Econ 422
Summer 2014
HW 1
Due Thursday 07/03/14
1. Casper Milktoast has $200,000 available to support consumption in periods 0 (now)
and 1 (next year). He wants to consume exactly the same amount in each period. The
interest rate is 8 percent. There is no
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 4: B OND R ETURNS AND P RICING WITH N O -A RBITRAGE
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
L ECTURE O UTLINE
I)
II )
III )
Pricing bonds with constant interest rate
Pricing bonds with non-constant int
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 9: C APITAL M ARKET E QUILIBRIUM AND CAPM
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
L ECTURE O UTLINE
I)
II )
Demand for Risk with Diversification: Portfolio Choice and the Mutual
Fund Theorem
Capital Ma
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 5: D URATION
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
O UTLINE FOR T ODAY
I)
II )
Introduction to Interest Rate Risk
Duration: formal definition
III )
Duration: economic interpretation
IV )
Application
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 6: E XPECTATIONS AND THE
I NFORMATIONAL C ONTENT OF Y IELD C URVES
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
O UTLINE
I)
II )
III )
Term structure of interest rates: certainty
Term structure of interest
E CON 422A: F INANCE AND I NVESTMENTS
M IDTERM 2 P REPARATION
Mu-Jeung Yang
University of Washington, Seattle
Winter 2016
c
2016
Mu-Jeung Yang
M IDTERM 2 L OGISTICS
I)
II )
III )
IV )
V)
VI )
VII )
VIII )
IX )
Date: Thursday, March 10th , 2016
Time: IN CL
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 10: E XPECTATIONS AND THE I NFORMATIONAL C ONTENT
OF S ECURITY P RICES
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
O UTLINE FOR T ODAY
I)
II )
Informational Efficiency: Neoclasscial vs. Behavioral Economic
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 8: R ISK Q UANTIFICATION , P ORTFOLIO C OMPOSITION AND
D IVERSIFICATION
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
L ECTURE O UTLINE
I)
II )
III )
Quantifying Risk and Risk Attitudes
Portfolio Composition
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Econ 422
Summer 2014
Problem Set 6
This problem set focuses on portfolio theory.
PCBR Chapter 9 (Optimal Portfolio Choice and the Capital Asset Pricing Model) pages
325-331
Problems 14, 15, 17, 20, 21, 25 (see the example Excel spreadsheet Portfolio ), 26
Econ 422
Summer 2014
Due on 08/05/2014
HW 4
Hand in the following textbook problems.
1) PCBR (Valuing Stocks) pages 239-243
Problems 1-4, 6, 8
9-1.
Assume Evco, Inc., has a current price of $50 and will pay a $2 dividend in one year, and its
equity cost o
Econ 422
Summer 2014
Problem Set 5
Due Monday 08/12/14
PCBR Chapter 8 (Capital Markets and the Pricing of Risk) pages 280 284
Problems 6, 9, 14, 20, 24, 33
PCBR Chapter 9 (Optimal Portfolio Choice and the Capital Asset Pricing Model) pages
325-331
Problem
Econ 422
Summer 2014
Problem Set 2
Due Thursday 07/15/14
Make sure that you can do PCBR Chapter 2 (Time Value of Money) problems with ease.
Hand in the following problems (it looks like a lot of problems but they are mostly pretty
short):
1. Suppose Tom J
Econ 422
Summer 2014
Problem Set 3
Due Tuesday 07/22/14
1. Upon retirement, a university professor finds that he has $1 million in his retirement
account at TIAA-CREF. He wants to continue receiving a monthly salary for the next 20
years, so he decides to
E CON 422A: F INANCE AND I NVESTMENTS
L ECTURE 7: BASICS OF S TOCK VALUATION
Mu-Jeung Yang
Winter 2016
c
2016
Mu-Jeung Yang
O UTLINE FOR T ODAY
I)
II )
III )
Debt vs. Equity
Basic stock pricing
Historical aggregate stock market performance
Debt vs. Equity