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Principles of Finance Summer Term 2005 Helmut Elsinger
[email protected]
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Contact 2 Helmut Elsinger Email:
[email protected]
Phone: 01/ 4277 38057 Office Hours: Tu. 10-11 a.m. ...
Course Grade 3 You have to prepare the assigned exercises . In total you have to prepare and mark at least 50% of all ex ercise ...
SyllabusPart 1 - Single-period random cash flows 4 Stocks (incl. empirical features of returns)Mean-variance portfolio theoryUti ...
Literature 5 First Part:Investment Science, David Luenberger, Oxford University Press Second Part:Options, Futures, and Other ...
Overview 6 Financial markets and the firm Players in financial markets Products traded on financial markets Classificatio ...
Financial markets and the firm 7 Source: Admati (2002) Introduction to financial markets ...
Players in financial markets 8 Borrowers: need funds Lenders / investors: wish to invest funds Hedgers: want to reduce risk ...
Players in financial markets: FI 9 ... matching borrowers and lenders / investors Ex-post information asymmetry between poten ...
Products traded on financial markets 10 Bonds / FI securities (deterministic CF stream): e.g. classification according to issue ...
Classification of financial markets 11 ...according to types of markets / traded products: bond market, stock market, derivativ ...
Pricing 12 Supply and demand Ä price and quantity in an equilibrium Introduction to financial markets 60 50 40 30 20 10 0 02468 ...
Pricing 13 What determines the price at which investors are willing to trade? Expectations about future cash flows Timing o ...
Pricing 14 Returns for different asset classes in Switzerland Source: Spremann (2002) Introduction to financial markets ...
Overview 15 Important stock markets Types of stocks Types of trades Computing returns Empirical features of returns A ...
Important stock markets 16 Market ca p italisation in million USD. Source: Exchan g e End 1990 End 1995 End 2000 NYSE 2 692 123 ...
Types of stocks 17 Common stock ... residual claim on the earnings of the firm Common stockholders can expect to receive th ...
Types of trades 18 Classification on the basis of the execution price Market order: executed at the best available price Li ...
Types of trades 19 Long position: owning an asset (e.g. 100 OMV shares) Short position / short selling Borrow shares from s ...
Computing returns 20 Simple returns, discrete compounding Log returns, continuous compounding Relation between simple and l ...
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