Problem set 4, which is based on the “Properties of Stock Options” reading and lecture note, is due at the beginning of class on Tuesday, February 11. Also, Problem set 5, which is based on the “Trading Strategies Involving Options” reading and lecture note, is due at the beginning of class on Thursday, February 13.
Problem Set 2 is available from the course website at http://fin4366.garven.com/spring2020/ps2.pdf; its due date is Tuesday, January 28.
Problem Set 2 consists of two problems. The first problem requires calculating expected value, standard deviation, and correlation, and using this information as inputs into determining expected returns and standard deviations for 2-asset portfolios. The second problem involves using the standard normal probability distribution to calculate the probabilities of earning various levels of return by investing in risky securities and portfolios; see pp. 17-23 of the http://fin4366.garven.com/spring2020/lecture4.pdf lecture note for coverage of that topic.
Problem Set 1 is due at the beginning of tomorrow’s Finance 4366 meeting. We will start class with a brief quiz based upon the assigned readings, which include “The New Religion of Risk Management”, by Peter Bernstein and “Normal and standard normal distribution”, by yours truly.
Going forward, I will typically not post reminders like this concerning Finance 4366 assignment deadlines; however, you’ll be “good to go” in Finance 4366 if you faithfully follow the guidelines listed in my “How to know whether you are on track with Finance 4366 assignments” posting.
At any point in time this semester, you can ensure that you are on track with Finance 4366 assignments by monitoring due dates on the course website. See http://fin4366.garven.com/readings/ for the reading assignment due dates, and http://fin4366.garven.com/problem-sets/ for the problem set due dates. Also, keep in mind that I will administer short quizzes in class on each of the dates shown for required readings.
There is a section in the assigned “Optimization” reading due Thursday, January 16 on pp. 74-76 entitled “Lagrangian Multipliers” which (as noted in footnote 9 of that reading) may be skipped without loss of continuity. The primary purpose of this chapter is to re-acquaint students with basic calculus and how to use the calculus to solve so-called optimization problems. Since the course only requires solving unconstrained optimization problems, there’s no need for Lagrangian multipliers.
Besides reading the articles entitled “Optimization” and “How long does it take to double (triple/quadruple/n-tuple) your money?” in preparation for this coming Thursday’s meeting of Finance 4335, make sure you have completed the student information survey, subscribed to the Wall Street Journal, and subscribed to the course blog (if you haven’t already done so).
A subscription to the Wall Street Journal is required for Finance 4366. For online access only, sign up for a “Student Digital Pack” at https://education.wsj.com/search-students. A Student & Digital Pack option (which provides daily home delivery in addition to online access) is available at https://r.wsj.com/PROFxypa.
Throughout the semester, I will often reference specific WSJ articles in class and on the course blog. Finance 4366 topics (as well as topics in many of your other business school courses) come to life in the world outside the Baylor bubble when you make a habit of reading the WSJ on a regular basis. Furthermore, if you expect to interview for jobs or internships anytime soon, reading the WSJ will give you a leg up on the competition, since you will be better informed and have more compelling ideas and insights to share with recruiters.
In closing, the following (2 minute) video provides a helpful introduction to the WSJ, providing time-saving tips to help you get the most from WSJ and succeed not only in Finance 4366, but also your other courses and careers:
A course blog has been established for Finance 4366 at the address derivatives.garven.com; it is also linked from the “Course Blog” button located on the course website. I recommend that you follow the options, futures, and other derivatives course blog regularly via email, Facebook, and/or Twitter.
The options, futures, and other derivatives course blog provides me with a convenient means for distributing important announcements to the class. Topics covered on the course blog typically include things like changes in the course schedule, clarifications and hints concerning problem sets, information about upcoming exams, announcements concerning extra credit opportunities, and short blurbs showing how current events relate to many of the topics which we cover in Finance 4366.
If you are either a Facebook or Twitter user, everything that is posted on the options, futures, and other derivatives course blog is automatically posted to Facebook and “tweeted”, so you can also subscribe by “liking” the Finance 4366 Facebook page or by “following” @fin4366 on Twitter. Finally, you can also subscribe via email. The remainder of this blog entry explains how to subscribe to the options, futures, and other derivatives course blog via email.
Email Subscription Instructions:
Email Subscription Instructions: If you would like to receive the risk management course blog via email, you can do this by going to derivatives.garven.com and entering your email address in the form provided on the right hand side of that webpage:
After clicking “Subscribe”, the following information will appear on your screen:
Next, check for an email from “Options, Futures, and Other Derivatives <firstname.lastname@example.org>”:
Next, simply click the “Confirm Follow” button. This will cause you to receive the following email:
From that point forward, whenever I post to the course blog, you will immediately receive a nicely formatted version of the blog posting via email. Also, you can opt to change your delivery preferences, or even cancel your subscription.