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FINA2802 Investments and Portfolio Analysis Spring, 2009 Dragon Tang

FINA2802 Investments and Portfolio Analysis Spring, 2009 Dragon Tang. Review for Exam I. 1. Importance of Financial Markets. Functions of Financial Markets: Smoothing consumption. Better risk-sharing. Separation of ownership and control. 2. Financial Securities. Money market Bond

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FINA2802 Investments and Portfolio Analysis Spring, 2009 Dragon Tang

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  1. FINA2802 Investments and Portfolio AnalysisSpring, 2009Dragon Tang Review for Exam I Review for Exam I

  2. 1. Importance of Financial Markets Functions of Financial Markets: • Smoothing consumption. • Better risk-sharing. • Separation of ownership and control. Review for Exam I

  3. 2. Financial Securities • Money market • Bond • Stock • Derivatives Review for Exam I

  4. 3. Stock Market Indexes • Price-weighted • Value-weighted • Equally weighted Review for Exam I

  5. 4. Securities Issuance and Trading • Role of investment banks • Different types of markets • Different types of orders Review for Exam I

  6. 5. Buying on Margin and Short Sales • Initial Margin • Actual Margin • Margin Call Buying on Margin: Short Selling: Review for Exam I

  7. 6. Investment Companies • Net Asset Value (NAV) • Closed-end fund: discount/premium • Mutual Fund Expenses: front-end load, back-end load, operating expenses, 12b-1 fees Review for Exam I

  8. 7. Risk and Return Expected Return and Risk of a Single Security: • Expected Return: • Variance: • Volatility: Review for Exam I

  9. 8. Asset Allocation Complete Portfolio Expected Return and Risk: Expected Return: Variance: Special Case: and Review for Exam I

  10. 9. Efficient Market Hypothesis • Three versions of EMH • Tests of EMH • Market Anomalies and explanations Review for Exam I

  11. 10. Market Efficiency • Dr Dragon Tang’s views • Evidence • Behavioral interpretation Review for Exam I

  12. 11. Behavioral Finance and Technical Analysis • Behavioral biases • Loss aversion • Overconfident • Mental accounting; etc. • Why TA may be useful • Slow reaction • Systematic biases • Technical indicators Review for Exam II

  13. 12. Current Events • The ongoing crisis: causes and consequences • The worldwide bailout: stimulus packages and bank nationalization • China vs U.S. • The real investment world (e.g., mini-bond incident) Review for Exam I

  14. Comments and Advices • Never leave a question blank, write down as much (relevant information) as possible to get partial credits. • Work on the easier and less time-consuming problems first. • Always show the formula before you put up the numbers. You will get most of the points in case of calculation errors. • Current events count 30%. • Homework questions will be highly relevant Review for Exam I

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