Tutorial 7
Example 1 (95 final)
The management of World Airways wants to determine the minimum amount of time needed
to turn around a plane from the moment it reaches the gate until it is ready to leave the gate.
To that end, the Flight Manager has identi

Table : Annuity table
Present value of $1 per year for each of n years = 1/r - 1/[r(1+r)n]
E.g.: If the interest rate is 10% per year, the present value of $1 received in each of the next 5 years is $3.791
Number
of years
1
2
3
4
5
6
7
8
9
10
11
12
13
14

Table : Discount Factor
Present value of $1 to be received after n years = 1/(1+ r) n
eg.: If the interest rate is 10% per year, the present value of $1 received at year 5 is $0.621
Number
of years
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
25
30

Chapter 2
Investment Appraisal:
Basic Methods
1
1. Introduction
In principle, an investment can be defined
as any action which brings about significant
changes in the companys cash flow.
buildings,
equipment,
land,
project
undertaken, and numerous other f

Mortgage repayment
Annual rate
in %
Loan
Amount
r x 100
P
6.5
6.75
100000
100000
No. of
years
No. of
months
n
20
5
Monthly
rate
rm=r/12
"annuity"
factor
a(rm,n)
Monthly
Installment
I
240 0.00541667 134.125004 745.573136
60
0.005625 50.8040744 1968.34607

STAT3001 Foundations of Financial and Managerial Statistics
Assignment 4: For Chapter 7
Deadline: 25th April 2016 at 5:00p.m.
(Solution will be uploaded soon after deadline)
1. The following table summarizes the precedence relationships among the
activiti

STAT3001 Foundation of Financial and Managerial Statistics
Assignment 3 (for Chapter 4 and 6)
Deadline: 8th April 2016
1. ABC is a shop specialized in gifts, crafts, and party supplies. The owner wants to
construct and maintain a measure for gauging overa

STAT3001 Foundation of Financial and Managerial Statistics
Assignment 2 (for Chapter 3)
Deadline: 4th Mar 2016 before 5:00p.m.
1. Assume the following information about a Treasury zero-coupon yield curve
today:
Maturity (years)
Zero rates (%) Maturity (ye

STAT3001 Foundation of Financial and Managerial Statistics
Assignment 1 (for Chapter 2)
Deadline: 16th February 2016 (5:00p.m.)
Please hand in questions 1 6 only.
1. Find the corresponding effective annual rates for the following nominal rates:
(a) 5% com

STAT 3001
FOUNDAN OF FIN and MANAGERIAL STA
Tutorial 4
1. Eigenvectors and Eigenvalues
Eigenvectors are a special case of matrix multiplication. E.g.
2 3
3
12
3
=
=4
2 1
2
8
2
This is the nature of transformation. Imagine a transformation matrix
flip

Table : Compound Factor
Future value of $1 after n years = (1+ r)n
eg.: If the interest rate is 10% per year, the investment of $1 today will be worth $1.611 at year 5
Number
of years
1
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
25
30
1%
1.010
1.0

STAT3001 Course Outline
1/10/2017
1. Course title and description
Course title:
STAT3001
Foundation of Financial and Managerial Statistics
2016-17 Spring
Instructor: Dr. HO Kwok Wah (LSB 116)
Teaching Assistant: Ms. Li chunxue (LSB G24)
Time and Venue (Le

STAT 3001 Tutorial 1
2/2/2011
Chapter 2 Investment Appraisal: Basic Methods
Discounted Cash Flow (DCF) methods: discount future cash flow according to their
distance from the present and the rate of interest (discount rate).
Present Value and Future Val

Formula Sheet
Continuous compounding: the amount of money obtained per x dollar invested
after t years is
c
r c (t ) nt
lim x(1
) xe r (t )t
n
n
PCA:
Rt ,t 1 R1 a1 b11Z1 . b1 p Z p
.
Rt ,t p R p a p b p1 Z1 . b pp Z p
Express the above equation by matr

Tutorial 5
1. Capital in Day 1 = 98 1,000,000 + 10 1,000,000 + 16 1,000,000 = 124,000,000
Similarly,
Capital in Day 2 = 125,760,000 and Capital in Day 3 = 180,160,000
As we want to construct an index similar to HIS, it should be:
HSI t
pN
p N
40
t
i 1 i

STAT 3001 Tutorial 7
Chapter 4 Index numbers and their uses
Percentage price index for a single item
P
I = n 100
P0
Pn : price at time period n
P0 : price at base time period
Aggregate price index
N
i =1
N
Unweighted aggregate price index:
Pi n
P0
i =

STA 3001 Tutorial 2
Chapter 2 Investment Appraisal: Basic Methods
Net Present Value Rule
Accept investments that have positive NPV
Choose the one with the largest NPV
Internal Rate of Return (IRR)
IRR is the discount rate which makes NPV = 0.
Cn
C1
C

STAT 3001 Tutorial 7
Tutorial 6
The market model:
ri = i + i rI + i
where
= return on security i for some given period
ri
= return on market index I for some given period
rI
So we need to estimate i and i
i
=
n
j =1
(ri ) j ri )(rI ) j rI )
n
j =1
(rI )

STA 3001 Tutorial 8
Chapter 8 CPM/PERT
o For planning, scheduling and control of projects that consist of numerous activities
CPM (Critical Path Method)
2 major components:
Activities:
represents the project operations / tasks to be conducted (arrows)
Eve

Tutorial 6 solution
Original data:
First, we find the return in the period I using this formula:
D V Vi 1
Ri i i
Vi 1
Vi 1
Period
2
3
4
5
6
7
8
Return of HSI
-0.2032
0.1762
0.3467
0.2535 -0.0475 -0.0656 -0.1360
Return of HSBC
-0.0079
0.0184
0.4663
0.1555

STAT3001 Survial Modeling
Tutorial 10
Example 1
A company has 2 investments to choose. The return of portfolio A is 4,000 if
the market is favourable but it is 0 if the market is unfavourable. The return
of portfolio B is 2,500 in any market condition. Th

STA 3001 Tutorial 9
Chapter 7 CPM/PERT
PERT (Program Evaluation and Review Technique)
The PERT method for project analysis assumes that three estimates of activity duration
follow a beta distribution.
1.
Optimistic time aij
The shortest possible time requ

Chapter 1
The course presents an overview of statistical
techniques that lay the foundation for effective
applications of statistics in the context of business
administration.
Part I covers financial management techniques
including investment appraisal,