Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 3 Answer Key
Question 1:
(a) The pricing formula for the stock price is given by
Dt+1 + Pt+1
1+k
Pt =
where k is the discount factor or the implied return. The discount
Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 1 Answer Key
Question 1:
(a) The margin requirement is 0.2 which means that the amount x that can be borrowed
for the margin purchase of $500 is given by
500 x
= 0.2.
50
Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 2 Answer Key
Question 1:
(a) The investors maximizes his utility subject to the constraint of facing the efficient
frontier. His portfolio choice is thus given by a solu
Economics 322
Winter 2017
Topics in Macroeconomics
Thorsten Koeppl
Answer Key to Midterm
Question 1 - 2: A security yields a return of 6% with probability 1/4 and 2% with probability 3/4. Calculate the expected return for the security.
(a)* 0%
(b) 1.5%
(c
Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 2
(Due: Friday, February 17 Dropbox until 3:00 pm)
1. Consider an efficient frontier that is described by the function
E[RP ] = 0.5 +
P 0.5.
(0.1)
The minimum variance p
Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 3
(Due: Wednesday, March 22 Dropbox until 3:00 pm)
1. Suppose the price of a common stock closes at $49 on March 17 after the announcement
that an extraordinary dividend
Midterm Hints!
Economics 322
Fall 2014
Instructor: Robert J. McKeown
The midterm exam is scheduled for October 30th at
8:30am. The class has been separated into two rooms.
Students with a family name beginning in A-K write in
Kinesiology 101.
Students wit
Economics 322
Winter 2017
Fin. Markets and Risk Management
Thorsten Koeppl
Assignment 4 Answer Key
Question 1:
(a) We first need to obtain the yield to maturity for the consol. The price of a consul is
given by
X
CA t
1
C
PA =
=C
1 C =
1+y
y
1 1+y
t=1
Hen