Category Archives: Announcements

Friendly reminder about this week’s assignments in Finance 4366

As I indicated in Saturday’s blog posting entitled “Problem Sets 4 and 5 are now available!”, Problem set 4, which is based on the “Properties of Stock Options” reading and lecture note, is due at the beginning of tomorrow’s Finance 4366 class meeting. Also, class will begin tomorrow with a quiz based on the assigned reading, which is Hull’s “Trading Strategies Involving Options” chapter.

On Thursday, Problem set 5, which is based on the “Trading Strategies Involving Options” reading and lecture note, will be due. That class meeting will be devoted to a review session for Midterm Exam #1, which is scheduled to occur in class on Tuesday, February 18.

Finance 4366 Grades on Canvas

I have posted Finance 4366 numeric course grades to Canvas; the FIN 4366 grade book is at To date, we have had five class meetings, three quizzes (two of which have been graded), and three problem sets (problem sets 1, 2, and the student questionnaire which was graded on a (0, 100) basis; the grade for problem set 2 is still pending). Since we haven’t had any exams yet, the course grade which now appears on Canvas was calculated using the following equation:

Current Course Numeric Grade = (.10(Class Attendance) + .10(Quizzes) + .20(Problem Sets))/.4

Or course, this is simply a special case of the final course numeric grade equation given in the course syllabus:

Final Course Numeric Grade = .10(Class Attendance) + .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)}

As time passes and I continue to collect grade data from you, the grades as reported on Canvas will be posted on a timely basis. Once Midterm 1 grades are determined, then the Canvas course grade will be calculated using the following equation:

Course Numeric Grade after Midterm 1 = (.10(Class Attendance) + .10(Quizzes) + .20(Problem Sets) + .20(Midterm 1))/.6

Once Midterm 2 grades are determined, then the following equation will be used:

Course Numeric Grade after Midterm 2 = (.10(Class Attendance) + .10(Quizzes) + .20(Problem Sets) + .20(Midterm 1) + .20(Midterm 2))/.8

After I record final exam grades, I will use the Final Course Numeric Grade equation above to determine your final course numeric grade, and (as also noted in the course syllabus), the final course letter grade will be based upon the following schedule of final course numeric grades:

A 93-100% C 73-77%
A- 90-93% C- 70-73%
B+ 87-90% D+ 67-70%
B 83-87% D 63-67%
B- 80-83% D- 60-63%
C+ 77-80% F <60%


Problem Set 2 question

Here’s a brief Q&A that I had last evening with a student about Problem Set 2:

Q: Hi Dr. Garven, I was wondering if I should use =stdev.p or =stdev.s when solving for the standard deviation on Excel. I understand this is a sample so =stdev.s is the formula I presume that I should use but I’m not quite sure. Which should I use?

A: Neither – the “=stdev.p” and “=stdev.s” commands in Excel are useful for calculating the standard deviation of observed realized values of a random variable. In problem set 2, the investor contemplates expectations of future state-contingent returns on securities. Since standard deviation is the square root of the variance, start by calculating variance (see p. 9 of the Statistics Tutorial, Part 1 lecture note).

New (1 page) reading entitled “Mean and Variance of a Two-Asset Portfolio”

I just posted a new (1 page) reading entitled "Mean and Variance of a Two-Asset Portfolio" which (not surprisingly) explains the origins of the formulas for mean and variance of a two-asset portfolio. I expect you’ll find such knowledge very helpful in understanding and completing the 4th and 5th sections of the Statistics Class Problem as well as parts D, E, and F of Problem 1 and part B of Problem 2 in Problem Set 2.

Volatility, now the whole thing

I highly recommend John Cochrane’s January 2019 article entitled “Volatility, now the whole thing” which builds and expands upon yesterday’s implied volatility topic in Finance 4366. Dr. Cochrane is a senior fellow at Stanford University’s Hoover Institution and was formerly a finance professor at Univ. of Chicago. Cochrane’s article provides a broader framework for thinking critically about the implications of volatility for future states of the overall economy. This article is well worth everyone’s time and attention, so I highly encourage y’all to read it!