The Money Multiplier (Review)
The Federal Reserve System
Structure and Functions
How Does the Fed Conduct Monetary Policy?
Anatomy of an Open Market Operation (OMO)
Other Tools of the Fed
3.6 SUMMARY AND CONCLUSIONS
This chapter has discussed aspects of financial statement analysis:
1. Sources and uses of cash. We discussed how to identify the ways that businesses obtain and use
cash, and we described how to trace
4.1 What Is Financial Planning?
Financial planning formulates the way financial goals are to be achieved. A financial plan is thus a
statement of what is to be done in the future. Most decisions have long lead times, which means t
Convexity, Timing, and Quanto Adjustments
Explain how you would value a derivative that pays off 100 R in five years where R is
the one-year interest rate (annually compounded) observed in four years. What diffe
2.6 SUMMARY AND CONCLUSIONS
This chapter has introduced you to some of the basics of financial statements, cash flow, and taxes. The
Sino-Forest example that was introduced at the start of the chapter shows just how important thes
Seagate Technology Buyout Case Analysis
FNCE 601, Chenxi Zhu (00311724)
September 28, 2015
Seagate was one of the worlds largest manufacturers of computer disk drives and related data
storage devices. Besides the disk drive operations, Seagates main asset
Value at Risk
Consider a position consisting of a $100,000 investment in asset A and a $100,000
investment in asset B. Assume that the daily volatilities of both assets are 1% and that the
coefficient of correla
Estimating Volatilities and Correlations
Explain the exponentially weighted moving average (EWMA) model for estimating volatility
from historical data.
Define ui as ( Si Si 1 ) / Si 1 , where Si is value of a mar
Wiener Processes and Its Lemma
What would it mean to assert that the temperature at a certain place follows a
Markov process? Do you think that temperatures do, in fact, follow a Markov process?
Imagine that you
The spread between the yield on a three-year corporate bond and the yield on a
similar risk-free bond is 50 basis points. The recovery rate is 30%. Estimate the average
hazard rate per year over the
Interest Rate Derivatives: The Standard Market Models
A company caps three-month LIBOR at 10% per annum. The principal amount is $20
million. On a reset date, three-month LIBOR is 12% per annum. What payment wou
Mechanics of Futures Markets
Distinguish between the terms open interest and trading volume.
The open interest of a futures contract at a particular time is the total number of long positions
Options on Stock Indices and Currencies
A portfolio is currently worth $10 million and has a beta of 1.0. An index is currently
standing at 800. Explain how a put option on the index with a strike of 700 can be
Trading Strategies Involving Options
What is meant by a protective put? What position in call options is equivalent to a protective
A protective put consists of a long position in a put option combined with
4.6 SUMMARY AND CONCLUSIONS
Financial planning forces the firm to think about the future. We have examined a number of features of
the planning process. We describe what financial planning can accomplish and the components of a
Hedging Strategies Using Futures
Under what circumstances are (a) a short hedge and (b) a long hedge appropriate?
A short hedge is appropriate when a company owns an asset and expects to sell that asset in the
The Greek Letters
Explain how a stop-loss trading rule can be implemented for the writer of an out-of-themoney call option. Why does it provide a relatively poor hedge?
Suppose the strike price is 10.00. The opt
The Black-Scholes-Merton Model
What does the BlackScholesMerton stock option pricing model assume about the
probability distribution of the stock price in one year? What does it assume about the
Mechanics of Options Markets
An investor buys a European put on a share for $3. The stock price is $42 and the strike
price is $40. Under what circumstances does the investor make a profit? Under what
What volatility smile is likely to be observed when
(a) Both tails of the stock price distribution are less heavy than those of the lognormal
(b) The right tail is heavier, and th
A stock price is currently $40. It is known that at the end of one month it will be either $42 or
$38. The risk-free interest rate is 8% per annum with continuous compounding. What is the
Determination of Forward and Futures Prices
Explain what happens when an investor shorts a certain share.
The investors broker borrows the shares from another clients account and sells them in the
usual way. To cl
Properties of Stock Options
List the six factors affecting stock option prices.
The six factors affecting stock option prices are the stock price, strike price, risk-free interest
rate, volatility, time to matur
Explain the difference between a call option on yen and a call option on yen futures.
A call option on yen gives the holder the right to buy yen in the spot market at an exchange
rate equal to the
A device that translate some physical quantity such as temperature or gas concentration to an electrical representation such as voltage or current that
can be read by a microcontroller. Some sensor may also include some processing capability but th
It is a market where money or its
equivalent can be traded.
Money is synonym of liquidity.
It consists of financial institutions and
dealers in money or credit who wish to
large institutions and government manage
AN OVERVIEW OF FINANCIAL
I. AN OVERVIEW OF FINANCIAL
What is Financial Markets?
Structure of Financial markets?
Capital Market: Debt
What is a bond market?
How does the bond market promote the
economic development process of a
A market where fixed income securities are issued
and trade is called Debt Market.
Govt. needs large
1. What is the complete cycle of interaction between a customer and the employees behind
the counter? Write it out in terms of its steps.
There are a few steps that I noticed at what happens when a customer comes into McDonalds.
The first step was that th
Price Sales Ratio: Definition
The price/sales ratio is the ratio of the market value of equity to the sales.
Market value of equity
The price/sales ratio is internally inconsistent, since the market value o
Valuation: Lecture Note Packet 2
Relative Valuation and Private Company
Updated: January 2012
The Essence of relative valuation?
In relative valuation, the value of an asset is compared to the values ass
IV. Closure in Valuation
Discounted Cashflow Valuation
Getting Closure in Valuation
A publicly traded firm potentially has an infinite life. The value is
therefore the present value of cash flows forever.
t = CFt
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c F'rranoid Accounting
0 Corporate Valuation
0 Francis! Modeing
a Merger Modeling
0 Excel Best Practices
Evening a Weekend
TTS Macros List?