×

### Let's log you in.

or

Don't have a StudySoup account? Create one here!

×

or

## F303Week3LectureNotes.pdf

by: Victoria Carr

140

0

3

# F303Week3LectureNotes.pdf BUS-F303

Marketplace > Indiana University > Finance > BUS-F303 > F303Week3LectureNotes pdf
Victoria Carr
IU
GPA 3.2
Intermediate Investments
Veronika Pool

These notes were just uploaded, and will be ready to view shortly.

Either way, we'll remind you when they're ready :)

Get a free preview of these Notes, just enter your email below.

×
Unlock Preview

COURSE
Intermediate Investments
PROF.
Veronika Pool
TYPE
Class Notes
PAGES
3
WORDS
KARMA
25 ?

## Popular in Finance

This 3 page Class Notes was uploaded by Victoria Carr on Friday January 30, 2015. The Class Notes belongs to BUS-F303 at Indiana University taught by Veronika Pool in Winter2015. Since its upload, it has received 140 views. For similar materials see Intermediate Investments in Finance at Indiana University.

×

## Reviews for F303Week3LectureNotes.pdf

×

×

### What is Karma?

#### You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 01/30/15
F303 Ian 26 28 Week 3 Lecture Notes Lecture 3 Practice Problems Slide 6 0 Answer always positive because it is the standard deviation which is the square root of variance so it must be positive Slide 7 0 0x W varx 0 0x J 2 2 22 5 18 22 3 5 22 0 0x 2433 Slide 8 0 0x J 3 08752 g 1 08752 g 1375 08752 0 0x 178 Slide 9 0 Answer 1 or 2 could be correct because she did not specify whether looking for the variance or standard deviation 0 ER 55 calculated in previous problem 0 71 552 3gtIlt 5 552 o V 4724 687 Slide 11 o On exam she may give a short sale so it is important to make sure that they add up to 1 0 Answer 19 o ER 92 11 19 Slide 12 i E R 90067 100125 6155 001 ABC p0 ABC 001 UABC iii up J92 02372 12 02952 2 9 1 oolABC Slide 13 0 Government Bond I Expected Monthly Return 42 I Standard Deviation O i E R 9 67 1 42 ii 0237 0 4 0 iii apJ920237212022910 solutions for all the above problems will also be posted on oncourse Lecture 4 Notes Basic Portfolio Theory 0 Slide 4 Portfolio Returns 0 What can the weight be I Long Term 01 I Short sell negative weight so you could have more with a higher weight 0 Slide 5 0 Last piece 0d the first equation is how they move in respect to each other 0 Also with the more assets you have the longer this piece is going to be 0 Slide 6 o How many different portfolios can you have from 2 assets I Infinite number because it depends on the weights of them Slide 9 An Example 0 Both of the 0R are positive so that means they are both risky Slide 10 o E R 615 421 174 Slide 11 Portfolios Risk 0 Risk is highest when perfectly positively correlated and lowest when they are negatively correlated Slide 12 0 Asset 2 is risker but it promises a higher return 0 Slide 13 Perfectly Positive Correlation o The balance between 1 and 2 depend on the risk aversion 0 When the correlation is perfectly positive you can shorten the equa on Up W1O391 W2O392 0 Slide 13 Perfectly Negative Correlation 0 Point on the y axis is when you create a risk free asset 0 You would not invest completely in Asset 1 because you can create a higher return with less risk with a mixture 0 When the correlation is perfectly negative you can simply the equation to up 2 W1 a1 wz 02 but taking the absolute value Slide 14 o No way to simplify this equation because it is a hyperbolic line 0 The higher the positive correlation the less hyperbolic the line will be I There is an excel doc on OnCourse to mess around and see this with Slide 15 0 Short selling will allow the line to go above or below Asset 1 amp 2 Slide 21 Portfolio Risk 0 As you diversify portfolios you limit firm specific risk but the market risk is always going to stay Slide 25 Limits to Diversification 0 Rule of Thumb How many stocks to not have a lot of risk and diversify I 2030 is good because it declines so quickly to that point

×

×

### BOOM! Enjoy Your Free Notes!

×

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

## Why people love StudySoup

Steve Martinelli UC Los Angeles

#### "There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Amaris Trozzo George Washington University

#### "I made \$350 in just two days after posting my first study guide."

Bentley McCaw University of Florida

#### "I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

#### "It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!
×

### Refund Policy

#### STUDYSOUP CANCELLATION POLICY

All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email support@studysoup.com

#### STUDYSOUP REFUND POLICY

StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here: support@studysoup.com

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to support@studysoup.com