A Note on Continuous Compounding
Continuous Compounding
If your money earns at an APR (annual percentage rate) of 6% per year
compounded semi-annually, what is the effective annual rate of return?
FV = (1.03)2 = 1.0609
reff = 6.09%
The general formula for
The CAPM, Index Model,
and the APT
and
B, K & M Chapter 7
Group Project III
The material on the slides with a star will not be covered on the exam.
The
The CAPM
The
The Markowitz portfolio selection models derives the
efficient frontier of risky assets a
Risk-Neutral Valuation and
the Binomial Model of Option
Pricing
Group Project 2
Risk-Neutral Valuation and the Binomial Model
We will develop below a simple model that is useful in
understanding how options are priced. Although, it will
seem unrealistic a
Risk, Risk Aversion, and Portfolio
Risk and Return
B, K and M Chapter 6
End-of-chapter problems: 1-3, and
practice problems at the end of
these slides.
Risk and Risk Aversion
Investors avoid risk and demand a reward for investing in
risky investments
The
Interest Rates, Risk Premiums, Risk
Aversion, and Portfolio Arithmetic
B,K & M Chapter 5
End-of-chapter problems: 1-19
Make sure you understand 12a and
12b.
Determinants of the Level of Interest
Rates
Interest rates, of course, are important inputs to
man
FIN 3504 EXAM III Practice Exam Questions
Advice for the final exam: First and foremost, understand all aspects of the third group project. Review
carefully not just the mechanics of what you did, but also the underlying finance as we developed in class.
Market Efficiency
and a few topics in Behavioral Finance
B, K & M
Chapter 8
Market Efficiency
Maurice Kendall in 1953 found that he could identify
no predictable patterns in stock prices.
Kendall's results were disturbing to some financial
economists.
Do
FIN 3504 - Investments (3 credit hours)
Summer 2013
Prof. Chuck Schnitzlein
E-Mail: [email protected] web site: http:/www.bus.ucf.edu/cschnitzlein/
Tel: 407-823-1127
Office: CBA 427E
Office Hours: Monday and Wednesday 3:00 to 4:30, and by appt.
TA: