Homework 1 & 2
Use the stock assigned to you for this homework and S&P 500 Total Return Index (^SP500TR).
Download the two stocks daily price data from Jan. 1, 2015 to Dec. 31, 2015 from
http:/finance.yahoo.com/. Use these stocks Adj Close Prices to do th

Chapter 5 Questions 6, 7, 8, 13 (9th Edition pages 155-156; 10th Edition pages 163-164)
6.
7.
a.
The Inflation-Plus CD is the safer investment because it guarantees the purchasing power of the
investment. Using the approximation that the real rate equals

INVESTMENTS
BU-232.701
Spring 2017
Section 34
01/23/2017 to 03/19/2017
2.0 Credits
CONTACT INFORMATION
Instructor: Yuval Bar-Or Ph.D.
Email: ybaror1@jhu.edu
Office Hours:
Wednesdays, 1pm to 2pm, or by appointment. Email is preferred method of
communicatio

Homework 2
HanFu Shi
Chapter 6
1. Which of the following choices best completes the following statement? Explain. An
investor with a higher degree of risk aversion, compared to one with a lower degree, will
prefer investment portfolios
a. with higher risk

Chapter 9
Questions 2, 3, 9, 17, 19, 20 (9th Edition pages 311-313; 10th Edition pages 317-319)
2.
If the securitys correlation coefficient with the market portfolio doubles (with all other
variables such as variances unchanged), then beta, and therefore

Equity Valuation
Valuation Models
Absolute valuation model (DCF)
Dividend discount model
Free cash flow discount model
Free cash flow to the firm
Free cash flow to equity
EVA model
etc.
Relative (Comparative) Valuation
Comparable Multiples (P/E,

Analysis of Financial
Statements
1
Liquidity Ratios
Liquidity Ratios: Can we make required
payments (short term obligation)?
Current ratio
Current As sets
Current Liabilities
Quick ratio (Acid Test ratio)
Cash ShortTerm MarketableSecurities AR
Current

Analysis of Financial
Statements
1
Liquidity Ratios
Liquidity Ratios: Can we make required
payments (short term obligation)?
Current ratio
Current As sets
Current Liabilities
Quick ratio (Acid Test ratio)
Cash ShortTerm MarketableSecurities AR
Current

Financial Options
1
Option Basics
Call Option
A contract that gives its owner the right (but not
the obligation) to purchase an asset at a fixed
price as some future date
Put Option
A contract that gives its owner the right (but not
the obligation) to

Final Exam Guide
Two-hour in-class closed book exam
You will use a school laptop you can bring
your mouse
You can bring a cheat sheet (one-sided, letter
size, hand writing, formulas only)
Violation of these rules may be penalized
Write your name on t

SUMMARY OUTPUT
Multiple R
R Square
Adjusted R Square
0.7086256511
0.5021503133
0.500150917
0.0096903494
251
df
Intercept
X Variable 1
SS
MS
F
Significance F
1 0.023583796 0.0235837964 251.1509626 1.38045E-039
249 0.023381815 9.39029E-005
250 0.046965611
C