Chapter 7: Introduction to Risk and Return
Tuesday, October 22, 2013
9:00 PM
Section 7.1: A century of Capital Market History in One Easy Lesson
3 portfolios:
1. Portfolio of Treasury bills -safe
2. Portfolio of US government bonds -< affected by interest
Chapter 6: Making Investment Decisions with the Net Present
Value Rule
Tuesday, October 22, 2013
3:07 PM
- Company needs to forecast the project's cash flows and discount them
at opp cost of capital to get NPV
- Project with positive NPV increases shareho
Chapter 8: Portfolio Theory and the Capital Asset Pricing Model
Thursday, October 17, 2013
2:43 PM
A: variance x12 x 12
B: variance x22 x 22
C: covariance: 2 ( x1 *x2*1*2)
Portfolio Variance = A+B+C
Variance : (expected return - actual return)^2
Std dev =
Chapter 9: Risk and the Cost of Capital
Tuesday, October 29, 2013
2:49 PM
Cost of capital (COC): (RD x D/V) + (RC X E/V)
WACC: (1-T) X RD (which is YTM) X D/V) + (RC X E/V)
CAPM: Pf + beta ( Rm - Rf)
- Since debt is cheaper than equity, why not use all de
Chapter 1 -LOOK AT HW!
Thursday, December 12, 2013
5:47 PM
Goals and Governance of the Firm:
To carry on busi, need real assets
- Use financial assets or securities to pay for them e.g. bank loan, corporate bond
a. Investment Decision: purchase of real as
Chapter 3: Valuing Bond
Thursday, December 12, 2013
7:38 PM
At maturity, you get final interest payment + face value of bond (principal)
- Y = yield to maturity
- Bond prices and interest rates are inversely related
- Change in interest rate have greater
Chapter 5: NPCV and Investment
Thursday, December 12, 2013
11:39 PM
- Invest if NPV>0
- Firm can either keep and reinvest cash or return it to investors
NPV:
- Dollar today is worth more than a dollar tmr
Can invest it to start earning interest immediate
Chapter 10: Project Analysis
Friday, December 13, 2013
3:48 AM
Capital Budget: list of investment projects planned for the coming year
- Proportion of porposed projects having postive NPVs at the coprorate hurlde rate is independent
of the hurdle rate
- D
Chapter 13: Efficient Markets
Friday, December 13, 2013
9:48 AM
Six Lessons of Market Efficiency:
Markets Have No Memory
Trust Market Prices
Read the Entrails
There are No Financial Illusions
Remember the Do-It-Yourself Alternative
Seen One Stock, S
Chapter 11: Investment, Strategy and Econ Rents
Friday, December 13, 2013
5:06 AM
- Smart investment decisions make more money than smart financing decisions
- Smart investments are worth more than they cost they have a positive NPV
- Firms calculate NPVs
Chapter 2: How to Calculate PV
Thursday, December 12, 2013
6:39 PM
FUTURE VALUES:
- Money can be invested to earn interest
- Dollar today is worth more than a dollar tomorrow
- Wealth grows at a compound rate and it is compound interest
PRESENT VALUES:
Or
Chapter 4: Value of Common Stock
Thursday, December 12, 2013
8:38 PM
Valuation by Comparables:
- Identify a sample f similar firms
Book Value: net worth of firm acc to balance sheet
Dividend: Periodidc cash distribution from dirm to shareholder
P/E ratio:
ECN 326
EXAM 1 FALL 2014
NAME _
Instructions:
You have 70 minutes to complete this exam.
There are 70 total points on the exam.
The exam contains 3 parts:
PART 1: RECORDING TRANSACTIONS (35 points)
PART 2: ACCOUNTING FOR ACCOUNTS RECEIVABLES (18 points)
P
ECN 326
EXAM 1 FALL 2015
KEY_
NAME _
Instructions:
You have 70 minutes to complete this exam.
There are 70 total points on the exam.
The exam contains 3 parts:
PART 1: SHORT ANSWER (35 points)
PART 2: ACCOUNTING FOR ACCOUNTS RECEIVABLES (18 points)
PART 3
Homework 1
Economics 286 Spring 2016
Due Feb 9
Name:
Points:
/26
Read This First: Homework in this course will include both analytical and computer exercises.
The computer exercises will involve work with statistical software packages. It is expected that
Bundling
1
Overview
With a downward sloping demand curve, consumers have
different valuations for the good. In setting a price,
monopolist must consider the trade-off:
- charge high price to extract surplus but lose sales.
- charge low price to get sales
Grinnell College
Dept of Economics
ECN 280
Fall 2015
Review Concepts for Exam 2
Production and Costs
Readings
Why do we need firms to organize economic activity on the production side? According to Coase,
what factors limit firm size?
Production and Costs
Grinnell College
Dept of Economics
ECN 280
Fall 2015
Review Concepts: Consumer Theory
Markets
What is a market? A competitive market?
What is the difference between real and nominal prices? Is there a relationship to our concept
of the numeraire good?
Ac
Pricing
(two part pricing)
1
Key issues
1.
Two part pricing with identical consumers
2.
Two part pricing with different consumers
i.
ii.
3.
firm is able to identify consumer type
firm is unable to identify consumer type
Applications and extensions
2
Price
Grinnell College
Dept of Economics
ECN 280
Fall 2015
Review Concepts
Pricing with Power, Monopolistic Competition, Oligopoly, and Game Theory
Pricing with power
Price discrimination
What are the key conditions necessary for a firm to price discriminate?
Grinnell College
Dept of Economics
ECN 280
Fall 2015
Review Concepts for Exam 3
Markets (competitive vs. monopoly) and Welfare
Competition
Define economic and accounting profit.
Assumptions:
List the four assumptions of competitive markets.
These four a
Price Signaling and Price
Leadership
The Dominant Firm Model
In
some oligopolistic markets, one large
firm has a major share of total sales,
and a group of smaller firms supplies
the remainder of the market
The large firm might then act as the
dominant