Chapter 09 - Behavioral Finance and Technical Analysis
CHAPTER 09 BEHAVIORAL FINANCE AND TECHNICAL ANALYSIS
1. Note the following matches Disposition effect d Representativeness bias e Regret avoidance b Conservatism bias a Mental accounting - c 2. Repres
Business Finance 310
Fall 2013
Assignment #1
Trading and Arbitrage
Due Date: September 20, 2013
The focus of this assignment is to understand the Law of One Price and Trading. The topics
correspond to Lectures 1 to 3. You will need to use a spreadsheet po
Chapter 14 - Financial Statement Analysis
CHAPTER 14 FINANCIAL STATEMENT ANALYSIS
1. N a. Inventory turnover ratio in 2009. = 2850 / (490 + 480) x .5 = 1.47 b. Debt equity ratio in 2009. = 3340 / 960 = 3.48 c. Cash flow from operating activities in 2009.
Chapter 13 - Equity Valuation
CHAPTER 13 EQUITY VALUATION
1. Theoretically, dividend discount models can be used to value the stock of rapidly growing companies that do not currently pay dividends; in this scenario, we would be valuing expected dividends
Chapter 06 - Efficient Diversification
CHAPTER 06 EFFICIENT DIVERSIFICATION
1. So long as the correlation coefficient is neither zero nor 1.0, the portfolio will contain diversification benefits. Any other combination will cause a diversification benefit
Chapter 10 - Bond Prices and Yields
CHAPTER 10 BOND PRICES AND YIELDS
1. a. Catastrophe bond. Typically issued by an insurance company. They are similar to an insurance policy in that the investor receives coupons and par value, but takes a loss in part o
Chapter 12 - Macroeconomic and Industry Analysis
CHAPTER 12 MACROECONOMIC AND INDUSTRY ANALYSIS
1. A top-down approach to security valuation begins with an analysis of the global and domestic economy. Analysts who follow a top-down approach then narrow th
Chapter 07 - Capital Asset Pricing and Arbitrage Pricing Theory
CHAPTER 07 CAPITAL ASSET PRICING AND ARBITRAGE PRICING THEORY
1. The required rate of return on a stock is related to the required rate of return on the stock market via beta. Assuming the be
Chapter 11 - Managing Bond Portfolios
CHAPTER 11 MANAGING BOND PORTFOLIOS
1. Duration can be thought of as a weighted average of the maturities of the cash flows paid to holders of the perpetuity, where the weight for each cash flow is equal to the presen
Chapter 17 - Futures Markets and Risk Management
CHAPTER 17 FUTURES MARKETS AND RISK MANAGEMENT
1. Selling a contract is a short position. If the price rises, you lose money. Loss = (850 800) x 250 = $12,500 2. Futures price = 800 x (1 + .01 - .02) = 792
Chapter 19 - Globalization and International Investing
CHAPTER 19
GLOBALIZATION AND INTERNATIONAL INVESTING
1. False. Investments made in a local currency have the added risk associated with
exchange rates. If an investment were made in dollars, the busin
IDS 355 Summer 2016 Final Exam FAQ
Q: When is the final exam?
A: Thursday, August 4th at 4:15pm.
Q: Where is the final exam?
A: 220 Douglas Hall.
Q: What will the final exam cover?
A: The main focus (about 80%) will be on the chapters Inventory Management
Summer 2016 Midterm 1 FAQ
Q: When is the midterm?
A: From 5pm to 6pm
Q: Where will the midterm take place?
A: The regular classroom.
Q: What will the midterm cover?
A: The four chapters: Introduction to Operations Management; Services; Strategy; and Forec
Jason Lee
667-868-558
Assignment 1
Trading and Arbitrage
Part 1:
1. In spite of the game results, buying both CBS and WS security will result in $1
which is equal to a risk-free asset. The payoff equals the same and the cost comes
out to $0.95. Without ot
Chapter 21 - Taxes, Inflation, and Investment Strategy
CHAPTER 21 TAXES, INFLATION, AND INVESTMENT STRATEGY
1. Moral hazard. The owner now has an incentive to cause a loss and file a claim. 2. The owner will suffer from adverse selection. The owner will a
Chapter 18 - Portfolio Performance Evaluation
CHAPTER 18
PORTFOLIO PERFORMANCE EVALUATION
1. a. Possibly. Alpha alone does not determine which portfolio has a larger Sharpe ratio.
Sharpe measure is the primary factor, since it tells us the real return per
Chapter 15 - Options Markets
CHAPTER 15 OPTIONS MARKETS
1. Options provide numerous opportunities to modify the risk profile of a portfolio. The simplest example of an option strategy that increases risk is investing in an `all options' portfolio of at th
Chapter 20 - Hedge Funds
CHAPTER 20 HEDGE FUNDS
1. No, a market-neutral hedge fund would not be a good candidate for an investors entire retirement portfolio because such a fund is not a diversified portfolio. The term market-neutral refers to a portfolio
Chapter 22 - Investors and The Investment Process
CHAPTER 22
INVESTORS AND THE INVESTMENT PROCESS
1.
The investment objectives of the Masons should be expressed in terms of return and
risk. These return and risk preferences should be portrayed in terms of
Chapter 05 - Risk and Return: Past and Prologue
CHAPTER 05 RISK AND RETURN: PAST AND PROLOGUE
1. The 1% VaR will be less than -30%. As percentile or probability of a return declines so does the magnitude of that return. Thus, a 1 percentile probability wi
Chapter 08 - The Efficient Market Hypothesis
CHAPTER 08 THE EFFICIENT MARKET HYPOTHESIS
1. The correlation coefficient should be zero. If it were not zero, then one could use returns from one period to predict returns in later periods and therefore earn a
Chapter 03 - Securities Markets
CHAPTER 03 SECURITIES MARKETS
1. An IPO is the first time a formerly privately owned company sells stock to the general public. A seasoned issue is the issuance of stock by a company that has already undergone an IPO. 2. Th
Assignment 4 Performance Evaluation.
To be handed in class.
The Finance professors at UIC have been running their own asset allocation businesses. We calculate
some summary statistics and find:
Obs Mean (ri rf)
30
0.20
30
0.15
30
0.10
Fund
Rosenthal Asset
Assignment 3 Testing the CAPM.
To be handed in class.
You observe that IBM, Google, and Facebooks stock returns have the betas in the table provided
below. Suppose the expected market return is 8% and the risk-free rate is 3%.
Stock
IBM
GOOGLE
FB
Beta
1.5
Chapter 2
11.
a.
At t = 0, the value of the index is: (90 + 50 + 100)/3 = 80
At t = 1, the value of the index is: (95 + 45 + 110)/3 = 83.333
The rate of return is: (83.333/80) 1 = 4.17%
b.
In the absence of a split, Stock C would sell for 110, so the valu
Trading & Markets
Finance 310
Matthew M Wynter
University of Illinois at Chicago, College of Business Administration
Fall 2013
Wynter (UIC)
Trading & Markets
Fall 2013
1 / 42
Where do securities trade?
Primary Markets
Initial public oerings (IPO)
Seasoned
Risk and Return
Finance 310
Matthew M Wynter
University of Illinois at Chicago, College of Business Administration
Fall 2013
Wynter (UIC)
Risk and Return
Fall 2013
1 / 41
Quantifying Risk
Risk Example
Which do you prefer?
A: $10,000 for sure
B: Flip a coi