Chapter 3
ELEMENTS OF PROBABILITY
3.1 INTRODUCTION
The concept of the probability of a particular event of an experiment is subject to various
meanings or interpretations. For instance, if a geologist is quoted as saying that there is
a 60 percent chance

Chapter 2
DESCRIPTIVE STATISTICS
2.1 INTRODUCTION
In this chapter we introduce the subject matter of descriptive statistics, and in doing so
learn ways to describe and summarize a set of data. Section 2.2 deals with ways of describing a data set. Subsecti

Chapter 1
INTRODUCTION TO STATISTICS
1.1 INTRODUCTION
It has become accepted in todays world that in order to learn about something, you must
first collect data. Statistics is the art of learning from data. It is concerned with the collection
of data, its

This course is flipped learning.
The lecture is assigned as homework!
Read Chapter 8 in your textbook and
watch video before class to dedicate
class time to activity and discussion.
It is highly recommended that you attend
tutorials.
You may learn better

This course is flipped learning.
The lecture is assigned as homework!
Read Chapter 8 in your textbook and
watch video before class to dedicate
class time to activity and discussion.
It is highly recommended that you attend
tutorials.
You may learn better

Mini Lecture
Chapter 7
Parameter Estimation
Week 12
Summary of the Random Variables
Distribution of Poisson random variable
Find the expected value of the random variable X whose PMF is given by
Solution
Now, we have
Therefore,
Distribution of Exponential

Mini Lecture
Chapter 04
Random Variables
Week 6
The probability that the sum is 7 when one roll a pair of dice
we may be interested in knowing that the sum is 7 and not be
concerned over whether the actual outcome was (1, 6) or (2, 5) or
(3, 4) or (4, 3)

Mini Lecture
Chapter 4
Expectation
Week 7
Expectation
Expected Value of Sums of Random Variables
Properties of Expected Value
Example 4.5e
Find the expected value of the sum obtained when
two fair dice are rolled
Let X denote the sum, then
Let Xi be the v

Mini Lecture
Chapter 02
Descriptive Statistics
Week 2
1
Descriptive Statistics
Descriptive Statistics is concerned with the description
and summarization of a set of data
Primary methods for description
graphs and tables
Primary methods of summarizatio

Weighted Average Cost of
Capital
Shinwoo Kang
Cost of Capital
Cost of capital (discount rate)
Required rate of return = discount rate = cost
of capital
The use of fund, not the source, matters
Projects with different risk level
Levered firm: portfoli

4-1.
You have just taken out a five-year loan from a bank to buy an engagement ring. The ring costs
$5000. You plan to put down $1000 and borrow $4000. You will need to make annual payments
of $1000 at the end of each year. Show the timeline of the loan f

Chapter 28
Mergers and Acquisitions
28-4.
Why do you think shareholders from target companies enjoy an average gain when acquired,
while acquiring shareholders on average often do not gain anything?
The acquiring firm has to compete against other firms, t

Chapter 11
Optimal Portfolio Choice and the Capital
Asset Pricing Model
11-2.
You own three stocks: 600 shares of Apple Computer, 10,000 shares of Cisco Systems, and 5000
shares of Colgate-Palmolive. The current share prices and expected returns of Apple,

Chapter 7
Investment Decision Rules
7-3.
You are considering opening a new plant. The plant will cost $100 million upfront. After that, it
is expected to produce profits of $30 million at the end of every year. The cash flows are expected
to last forever.

Chapter 8
Fundamentals of Capital Budgeting
8-23.
Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal
to build a plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of
12% to evalu

Chapter 20
Financial Options
20-2.
What is the difference between a European option and an American option? Are European
options available exclusively in Europe and American options available exclusively in the United
States?
European options can be exerc

6-6.
Suppose a 10-year, $1000 bond with an 8% coupon rate and semiannual coupons is trading for a
price of $1034.74.
a.
What is the bonds yield to maturity (expressed as an APR with semiannual compounding)?
b. If the bonds yield to maturity changes to 9%

Chapter 2 Analyzing the External Environment of the Firm
True/False Questions
1. Environmental scanning and competitor intelligence provide important inputs for
forecasting activities.
Page: 43
2. Environmental monitoring deals with tracking changes in en