Introduction to Risk and Return
Topics Covered
Over a Century of Capital Market History
Measuring Portfolio Risk
Calculating Portfolio Risk
Beta and Unique Risk
Diversification & Value Additivity
1
Over a Century of Capital Market History
Capital Market a
Portfolio Theory and the Capital Asset Pricing Model (CAPM)
Topics Covered
Markowitz Portfolio Theory Variance and Covariance; Efficient Frontier
(Treynor 61, Sharpe 64, Lintner 65, Mossin 66) Risk and Return Relationship the CAPM
Some Alternative Theorie
Chapter 3 (Valuing Bonds, Duration, Spot/Forward Rate)
Suggested Homework
1. A six-year government bond makes annual coupon payments of 5% and offers
a yield of 3% annually compounded. Suppose that one year later the bond still
yields 3%. What return has
Chapter 3 (Valuing Bonds, Duration, Spot/Forward Rate)
Suggested Homework
1. A six-year government bond makes annual coupon payments of 5% and offers
a yield of 3% annually compounded. Suppose that one year later the bond still
yields 3%. What return has
Chapter 2 (How to Calculate Present Values)
1. Siegfried Basset is 65 years of age and has a life expectancy of 12 more years. He wishes to
invest $20,000 in an annuity that will make a level payment at the end of each year until his death. If
the interes
Risk and the Cost of Capital
Topics Covered
Company and Project Costs of Capital
Measuring the Cost of Equity
Setting Discount Rates w/o Beta
Certainty Equivalents
Discount Rates for International Projects
1
Company Cost of Capital
What discount rate shou
Project Analysis
Topics Covered
How to Handle Uncertainty?
Sensitivity Analysis - the effects of changes in sales, costs, etc. of a project one
variable changes.
Scenario Analysis - the structures of assumptions and variables are maintained a
set of var
The Value of Common Stocks
Stock represents ownership of the corporation.
Topics Covered
Stocks and Stock Markets
How Dividends are Paid
Valuing Common Stocks
What Causes the Dividends to Grow? - A Comprehensive Example
1
Stocks and Stock Market
Auction M
Chapter 2 (How to Calculate Present Values)
1. Siegfried Basset is 65 years of age and has a life expectancy of 12 more years. He wishes to
invest $20,000 in an annuity that will make a level payment at the end of each year until his death. If
the interes
Valuing Bonds
Bonds are long-term standardized (securitized) loans issued by governments or
corporations.
Topics Covered:
Treasury and Corporate Bonds, and the Default Risk
Pricing Bonds: Annual and Semiannual Coupons
Duration - How Bond Prices Vary With
How to Calculate Present Values
Topics Covered:
Simple Interest, Compound Interest and Effective Interest Rate
Future Value, Present Value and the Net Present Value Rule
Shortcuts Perpetuities and Annuities
More Shortcuts Growing Perpetuities and Annuitie
Goals and Governance of the Firm
Topics Covered:
Business Forms
Financial Market and the Financial Manager
Decision Making & Opportunity Cost of Capital
Separation of Ownership and Management, Corporations Goals, and Agency Problems
1
1. Business Forms
So
Exam MFE/3F
Sample Questions and Solutions
April 6, 2010
1
1. Consider a European call option and a European put option on a nondividend-paying
stock. You are given:
(i)
The current price of the stock is 60.
(ii)
The call option currently sells for 0.15 m
Notes 9 ANOVA Homework Answers
(1) According to the leadership literature, there are a number of different leadership styles. Listed below are
scores obtained from an instrument designed to measure a particular leadership style, which will be referred to
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B&W CONFIRMINGS
C H A P T E
R
4
Probability and
Counting Rules
Objectives
Outline
After completing this chapter, you should be able to
41
1
Determine sample spaces and nd the
probability of an event, using classi
0
This exam is open book, open notes, but INDIVIDUAL effort. Please DO NOT consult with ANYONE.
The name of this file is kcattaniEXAM2. Save this file with a new name created by using your email alias (rather than mine or that of Jennifer Lawrence).
Pleas