Exam1 - FI 478 Investment Strategies and Speculative...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
FI 478 Investment Strategies and Speculative Markets Professor Fan Yu Exam I Spring 2008 Student Name Student Number Instructions 1. Write down your name and student number in the spaces provided above. 2. There are four questions in this examination. 3. You have one hour and twenty minutes to complete the test. 4. Please outline your solutions, and indicate intermediate steps and calculations. Partial credit will be awarded if you provide su¢ cient evidence of approaching a problem correctly. 1
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
security. a portfolio of existing securities with available market prices, so that the payo/of the portfolio mimics the payo/of the derivative. By the principle of no arbitrage, the value of the derivative would have to equal the cost of the portfolio, which can be calculated based on portfolio weights and market prices. contract in return for receiving the asset at the maturity date of the contract. In a perfect world with no restriction on short selling, what should be the pre-paid forward price on a non-dividend-paying stock? Explain. It should be just the current stock price. If this were higher, one can short the prepaid forward
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 03/19/2008 for the course FI 478 taught by Professor Yu during the Spring '08 term at Michigan State University.

Page1 / 3

Exam1 - FI 478 Investment Strategies and Speculative...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online