Understanding Investment Returns, Margin, and Portfolio Optimization
Question 2
Consider the three stocks in the following table. Pt represents the price in time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.
P0 | Q0 | P1 | Q1 | P2 | Q2 | |
A | 120 | 400 | 135 | 400 | 135 | 400 |
B | 60 | 800 | 52.5 | 800 | 52.5 | 800 |
C | 135 | 800 | 150 | 800 | 75 | 1600 |
a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1).
b. What must happen to the divisor for the price-weighted index in year 2?
c. Calculate the rate of return for the second period
Read MorePortfolio Management and Investment Analysis
Question 2
Consider the three stocks in the following table. Pt represents the price in time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.
P0 | Q0 | P1 | Q1 | P2 | Q2 | |
A | 120 | 400 | 135 | 400 | 135 | 400 |
B | 60 | 800 | 52.5 | 800 | 52.5 | 800 |
C | 135 | 800 | 150 | 800 | 75 | 1600 |
a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t = 0 to t = 1).
b. What must happen to the divisor for the price-weighted index in year 2?
c. Calculate the rate of return for the second period
Read MoreUnderstanding Cointegration and Error Correction Models in Eviews
In-Class Exercise 7
Question 1
This question helps to familiarize you with the analysis of cointegration and the error correction model. The dataset we are using is forex.csv, which can be downloaded from Moodle.
Part 1: Using Eviews for Analysis
First, load the file into Eviews. To get a sense of the data over the sampling period, highlight and open the two series spotrate and forwardrate. Then choose View > Graph and click OK.
%IMAGE_1%
Clearly, the two series show some trending behavior, and they
Read MoreAnalysis of Cointegration and Error Correction Models
In-Class Exercise 7
Question 1
This question helps to familiarize with the analysis of cointegration and error correction models. The dataset we are using is forex.csv, which can be downloaded from Moodle.
Part 1: Using Eviews for Analysis
First, load the file into Eviews. To get a sense of the data over the sampling period, highlight and open the two series spotrate and forwardrate. Then choose View -> Graph and click OK.
%IMAGE_1%
Clearly, the two series show some trending behavior, and they seldom
Read MoreFinancial Statement Analysis: Ratios & Explanatory Notes
Financial Statement Analysis
Explanatory Notes to Financial Statements
1. What should be done to ensure a valid comparison of two balance sheet items?
The CPI for the previous year’s balance sheet should be applied to make comparisons in real terms over the current year.
2. What is the purpose of the Explanatory Notes to the Financial Statements and when are they most relevant?
The explanatory notes are an essential complement to the financial statements. They provide context and background information,
Read MoreData Visualization: An Overview and Practical Guide
Data Visualization Overview
Important Factors When Designing a Visualization
Goal/Purpose: This is usually determined before starting.
- Data (What?): What data will be used?
- Audience (Who?): Who is the visualization for?
- Types of Visualization (How?): How will the data be visualized?
Tools for Visualization
- Tableau: Extremely user-friendly, similar to PowerPoint.
- D3.js: JavaScript framework for manipulating SVG objects, used for programming visualizations.
- Python: Python Notebook and Matplotlib are popular