Econ 111 Section 3
Juliana Salomao, Igor Salitskiy
Feb 3, 2012
Outline
Review of Portfolio Choice
Practice questions
Forming Portfolios
Starting with the simplest framework
One riskless (or risk free)
Section 5 - Econ 111
Juliana Salomao
February 16, 2012
1) When yield curves are steeply upward sloping,
A) short-term interest rates are about the same as long-term interest rates.
B) short-term inter
Econ 111 Section 5
Juliana Salomao
Feb 17, 2012
Outline
Practice Multiple Choice Questions
Calculation Questions on Expectation Hypothesis
Multiple Choice Questions
1) When yield curves are steeply up
Econ 111 Section 6
Juliana Salomao, Igor Salitskiy
February 24, 2012
Outline
Multiple choice questions on Ecient Market Hypothesis
(EMH)
Review of Capital Asset Pricing Model (CAPM)
Multiple Choice Qu
Econ 111 Section 7
March 2, 2012
Outline
Questions on Term Structure and CAPM
2011 Final
Others
Question 1
The current one-year interest rate is x%. The long run average for
interest rate is 4%. The o
Econ 111 - Section 7
March 2, 2012
Question 1
The current one-year interest rate is x%. The long run average for interest
rate is 4%. The one year interest rate next year will increase by 0.05% with
p
Econ 111-Section 8
March 8, 2012
1)A customer owns 200 shares of stock X at $90, and wishes to hedge the position while generating
income. What is the best recommendation?
A) Sell calls
B) Sell puts
C
Econ 111 Section 8
March 9, 2012
Outline
Multiple Choice Question on Derivatives
Practice questions for Option and Foward Rates
1)A customer owns 200 shares of stock X at $90, and wishes to
hedge the
Econ 111 - Section 3
Juliana Salomao, Igor Salitskiy
February 2, 2012
You are the boss of a fund management company. The rm currently oers two products, a 'US MARKET' fund, which invests exclusively i
Econ 111 Section 2
Juliana Salomao, Igor Salitskiy
Jan 27, 2011
Outline
Interest rates. Examples in real life
Review of Lump Sum Calculations
Present and Future Value of a Lump Sum
Solving for interes
THE STOCK MARKET
Popular Views: Fundamentals or Crowd Psychology ?
Fundamentals: discounting and p/e ratios
Crowd Psychology: bubbles
Theories of Expectation Formation
N Pre 70s view: Adaptive Exp
DERIVATIVES
1. Forward or Futures Contracts
= obligation to buy or sell something at a given date in
the future at a price (= futures price) xed today.
Interest rate futures
N long v. short futures p
Review section problems
Juliana Salomao, Igor Salitskiy
Mar 16, 2012
Annuity
Q1. 10 years from now, you plan to buy a house worth 1 million. You want to
nance the house purchase with a 20% downpayment
Econ 111 Review session
Juliana Salomao, Igor Salitskiy
Mar 16, 2012
Annuity question
Q1. 10 years from now, you plan to buy a house worth 1 million.
You want to nance the house purchase with a 20% do
Review
Econ 111 W12
()
1/8
Financial Markets v. Institutions
Both channel funds from savers to borrowers
Why not only markets ?
Transaction costs
Asymmetric information (moral hazard, adverse selectio
SECTION 7 : ECON 111
FEBRUARY 24, 2011
MULTIPLE CHOICE QUESTIONS
1) If in an efficient market all prices are correct and reflect market fundamentals, which of the
following is a false statement?
A) A
Econ 111 - Section 1
Jan 20, 2012
MULTIPLE CHOICE: Choose the one that best completes the statement or
answers the question.
1) Financial markets improve economic welfare because
A) they channel funds
Econ 111 - Section 2 (01/27/11)
Juliana Salomao, Igor Salitskiy
Formulas:
Lump Sum Calculations
Assume:
i=interest rate (not in %)
n=life of lump sum investment
PV be present value
FV be future va
PART II.1: DISCOUNTING
Lump Sum Calculations
N Compounding
N Present & Future Value of a Lump Sum
N Solving for the interest rate
N Application: comparing bonds and loans
N Solving for the number of