rsm330 - A Checklist for the Optional RSM 330 Midterm Exam...

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Midterm Exam – Fall, 2010 The midterm is a 90 minute test. Time: 4:00−5:30 pm, Thursday, October 28 • Location: UC266. Overflow room is UC 273 If you have a time conflict, and want to take the exam please email me Your email subject” RSM 330 – Mid Term Exam Conflict” This is a closed-book test. A one-side only 8 . 5 × 11 crib sheet is allowed. • There is no make-up midterm. You do not need to inform me if you decide not to write the midterm exam. Keep a copy of this handout as it will also be useful to help you study for the final exam which will be cumulative, covering all course material. The mid-term exam will have a number of multiple-choice questions, a few short questions and/or some long ones and problems. There will be a mix of conceptual and technical questions. As far as the long questions are concerned, some possible topics are: (i) asset allocation, (ii) international investments,(iii) short versus long horizon allocation, and (iv) dividend-yield and earnings-yield regressions. Below is a checklist of things we should be familiar with. The test will cover materials from Class 1 to the end of Class 6. In preparing for the exam, the class notes and required readings are important. It should be very helpful to practice with the sample exams which will be posted on Blackboard. The samples are past midterm exams. For the current term, as we do not cover CAPM until November 4, so no questions on CAPM and Beta will be included in our midterm exam. Class Note 1: Overview of Three Asset Classes and ETFs • Be aware of inflation risk for T-bonds, the tax feature of US municipal bonds, and default risk of corporate bonds. • Be able to qualitatively explain yield spread between various types of bonds • Understand why the default premium (e.g., yield spread between junk bonds and treasury bonds) may be a good indicator of investor sentiment. • Understand that the bid-ask spread is a transaction cost for investors. • Be comfortable with what is going on when you buy on margin or short-sell a stock. • Be able to explain why Dow Jones Industrial Average may not be a good measure of the overall stock market. Understand how a price-weighted index and a value-weighted index differ in construction. • Know what ETFs are, the different types of ETFs and their advantages and disadvantages. Understand how investors may use information on short interest. Class Note 2: Examples of Investment Strategies; Equity Premium Puzzle; Asset
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rsm330 - A Checklist for the Optional RSM 330 Midterm Exam...

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