FIN4011
CHAPTER 4
HANDOUT
[NAV Calculation] At the close of trading on Aug. 1st, the Company XYZ mutual fund held $10,500,000
worth of securities, $1,000,000 of cash, and $500,000 of liabilities. The
FS-FIN4011 Investments
Homework 3
Due 9/25
1. (PS-14) DRK Inc. has just sold 100,000 shares in an initial public offering. The underwriters
explicit fees were $60,000. The offering price for the share
FS-FIN4011 Investments
Homework 1
Due 9/11
1. (PS-9) Lanni Products is a start-up computer software development firm. It currently owns
computer equipment worth $30,000 and has cash on hand of $20,000
Optimal Risky Portfolio:
Many Risky Assets
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
Portfolio Choice with Many Risky Assets
Discussions
Securities Market:
The Issuance and Trading of Securities
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview
How securities are issued?
Primary v
Asset Classes and Financial Instruments:
Equity, Market Indexes, and Derivatives
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview: Segments of
Introduction:
Recent Trends and The Financial Crisis
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Recent Trends
Computer Networks
We have seen a tre
Asset Classes and Financial Instruments:
Money Market and Bond Securities
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview: Segments of Financi
Introduction to Risk and Return:
Interest Rates and Investment Returns
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview
Investment decisions sh
Introduction:
The Investment Environment
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
Investment
The concept of investment
Real vs. nancial
) c? bw'&t'M
Name:
-~-
Your dad just received a big bonus for his great performance at work. He is thinking about investing
the money as a future fund for your wedding (maybe a car). Since you're taki
Carl H. Linder College of Business
University of Cincinnati
FIN 7041: Investments
Exam I Formula Sheet
Suppose nominal interest rate is R and ination rate is i, then real interest rate is r =
Ri
1+i
S
FIN7041 Final Exam Preparation Guide
The Final Exam would cover: (1) Chapters 6 to 9 (mainly calculations); (2) Chapter 10 to 12 (both
concepts and calculations). Concept questions are mostly about im
1. Suppose the universe of available securities include only two risky assets, A and B, and T-bills.
E(r)
(j
10%
25%
5%
Asset A
Asset B
T-bills
20%
40%
0%
The correlation between fund A and fund B is
Carl H. Linder College of Business
University of Cincinnati
FIN 7041: Investments
Final Exam Formula Sheet
Optimal Portfolio: There are two risky assets, A and B. The expected returns are E(rA ) and
E
~o/at4on
~-'-~-
FIN704llnvestments Mid-Term Exam I
Name: _
As the fiscal future of our government becomes gloomy, people have to rely more on their own
investments (e.g., for retirement). This creates
The Capital Asset Pricing Model
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview
The Capital Asset Pricing Model (CAPM)
The CAPM determines exp
Asset Allocation:
Combining Cash and One Risky Asset
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Introduction
Asset allocation: Allocating your inv
FIN70411SFS Midterm Exam Practice Problems
1. Fixed-Income
Maturity
Feb 15 2015
Coupon
4.000
Bid
105.6250
Yield
3.017
Asked
105.6875
What is the purchase price of one T-bond ($ 1,000 face value)? How
FIN7041 15FS Homework 3 Solution
Chapter 3 Concept Review Problems
1. A stop-loss order will sell a security at the current market price if its price falls below a given level.
With a limit sell order
FIN7041 15FS Homework 2 Solution
Chapter 2 Concept Review Problems
2.
Money market securities are called cash equivalents because of their great liquidity. The
prices of money market securities are ge
FIN7041 15FS Homework 1 Solution
Chapter 1 Concept Review Problems
1.
Real assets determine the material well-being of an economy, while financial assets only
determine the allocation of income genera
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APPENDICES
A
Quantitative Review
B
References to CFA Questions
C
Glossary
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A
P
P
E
N
D
I
X
A
QUANTITATIVE R
The Ecient Market Hypothesis:
Empirical Evidences
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Review
The Ecient Market Hypothesis
EMH: Stock prices
Multifactor Asset Pricing Models
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
Empirical Performance of the CAPM
Multifactor Asset Pricing Mo
The Ecient Market Hypothesis:
Ideas and Implications
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview
Are stock prices predictable?
Maurice Ken
The Single-Index Model
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
The Single-Index Model: Conceptual Framework
Portfolio Alpha and Beta, D
Optimal Risky Portfolio:
Two Risky Assets
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
Overview
Diversication and Portfolio Risk
Portfolio o
The Arbitrage Pricing Theory
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Outline
Arbitrage: Concepts and Examples
Large-Market Arbitrage Pricing wi
Behavioral Finance
Prof. Chen Xue
Carl H. Lindner School of Business
University of Cincinnati
FIN 7041: Investments
Overview
The Behavioral Critique
I can calculate the motion of heavenly bodies, but