524 Session 7 Objectives
FBE 524
Class Objectives and Assignments
J. K. Dietrich
Week 7 – October 5, 2005
Goals and Objectives
(1) Discuss the theoretical and empirical approaches to understanding the behavior of important
financial market variables (Saturday class discussion)
(2) Describe and explain the relation between fixed-income values and yields (Saturday class discussion)
(3) Define and relate to investors’ goals the components and estimated holding-period yield risk
Important Vocabulary List from Class
THEORY, EMPIRICAL TESTING OF THEORIES
ESTIMATION OF MODELS, CALIBRATION OF MODELS
Suggested Wall Street Journal or other Articles
Monday, October 3, 2005
“Wooing China’s credit-Card Users” (C1) and “Schmoozing in Shanghai” (C16) – Description of
strategies to expand unsecured consumer credit and wealthy individual asset-management
services in the fastest growing and soon to be largest consumer market
“UnumProvident Is Set to Pay $8 Million Penalty in California” (C3) – Story provides a good example of
insurance regulation at the state level in U.S.
Tuesday, October 4, 2005
“An Insurance Chief’s Huge Task” (C1) – Good example of what casualty insurance regulators have to
be ready to do after a catastophe
“’Synthetic Convertibles’ Thrive as Benefits Become Clearer” (C5) – Good example of use of options to
replicate other investment strategies
“Building Portfolios with ETFs” (R1) – Good description of use, advantages and disadvantages, and
growth of the market for exchange-traded funds, competitors to standard mutual funds
Wednesday, October 5, 2005
“Greenspan’s Boots” (A20) – Opinion piece on criteria for replacements for chairman of Federal
Reserve, due to retire in January 2006
“Swap Spreads Signal Rise in Yields” (C5) – Technical discussion of swap market that we discuss later
and interpretation of the “swap curve,” discussed then
