Course Outline and Review for Finance 6310
This outline is NOT a substitute for studying class lecture notes and homeworks. It is merely a guide of the material covered and is not intended to include answers to exam questions.
Exam 1: Chapters 1-7
Terminology & Concepts
See lecture slides and homework
Financial system functions and goals
Types of assets, physical, financial, …
Debt, money market, notes, bond, government debt, sovereign debt
Types of US government debt, mortgage backed securities
Equities, common, preferred, warrants
Pooled investment securities, nav, open-end, closed-end, etf, trust depositories, hedge funds
Currencies, contracts, settlement, forward contracts, futures
Financial intermediaries
Primary market, secondary market
Oder details
Market, limit, stop loss (stop sell) and stop buy orders
Bid ask spread, commission
Buying on margin and leverage, margin call
Short sale, margin, margin call
Unique, firm-specific diversifiable, nonsystematic risk
Market risk, beta, systematic, nondiversifiable risk
Modern portfolio theory
leverage
Minimum variance frontier, efficient frontier, global minimum variance portfolio,
Riskless asset, risky asset, optimal risky portfolio
Capital allocation line
Sharpe ratio
Problems
See lecture slides and homework for clarification
Buying on margin
Short selling
NAV
Front end load, Back end load, Operating expenses, 12b-1 charges – marketing and distribution costs
Mutual fund rate of returns over several years
Types of returns – holding period, average (equal), compounded (time), dollar weighted, scenario
Stock risk – standard deviation
Portfolio returns, standard deviation and variance
Capital allocation line slope
Portfolio design given desired return or risk level
After Exam 1: Chapters 9, 11 - 18
Terminology & Concepts
CAPM, efficient market hypothesis, alpha, beta, jensen’s alpha
Regression beta, adjusted beta, bottoms-up beta
Multifactor models, fama-french...