c3
Student: _
1. A purchase of a new issue of stock takes place
A. in the secondary market.
B. in the primary market.
C. usually with the assistance of an investment banker or dealer.
D. a and c.
E. b
c3 Key
1. A purchase of a new issue of stock takes place A. in the secondary market.B. in the
primary market.C. usually with the assistance of an investment banker or dealer.D. a and
c.E. b and c.
Fun
10/24/2016
General Information
The midterm will be held on Friday Oct 28, 2016 from 1pm to
3pm.
The location is Burke Building Theatre-A
MIDTERM REVIEW
Students are responsible for the materials co
c2 Key
1. Which of the following is not a characteristic of a money market instrument?
A. liquidityB. marketabilityC. long maturityD. liquidity premiumE. Both long maturity and
liquidity premium
Money
c10 Key
1. Conventional theories presume that investors _, and behavioural finance
presumes that they _. A. are irrational; are irrationalB. are rational; may not
be rationalC. are rational; are ratio
c1 Key
1. The means by which individuals hold their claims on real assets in a well-developed
economy are A. investment assets.B. depository assets.C. derivative assets.D. financial
assets.E. exchange
c9 Key
1. If you believe in the _ form of the EMH, you believe that stock prices reflect all
relevant information including historical stock prices and current public information
about the firm, but n
c11
Student: _
1. The expected return/beta relationship is used _.
A. by regulatory commissions in determining the costs of capital for regulated firms
B. in court rulings to determine discount rates
c4 Key
1. 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. The exact actual growth rate of
your purchasing p
c8 Key
1. As diversification increases, the total variance of a portfolio approaches _.
A. 0B. 1C. the variance of the market portfolioD. infinityE. none of these
As more and more securities are added
Formulae for FINA4466
U= E(r) - 1/2 A 2
y*
E ( r ) rf
A 2
() = =1
() =
[ ()]2
=1
(, ) = =1 [ ( )][ ( )]
A,B
Cov(rA , rB )
A B
n
E (r )
r
i
i 1
n
AB
n
[r
i 1
Ai
E ( rA )][ rBi E ( rB )]
n 1
FINA4466 Investments- 2016-17 Winter
Assignment 2
Due: March 30, 2017, Thursday, in class
Please submit your assignment in the class of the due date.
No later assignment will be accepted.
This is a gr
c7 Key
1. In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk
is A. unique risk.B. beta.C. standard deviation of returns.D. variance of returns.E. none of
these.
Once
c6 Key
1. Market risk is also referred to as A. systematic risk, diversifiable risk.B. systematic
risk, nondiversifiable risk.C. unique risk, nondiversifiable risk.D. unique risk, diversifiable
risk.E
c5 Key
1. A T-bill pays 6 percent rate of return. Would risk-averse investors invest in a risky
portfolio that pays 12 percent with a probability of 40 percent or 2 percent with a
probability of 60 pe
09/22/2016
Outline
Determinants of Interest Rates
RISK AND RETURN
Rates of return for different holding periods
Risk and Risk Premiums
Estimation of return and risk
Normal distribution and histor
11/19/2016
Outline
Concept of Market Efficiency
Random Walk
MARKET EFFICIENCY
Efficient Market Hypothesis (EMH)
Empirical Tests of Market Efficiency
Test of weak form efficiency
Test of semi-str
11/5/2016
Outline
CAPM, INDEX MODEL
AND APT
Systematic Risk vs. Unsystematic Risk
Beta
Capital Asset Price Model
Security Market Line (SML)
Index Model
Arbitrage pricing theory
Dr. Liqiang Chen
9/7/2016
Outline
FINANCIAL
INSTRUMENTS AND
MARKETS
A Brief History of U.S. Stock Market
The Economy of Investments
Financial Instruments
Financial Markets
11 FIN4466
Investments
Dr. Liqiang Chen
A
10/1/2016
Outline
Risk aversion
Mean-variance utility
Risky assets allocation
Allocation with one risky and one risk-free asset
RISK AVERSION AND
ASSET ALLOCATION
11 FIN4466
Investments
Dr. Liqian
10/11/2016
Outline
Diversification and portfolio risk
Allocation with two risky assets
Extending to N risky assets
The Markowitz portfolio optimization model
Minimum variance frontier
Minimum va
9/7/2016
Outline
TRADING ON
SECURITIES MARKETS
How firms issue securities
Types of markets and orders
Margin account
Margin call
11 FIN4466
Investments
Dr. Liqiang Chen
Primary vs. Secondary Secur
Ch1
2.
a.
The bank loan is a financial liability for Lanni. (Lannis IOU is the banks
financial asset). The cash Lanni receives is a financial asset. The new financial
asset created is Lannis promissor
FINA4466 Investments- 2016-17 Winter
Assignment 1
Due: March 9, 2017Thursday, in class.
Please submit your assignment in the class or to my office by the due date.
No later assignment will be accepted
Formula Sheet
m
m
APR f
EPR 1
1
m
APR
EAR 1
1
m
Geometric average return = 1 R1 1 R2 . 1 Rt
1/ T
Ex Post Var ( R)
R
2
Ex Ante 2j
R
j
j
j
1
2
j
R
T 1
2
E ( R j ) Pj
j 2j
E ( R p ) W1 E (
CHAPTER4
RETURNANDRISK:ANALYZINGTHEHISTORICALRECORD
1. Your holding period return for the next year on the money market fund depends
on what 30-day interest rates will be each month when it is time to