RSM332 Problem Set 1 - Spring 2015
Due in class on February 9/10
Only one copy of your write-up should be submitted for your group. Every member of
the group will receive the same mark on the assignment.
On the cover page, list the full names and student

RSM 332 H1F
Lecture 3: Time Value of Money /
Present Value Concepts
What is Time Value of Money (TVM)?
Value of a dollar today is not the same as the
value of a dollar 1-year from now
Buy different amounts (inflation) buying power
Buy different things

Notes on Arbitrage Pricing Theory
Review of Regression
If you are not comfortable with the topic of linear regression, you may wish to review your intro stats material
with a focus on: normal distributions, confidence intervals and hypothesis testing, t-t

RSM 332 H1F
Lecture 2: Optimal Consumption
and Investment
Maximization
To find optimal consumption and
investment amounts we will use calculus
Maximization problems
What aspect of the curve below helps identify the
maximum point?
?
Slope = 0
2
Review o

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
RSM332
Tutorial 1 Problem Set
September 21/23, 2016
1. Consider a consumer whose utility function U is defined on consumption today, C0 ,
and consumption in the future, C1 , and is equal to U (C0

UNIVERSITY OF TORONTO
Faculty of Arts and Science
and
Rotman School of Management
Final Examinations, December 2015
RSM 332H1F Capital Market Theory
Duration: 2 hours
Aids Allowed: Silent electronic calculator and one 1-sided 8 12 11 crib sheet
Name:
Stud

Plan for Today
RSM 332, Week 1, Kevin Wang
B Getting Started with Examples
B Course Overview
B Three Asset Classes
1
Getting Started with Examples
A look at Dell: Jan 1990 - Dec 1999
Yahoo Finance Charts#symbol=dell;range=my;indicator=volume;charttype=lin

RSM 332: Capital Market Theory
Lecture 2: Financial markets and net present
value
Prof. Alex Corhay
September 22, 2016
Why Is This Important?
I
Do capital markets benefit society?
o Are individuals better o when financial markets exist?
I
Can managers sat

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Dec. 13, 2012
RSM332
Brean/Kadar
Kan/Yang/Yung
FINAL EXAMINATION
SOLUTIONS
1. (a) Let wA be the weight on security A. Then,
p = wA A + (1
p B
) wA =
A B
0.16 0.2
) wA =
0.12 0.2
) wA = 0.5.
wA )B

Lecture 5
Valuation of Stocks
Erfan Danesh
Rotman School of Management
Lecture agenda
Characteristics of stock
Valuation of common stocks
Stock price: PV of future dividends
Gordon models
Zero-growth
Constant growth
Differential growth
NPV of growth oppor

Lecture 9
The Arbitrage
Pricing Model
Erfan Danesh
Rotman School of Management
Lecture agenda
APT Theory
APT vs. CAPM
Apply and Test APT
Erfan Danesh, RSM 332 Capital Market Theory
2
The BIG Picture
Two general approaches to valuing assets under uncertain

RSM 332 Tutorial 5
Tina Tan
October 19/21, 2016
Tina Tan (University of Toronto)
RSM 332 Tutorial 5
October 19/21, 2016
1 / 15
Announcement
Mid-term: 8pm-10pm, October 25, Tuesday, EX100 and EX200
Prepare your own formula sheet, one-sided A4 page
Bring a

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Oct. 16, 2009
RSM332
MID-TERM EXAMINATION
Fang/Kan
Pomorski/Yang
SOLUTIONS
1. (a) The effective 6 month interest rate is r = exp(0.05/2)1 = 0.025315. Let x be the
amount of your semi-annual withd

Lecture 6
E (RA ) = p1 RA1 + p2 RA2 + . + pN RAN
2
2
2
2
E RA
= p1 RA1
+ p2 RA2
+ . + pN RAN
2
2
2
A
= E RA
E (RA )
E (RA RB ) = p1 RA1 RB1 + p2 RA2 RB2 + . + pN RAN RBN
AB = E (RA RB ) E (RA ) E (RB )
AB =
AB
A B
Lecture 7
E (RP ) = wA E (RA ) +

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
RSM332
PROBLEM SET #2
SOLUTIONS
1. We first figure out the effective monthly interest rate, rm . Since (1 + rm )12 = 1.12, we
have
1
rm = (1.12) 12 1 = 0.0094888.
There are many ways to compute t

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
RSM332
PROBLEM SET #1
SOLUTIONS
2
1. (a) The net output of corn at date 1 = 90 64,000 3 = 144,000.
2
(b) We know from the transformation formula that W1 = 90 I03 . Thus to harvest
W1 at date 1, w

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
RSM332
PROBLEM SET #3
SOLUTIONS
1. (a) The expected returns on each security are all equal to 17%. As an example of how
to calculate this,
E[R1 ] = 0.4(0.3) + 0.4(0.1) + 0.1(0.1) + 0.1(0.0) = 0.1

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Oct. 25, 2011
RSM332
Kan/Simutin
Yang
MID-TERM EXAMINATION
SOLUTIONS
1. Let one period be six months and D be the amount of semi-annual deposits. Kathy
will deposit D from t = 1 when Larry is fiv

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Oct. 25, 2011
RSM332
MID-TERM EXAMINATION
Kan/Simutin
Yang
DURATION - 2 hours
Aid Allowed: Silent electronic calculator and one 1-sided 8 12 11 crib sheet
Student Number:
Name:
Circle the section

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Nov. 13, 2007
MGT337Y
MID-TERM EXAMINATION #1
Bal/Chang/Lenouvel
Pomorski/Rahaman
SOLUTIONS
1. a. Since the bond trades at par, the yield to maturity is equal to the coupon rate, 5%.
b. The price

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Oct. 21, 2008
RSM332
Ezer/Kan/Florence
Pomorski/Zhou
MID-TERM EXAMINATION
SOLUTIONS
1. (a) For Mr. Oh, his consumption at time 0 and time 1 are given by C0 = 1000 I0
1
and C1 = 30I02 . Therefore,

University of Toronto - Rotman School of Management
RSM 332 Midterm Exam
Duration: Two hours
February 24, 2015
Please do not open this exam until you get the go-ahead.
This is a closed book exam. A non-programmable calculator is allowed.
You may use a

UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
Oct. 17, 2014
RSM332
MID-TERM EXAMINATION
Babaoglu/Huggins
Yang/Yung
SOLUTIONS
1. (a) If Jason does not invest, his utility will be min[120, 100] = 100. If he takes one
project, his date-0 consum

Lecture 3
Bond Valuation
Erfan Danesh
Rotman School of Management
Lecture agenda
Bond valuation: P = PV of cash flows
Zero coupon bonds, level coupon bonds
Yield to maturity
Factors affecting bond prices
Erfan Danesh, RSM 332 Capital Market Theory
2
Motiv