Final Examination Information
March 8, 2010
Ana and Haeng Ku will hold an optional review session Monday, March 15, 2010, from 2:10 to
3:00 in 234 Wellman. I will hold office hours Tuesday March 16 from 2:30 to 3:30 for last minute
The final examination is Wednesday March 17, 2010 from 1:00 to 3:00 in the usual
classroom. Do not bring scratch paper or other materials to the examination. You will answer on
the examination itself, and you can use the backs for scratch paper. Everything else must be stowed
away. The examination will be closed book.
A calculator will be required.
There may be some
The following sections of chapters 4, 5, 7, 9, 10, 12, 13, and 22
everything in my notes on the class web page will be covered, with three exceptions:
on fair games and martingales (note that the random walk on page 92 remains testable), 2) pages
95-108 on Real Options, and 3) pages 135-140 at the end of the notes.
Chapters 10 and 22 and
related materials are a very important segment of the course. The final will emphasize the material
since the midterm, but there will be someofthe more complicated problems from the earlier material.
In general, formulas will be provided (do
memorize the Black-Scholes equations!), although
you must know which to use, and some equations are part of the logic of solving the problem
the replicating portfolio equations in pricing binomial options).
Post-Midterm Text Topics:
Chapter 10. Return and Risk: The Capital Asset Pricing Model (CAPM)
All of chapter 10, with extensive supplementary material provided in the class notes. Be able
to derive the CAPM and explain the logic of critical steps.
Skip Chapter 11.
Chapter 12. Risk. Return, and Capital Budgeting
Chapter 12, sections 12.1 and 12.2 only
Chapter 13. Corporate Financing Decisions and Efficient Capital Markets
All of Chapter 13
Chapter 22. Options and Corporate Finance
Chapter 22 up to and
the material under the heading
"The Firm Expressed in Terms
of Call Options" (in section 22.9) except section 22.5 Option Quotes. You do not need to
know any of the material in the book that follows that delineated above. There is extensive
supplementary material in the notes for which you are responsible, however. You need not
read section 22.11 (22.12 in editions 6 and 7), but it is similar to material in the notes and