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Course Outline and Review for Finance 6310

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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

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