Here are some helpful hints to consider for Problems 1 and 2 on Problem Set 8 (Problem Set 8 is due by 11 am this Tuesday): Problem 1, Part A: Since the call option described in Problem 1, Part A is initially out-of-the-money (i.e., since S = $18 and K = $20), there will be terminal nodes at which the call option expires in-the-money and others at which it expires out-of-the-money.  By solving the equation and rounding to the nearest integer greater than b (referred to in the CRR equation below as the parameter “a“), this indicates the minimum number of up moves required such that this ..read more

… are available at http://fin4335.garven.com/spring2024/ps7solutions.pdf ..read more

… are available at: http://fin4335.garven.com/spring2024/BinomialOPMClassProblem.pdf (Class Problem), and http://fin4335.garven.com/spring2024/BinomialOPMClassProblemSolutions.pdf (Class Problem Solutions ..read more

For a simple and non-technical way to grasp the concepts of forward and futures contracts, look no further than this delightful video tutorial in which a group of five and six-year-old children explain the fundamentals of investing in corn, equity, and cocoa futures ..read more

Due to the delay in posting Quiz 8 today, the deadline for submission has been extended to 11 am on Wednesday, April 3. This quiz draws on the material outlined in the readings for April 2, which can be found on the course website’s Readings Page at http://fin4335.garven.com/readings: 1. "Derivatives and Options" from Doherty, Chapter 6 2. "Teaching the Economics and Convergence of the Binomial and Black-Scholes Option Pricing Formulas" by James R. Garven and James I. Hilliard ..read more

I’m offering an optional extra credit activity for students enrolled in Finance 4335. This opportunity involves attending and reporting on a presentation titled “The Campus Conformity Gauntlet” by Greg Lukianoff, the President and CEO of the Foundation for Individual Rights and Expression (FIRE).  Mr. Lukianoff’s presentation is scheduled for Tuesday, April 23, beginning at 5:15 pm in Foster 240. The presentation will discuss themes from Lukianoff’s recent book with Rikki Schlott, titled “The Canceling of the American Mind: Cancel Culture Undermines Trust and Threatens Us All―But There I ..read more

The grades for Midterm 2, along with the latest updates for attendance, quizzes, problem sets, and overall course grades for Finance 4335, are now available on Canvas. As indicated in the course syllabus, final numeric course grades will be determined according to the following equation: Final Course Numeric Grade =.10(Attendance and Participation) +.10(Quizzes) +.20(Problem Sets) + Max{.20(Midterm Exam 1) +.20(Midterm Exam 2) +.20(Final Exam),.20(Midterm Exam 1) +.40(Final Exam),.20(Midterm Exam 2) +.40(Final Exam)} Given our progress through the spring semester and the ongoing evaluation in ..read more

I have updated the Midterm Exam #2 Formula Sheet and uploaded the revised version on the course website. It is also listed here for your convenience. The update involves changes to the final item listed on this document, which explains the relationship between the Sharpe Ratio, an investor’s risk tolerance, and the volatility of an asset in determining the ideal proportion of the risk asset in a portfolio, whether for borrowing or lending purposes. This key concept from capital market theory is detailed towards the end of page 7 in my Portfolio and Capital Market Theory teaching note, a requir ..read more

I am available for Finance 4335 virtual office hours via Zoom from 3:30-5 pm today. To get there, type “officehours.garven.com” in the address field of your device’s web browser ..read more

… are available at http://fin4335.garven.com/spring2024/samplemidterm2.pdf http://fin4335.garven.com/spring2024/samplemidterm2solutions.pdf ..read more