# Assignment0 - The Johnson School at Cornell University...

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Page 1 of 3 The Johnson School at Cornell University Professor George Gao NBA 6730 Fall 2010 Assignment 0 (Pre-Week 1) Note: Do not hand in this assignment. This assignment is a self-test so that you can decide on your own whether you have the necessary technical background for this course. These questions help you review some basics from investment, probability, statistics, and calculus that will be used in this course. TA will discuss this assignment at the review session scheduled during the first week of class. Conventions : Here are some conventions that we will adopt throughout the course. These conventions are also common in finance. (1) Interest rate is annualized. This is true, even when we are using semi-annual or quarterly compounding. The frequency of compounding has nothing to do with whether an interest rate is annualized or not. Thus, we always assume it is annualized. (2) The word “logarithm” refers to natural logarithm (both symbols “log” and “ln” mean the same thing). (3) Time is measured in years. For example, if t is today and T is the time at which a bond matures, then ܶെݐൌ2 means the bond matures 2 years from now; ܶെݐൌ0 .5 means the bond matures 6 months from now.

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## This note was uploaded on 10/31/2010 for the course NBA 6730 at Cornell University (Engineering School).

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Assignment0 - The Johnson School at Cornell University...

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