Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week is talking about the two main
areas that are obscurity and rhetorical
devices. The language will mislead as the
results
of
jargon,
vagu

29/09/2015
1
FINA303 DERIVATIVES
LECTURE 11 GREEK LETTERS
EXAMPLE (PAGE 365)
29/09/2015
A
FINA303 DERIVATIVES
bank has sold for $300,000 a European
call option on 100,000 shares of a nondividend- paying stock
S0 = 49, K = 50, r = 5%, s = 20%,
T = 20 week

5/10/2015
1
FINA303 DERIVATIVE
LECTURE 12 BINOMIAL TREES IN
PRACTICE
BINOMIAL TREES
5/10/2015
Binomial
Mean
Variance
FINA303 DERIVATIVE
trees are frequently used to
approximate the movements in the price of
a stock or other asset
In each small interval

Tutorial 7. Binomial Tree
Binomial tree is a useful and very popular technique for pricing an option. This is a diagram
that represents different possible paths that might be followed by the stock price over the life
of the options. The structure of binom

Value of index in three months
Futures price of index today
Futures price of index in three months
Gains on futures position
Return on the market
Expected return of the portfolio
expected vaule of portfolio
Total value of positions in three months
Return

Tutorial 8. Binomial Tree
Binomial tree is a useful and very popular technique for pricing an option. This is a diagram
that represents different possible paths that might be followed by the stock price over the life
of the options. The structure of binom

23/09/2015
1
FINA303 DERIVATIVES
LECTURE 10 BLACK-SCHOLESMERTON (BSM) OPTION PRICING
MODEL
HISTORY OF BSM OPTION PRICING MODEL
23/09/2015
Proposed by Fisher Black, Myron Scholes and
Robert Merton in the early 1970s.
Scholes and Merton were awarded the No

In an interest rate swap the principal is not exchanged
In a currency swap the principal is exchanged at the beginning and the end of the swap
TYPICAL USES OF A CURRENCY SWAP
Conversion from a liability in one currency to a liability in another currency
C

Tutorial 3. Hedge using stock index futures.
Consider the following situation
Index
1,000
Index futures price
1,010
Portfolio value
$1,010,000
Risk free rate per annum
5%
Dividend yield on index
1%
Portfolio beta
2
Each futures contract is pm $250 times t

Leasing
The process by which a frim can obtain the use of certain assets for which it must make a
series of contractual, periodic, tax deductible paymens.
Lessee is the receiver
Lessor is the onwer of the assets
Operting leasing:
Is normally a contractual

Lectures 1 & 2
Financial Evaluation of Investment Opportunities:
Discounted Cash Flow Valuations
MMPA 504
Trimester 1, 2016
Lecturer: Tina Wendel
Learning objectives
Explain capital budgeting in the context of corporate finance
Explain time value of mon

Individual Learning Logs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
This week tutorial is focuse on dealing
evidence. This topic shows the quality of
evidence depends on the source, the
relationship of evidence wi

IndividualLearningLogs
Name: Zhong Heng
Student ID: 24839116
1. What concepts were covered in the
tutorial?
The structure of arguments
-Contentions
-Reasons
-Objections
Rebuttal opposed opinions
2. What was the activity/ies
undertaken during the tutoria

16.3)
a)
The present values of the three alternatives are:
PV(liq) = 120
PV(A)=135/(1+rf)=135/(1+0%)=135
PV(B) = [(0.5 (161+0.569)]/(1+0%) = 115
Thus, project A has the highest present value.
b)
Yes, Jack and Jill should agree to loan the firm 20. If they

12.2)
The cash flows from the project (in $ millions) have the following tree diagram:
1000 or 500
PVu
PV0
200 or 100
PVd
-500 or -250
The tree diagram for the risk neutral probabilities derived from the returns to investing in the
market is:
u=.70 $1.20

9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning the month after her 60th birthday, of 2,000 (after taxes)

9.5 A woman who has just turned 24 wants to save for her retirement through a defined benefit
employee pension scheme. She plans to retire on her 60th birthday and wants a monthly
income, beginning the month after her 60th birthday, of 2,000 (after taxes)

14.2)
Initially, the expected payoff to equity is: (0.5) (210 50) + (0.5) (80 50) = $95
Therefore, the price per share is: 95/100 =0.95
14.3)
a)
In the good state, both the new debt and the existing debt are paid in full. In the bad state, the
debt holder

1. You are analyzing the beta for Hewlett Packard and have broken down the company into
four broad business groups, with market values and betas for each group. The firm has 36%
corporate tax rate.
Business Group
Mainframes
Personal
Computers
Software
Pri

12.3)
Sq foot
Cost/Sq foot
Good state
Bad state
Price Now/ sq
foot
Rent (% of
price now)
Apartment
10000
120
230
140
180
House
3000
100
300
200
225
20%
10%
a)
Since both house and condo values per square foot have to satisfy risk neutral valuation, we
can

10.2 Consider the purchase of a new milling machine. What purchase price makes the NPV of the project zero? Base
your analysis on the following facts.
The new milling machine will reduce operating expenses by exactly 20,000 per year for 10 years. Each of

MID TERM TEST 2013
TRIMESTER 2
FINA303
DERIVATIVES
Time allowed: 50 Minutes
Instructions: Closed Book
20 multiple questions to be answered
Each question is worth five marks
Only silent non-programmable calculators or silent
programmable calculators with t

27/07/2015
FORWARD AND FUTURES PRICES
1
FINA303 DERIVATIVES
LECTURE 4 DETERMINATION OF
CONSUMPTION VS INVESTMENT ASSETS
27/07/2015
Investment assets are assets held by significant
numbers of people purely for investment
purposes (Examples: gold, silver)

EXAMINATIONS 2014
TRIMESTER 2
FINA303
DERIVATIVES
Time allowed: TWO HOURS
Instructions:
Closed Book
Twenty questions to be answered.
Questions 1 to 15 are worth 3 marks each.
Question 16 is worth 12 marks.
Question 17 is worth 10 marks.
Question 18 is wor

School of Economics and Finance
FINA303 DERIVATIVES
Trimester 2, 2015
ASSIGNMENT 4 (Due: 4 pm, 16/10/2015)
1. The current price of a non-dividend-paying stock is $100 with a volatility of 20%. The
risk free interest rate is 3%. For a three month step:
(1)