Math 5621 (369) Financial Mathematics II

(Applied Mathematics of Corporate Finance)

Spring 2012

Instructor – James G. Bridgeman

Opportunity Cost of Capital and WACC

trinomial default model

accounting statements

The solution to Q14 in the financial analysis handout is incorrect.  Correct is 14(a) .0847 and 14(b) .1429.  Make sure you can get those answers.  Extra credit to anyone who can figure out how the authors (or the grad student who came up with the solutions) got their answers.

The solution manual has an error for exercise 2.8.  You should be able to spot the error yourself, but ask me if you don’t see it.

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

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

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

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)

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 for your term paper (if you are stuck for a topic, look at trinomial default model above, follow the instructions and write a paper about it and what you learned from it.)

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 Chapter 14A again but drop the assumption that maintenance investment exactly equals depreciation plus amortization

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.)