Exam #2 Review

Scheduling Information:

 Time: Wednesday, March 25.
Location: Gradescope.
Review Session: Zoom.

 

Reading:
Basic Types of Securities with Deterministic Payments Chapter 2, Section 5
Discount Factors and Present Value of Future Payments Chapter 2, Section 6
Arbitrage-Free Prices of Securities Chapter 2, Section 7
Prices of Coupon Bonds and Annuities Chapter 2, Section 8
Internal Rate of Return or Yield to Maturity Chapter 2, Section 9
Floating rate bonds Chapter 2, Section 10
Interest Rate Swaps Chapter 2, Section 10
Forward prices for fixed income securities Chapter 3, Sections 1 and 2
Forward currency exchange rates Chapter 3, Section 3
Forward prices for stocks
(no dividend, known dividend, known dividend yield) 		Chapter 3, Section 4
Forward prices for commodities Chapter 3, Section 5
 

Exercises:

 Chapter 2: #13, 15, 20, 21, 22, 23, 25, 27, 32, 35.
Chapter 3: #1, 8, 18, 19, 20.
Answers:

Chapter 2:
(13) a) 4.80%, b) 4.72%.
(15) $43,897.19
(20) $477.83. (21) $11,083.24. (22) R_I=7.76% , A=$1158.76.
(23) rI[12]=6.85%.
(25) Take the cash back.
(27) 5.54%.
(32) qswap[2]=3.95%.

Chapter 3:
(1) FBA=5.29.
(8) Yes, $1.72 per oz.
(19) $4303.15
(20) $9884.18

 

Formula Sheet:

 Here is the formula sheet you'll be given with the midterm exam.
 

Calculator:

 Remember that you will need to have one of the approved calculators: TI-30X IIS, TI-30X IIB or TI-30Xa. Amazon has some in stock and offers next day and second day shipping. [Disclaimer: I have no affiliation with Amazon other than as a customer.]
 
 

Old Exam Problems:

Here is a collection of exam problems I've goven to students in previous semesters.

Before the questions come in - no, I don't have solutions available for these problems. You have a number of problems from the text with answers, and it's important for you to get used to working on problems where the answers are not available. You'll have a chance to ask questions at the Review Session, and during your TA's office hours, too.