onlincourse

Finance Fundamentals: Investment Theory and Practice

Manage your financial future by looking at the investment choices open to you, and the risks and returns involved, with this online course from the Open University.

Duration

4 weeks

Weekly study

3 hours

100% online

How it works

Unlimited subscription

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Accreditation

More info

Established

1969

Location

Milton Keynes, UK

World ranking

Source: Times Higher Education World University Rankings 2020

Ensure your investments are effective and match your risk-return appetite

Research shows that UK households are poor at investment management, with a limited understanding of choices, risks and returns. This could mean that many people cannot afford to retire in future.

This online course will give you the tools to avoid this nightmare. You will study investment choices, and the risks and returns of each; investment strategies and your risk-return appetite; and behaviours that can impair effective investment decisions.

The Open University’s Centre for the Public Understanding of Finance created this course, with the generous support of True Potential LLP.

Week 1
The Spectrum of Personal Investments
- The importance of personal investments
  Why should we save and invest for the future? Savings products – what do they offer?
- Shares
  Understanding and investing in shares (or ‘equities’). What to look for when making decisions about share investments. Introducing the shares that we’ll be following in the course.
- Bonds and funds
  Investments in bonds. The importance of government bonds (UK ‘gilts’). The relationship between yields on bonds and their prices. Introducing the yield curve – we’ll be tracking this throughout the course. Investments in funds.
- Alternative investments, tax, advice and the costs of investing
  Other ways of investing – property, commodities and peer-to-peer. Understanding the costs of investing including taxation. When to seek advice about investments – the benefits and costs.
Week 2
Devising investment strategies – principles and practice
- Devising your strategies: time horizons and understanding risk
  Devising an investment strategy. Time horizons and risk appetite. What are the financial risks and how are they inter-related?
- Understanding and applying Portfolio Theory
  How to diversify away risk. Getting to grips with Portfolio Theory. How is this theory applied in practice by investment managers?
- Understanding and applying the Capital Asset Pricing Model (CAPM)
  Managing your investment risk profile. Understanding the Capital Asset Pricing Model (CAPM). How is CAPM applied in practice? What is the role of ‘betas’ in managing risk?
- Market tactics and know-how: Can we outperform the market?
  The Random walk Prediction. Are financial markets efficient – understanding Efficient Markets Hypothesis (EMH). Can we outperform the markets? Is technical analysis (‘chartism’) a good predictive tool for investors?
Week 3
Investment in practice: practices, styles, history and performance
- Investment strategies in practice
  How are the theories on investment strategy applied in the real world? What practices do investment managers apply? What are the current features of investment activity – what’s currently fashionable?
- Measuring the performance of investments
  How do we assess how well our investments have performed? How should we judge investment managers? We look at relative returns and absolute returns on investments.
- Investment performance: the lessons from history
  We examine the long-term historical evidence about the performance of different asset classes. We look at investment bubbles and at recent personal investment news stories.
- More lessons from history: what can we learn from them?
  The collapse in supermarket share prices. Have fun reviewing the past century of investment performance – and the drivers of performance in each decade.
Week 4
Investment and human behaviour
- Behaviour and risk-taking
  How can human behaviour impair financial decision-making? Behaviour in the context of the 2007/08 financial crisis. Understanding the impact of behaviour in the business environment.
- Individual behaviour
  Individual behavioural biases. Learn about bounded rationality. We look at ‘prospect theory’ and the impact of ‘anchoring’ and overconfidence.
- Group behaviour
  We study group behavioural biases. We explore ‘contagion’ and ‘herd behaviour’. Do groups make better decisions than individuals? Understanding the pitfalls of ‘group think’.
- Rounding-up what we have learned
  We complete the course with a summary guide to investment decision making, take one last look at UK yield curve and the prices of the shares we have been tracking. You finish with an extended test covering the entire course.