcèlement psychologique, le harcèlement discriminatoire et le

harcèlement sexuel.
Le harcèlement psychologique est une conduite vexatoire se manifestant par des comportements, des
paroles, des écrits, des actes ou des gestes répétés qui sont hostiles ou non désirés, blessants ou injurieux
d’une personne envers une autre et ayant pour effet de porter atteinte à la dignité ou à l’intégrité
psychologique ou physique d’une personne et pouvant entraîner pour celle-ci un milieu de travail ou d’études
néfaste. Ces conduites vexatoires peuvent être le fait d’une seule personne ou d’un groupe de personnes.
Le harcèlement discriminatoire est lié à l’un ou l’autre des motifs sur lesquels il est légalement interdit de
discriminer (le sexe, l’identité ou l’expression de genre, la grossesse, l’orientation sexuelle, l’état civil, l’âge,
la religion, les convictions politiques, la langue, l’origine ethnique ou nationale, la race, la couleur, la condition
sociale, le handicap ou l’utilisation d’un moyen pour pallier ce handicap) ou un motif analogue.
Une seule conduite grave peut aussi constituer du harcèlement si elle porte une telle atteinte et produit un
effet nocif continu pour cette personne.

Situation pouvant mener à du harcèlement

Situation problématique qui met en jeu la dignité ou l’intégrité physique ou psychologique d’une personne
et qui est susceptible de dégénérer jusqu’à devenir du harcèlement. C’est le cas notamment, mais non
exclusivement, de l’abus de pouvoir ou d’autorité, du conflit et de l’incivilité. Pour éviter qu’une telle situation
ne dégénère, elle doit être réglée de façon constructive, rapidement et avec respect afin de favoriser le
mieux-être de chaque personne.

La politique s'applique à toute la communauté universitaire et aux partenaires externes en lien direct avec
l’Université dans le cadre de leurs relations avec les membres de cette communauté. Elle s'applique à
l’intérieur et à l’extérieur du campus, incluant les interactions exercées ou exprimées grâce à des moyens
technologiques, tels les médias sociaux ou autres médias numériques. La politique vise également les
personnes étudiantes dans le cadre de leurs activités d’apprentissage hors campus approuvées telles que les
stages, en tenant compte des limites des capacités d’intervention de l’Université.

Pour plus d’information :

Bureau d’intervention et de prévention en matière de harcèlement (BIPH)
514 987-3000, poste 0886 ; harcelement@uqam.ca; harcelement.uqam.ca
Soutien psychologique (Services à la vie étudiante) Service de la prévention et de la sécurité :
514 987-3185 ; vie-etudiante.uqam.ca 514 987-3131

13