ECON 1095 QUANTITATIVE METHODS IN FINANCE
Final Exam Answers
Sem 1 2007
_
QUESTION 1
(a)
For y = a + bx +cx2 , the intercept = a, slope is
the elasticity is
(b)
(c)
dy x
x
= (b + 2cx)
dx y
y
For y = a + b.t + c.t2 , and the growth rate is
then
dy
= b + 2c
Topic 6 - Monopoly
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
Question 1
The important barriers to entry include: economies of scale, legal barriers such as
patents and licences, and ownership of essential raw materials.
(For
EXAM COVER SHEET
RMIT University Examinations
EXAMINATION DETAILS
Course code/s:
ECON 1095
Course name/s:
Quantitative Methods in Finance
Date of exam:
Friday 12th June 2007
Time of exam:
9.15 am to 12.30 pm
Duration of exam:
3 hours plus reading time
Tot
ECON 1095 QUANTITATIVE METHODS IN FINANCE
Final Exam Answers
Sem 1 2007
_
QUESTION 1
(a)
Linear
(b)
For the market model equation
(i)
0
1
is the slope
(iii)
As
= 0 + 1RMt
is the intercept
(ii)
Rit
(c)
Rit
(iv)
dRit
dRit Rmt
R
= 1 this is the slope, the el
ECON 1095 QUANTITATIVE METHODS IN FINANCE
Final Exam Answers
Sem 1 2006
_
QUESTION 1
(a)
A linear function:
y = a + bt
where b is the constant absolute change in y per time period (t).
(b)
An exponential function:
y = a.ebt
where b is the constant growth
Prices and Markets
Questions for Demonstration Lectures
Topic One: Markets
1
(a) What is a market and why is it in a firm's interests to determine its market
or market boundaries?
(b) Describe the characteristics that must be discussed in order to determi
Topic 3 - Applications of Demand and Supply
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
P
Question 1
S
(a)
35
A
20
B
5
-10
D
30
0
(b) At equilibrium PE = $20
(c) CS
PS
=
=
225
225
and
Q
70
QE = 30,000kg
$225,000 (area A)
$225
Topic 2 - Demand, Supply and Elasticity
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
Question 1
(a) (i)
P
S
40
25
20
D
-25
0
55 75 100
200
Q
To sketch the demand and supply curves
choose any two prices, substitute into the
deman
FORMULA SHEET
Financial Mathematics
P0 =
t =1
FVn = C (1 + r) n
P0 =
PV = C n /(1 + r) n
FVn = C 1 +
PV =
Pt =
FV = C e rn
FVn = PV (1 + g)
C
1
1
r (1 + r ) n
PVA n =
FVA n =
[
]
C
(1 + r ) n 1
r
PS 0 =
D t +1
R g
D1
(1 + R)1
Annuity due value
Topic 1 - Markets
Demonstration Lecture Questions
(Brief Solution Guide to the Questions)
Question 1
(a) There are a variety of definitions given eg, any institutional structure, or
mechanism, that links potential buyers with potential sellers (Jackson pa
I.
Solving simple equations:
An equation is a mathematical statement in which the verb is Equal i.e. =. It establishes
the equality of two expressions and involves an unknown variable represented by a letter. For
instance: x + 3 = 8
The process of finding
Topic 4 - Production and Costs
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
Question 1
Jackson, page 71, Q1 - Discuss (a) wants for a single item by an individual versus
wants for a range of goods and services for society as a w
1
Introduction
As a companys aim is always maximizing the shareholders wealth, it is vital for the
executive officers deciding wisely in financial decisions, or in another word,
performing well in financial management. There are three different financial
School of Economics, Finance & Marketing
BAFI1008 Business Finance
_
Topic 4 Capital Budgeting
Part 1
Tutorial Questions
Question 1
What is the payback period if the initial investment is $60,000 and the net cash-flows are:
Year
Year
Year
Year
Year
1
2
3
Business Computing 1 (ISYS2056)
ANALYSING A SPREADSHEET AND PRESENTING A BUSINESS REPORT
Due Date: Sunday September 20, 11:59 pm 2015
(15% of Final Grade)
Case Study
Colin Hammer, the owner and manager of Hammer Wines, has decided to trial the sale of a n
School of Economics, Finance & Marketing
BAFI1008 Business Finance
_
Topic 3 Valuation
Part 1 Bonds
Tutorial Questions
Question 1
Wesfarmers P/L has issued bonds earning a 7% p.a. coupon rate. The interest is paid
semi-annually and the bonds mature in eig
Student Name:
SECTION C - Database Section
At the Port Melbourne Wholesale Fish Market George (the Chief Executive Officer) and
Francesca (the Office Manager) want to create a database to record retailers orders for
seafood. Francesca will record all orde
Topic 3
Valuation
Part 2
Equity
Overview
In this lecture we will discuss:
Models of share valuation;
The dividend valuation model;
Constant growth stocks & the constant growth in dividends pricing model;
Dividend yields, capital gains yields, & total ret
THE DEFINITION of the derivative is fundamental.
The student should be thoroughly familiar with it. From that definition it is possible to prove
various rules, some of which we will present in this Course. The student will find it extremely
helpful to sta
Topic 8 - Market Failure
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
Question 1
(a)
Externalities are any costs or benefits that fall on third parties, without their
consent and without working through the market mechanism. Ext
Topic 7 - Monopolistic Competition and Oligopoly
Demonstration Lecture Questions (Brief Solution Guide to the Questions)
Question 1
Although the names sound similar, the markets are quite different. A monopoly
market, as discussed in Topic 6, has high con
Lecture 9: Multi-Variate Calculus (BP, Ch 7)
Partial Differentiation
A univariate function has one independent variable:
y = f ( x)
Example: y = a + bx
A multivariate function has 2 or more independent variables:
y = f ( x, z )
Example1: y = 3 x + 5 z
To
THE DERIVATIVE OF A FUNCTION
dy
, is a function which
dx
tells us the slope of our function at any given value of
x.
The derivative of a function,
The derivative is formally defined as:
lim y
dy
=
dx x 0 x
To find the derivative of a function it must be
c
Q19 (a)
n=
u=
d=
p=
S=
X=
ii =
rr =
50
1.005
0.9975
0.7
9.2
9.6
0.0500
1.05
numerator
denominator
m>
0.1677161
0.0074907
22.389998
You were not asked to value the option using the binomial model.
Q19 (b)
XX =
$9.60
SS =
$9.20
iii =
0.0500
T=
VOL =
0.49315