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FIN 330 Final Review

FIN 330 Final Review. Woo-hoo!!. Chapter 1. Know how to calculate total dollar returns. Why does a Risk Premium exist? Arithmetic or Geometric?. Chapter 2. Know Cash vs. Margin accounts. Margin Call Maintenance Margin Hypothecation Short Sales, Naked Short Sales. Chapter 3.

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FIN 330 Final Review

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  1. FIN 330Final Review Woo-hoo!!

  2. Chapter 1 • Know how to calculate total dollar returns. • Why does a Risk Premium exist? • Arithmetic or Geometric?

  3. Chapter 2 • Know Cash vs. Margin accounts. • Margin Call • Maintenance Margin • Hypothecation • Short Sales, Naked Short Sales

  4. Chapter 3 • Know securities types • Interest Bearing, stocks, derivatives • T-bills, notes, bonds • Futures, options – obligations or rights? • European or American?

  5. Chapter 4 • Mutual funds - Yep….

  6. Chapter 5 • Primary market • Secondary market • IPO process • Bid/Ask • Listed, non-listed securities • Exchanges

  7. Chapter 6 • Fundamental analysis • Technical Analysis • FV, PV – Dividend discount model • Constant Growth • Perpetual Growth • Sustainable growth rate, retention ratio • Two-stage growth model • Residual Income Model (RIM) • P/E, P/S

  8. Chapter 7 • Efficient market hypothesis (EMH) • Weak-form Efficient Market • Semistrong-form Efficient Market • Strong-form Efficient Market • Excess/ Abnormal returns • Market efficiency • Competition/Profit motive • Implications • Random walks & Prophecy • Whut is an event study? • Informed vs. Insider Trading • Anomalies

  9. Chapter 8 • Behavioral Finance • Rational Behavior • Cognitive psychology • Three Economic Conditions that lead to Rationality • Investor rationality • Independent deviations from rationality • Arbitrage • Prospect theory • Frame Dependence • Mental Accounting • The House Money Effect • Technical Analysis – why? • Dow Theory, Elliot Wave, resistance levels, charts, OHLC, moving averages

  10. Chapter 9 • Interest Rates: • Prime rate • Bellwether rate • Federal funds rate • Discount rate • Money Market Rates • Commercial Paper • CD • Eurodollar • LIBOR • Bank Discount/BEY/EAR • Yield Curve, Term Structure – STRIPS • Nominal vs. Real Interest Rates • Term Structure Theories • Expectations Theory • Maturity Preference Theory • Market Segmentation Theory

  11. Chapter 10 • Bonds • Prices • Yield to maturity • Dirty/Clean • Callable/convertible • Yield to call • Malkiel’s Theorems • Teeter-totter • Duration • Dmac • Dmod • Immunization by duration matching

  12. Chapter 11 • Diversification/Expected Return • Variance/Std Deviation – diversification of risk, correlation • Portfolios – expected return • Markowitz Efficient Frontier • Minimum variance portfolio

  13. Chapter 12 • Systematic Risk, Unsystematic Risk Components • Portfolio betas • Reward to risk ratio • Security Market Line • Market Risk Premium • Determination of Beta • CAPM • Implication • Fama French Carhart

  14. Chapter 14 • Forward contracts • Futures contracts • Long, Short, Hedging • Cash Futures Arbitrage • Basis • Spot futures parity • Cross Hedging • Hedging stock portfolios with an index • Cheapest to deliver

  15. Chapter 15 • Option Basics • The minimum terms stipulated by stock option contracts are: • The underlying • The strike or exercise • The contract size. • The expiration date, or option maturity. • The exercise style (American or European). • The delivery, or settlement • Option Moneyness • Protective put, covered call, straddle • Upper/lower bounds, intrinsic value • Put call parity • ESO’s • Vesting

  16. Chapter 16 • The Black-Scholes-Merton option pricing model • S, Y, K, r, T,  • Greeks – Delta, Gamma • Calculate C, P, Delta, Eta, Vega… • Implied Volitality • VIX, VXN • Delta hedging • Calls • Puts

  17. Chapter 18/19 • Protective Covenants • Debentures • subordinated • Yield spread, • T-bills, Strips (Term Structure) • Yield to call • Investment Grade Rating

  18. Good Luck! • Bonne chance ! • VielGlück! AllesGute! • MaikaiPomaika! • Buona fortuna! In bocca al lupo! • Bona fortuna! • Lykketil! • Удачи! • Zolzaynmitmazl! • Guid Luck!

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