Invoice Price Sheet
Bond 1
Bond 2
12/31/2014
12/31/2020
0.05
0.062
100
2
3/5/2015
12/31/2020
0.05
0.062
100
2
Flat price (% of par)
94.063
Days since last coupon
Days in coupon period
Accrued interest
1
OPTIONS
Option-
A contract between two traders in which the buyer of the option has the right, but not
obligation, to buy or sell an asset at a fixed price within a specified period of time.
In the
MUTUAL FUNDS
(revised 7/31/2007)
Mutual funds are actually Investment Companies.
Investment Companies - These companies pool the funds of many small investors to buy
stocks, bonds, options, and physic
1
Hedging with Commodity and Interest Rate Futures
We talked about immunizing a portfolio against interest rate risk by using duration. i.e.: Set Duration= Length
of holding period.
As we said this is
Finance 4504 Midterm Exam Part 1
First, finish reading and working through the Portfolio Theory notes to understand the
Capital Allocation Line, and work the Simple Beta problem set I gave you by hand
BOND RISK AND DURATION (Revised Oct. 2009)
Interest Rate Patterns over the Business Cycle
As the economy heats up, spending increases, unemployment decreases, the demand for loanable funds
increases,
BONDS and BOND VALUATION
First Lets Look at the Book to Examine Bond Features
Interest Rates or Yields
Basis Point:
1/100 of 1% of interest
i.e. One percentage point = 100 Basis points
Prices:
1 point
Risk and Return
Rates of Return
Holding Period Return
Assume you buy a stock in year t-1 and hold it until year t, and it pays a dividend, dt.
Then the one-period holding return can be figured as foll
Portfolio and Capital Market Theory
Portfolio Theory Selection of optimal portfolios
Efficient Portfolio That portfolio that maximizes expected return at any given level of expected
risk.
Assumptions:
SECURITIES MARKETS
revised 1/30/2008
Investment Banking
Glass - Steagall Act-1933- Between 1930-1933 about 9000 banks failed causing depositors to
lose money. The G-S act:
1)
Created the Federal Depos
Rates of Return on Money Market Securities
Securities such as T-bills, Federal Funds, Bankers Acceptances, Repurchase
Agreements (Repos), Commercial Paper, and Negotiable Certificates of
Deposit are M
STOCK MARKET INDICATOR SERIES
There are a number of different ways of computing Stock Market Indexes.
1. Price-Weighted Series Index where prices are summed and then divided by a
divisor that is adjus
Portfolio and Capital Market Theory
Portfolio Theory Selection of optimal portfolios
Efficient Portfolio That portfolio that maximizes expected return at any given level of expected
risk.
Assumptions:
Risk and Return
Rates of Return
Holding Period Return
Assume you buy a stock in year t-1 and hold it until year t, and it pays a dividend, dt.
Then the one-period holding return can be figured as foll
SECURITIES MARKETS
revised 1/30/2010
Investment Banking
Glass - Steagall Act-1933- Between 1930-1933 about 9000 banks failed causing depositors to
lose money. The G-S act:
1)
Created the Federal Depos
Chapter 1
-Financial Investment: current commintment of money/greater amount of money
-3 things investors do: current consumption,inflation &risk.
-Dif between real and financial asset: real are used
This document applies to the HP 10bII+
Please Note: If you plan to use the calculator in the way I show you now, you must understand what you are doing
and follow some basic rules.
Rule 1: Set your ca
Miro Cuculiza
Mrs. Ana Agapova
04/19/2015
StockTrak Assignment: Investment Analysis
Diversification can mitigate risks associated with ones portfolio. Asset classes perform
differently and have differ
Bos
NYY
Tor
Bal
Tam
Cle
Det
Min
Kan
Wso
LAA
Sea
Oak
Tex
NYM
Phi
Atl
Was
FLA
CUB
Mil
STL
Cin
Hou
Pit
SD
Ari
LAD
Col
SF
2007 American League Standings
EAST
Boston
NY Yankees
Toronto
Baltimore
Tampa Bay
Bos
NYY
Tor
Bal
Tam
Cle
Det
Min
Kan
Wso
LAA
Sea
Oak
Tex
NYM
Phi
Atl
Was
FLA
CUB
Mil
STL
Cin
Hou
Pit
SD
Ari
LAD
Col
SF
2007 American League Standings
EAST
Boston
NY Yankees
Toronto
Baltimore
Tampa Bay
Project the PV of each cash flow
DISCOUNT RATE 6.5%
Ritter College
Duration of program in years
tuition per year
books per year
health insurance
room and board per year
2
$60,000.00
$2,500.00
$3,000.0
S= 1.10
p=$0.025 Own call
p= $0.17 Own Put
Net Profit
$0.90
-0.025
0.175
$1.05
-0.025
premium S= 1.05
$0.03 Own call
$0.02 Own Put
Net Profit
0.95
-0.03
0.08
0.05
1.00
-0.03
0.03
0.00
$1.50
$2.00
-0.1
A
1
ANALYST'S NAME
NAME OF COMPANY
6
FIRST CALENDAR YEAR OF
DATA
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
NUMBER OF YEARS OF DATA
INCOME STATEMENT
Sales Revenue
Less: Cost of Goods
Financial Calculator
Present Value of an Amount
Future Amount
Number of Periods
Interest Rate per Period
Present Value
$10,000
10
9.0%
$4,224
Future Value of an Amount
Present Value
Number of Periods
Financial Ratios
Current ratio = CA / CL
Quick ratio = (CA-Inv)/ CL
Interval measure = CA / Average daily operating costs
Total debt ratio = (TA TE) / TA
Long-term debt ratio = LTD / (LTD + TE)
Times
Test Questions:
1)
j
= 0 This implies no systematic risk, T-bill
j
> 1 This implies that the asset is more volatile than the market, and is more risky.
j
< 1 This implies that the asset is less volati
InvestmentsStockPricingProblemSet
Name_
ShowAllWork
Use the Following Information for Questions 1 and 2.
A firm currently has earnings of $2 per share and pays out 30% of earnings as
dividends on its
Stock Valuation
The basic model of stock valuation recognizes the importance of income that the owner of the
stock will receive. That is,
Value =
Incomet
1 r
t
t
1
But there are some obvious problem
Question 1
Calculate expected return and standard deviation
State of the Economy
Probability
30.00%
40.00%
30.00%
Boom
Normal Growth
Recession
HPR
44.00%
14.00%
-16.00%
Mean (Expected Return)
Question
Question 1
The standard deviation of the market-index portfolio is 20%. Stock A has a beta of 1.5 and a residual standard deviation of 30%
Market Index Portfolio
Standard Deviation
20%
Stock A
Beta
St
Question 1
1 out of 1 points
On timeline, the present is represented as
Time zero
Question 2
1 out of 1 points
You have been accepted to study gourmet cooking at Le Cordon Bleu Culinary Institute in
P
FIN 4502 Homework 2 Ch.2
1. Which of the following correctly describes a repurchase agreement?
a. The sale of a security with a commitment to repurchase the same security at a specified
future date an
Chapter 1: Review Essay
1. What do you think is the biggest personal reward of being a manager? What is the
biggest potential downside of being a manager?
Being a manager is an extremely important rol