Foundations of Finance
Solutions to Homework 3
Prof. Robert Richmond
Topic 6: Equity Valuation
1. Suppose that the consensus forecast of security analysts of your favorite company is that
earnings nex
C15.0002 FOUNDATIONS OF FINANCIAL MARKETS
Fall 2011
Problem Set #1
This problem set is due at the start of class, one class after session 3. No late assignments accep ted.
1. Consider zero coupon bond
Foundations of Finance
Homework 4
Prof. Alexi Savov
Due at the start of class 26
Topic 8: Fixed Income Securities
1. A zero coupon bond with 2.5 years to maturity has a yield to maturity of 25% per an
Foundations of Finance
Solutions to Homework 1
Prof. Robert Richmond
Topic 1: Financial Markets
1. You are among the OTC marketmakers in the stock of BioEngineering, Inc. and quote
a bid of $102.25 an
Part 3 Stocks and Options
9. Finally, you can also use the information in Thomson ONE to value the entire corporation,
This approach requires that you estimate XOM’s annual free cash ﬂows. Once you es
Foundations of Finance
Solutions to Homework 3
Professors Theresa Kuchler, Richard Levich and Robert Whitelaw
Fall 2015
FINC-UB.0002.04, FINC-UB.0002.05, FINC-UB.0002.06
Topic 6: Equity Valuation
1. S
C15.0002 FOUNDATIONS OF FINANCIAL MARKETS
Fall 2010
Sample Midterm Solutions
Multiple choice questions
1. A stock has a beta of 1.5 and a volatility (standard deviation) of 50%, and the volatility (st
230
Iﬁhﬁ _(;1v_l.l_1"._Q_E:
Part 2
EDP-PETE”
Fixed income Securities
What is the band’s yield to maturity?
What is the bonds current yield?
What is the band’s capital gain or loss yield?
What is the b
Foundations of Finance
Practice Questions for Final Exam ANSWERS
Question 1
You have $100 to invest. The price of XYZ stock is $100. You sell short one share of XYZ
and then invest all available funds
The Bond portion of the project
General Electric Capital Corp. coupon 4.65% maturity 6/ 15/2024
Purchase the bond on 6/15/2015
The YTM is 3.367%
What is the price of the bond?
If on 6/15/2016 yield on
Performance of securities / PV /FV/ Annuity
1.
What is the effective annual rate corresponding to an APR of 40% with weekly compounding?
(a) 34.23%
(b) 52.12%
(c) 42.88%
(d) 48.95%
2.
Your bank offers
Performance of securities / PV /FV/ Annuity
1.
What is the effective annual rate corresponding to an APR of 40% with weekly compounding?
(a) 34.23%
(b) 52.12%
(c) 42.88%
(d) 48.95%
2.
Your bank offers
HW #6
Due with the Hubbles Law and the Expanding Universe lab.
You can use a calculator, but please show your work.
1. List the escape velocities for the following situations:
a)
b)
c)
The surface of
H8
Numerical Example of Creating a Zero Risk
Portfolio with Two Risky Securities Whose
Returns are Perfectly Negatively Correlated
Foundations of Finance
Prof. Alexi Savov
Good year
(P rob = 0.5)
Bad
Intro lecture
1.
2.
3.
4.
Basic concepts of finance
Investors prefer more to less
Investors are risk averse and must be compensated to take risks
Money paid in the future is worth less than money paid
Solutions to Homework 4
Prof. Jerey Wurgler
Topic 8: Fixed Income Securities
1. A zero coupon bond with 2.5 years to maturity has a yield to maturity of 25% per annum. A
3-year maturity annual-pay cou
Solutions to Homework 3
Prof. Jerey Wurgler
Topic 6: Arbitrage
1. The stock PolarBear.com trades on both the South Pole Stock Exchange and the North Pole
Stock Exchange.
(a) Suppose the price on the N
Foundations of Finance
Homework 2, due at the start of class 11
Spring 2016, FINC-UB.0002.04
Topic 3: Portfolio Theory with 2 Risky Assets
1. The expected returns and standard deviation of returns for
3. Suppose todays stock price of Book.com is $100. With probability 60% the price will rise to
$130 in one year and with probability 40% it will fall to $80 in one year. A European put
option with a s
Foundations of Finance
Homework 1, due at the start of class 6
Spring 2016, FINC-UB.0002.04
Topic 1: Financial Markets
1.You are among the OTC market makers in the stock of Bio-Engineering, Inc. and q
Foundations of Finance
Solutions to Homework 4
Professor Theresa Kuchler, Richard Levich and Robert Whitelaw
Fall 2015
FINC-UB.0002.04, FINC-UB.0002.05, FINC-UB.0002.06
Topic 8: Fixed Income Securitie
Foundations of Finance
Homework 1
Fall 2015 - FINC-UB.0002.04, FINC-UB.0002.05, FINC-UB.0002.06
Due at the start of Class 6
Topic 1: Financial Markets
1. You are among the OTC market makers in the sto
Foundations of Finance
Homework 2
Professor Theresa Kuchler
Fall 2017
Topic 3: Portfolio Theory with 2 Risky Assets
1. The expected returns and standard deviation of returns for two securities are as