Econ 4751 HW 1 Due on Thursday 09/24/2009
The Investment Environment
(10) 1. Discuss the similarities and differences between real and financial assets.
(10) 2. Discuss the following ongoing trends as they relate to the field of investments: globalization
Financial Economics 4751 Nick Guo
University of Minnesota Fall 2009
Practice Midterm Exam
There are 8 questions in this midterm. Show all your work and label the graph carefully. 1. (5) According to data, in 2007, what was the most significant real asset
Econ 4751 HW 5 Due on Tuesday, 12/15/2009 Option and option pricing theory (contd)
1. (50) Suppose Jake is going to travel in France in Four months, and he needs 100 at that time. The current exchange rate is 1=$1. Assume we know that the exchange rate go
Econ 4751 HW 4 Due on Thursday, 12/3/2009 Option and option pricing theory
1. (50) Suppose Zack is going to travel in Italy in three months, and he needs 1000 at that time. The current exchange rate is 1=$1. Assume we know that the exchange rate goes eith
Econ 4751 Solution to HW 3 Capital Asset Pricing Model
1. (50) See lecture notes 2. (20) A) 1 B) E(R) = 6% + 1.2(12 - 6) = 13.2%.
C) 12% < 7% + 1.3(15% - 7%) = 17.40%; therefore, stock is overpriced and should be shorted. D) 0.2(1.4) + 0.8(0.3) = 0.52. E)
Econ 4751 HW 3 Due on Thursday 11/12/2009 Capital Asset Pricing Model
1. (50) A) State carefully all the assumptions we need to derive the CAPM; B) Why every investor invests the same portfolio? What assumptions from the above do you need for your argumen
Econ 4751 Solution to HW 2 Learning about Return and Risk from the Historical Record 1. (15) A) r = (1+R) / (1+I) - 1; 1.10% / 1.05% - 1 = 4.8%. B) 6.29%. C) i_norminal > i_inflation
2. (10) A) (1.0125)4 -1 = 5.09% B) (1+x/n)^n-exp(x)
3. (15) A) HPR = .30
Econ 4751 HW 2 Due on Thursday 10/15/2009 Learning about Return and Risk from the Historical Record 1. (15) A) Over the past year you earned a nominal rate of interest of 10 percent on your money. The inflation rate was 5 percent over the same period. Wha