Examples for Midterm Exam jlnvestment! Spring, ZDZI Ch.ll El Explain the efcient frontier {portfolio} introduced by Harry Lfarkowitz portrayed by meandominance principle. {Harry lufarkowitz, Portfolio Selection, The Journal of Finance, Vol. 'II', No. 1. (Man, 1952}, pp. TFQl} EI Show in what way investors choose among the portfolios on Harry Liarkowitz's efficient frontier {portfolio}. You are expected to use the idea of utility function in connection with efficient frontier. El Explain the way portfolio risk is lowered by means of diversification, explicitly showing what factor brings about the effect. El You are expected to calculate expected return, variance {standard deviation} of individual asset returns, further expected return, variance {standard deviation) of portfolios. El Decompose portfolio risk and shortr that your effort to lower it is limited. Explain why. Ch.12 El You are expected to be able to calculate expected return of individual risky assets by 5M1. [CAP'L'IJ given necessary parameters: as) = Remap351a,. El You are expected to be able to calculate portfolio beta and expected return. El You are expected to be able to check whether a stock is undervalued or overvalued in order to detennine either to buy or short sell to make money. El TWhat is market portfolio? 1Why is it important in CAPE\"? Ch.14 El Compare futures contract to forward contract focusing on the differences. El You are expected to be able to calculate speculation prots by taln'ng long or short posititms. El You are expected to be able to calculate hedging by taking long or short positions El Introduce spot futures parity {1] without dividends {2} with dividends. {3} Explain in what conditions arbitrage transactions can happen. ElYouareemectedtobeabletosetupahedgingporlfoliowithstod: index futures. Ch.15 El You are expected to be able to calculate pay offs from investing in underlying assets andfor investing in options. El You are expected to be able to pay off structure of call andfor put options