Before beginning the examination, you must (1) read and fully comprehend the instructions below and (2) sign your name prominently at the top of the page. Failure to sign your examination will result in an automatic deduction of fifteen points.
The final examination consists of ten questions. The points assigned to each question are clearly indicated. Be sure to explicitly show all required computations to assure that you receive the maximum possible credit. If you believe that information required to solve a particular problem has been omitted, make such assumptions as you consider to be warranted by the other facts in evidence.
You will have two hours and forty-five minutes to complete the examination. The exam is closed book and closed notes. The terms closed-book and closed notes are defined to mean that there are absolutely no circumstances under which students are allowed to refer to their textbook, class notes, or any other class materials during the final exam. Each student may use a calculator during the final exam. Further, each student may bring one “crib sheet” to the exam. The contents of the crib sheet are limited to formulas and must not include worked examples, printed words or written words. The crib sheet must be hand written and fully contained on one sheet of paper no larger than 8 1/2 inches x 11 inches. Any sharing of crib sheets among students during the exam is expressly prohibited. Failure to comply with these instructions will be treated as a serious violation of the honor code.
Each student is required to present a valid ID when requested during the examination. To maximize compliance with the honor code during in-class examinations, talking among students during the examination is expressly prohibited. Students are not permitted to use cell phones or other wireless devices and methods of communication during the exam. All backpacks, books, notebooks, handbags, or other objects must be placed on the table (or floor) at the front of the classroom. Any student violating either of these prohibitions will be asked to leave the room immediately. Crowded conditions in the examination room may necessitate requiring that students sitting in adjacent seats take different versions of the examination (covering similar conceptual issues). Any talking during the examination or any attempt to circumvent the requirement that students sitting adjacent to one another must take alternate versions of in-class examinations will be treated as a serious violation of the honor code.
The spreadsheet model used in class on February 19 to infer implied volatilities from the prices of put and call options is available as Implied Volatility.
The suggested solutions to Homework Sets 3 and 4 are now available at solutions to assigned homework as well as links to most of the assigned readings listed in the course outline are available on WebCT. Once you have logged into the webct site for the course, click on the either the Homework Solutions or the Articles icon on the homepage. Clicking on these icons gives you access to the WebCT tool pages where the homework solutions and links to assigned readings are stored.
Finance 6310 will meet every Tuesday evening from 7 PM until 9:45 PM in room SOM 1.110. The required textbook for the course is the Seventh edition of Investments by Zvi Bodie, Alex Kane, and Alan Marcus. In addition, the required readings for the course include a number of journal articles that have appeared in publications targeted toward investment professionals. Many of these articles can be obtained easily on the internet. For your convenience, links to such articles may be obtained on the course outline available on the WebCT site for this course.
During the semester, I plan to make assigned homework, spreadsheet assignments, detailed homework solutions, and selected notes for some of my lectures available either on this Web location or on the WebCT site for the course. Although much of this material is currently listed below, these materials may be revised extensively prior to becoming available here on the Webb page. As you might expect, suggested solutions for the required homework will be unavailable until after the due date for the assignment.
Click on the highlighted file name to download the Course Syllabus for Finance 6310.
Students in Finance 6310 are encouraged to participate actively during classroom lectures by raising questions pertaining to investment terminology, the instutional details related to financial instruments and trading, or other issues related to classroom lectures. When I don't know the answer to your question, I will find out and answer you at the next class meeting. It is important for you to feel at ease in asking questions, and to remember that there are very few unimportant or irrelevant questions about the workings of financial markets. In spite of my desire to provide a forum for student questions, questions sometimes go unanswered because a student "didn't want to interupt me while I was on a roll". If this happens, please send me an e-mail message or come by to see me during office hours. I will be glad to answer your question. When your question is particularly good (meaning that I think that the rest of the class would like to discuss the answer to your question), I will list your question (without attribution) below and provide my best answer, which naturally can be the source of additional questions during future classroom discussions.
The Stock-Trak investment simulation that we will conduct this semester incorporates most of the features of actual on-line investing. In fact, as was noted in class, simulated trading with Stock-Trak exposes your class account to certain risks that you do not have to deal with in actual markets. To be sure that you fully understand the dynamics of on-line investing, as well as the institutional requirements on margin accounts, you should familiarize yourself with the following information.
The internet has become a repository for a great deal of investment commentary/analysis in the form of bulletin boards where individual investors are permitted to post their 'analysis' and commentary concerning the investment merits of various stocks. Investors must use great care with respect to both consuming and disseminating investment information on the internet. The Securities and Exchange Commission is particularly concerned about attempts to manipulate stock prices through the dissemination of information that is known (or should have been known) to be false. The links below provides additional information on the SEC Internet Enforcement Program and recent enforcement activities, as well as cautionary information concerning investment scams that you may encounter on the internet.
Exchange-Traded funds permit investors to trade well-known stock index portfolios just like individual stocks. The American Stock Exchange Web site provides information on the beta risk and fundamentals of virtually all of the ETF's listed for trading on the AMEX. ETF zone provides links to articles on ETF's, as well as information concerning ETF's traded on foreign markets.
Click on the highlighted file name to download all files. Given the relatively large number of formulas contained in the solutions to homework exercises, these documents have been saved in a format that you will be unable to view from my Webb page. However, all of these documents can be downloaded to your PC. Once you have the document on your PC, you may examine the document visually using Word, Word Perfect, or other word processing packages and/or print out a copy for yourself. Due to a change in the format relative to the format used to create these documents, I apologize in advance for the fact that some of the original pages may require an additional page when printed out.
To download spreadsheet data sets, click on the link and scroll down to "Save this link as..." .