Sample Midterm Questions
Foundations of Financial Markets
Summer 2007, Section 1
Total exam time: 1 hour and 30 minutes
1. If you can get 7.75% return on in 10 years from your local bank, would it be
wise to invest in a 10 year, $1000 par value zero coupo
Sample Final Questions
Foundations of Financial Markets
Summer 2007, Section 1
Total exam time: 2 hours
1. If the (positive) yield to maturity on a zero coupon bond is constant from one
year to the next, the price of the zero coupon bond over the next yea
Problem Set 1
Foundations of Financial Markets
Summer 2007, Section 1
Due date: End of class, May 22
1. You are among the OTC marketmakers in the stock of BioEngineering, Inc. and quote
a bid of 102 1/4 and an ask of 102 1/2. Suppose that you have zero in
Problem Set 4
Foundations of Financial Markets
Summer 2007, Section 01
Due: End of class, June 12
1. The stock of the Internet company PolarBear.com trades on both the South Pole
Stock Exchange and the North Pole Stock Exchange.
(a) Suppose the price on t
Problem Set 5
Foundations of Financial Markets
Summer 2007, Section 1
Due date: June 19
* Required problems: 1 2(a) 4 5 6
Others: suggested problems. Id recommend doing these before the exam, though.
1. * Suppose you buy a ve-year zero-coupon Treasury bon
Problem Set 2
Foundations of Financial Markets
Summer 2007, Section 1
Due: End of class, May 29
1. Suppose you have 2 mutual funds whose annual returns are shown in the following
table. Assume you invest $1000 in each, and the proceeds from year 1 are rei
Solution to Sample Final
Foundations of Financial Markets
Summer 2007, Section 1
1. a.
A price of a zero coupon bond with t years to maturity is
p=
FV
(1 + Y T M )t
As the time to maturity t decreases over time, price increases. Note that zero coupon
bond
Problem Set 3
Foundations of Financial Markets
Summer 2007, Section1
Due Date: June 5
1. Given the following information, Rf = .06, E (RM ) = .12, M = .15,where E (RM ) is
expected market return and M is volatility of market return, answer the following
q