Week 1
What is finance
1. Financial system
The financial system functions to facilitate the flow of fund between
deficit & surplus units through the interaction of financial institutions,
instruments & markets.
2. Definitions
A deficit unit saves less t
BFF9140: Bank Lending
DRAFT EXAM SOLUTIONS
Section A: (10 x 1.5 mark = 15 marks)
Question 1:
The amount of current assets required to meet a firms long-term minimum needs is
referred to as _ working capital
A
permanent
B
temporary
C
net
D
gross
Question 2
T4Q1
a.
D4 = 10 x 1.153 x 1.12 x 0.5 = $8.06
P3 = 8.06 / (1.4 x (8% - 5%) + 5%) = $87.6
V = $87.6 / (1.4 x (8% - 5%) + 5% + 1)3 = $67.28
b.
Multistage growth models allow dividends per share to grow at several different rates as the firm
matures. Many ana
BK Ch 15: Q10
a. A 3-year zero coupon bond with face value $100 will sell today at a yield of 6% and a
price of: $100/1.06 =$83.96
Next year, the bond will have a two-year maturity, and therefore a yield of 6% (from next
years forecasted yield curve). The
BKM Ch 22 Q13:
a. 120 x 1.06 = $127.2
b. The stock price falls to: 120 x (1 0.03) = $116.4
The futures price falls to: 116.4 x 1.06 = $123.384
The investor loses: (127.20 123.384) x 1,000 = $3,816
c. The percentage loss is: $3,816/$12,000 = 0.318 = 31.8%
T10Q1
(a) Because K = 100, so payoffs of call at maturity are:
Cu = maxcfw_ uS K, 0 = 10 and Cd =maxcfw_dSK,0=0.
Initial cost of the portfolio would be:
S + B = 100 + B,
since the portfolio is replicated consisting of units of the stock and borrowing/
inv
T6Q1.
a) Technical analysis concentrates on the security price and uses this data to predict its future price.
Fundamental analysis focuses on economic factors.
b) It is not enough to do a good analysis of a firm; you can make money only if your analysis
T3Q1
a.
The basic procedure in portfolio evaluation is to compare the returns on a managed portfolio
to the return expected on an unmanaged portfolio having the same risk, using the SML. That
is, expected return is calculated from: E(r p) = rf + (E(rM) -
T2Q1
a.
5% + (12% - 5%) x 1 = 12%
b.
Since the = 0, there is no systematic risk. The stocks expected rate of return is 5%.
c.
The stocks fair expected rate of return is:
5% + -0.5 x (12% - 5%) = 1.5%
However the actually expected rate of return next year
BKMCh 20: Q7
a.
Put-call parity: P = C S0 + [X/(1 + rf)T] = 10 100 + [100/(1.1)1/4] = $7.65
b.
Purchase a straddle, i.e., both a put and a call on the stock. The total cost of the straddle is: $10 +
$7.65 = $17.65. This is the amount by which the stock wo
T1Q1
a.
Payof
840
Bills and calls
780
Stock fund and puts
780 840
ST
b.
The strategy of bills and calls has greater payof when the 840 > ST >780, so it will be more costly.
c.
Bills
Calls
Cost
Profit
840
0
930
-90
Stocks
Puts
Cost
Profit
700
80
906
-126
S
ETB2111 Business Data Modelling
Topic: Inference on the Population Mean
(Read Sections 3.1 -3.4 in AWZ or use Selvanathan or Black), a
topic covered in a pre-requisite unit Bus Stats.
Week 2 Lecture part (a) Plan
Revision Inference on a population mean
ETB2111 Business Data Modelling
In-Class Lecture Week 08
Simple Linear Regression (Part 1): Revision of work done
in Bus Stats
Introduction
Scatter plots
Least squares estimation
Using Excel
Reporting results
Assessing a model: the
Standard error of
Index Name:
ALL ORDINARIES
Constituent
1300 Smiles Ltd
360 Capital Industrial Fund
Abacus Property Group
Abm Resources NL
Acrux Ltd
Aditya Birla Minerals
Ainsworth Game Technology Ltd
AJ Lucas Group Ltd
Alacer Gold Corp.
Alchemia Limited
Ale Property Grou
ETB2111 Business Data Modelling
Inference on population proportions (Read Sections
9.5, 9.9 & 10.4.1 in AWZ)
Pre-Lecture Week 03 (part a) Plan
Sampling distribution of a proportion
Confidence interval on a proportion
Hypothesis test on a proportion
DK_
ETB2111 Business Data Modelling
In-Class Lecture Week 05
Statistical Inference for Comparing Two
Population Means- Paired samples & Two
Population Variances
ETB2111 In-Class Lecture Wk 04 (DK)
Statistical Inference for Comparing Two Population Means- Pair
ETB2111 Business Data Modelling
In-Class Lecture Week 06
Statistical Inference for Comparing Two Population Proportions
&
Chi-square test for comparing more than two proportions
Introduction
Sampling distribution of the difference in proportions
Confidenc
7:1
TOPIC 7: TESTING THE EQUALITY OF TWO VARIANCES
(AWZ 10.4.3)
7.1
Introduction
Why is such a test important? Recall that the t test for the difference in two means
used a "pooled variance" which required 12 = 22 . Thus, being able to test for
equality o
6:1
TOPIC 6: DIFFERENCE BETWEEN TWO MEANS
(AWZ)
6.1
Introduction
A very important part of statistical inference is the area of comparisons between
populations. Consider the following questions.
(1)
Is computer aided learning a more effective way of learni
5:1
TOPIC 5: DETERMINATION OF SAMPLE SIZE
(AWZ 9.9)
5.1
Introduction
Recall the subject of confidence intervals from Topics 3 and 4. For example,
confidence interval for a population mean, is obtained from x B , where x is the
corresponding sample mean an
ACB2020 Tut 4 Answers
3.1
(a) Cost estimation: the process of determining how a particular cost behaves.
(b) Cost behaviour: the relationship between cost and the level of activity (that is, cost driver).
(c) Cost prediction: using knowledge of cost behav