William L. Silber
Foundations of Finance (COR1-GB.2311)
Fall 2013
COMPLETE PROBLEM SET
QUESTIONS
Page
PROBLEM SET I
3
PROBLEM SET II
5
REAL TIME EXERCISE: EQUITIES
9
PROBLEM SET III
10
PROBLEM SET IV
Problem Set 2
Corporate Finance, Sections 001 and 002
Due Thursday, February 5th
Suggested problems:
RWJ Problems 5.5, 5.6, 5.8, 5.10
(use revised problems on http:/nance.wharton.upenn.edu/jwachter/fn
Statistics Review, B01.2311.10-11-12
Prof. Stijn Van Nieuwerburgh
1
Introduction
Please study this handout carefully, as early as possible. It will be instrumental for your understanding of portfolio
Problem Set 1
Foundations of Finance
Problem Set 1: Time Value of Money and Equity Markets
Due Start of the 4th Class
I.
Present Value with Multiple Cash Flows: You have just joined the investment ban
Portfolio Theory Part 3
Efficient and Optimal Portfolios with a
Riskless Asset
9/22/2016
Fundamental of Finance L6
1
Outline
1.
2.
3.
4.
Portfolio selection with 2 risky securities
Portfolio selection
Portfolio Theory Part 1
9/12/2016
Fundamental of Finance L5
1
Outline
1.
2.
Statistic review
Risk and return
9/12/2016
Fundamental of Finance L5
2
Most Assets are Risky
E.g. Stocks, Corporate Bonds
Fixed-Income Securities:
Yield Curve and Forward
Rates
Fundamental of Finance L1.2
1
What is R?
So far:
One prevailing interest rate R
Could change over time
Now:
Many different R depending on timing
Equity Valuation:
Dividend Discount Models and
Valuation Ratios
Fundamental of Finance L1.2
1
Outline
1.
2.
Balance sheet valuation concepts
Fundamental value / intrinsic value
Dividend Discount Model
Equity Valuation:
Application of Concepts
and Examples
Fundamental of Finance L1.2
1
Case Study: Microsoft vs. Apple
Microsoft
(MSFT)
Apple
(AAPL)
Market cap
$268 B
$560 B
Price
$31.91
$602.50
Earning
Options:
The Black-Scholes-Merton
Option Pricing Formula
1
What is the Value of a Call Option?
Value
Option Value
BLACKSCHOLES
Intrinsic Value
Adjusted Intrinsic Value
Time value
X
Current stock price
Arbitrage
Fundamental of Finance L1.2
1
Outline
Arbitrage definitions
Arbitrage pricing
Arbitrage pricing with transactions costs
Real-world arbitrage trading
2
Arbitrage Definitions
In finance theory
Portfolio Theory 4 - efficient and optimal
portfolios with multiple risky assets
Fundamental of Finance L10
1
Outline
1.
2.
Portfolio selection with a risk-free and 1 risky
security.
Portfolio selecti
Problem Set 2
Foundations of Finance
Problem Set 2: Portfolio Management and the CAPM
Due Start of 8th Class
I.
Expected Return, Return Standard Deviation, Covariance and Portfolios:
State
Probability
Solution Set 1
Foundations of Finance
Problem Set 1: Time Value of Money and Equity Markets
I.
Present Value with Multiple Cash Flows:
0
1
2
3
.)2)2)-
A:
B: 30000
40000
20000
40000
20000
APR is 16% co
HORIZONTAL ANALYSIS
STATEMENT OF FINANCIAL POSITION
Short term Solvency Analysis
As shown on the Financial Position, the percentage of increase in total
current assets (22.4%) is definitely higher tha
RUNNING HEAD: QuickBooks in Santys Kitchen
The researcher attempts to answer the following questions in this research study:
1. What is the current financial management condition of the Santys Kitchen
The Man of Zara: From Zero to Zara
I.
Historical Background
What is Zara?
Zara is a Spanish clothes and accessories brand, it is the flagship brand of the Inditex group. Few
clothing brands, such as P
I.
The Water Treatment Industry in the Philippines
The Philippine market for water resource equipment and services is expected to grow by at least
five percent yearly over the next five years as a res
MAIN TARGET MARKET:
LGU
The study team aims to increase the number of distributors per
region. Currently, there is only one distributor for every 2 regions.
Thus, the needs of every local government c
TERMS
PARALANGUAGE
Component of meta-communication that
may modify or nuance meaning, or convey
emotion, such as prosody, pitch, volume,
intonation etc. It is sometimes defined as
relating to non-phon
Background of the Industry
Market Trend
The Philippine market for water resource equipment and services is expected to grow by
at least five percent yearly over the next five years as a result of the
SWOT:
STRENGTHS
1. Integrated Cost leadership and Differentiation strategy
By maintaining this strategy, Zara focuses on cost leadership and differentiation as 2
competitive advantages. Cost leadershi
How to make a DIY (Do-It-Yourself) Drawstring Pouch
Having bags and pouches are important especially for girls to keep things organized.
Bags and pouches are versatile and it seems you can never have
5 PORTERS MODEL
1. THREAT OF NEW ENTRANTS
With the fast growing fashion industry, force of new players is high since the clothing
and retail industry is very attractive. The attractiveness of the indu
Inputs
Enter revenues in current year =
Enter size of overall market in current year =
Enter expected growth rate in overall market =
Enter expected market share in 5 years =
Enter expected market sha
Solution Set 2
Foundations of Finance
Problem Set 2 Solution: Portfolio Management and the CAPM
I.
Expected Return, Return Standard Deviation, Covariance and Portfolios:
State
Probability
Asset A
Asse
2c20dcaa448c68426471ec6873f558cef59d448f
Date
Open
High
Low
Close
Volume
Adj Close
9/1/2016
2171.330078 2187.870117 2119.120117 2164.689941 3851216800 2164.689941
8/1/2016
2173.149902 2193.810059 2147