Second Quiz Review Sheet
Computer Skills
 Be able to calculate portfolio allocation weightings (like we have done during
class). This could be a simple stock/bond/real estate weighting, or it could be
something more complex like market cap weightings. You may also have to deal
with complicated weightings where a fund is split between stock and bond, and
within the stock allocation, it is split between US and foreign, and within the US
allocation, it is split between large cap, mid cap and small cap.)

Be able to create an amortization schedule (where the schedule zeros out)

What is the BDH function and what can you use it for?

The BDH function requires 4 arguments (Security, Fields, Start, End)
What goes into each of the arguments?
Be prepared to write out the function and explain its components.

Know when you can and can’t use the BDH function. What is required?

Be able to use the straight-line depreciation (SLN) and declining balance
depreciation (DB) functions in Excel.

Given a series of cash flows, be able to calculate the NPV and IRR

Given two investments, be able to use NPV and IRR to recommend which
investment should be made.

If you are given the amount of a dividend/distribution, be able to calculate the
number of shares someone will receive if the distribution/dividend is reinvested.
Computer Concepts
 What is “what-if” analysis?

What is the purpose of an amortization schedule?

Why would you use the NPV function and why would you use the IRR function?
How are the PV function and NPV function different?

The chapter 9 tutorial and the class notes called “Calculating Return on
Investment” both contain Figure 9-33. Figure 9-33 is a figure that compares NPV
and IRR. Make sure that you know the contents of that figure.

Make sure that you review the various types of “what-if” analysis found in
tutorial #10 (also seen in the class PowerPoint presentation called “What-if
Analysis.

Circuit breakers serve what purpose?

What are the risks of automated trading decisions?

What are the benefits of high frequency trading and why should it be allowed?

What are the reasons that high frequency trading should not be allowed?

Think about how we did use the Bloomberg terminals/Bloomberg system. What
did we use that for? What types of information were we able to get from there?
How does using Bloomberg compare to using the Internet or other sources that
you have seen/used when conducting research? Be able to discuss and provide
examples.

You will also see a matching section where you will match the computer or
financial concept to its description. These items can cover anything seen in class
since the last quiz.

You have decided to use the vlookup function. Prior to using this function, you
have to create a table containing the values you are searching for, along with the
corresponding results/answers that you wish to display after a given item is found.
When you make the table used by your vlookup function, how must you arrange
the items in the table (specifically what must occur in the various columns (1,2,3,
etc))?
Financial Concepts covered in class
 Why is it important to understand the weighting and allocation of your investment
portfolio? If you understand that, they what can you (or should you) do?

How is an actively managed fund different from an index fund?

What is depreciation? Why is it calculated? What types of assets are
depreciated? If I have purchased an asset, why would I depreciate it (versus not
depreciate)?


How is straight-line depreciation different from declining balance depreciation?
What is the time value of money concept?

Lets assume that you want to purchase 1 million shares of a stock.
o For what reason(s) would you break up your purchase into smaller lots?
o For what reason(s) would you NOT break up your purchase into smaller
lots?

What is the purpose of the model portfolio project?

Explain the purpose and function of the model portfolio spreadsheets that we have
been building as a part of this class. Explain the functions and purposes of each
of the individual sheets? How and why are the worksheets communicating back
and forth? What is our goal in creating this? How can it be used and how might
it be used? How can this tool be used in decision making? Explain the model and
what we hope to accomplish by using it. THIS IS THE TAKE-HOME
QUESTION FOR QUIZ #2.