1
Chapter 3: How Securities are Traded
Total equity (purchase of stock) = Number of shares x Price per share
Investors equity or margin = Total equity Liabilities
Total liabilities = Borrowed amount (principal) x (1 + r)n
Margin balance/investors equity o

1
Student Name (In Capital Letters): _
2014
Please Tick Mark ( ) Section Numbers:
11:20AM)
Total Points: 100
02 (8:30AM - 9:50AM)
Due date: March 19,
04 (10:00AM -
Chapter 8 Index Models and Arbitrage Pricing Theory (8 Questions each worth 3.85 points)
Q1

1
Student Name (In Capital Letters): _
2014
Please Tick Mark ( ) Section Numbers:
11:20AM)
Total Points: 100
02 (8:30AM - 9:50AM)
Due date: February 3,
04 (10:00AM -
Chapter 3: How Securities are Traded (7 Questions each worth 3.70 points)
Q2) Suppose tha

1
Chapter 8 Index Models and Arbitrage Pricing Theory
Estimates of co-variances =
Estimates to optimize portfolio =
Single index model: ri rf = i + i(rM rf) + ei
i = stocks expected return if markets excess return is zero
i (rM-ri) = the component of retu

1
Student Name (In Capital Letters): _
2014
Please Tick Mark ( ) Section Numbers:
11:20AM)
02 (8:30AM - 9:50AM)
Due date: January 15,
04 (10:00AM -
Total Points: 100
Chapter 1 and 17: The Investment Objectives (4 Questions each worth 5 points)
Q1)
Suppose

1
Chapter 18 Options Valuation
d1 = [In(S0/X) + (r + 2 / 2)T] / (T).50
d2 = d1 - (T) .50
N(d1) = S0 Xe-rT
Variance ( 2) = ()2
d = Area under the standardized normal distribution up to the expression inside the brackets. For example, d(0)
[Meaning: d of 0]

COMM367.3 (02, 04)
Security Analysis and Evaluation
Course Outline
2013/14 Term 2
The Edwards School of Business develops business professionals to build nations.
Instructor
Telephone
Office
Email
Office Hours
Lecture Time
Lecture Location
Dr. Amarjit Gil

1
Student Name (In Capital Letters): _
2014
Please Tick Mark ( ) Section Numbers:
11:20AM)
Total Points: 100
02 (8:30AM - 9:50AM)
Due date: March 19,
04 (10:00AM -
Chapter 8 Index Models and Arbitrage Pricing Theory (8 Questions each worth 3.85 points)
Q1

1
Chapter 15: Security Analysis
g = ROE x b
D1 = EPS x (1 b)
P0 = D1 / (k g)
P3 = P0 (1 + g)3
k = rf + i[E(rM) - rf]
D1 = E0 x (1 + g) x (1 b)
P0 = D1 / (k g)
P/E Ratio = Price per share / EPS
Earnings at time period 1 (E1) = EPS0 x (1 + g)
Leading = P0 /

1
Chapter 5 Risk Aversion and Capital Allocation to Risky Assets (15 Questions)
n
Expected cash flow [E(CF)] = Sum of possible cash flows x Their Probabilities = E (CF )
pi CFi
Required rate of return (r) = Rf + [E(RM) Rf]
i
1
Market risk premium (RPi) =

1
Student Name (In Capital Letters): _
2014
Please Tick Mark ( ) Section Numbers:
11:20AM)
Total Points: 100
02 (8:30AM - 9:50AM)
Due date: February 26,
04 (10:00AM -
Chapter 5 Risk Aversion and Capital Allocation to Risky Assets (15 Questions each worth

1
Chapter 12: Bond Prices and Yield
Effective rate = (FV / PV)m - 1
FV = Future value; PV = Present value; m = Number of times the interest is compounded in a year
m
APR
1
Effective Annual Rate (EAR): EAR 1
m
Current yield = Coupon payment / Price =
Y

1
Chapter 7: The Capital Asset Pricing Model
E(r ) = r + [E(rM) rf]
P
f
P
Risk premium = [E(rM) r ]
f
New discount rate for the security = r + rP
f
Price = Dividend / Discount rate = 50 = D /.14
1
1 (1 r ) t
PV Annuity C
r
or PV of an Annuity = cfw_1 [1

1
Chapter 4: Concepts and Issues: Return, Risk, and Risk-Aversion
s
E (r ) pi ri
i
1
s
2
Variance p(i ) r (i ) E (r )]
[
2
i
1
Standard deviation = (2)1/2
1
1 (1 r ) t
PV Annuity C
r
or PV of an Annuity = cfw_1 [1 / (1+r)t] / r
Present value (PV) = FV /