Session 01 Quiz
Part 1 of 1 
10.0/ 10.0 Points
Question 1 of 4
7.0/ 7.0 Points
Match the following terms with their correct definitions.
A. Funds available for distribution to investors.
B. Where trading of longterm debt and corporate stocks occur.
C. W
Session 03 Quiz
Return to Assessment List
Part 1 of 1 
Question 1 of 10
9.0/ 10.0 Points
1.0/ 1.0 Points
Market (or systematic) risk refers to the tendency of a stock to move with the general stock market. A
stock with aboveaverage market risk will tend
Session 02 Quiz
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Part 1 of 1 
4.0/ 10.0 Points
Question 1 of 10
1.0/ 1.0 Points
Each question on this quiz is unrelated to the other questions. In some cases, more information may be
given than is necessary to answer the question
Quiz1
1. In the traditional buildup method of calculating a companys discountrate,which
ofthefollowingcomponentsisMOSTsubjecttotheanalystspersonalopinion:
A.Equityriskpremium
B.Sizeriskpremium
C.Riskfreerate
D.Companyspecificriskpremium(CSRP)
AnswerKe
QUIZ1
Question 1 of 12
1. Which of the following statements is generally true?
A. In the private markets, owners are well diversified
B. In the private markets, markets are efficient
C. In the private markets, every business has one correct value
D. In th
QUIZ1
Question 1 of 12
1. Which of the following statements is generally true?
A. In the private markets, owners are well diversified
B. In the private markets, markets are efficient
C. In the private markets, every business has one correct value
D. In th
FINC 640.13 Summer 2016
Quiz 1 Solutions
Version B
Problem 1 Solution
Calculate the futures price of Gold based on the following information (use cont. compounded rates):
F=
$1,195.78
e
0.005
+
0.020
0.33
=
$1,205.79
Problem 2 Solution
Calculate the noar
FINC 640.13 Summer 2016
Solutions for:
Quiz 2
Solution to:
Problem 1
S=
K=
r=
t=
p=
S=
K=
r=
t=
c=
p=
S + p = K ert + c
40
41
0.04
0.66667
3.2358
Solution to:
Version A
S + p K ert =
40
therefore: c =
+
3.2358
S + p  K ert

39.921
Based on PutCall Par
FINC 640.13 Summer 2016
Solutions for:
Quiz 2
Solution to:
Problem 1
S=
K=
r=
t=
p=
S=
K=
r=
t=
c=
p=
S + p = K ert + c
55
56
0.03
0.66667
4.0386
Solution to:
Version B
S + p K ert =
55
therefore: c =
+
4.0386
S + p  K ert

54.891
Based on PutCall Par
FINC 640.13 Summer 2016
Quiz 1 Solutions
Version A
Problem 1 Solution
Calculate the futures price of Gold based on the following information (use cont. compounded rates):
F=
$1,280.00
e
0.015
+
0.025
0.67
=
$1,314.59
Problem 2 Solution
Calculate the noar
The Value of Derivatives
International Swaps and Derivatives Association, Inc.
WHO USES DERIVATIVES AND WHY?
MANUFACTURING
INTERNATIONAL TRADE
TRANSPORTATION
FINANCING COSTS
EXCHANGE RATES
FUEL COSTS
MANUFACTURERS USE DERIVA
ALL TYPES OF COMPANIES USE
AI
Table 19: Amounts outstanding of overthecounter (OTC) derivatives
By risk category and instrument
In billions of US dollars
Notional amounts outstanding
Gross market values
Risk Category / Instrument
Jun 2012
Dec 2012
Jun 2013
Dec 2013
Jun 2014
Jun 2012
Parameters
Current Stock Price
Call Implied Volatility
Put Implied Volatility
Days to Expiration
$1,000.00
40.0%
40.0%
365
Call Probabilities
Target
Winning Close Above
Stock Price Probability
Target
$1,020.00
51.97%
48.03%
Put Probabilities
Target
Winnin
6961 HELLNIM #5
How we came up with
the option formula
Like many great inventions, it started with tinkering and ended
with delayed recognition.
Fischer Black
y paper with Myron Scholes giving the
derivation of our option formula appeared in the
spring of
Depository Institutions, the FED
and Monetary Policy
Session 4
CHAPTER 4
Depository Institutions
Depository Institutions
Depository institutions include commercial banks, savings banks,
savings and loan associations, and credit unions.
With the funds that
Overview of Market Participants
Session 3
CHAPTER 3
Overview of Market Participants
The Financial System: Institutions
In these slides, we identify and review some of the players in
financial markets.
We focus on one particular group of market players, ca
Long Term Holdings
Criteria
Dividend Yield: Over 4%
P/E: Under 20
Large Cap
Diversified
Highlighted
Holdings
Security
Sandisk Acquisition
Negative Market Sentiment
represents good value for long term
Highlighted
Holdings
One of the highest dividen
Problem 35
Texas International Chili Co.  adopting new credit terms.
Given:
increase in NPV per day from new credit
$0.75
opportunity cost
10.00%
a.)
PV of a perpetual stream of cash flow at an 10% discount rate.
$0.75 / (.10/365) =
b.)
PV of a perpetua
1
Sales
I. COLLECTIONS
Discount
Net
Late
Total
II.PAYMENTS
Materials:
Labor:
G&A salaries
Lease
Misc expense
Tax
Interest
Capital expenditures
Total payments
Increase or (decrease)
III. SURPLUS or LOAN
Beginning cash w/o loan
Cumulative cash
Less: Target
Problem 32
a.)
Computing PV of $10,000 in six months at 12% per year.
Use the exact, daily compound interest formula to discount the future value:
FVn = $10,000.00
N = 182.5
k = 12%
(182.5 days = 6 months in the Problems header)
PV = FV / (1 + (k / 365)n
4.
Anvaricorp  estimate of lost value from delayed collection of remittances.
Average daily remittances (lira)
Exchange rate (lira per Can. $)
Weightedaverage cost of capit
Mail days lira check
Mail days Canadian $ draft
Processing days, lira check
Proc
55
Certainty NPV and Uncertainty NPV for Credit Decision.
Solution assumes all collection costs are incurred at the time of the credit sale collection.
a.)
Credit terms, CP:
Opportunity cost of funds, k:
Dollar amount of invoice, S:
Variable costs, VCR:
Problem 33
a.)
The present value of a future sum.
How much (in PV) is needed to invest at 10% per year in order to have $3,000 nine months
from now? Using the simple interest formula, we get:
FVn = 3000
k = 10%
n = 273.75
273.75 days = 9 months in the Pr
42.
Lott Manufacturing, Inc.
Assumptions
Order costs(F)
Holding costs per unit (H)
Total period quantity (T)
Order Quantity (Q)
Planning Period
Delivery Time (days)
a.)
EOQ =
EOQ =
b.)
Total cost = (F*T/Q) + (H*Q/2)
Total Cost @10,000 units =
$50.00
$3.0
75
a.)
Avg. Daily Purchases = SUM of Purchases/(#of Months*30days)
Days Payables Outstanding = Ending Payables/Avg. Daily Purchases
ASSUMPTIONS
December January February
March
April
May
Purchases
400
375
350
325
400
500
Payables
342
320
297
345
430
June
Problem 94
Assumptions
Average # of remittances per month =
Average face value =
Mail float =
Processing float =
Availability float =
Opportunity rate =
Fixed cost =
Variable cost =
Part a Total cost for cash collection system
TC = Total cost
N = # of re