Portfolio Theory
Lecture 7. Portfolio Theory
- Textbook Chapters: CH 5
- Covered Topics
(1) Expected Return, Variance, and Covariance
(2) The Return and Risk for Portfolios
(3) The Efficient Set (Efficient Frontier)
Portfolio Theory
Expected Return, Varia
Time Value of Money
Lecture 4. Time Value of Money
- Textbook Chapters: CH 3
- Covered Topics
(1) Time Value of Money
Time Value of Money
Time Value of Money
A dollar today is more valuable than a dollar to be received in the
future
- Why?
A dollar today
Introduction to Investments & Financial Analysis
(FIN310)
Spring 2017
School of Business
The College of New Jersey, Ewing, NJ
Instructor: Dr. Tae-Nyun Kim
Course Overview
Course information
Instructor: Dr. Tae-Nyun Kim
Class meeting
Section 02: Mon/Thurs
Securities Markets
Lecture 3. Securities Markets
- Textbook Chapters: CH 2
- Covered Topics
(1) The Short Sale
(2) Stock Market Regulations
(3) Initial Public Offering
Securities Markets
The Short Sale
Short sale: The sale of borrowed securities in antic
Portfolio Theory
Lecture 11. Portfolio Theory
- Textbook Chapters: CH 5
- Covered Topics
(1) CAPM and Real World
(2) Arbitrage Pricing Theory (APT)
(3) Fama-French Three-Factor Model
Portfolio Theory
The CAPM and the Real World
In limited ways, portfolio
Risk and Return
Lecture 6. Risk and Return
- Textbook Chapters: CH 5
- Covered Topics
(1) Returns
(2) Historical Risks and Returns of Stocks
(3) Probabilistic Approach for Expected Returns
Risk and Return
Returns
Returns have two components:
1) Current In
Financial Planning
Lecture 5. Financial Planning, Taxation, and the Efficiency of
Financial Markets
- Textbook Chapters: CH 4
- Covered Topics
(1) The Process of Financial Planning
(2) Taxation and Investment
(3) Pension Plans
(4) The Efficient Market Hyp
Portfolio Theory
Lecture 10. Portfolio Theory
- Textbook Chapters: CH 5
- Covered Topic
(1) Capital Asset Pricing Model (CAPM)
(2) Security Market Line (SML)
(3) Demonstration of MS Excel Project #1 (Portfolio Analysis)
Portfolio Theory
Security Returns
C
FIN 310 Test #1 Study Guide
What was the unemployment rate for Dec. 2015?
-4.9 %
What is the main indicator of economic growth?
-GDP
What is the difference between real and financial investments?
-Real investments are tangible like homes and collections,
FIN 310 Test #3 Study Guide
A stock repurchase or buyback does what?
-It increases the price of the stock and increases the EPS
-In some cases its better than dividends because the higher price/EPS
benefits the stockholder but it doesnt result in a taxabl
FIN 310 Test #2 Study Guide
What are the three things people are taxed on?
-Income, wealth, and consumption
What is sales tax a tax on?
-Consumption
What are examples of taxes on wealth?
-Property and estate taxes
What is another name for the marginal tax
Solution for Homework Assignment #1: Introduction to Investments (FIN310)
Fall 2015
School of Business
The College of New Jersey
1. An investor purchased on margin Orange Computer for $30 a share. The stock's price
subsequently increased to $50 a share at
Solution for HW Assignment #3: Financial Modeling (FIN 360)
Spring 2016
School of Business
The College of New Jersey
1. Use the Black-Scholes formula to find the value of a call option on the following stock (3
points).
Time to expiration
6 months
Standar
Solution for Homework Assignment #3: Introduction to Investments (FIN310)
Fall 2015
School of Business
The College of New Jersey
1. (4 points) Consider the data in the following table for a hypothetical two-stock version of
the Dow Jones Industrial Averag
Practice Questions and Solutions for Chapter 5
Introduction to Investments (FIN310)
Fall 2015
School of Business
The College of New Jersey
1. Consider the following price and dividend data for Ford Motor Company:
Date
Price ($) Dividend ($)
December 31, 2
Practice Questions and Solutions for Chapters 2 and 3
Introduction to Investments (FIN310)
Fall 2015
School of Business
The College of New Jersey
< Chapter 2 >
1. Relationships and Illustrated Fundamental Problems on textbook pages 53-54.
2. Problems #5 a
Practice Problems for Final Exam
Financial Modeling (FIN 360)
School of Business
The College of New Jersey
1. Textbook problems #6 on page 420 and #7 on page 421
Solution> See the attached Excel file on Canvas website.
2. Calculate the duration of a par v
Practice Problems for Option Basics
Financial Modeling (FIN 360)
School of Business
The College of New Jersey
1. An American call option is written on a stock whose price today is S = 50. The exercise
price of the call is X = 45.
a. If the call price is $
Term Structure Modeling
Lecture 24. Term Structure Modeling
- Textbook Chapters: CH22
- Covered Topics
(1) Term Structure Model for One Bond per One Maturity
(2) Term Structure Model: Multiple Bonds w/ the Same Maturity
(3) Fitting a Functional Form to th
Option Pricing Models
Lecture 17. Option Pricing Models
- Textbook Chapters: CH16
- Covered Topics
(1) The Multi-Period Binomial Pricing Model
(2) Pricing American Options Using the Binomial Pricing Model
(3) Programming the Binomial Option Pricing Model
Formula Sheet for Final Exam
Financial Modeling (FIN 360)
School of Business, The College of New Jersey
1. Binomial option pricing with state prices
RD
U R
qU
, qD
R (U D)
R(U D)
C qU max( S U X , 0) qD max( S D X , 0)
P qU max( X S U , 0) qD max( X S D
Solution for Homework Assignment #2: Introduction to Investments (FIN310)
Summer 2016
School of Business
The College of New Jersey
1. (4 points) Below is the data for historical annual returns of stocks A and B.
Year
1
2
3
4
5
Stock A
0.1
0.07
0.15
-0.05
Solution for Homework Assignment #3: Introduction to Investments (FIN310)
Summer 2016
School of Business
The College of New Jersey
1. The following table contains information about Wal-Mart (WMT) and Nordstrom (JWN).
Compute their respective ROEs and then
Solution for Homework Assignment #4: Introduction to Investments (FIN310)
Summer 2016
School of Business
The College of New Jersey
1. (3 points) A bond matures in 2020 and has an annual coupon of 3.65 percent, payable on
January 1 and July 1. The current
Solution for Homework Assignment #1: Introduction to Investments (FIN310)
Summer 2016
School of Business
The College of New Jersey
1. An investor purchased on margin Orange Computer for $30 a share. The stock's price
subsequently increased to $50 a share