617-552-0883 Email: muravyev@bc.edu Lectures: Thursday‚ 7pm‚ Fulton 150 Course Description The course is a rigorous‚ quantitative introduction to portfolio choice and financial asset valuation. The main topics of the course are arbitrage‚ portfolio selection‚ equilibrium asset pricing (CAPM)‚ fixed income securities‚ and derivative pricing. You are expected to understand valuation formulas and be able to apply them to new problems. The appropriate tools necessary for solving
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Ch.1 financial intermediation results from economies of scale and the specialization of financial transactions. (banks‚ inv. companies [mutual & pension funds]‚ insurance companies‚ credit unions‚ brokerage firms‚ investment banks). Inv. banks assist firms in raising capital‚ create the market for innovative new securities that meet the risk and return demand (CMOs‚ collateralized mortgage obligations – derivative security that separates the cash flows of a mortgage pool into different classes
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Fundamentals of Multinational Finance‚ 3e (Moffett) Chapter 6 International Parity Conditions 6.1 Multiple Choice and True/False Questions 1) If an identical product can be sold in two different markets‚ and no restrictions exist on the sale or transportation costs‚ the product ’s price should be the same in both markets. This is know as A) relative purchasing power parity. B) interest rate parity. C) the law of one price. D) equilibrium.
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Releases capital Why Securitize assets ? Arbitrage – yield and term Enables better utilization of resources Risk management “Dress up” accounting profits if “true sale” criteria is satisfied Benefits to investors? Better security Greater moral responsibility Create instruments to match investment objectives Better and more resilient credit ratings Risks in securitization Risk Credit Risk Recovery Risk Liquidity Risk Pre Payment & Yield Risk Risk Mitigant Tranching‚ Cash reserves
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the income from specified assets. The investor’s best choice is A rated debt. BB is speculative which is not what the investor desires and given the investor’s forecast AA and AAA rated bonds are not necessary and would result in a lower promised yield than an A rated bond. The TIE ratio = EBIT / Int. Exp. = $66/$6 = 11; Current Ratio = Cur. Assets / Cur. Liabilities = $79 / $52 = 1.52; Debt/Equity = $65 / ($79 + $72 - $65) = $0.76. The bond meets the AAA criteria for theTIE since it is above 10
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partial differential equation for the prices of bonds and other interest rate derivative products. The ‘spot rate’ that we will be modeling is a very loosely-defined quantity‚ meant to represent the yield on a bond of infinitesimal ma-turity. In practice one should take this rate to be the yield on a liquid finite-maturity bond‚ say one of one month. Bonds with one day to expiry do exist but their price is not necessarily a guide to other short-term rates. 3 3 Stochastic interest rates Since
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ISM Question 1 Explain various system design and development methodologies. Question 2 Write short notes on following: • Data Mining • IT Outsourcing Question 3 Differentiate between MIS and TPS [pic] http://www.authorstream.com/Presentation/mashkoor-883032-tps-transaction-processing-system/ http://books.google.co.in/books?id=D7UMstcSWkoC&pg=PR173&lpg=PR173&dq=list+of+differences+between+MIS+and+TPS&source=bl&ots=C2x_cS9fQz&sig=rmM2TuHnkzbPLer
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Chapter 7 2. Locational Arbitrage. Assume the following information: Beal Bank Yardley Bank Bid price of New Zealand dollar $.401 $.398 Ask price of New Zealand dollar $.404 $.400 Given this information‚ is locational arbitrage possible? If so‚ explain the steps involved in locational arbitrage‚ and compute the profit from this arbitrage if you had $1‚000‚000 to use. What market forces would occur to eliminate any further possibilities of locational arbitrage? ANS: Yes. One
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April 2014 Final Examination Finance 1 MGCR 341 April 24‚ 2:00PM-5:00PM FINAL EXAM: Solutions Examiner: Vadim di Pietro Student Name: McGill ID: INSTRUCTIONS: a) This is a CLOSED BOOK and CLOSED NOTES examination. b) The exam is 180 minutes in length. c) SHOW YOUR WORK: In order to receive credit for your answers‚ you must show your work. Correct answers with no work shown will not receive any credit. Incorrect answers with partial correct work may receive partial credit
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L1 - Modigliani & Miller (1958) ‘The Cost of Capital‚ Corporation Finance and the Theory of Investment’ This article mainly discusses the cost of capital‚ the required return necessary to make a capital budgeting project worthwhile. Cost of capital includes the cost of debt and the cost of equity. Theorist conclude that the cost of capital to the owners of a firm is simply the rate of interest on bonds. In a world without uncertainty the rational approach would be (1) to maximize profits and (2)
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