Math 5621 (369) Financial Mathematics II

(Applied Mathematics of Corporate Finance)

Spring 2011

Instructor – James G. Bridgeman

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.)