BA 103 Lec 1

BA 103 Lec 1 - Introduction to Finance Lecture 1 FINANCIAL...

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Introduction to Finance Lecture 1 (1/23/08) FINANCIAL CALCULATOR: HP 12 C!!! Instructor: Mark Rubinstein Class meetings: Monday, Wednesday 8:00-9:30 (F295) [2/18, 3/24, 3/26 no class] Office Hours: Monday, Wed 9:30-10:15 9F690) Email: [email protected] Website: http://idisk.mac.com/markrub-Public GSIs: Jolly Ahluwalia, Steve Odom, Xingwei Wu (Sections: review problems and concepts, help with calculator) Readers: Sherveen Abdarbashi & David Fiore Textbook: Corporate Finance (Addison-Wesley 2007) by Jonathan Berk (UC Berkeley) and Peter DeMarzo (Stanford). Problems assigned from each textbook chapter. Look for 3 rd Printing of textbook! Grading: (optionally drop one mid-term) Midterm 1: 25% (Feb 27, closed book) Midterm 2: 25% (April 9, closed book) Final: 50% (May 15, 8:00 11:00 AM, closed-book) [1/2 problems from textbook, 1/2 problems talk about in test] [Ex. Derivatives, have futures and options. Book as nothing on futures. so professor will talk about it and it may be on test.] Calculator: use a financial calculator such as HP 12C. This should be used during midterms & final. Grading Curve : If everyone has 90%+, then everyone gets A ’s. He tries to grade straight, but if few people with 90’s, lower A’s t 85. Ideally, no curve. If only 10% got 90 or better, would curve it. Price of security traded on international market is determined by millions of different investors. All the information gets stuck in price. Price is aggregate, and changes. Additional reading: Peter Bernstein how stock markets work Burton Malkiel Ten Questions (1) What is the most basic proposition in financial economics? Arbitrage. Can’t borrow at 5% and guarantee will make a higher return than that. It may be expected but not guarantee. Hypothesis that there is no arbitrage. Main reason they’re not available is because there’s a lot of people looking for these. If there is an arbitrage opportunity
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BA 103 Lec 1 - Introduction to Finance Lecture 1 FINANCIAL...

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