Economics 372/572
Intermediate Finance
Spring 2013
Problem Set 6: FUTURES: SOLUTIONS
1. A Wheat farmer expects to harvest 60,000 bushels of wheat in September. In order to pay for
the seed and equipment, the farmer had to draw $150,000 from his savings ac
Economics 372
Intermediate Finance
Spring 2013
Problem Set 7: OPTIONS: SOLUTIONS
Question 1
A Swiss company purchased machine tools from a US engineering firm. The delivery date is in
June, and the purchase price of the machine tools is SFR 5million. The
Problem 1
Investment
A
B
C
D = 0.5(A+C)
E[R]
12%
15%
18%
15%
correl(A,C)
Volatility
30.00%
25.00%
40.00%
9.22%
-90%
(a)
Between A and B, the investor should only choose B, since
B has both a higher expected return and a lower volatility.
(b)
Between B and
Economics 372
Intermediate Finance
Spring 2013
Problem Set 3: Equity Markets SOLUTIONS
Question 1
Part A
Replicate in a spreadsheet the sample DCF calculation from class (the Ice Cream company), using the
PS3_Q1.xls spreadsheet provided. [20 marks]
1. All
Economics 372/572
Intermediate Finance
Spring 2013
Problem Set 4: Risk, Return and Diversification - SOLUTIONS
Problem 1:
Suppose a risk-averse investor can choose from the following three investments.
Investment
Expected Return (E[ri])
Standard Deviation
Economics 172
Intermediate Finance
Spring 2013
Problem Set 2: Bond Markets: SOLUTIONS
Question 1
The 5.75% coupon, 10-yr US Treasury bond is priced at 100.83.
(i) What is its yield? [5 points]
You can back this out using the price-yield formula and solvin
PS 1: Bonds
SOLUTIONS
Econ 372/572
Spring 2013
1. You have been told that the yield on a particular 10yr bond is 6.5%. This bond pays an 8.5% coupon with
semi-annual compounding. What will its price be? [5 points]
P
= 4.25/0.0325 [1 - 1.0325 -20] + 100/(1
LSE Research Online
Article (refereed)
Eric Neumayer
Unequal access to foreign spaces : how states
use visa restrictions to regulate mobility in a
globalized world
Originally published in Transactions of the Institute of British Geographers, 31
(1). pp. 7
An Overview of Matrix Algebra
x Definitions
Operations
x STATA matrix commands
What is it?
x Matrix algebra is a means of making
calculations upon arrays of numbers (or
data).
x Your data set is a matrix
Why use it?
x Matrix algebra makes mathematical
exp
PS 233 Intermediate Statistical Analysis
Homework 6:
Logit and Probit Research Note
(Due 4/15/2002)
Deterrence Outcomes on a Probability Curve
When do great-power disputes escalate to war? When do defenders are able to thwart
challengers attempts at revis
Political Science 233
Intermediate Statistical Methods
Homework 5:
Dummy Variables and Functional Form Research Note
Does Trade Really Follow the Flag?
Realist scholars have often responded to liberal claims that trade prevents international
conflict by a
PS 233 Intermediate Statistical Analysis
Homework 4:
Autocorrelation Research Note
(Due 3/27/2002)
Those Who Dont Know: An Empirical Analysis
Every year, every time Gallup asks the question Do you [approve/disapprove] of the
way President [name] is handli
PS 233 Intermediate Statistical Analysis
Homework 3:
Omitted Variable Bias Research Note
(Due 3/8/2002)
Economic Growth in the Tropics
A recent paper has claimed that
tropical countries have shown a consistent pattern of stagnant economic growth
in the la
PS 233 Intermediate Statistical Analysis
Homework 2
(Due 2/13/2002)
Exercise 1
For the simple linear regression model y i = 0 + 1 x1i + ei show that the
square of the t-statistics used in testing 1 = 0 is numerically equivalent to the Fstatistics in the a
PS 233 Intermediate Statistical Analysis
Homework 1
(Due 2/1/2002)
Exercise 1
Show that:
n
ErrorSS = i =1 ( y i y i ) 2 = S yy 12 S xx
where S yy =
n
( y i y ) 2 , S xx =
i =1
n
i =1
( xi x ) 2 , and 1 is the slope of the
regression line in a Linear Regre
PS 233
Intermediate Statistical Methods
Lecture 5
Multiple Regression & Matrix
Format
What If Y has more than just
ONE cause?
s
s
s
s
We have found an estimator for the
relationship between X and Y
We have developed methods to use the
estimator to test hy
PS 233
Lecture 2
The Simple Linear
Regression Model
What is Ordinary Least Squares?
s
s
s
Ordinary Least Squares (OLS) finds the
linear model that minimizes the sum of
the squared errors.
Such a model provides the best
explanation/prediction of the data.
PS 142
PS
War and Peace
Lecture 2
The Causes and
Effects of Alliances
Alliances in International
Politics
Alliances are perhaps the most common
International Institution
Literature has not traditionally called them
institutions
Logical inconsistency in