Math 5621 (369) Financial Mathematics II

(Applied Mathematics of Corporate Finance)

 

Spring 2011

Instructor – James G. Bridgeman

instructor's web site

syllabus for the course  

 

There will no class on Friday April 22!  Next class is Monday April 25.

 

Your papers must be submitted by Friday April 29, no later than 5PM.  No exceptions!  They can be submitted by email or by hard copy in my department mailbox or under my office door.

 

Here is the Final Exam.  Here are the Solutions.  Here is the grading worksheet.  Final grades will be posted to the registrar’s system prior to May 3.

 

Opportunity Cost of Capital and WACC   trinomial default model

 

The solution manual has an error for exercise 5.14 part (b).  A hint for the correct solution: when you sell something short you get cash in return.

 

Cumulative assignments (most recent assignment at top)

(Final)

Read ch. 9 for background

Do exercises 16.1, 16.5, 16.6, 16.7, 16.8 and 16.10

Study sections 16A-D and 16G

Study sections 7G, H, and I and read 7J and 7K for background

Do exercises 15.1-15.9, 15.11-15.15, 15.17-15.18, and 15.20-15.21

Read for background 15K-L

Study Section 14C and Sections 15A-15J

Do exercises 11.1, 11.3, 11.4, 11.8, and 11.9

Study Chapter 11 sections A, D, E, F and G (read the other sections for background only)

Hand in the assignment given in class on 3-18: in a two asset portfolio consisting of two assets with perfectly correlated returns, and a portfolio variance of 0, prove that the expected portfolio return is the risk-free rate.

Do exercises 10.1, 10.2, 10.5, 10.6, 10.8

Study Chapter 10, sections A, C, E, and F (read the other sections for background only)

Submit a topic selection for your term paper

Do exercises 6.2-6.18, 6.21

Study Chapter 6

Do exercises 5.3-5.7, 5.9-5.11, and 5.13-5.14; make sure you understand exercise 5.8 (but no need to prove)

Study Chapter 5 

Read chapters 3 and 4 for background only

Do exercises 14.1 thru 14.5

Study Chapter 14, section B … keep connections with financial analysis statement handout, chapter 2 and chapter 14A in mind.

Work out formulas like 14A but without assuming that depreciation equals investment required to maintain prior investments

Study Chapter 7, sections A-E

Study Chapter 14, section A … keep in mind the connections with chapter 2 and with financial statements 

Do exercises 2.1 thru 2.11

Study Chapter 2 C-H

Study Opportunity Cost of Capital and WACC (download it just above)

Read for background Chapter 1 and Chapter 2, sections A and B

Study the financial statement analysis handout, do all Quiz questions, Practice Qu. 4,7,8,9,10 and Challenge Qu. 1

(the quiz solutions are in the handout; the PQ and CQ solutions are here.)