This document outlines the course requirements for BUS 405 Entire Course. It includes discussion questions, assignments, quizzes and exams for each week that cover topics like Blume's formula, money market funds, primary and secondary markets, bond pricing, portfolio analysis, futures, and options. The final project involves constructing a well-diversified $50,000 portfolio using stocks, bonds, mutual funds or derivatives and analyzing its expected returns, risks, and performance.

1. BUS 405 Entire Course
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BUS 405 Week 1 DQ 1 Blumes Formula, Allocation, and Selection
BUS 405 Week 1 DQ 2 Money Market Funds
BUS 405 Week 1 Quiz Chapters 1-4
BUS 405 Week 1 Assignment Annualized Returns Chapter 3 problem
18
BUS 405 Week 2 DQ 1 Primary and Secondary Markets
BUS 405 Week 2 DQ 2 Contrarian Investing
BUS 405 Week 2 Assignment Abbott Laboratories Problem
BUS 405 Week 2 Quiz Chapters 5-8
BUS 405 Week 3 DQ 1 Forward Interest Rates
BUS 405 Week 3 DQ 2 Bond Prices versus Yields
BUS 405 Week 3 Assignment Bootstrapping Chapter 10 Problem 31
BUS 405 Week 3 Quiz Chapters 9-10
BUS 405 Week 4 DQ 1 Expected Returns and Deviation

2. BUS 405 Week 4 DQ 2 Portfolio Weights
BUS 405 Week 4 Assignment Performance Metrics Chapter 13 Problem
22
BUS 405 Week 4 Quiz Chapters 11-13
BUS 405 Week 5 DQ 1 Hedging with Futures
BUS 405 Week 5 DQ 2 Option Strategies
BUS 405 Week 5 Final Project Construct a well-diversified portfolio
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BUS 405 Week 1 Assignment Annualized Returns Chapter 3
problem 18
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Annualized Returns. Complete problem 18 in Chapter 3 (shown below)
and submit to the instructor. Show your work to find the annualized
return for each of the listed share prices. Write a 100 word analysis of
the process to calculate these annualized returns.
Suppose you have $28,000 to invest. You’re considering Miller-Moore
Equine Enterprises (MMEE), which is currently selling for $40 per
share. You also notice that a call option with a $40 strike price and six
months to maturity is available. The premium is $4.00. MMEE pays no
dividends. What is your annualized return from these two investments if,

3. in six months, MMEE is selling for $48 per share? What about $36 per
share?
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BUS 405 Week 1 DQ 1 Blumes Formula, Allocation, and
Selection
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Blume’s Formula, Allocation, and Selection. From Chapter 1, answer
Concept Question 5: What is Blume’s formula? When would you want
to use it in practice? Also, from Chapter 2, answer Concept Question 4:
What is the difference between asset allocation and security selection?
Remember to complete all parts of the questions and support your
answers with examples from the text and other resources. Respond to at
least two of your classmates’ postings outside of your own thread.
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BUS 405 Week 1 DQ 2 Money Market Funds
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Money Market Funds. From Chapter 4, complete Problem 4: The Aqua
Liquid Assets Money Market Mutual Fund has a NAV of $1 per share.
During the year, the assets held by this fund appreciated by 2.5 percent.
If you had invested $50,000 in this fund at the start of the year, how
many shares would you own at the end of the year? What will the NAV
of this fund be at the end of the year? Why? Remember to complete all
parts of the question, show your work, and report the results of your
analysis. Respond to at least two of your classmates’ postings outside of
your own thread.
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BUS 405 Week 1 Quiz Chapters 1-4 (All possible Questions)
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BUS 405 Week 1 Quiz Chapters 1-4
400 Question Set
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5. BUS 405 Week 2 Assignment Abbott Laboratories Problem
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Abbott Laboratories Problem. After reading the Value Line figures and
information on Abbott Laboratories in the Questions and Problems
section of Chapter 6 (just before Problem 27), complete Problems 27,
28, 29, 30, and 31 and submit to your instructor. Show your calculations
and in your response to problem 31 write a 100 to 200 word defense of
your position as to the value of Abbott Laboratories stock at its current
price of $50 per share.
27. What is the sustainable growth rate and required return for Abbott
Laboratories? Using these values, calculate the 2010 share price of
Abbott Laboratories Industries stock according to the constant dividend
growth model.
28. Using the P/E, P/CF, and P/S ratios, estimate the 2010 share price for
Abbott Laboratories. Use the average stock price each year to calculate
the price ratios.
29. Assume the sustainable growth rate and required return you
calculated in Problem 27 are valid. Use the clean surplus relationship to
calculate the share price for Abbott Laboratories with the residual
income model.

6. 30. Use the information from the previous problem and calculate the
stock price with the clean surplus dividend. Do you get the same stock
price as in the previous problem? Why or why not?
31. Given your answers in the previous questions, do you feel Abbott
Laboratories is overvalued or undervalued at its current price of around
$50? At what price do you feel the stock should sell?
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BUS 405 Week 2 DQ 1 Primary and Secondary Markets
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Primary and Secondary Markets. Complete Concept Question 1 from
Chapter 5: If you were to visit your local Chevrolet retailer, there is both
a primary and a secondary market in action. Explain. Is the Chevy
retailer a dealer or a broker? Remember to complete all parts of the
question and support your answers with examples from the text and
other resources. Respond to at least two of your classmates’ postings
outside of your own thread.
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BUS 405 Week 2 DQ 2 Contrarian Investing

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Contrarian Investing. Complete Concept Question 9 from Chapter 8:
What does it mean to be a contrarian investor? How would a contrarian
investor use technical analysis? Post your answers to the discussion
board. Remember to complete all parts of the question and support your
answers with examples from the text and other resources. Respond to at
least two of your classmates’ postings outside of your own thread.
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BUS 405 Week 2 Quiz Chapters 5-8 (All Possible Question)
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BUS 405 Week 2 Quiz Chapters 5-8
400 Question Set

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BUS 405 Week 3 Assignment Bootstrapping Chapter 10
Problem 31
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ootstrapping. Complete problem 31 of Chapter 10 (shown below), and
submit to your instructor. Show your calculations and the algebraic
manipulation of the price equation for the bond. In addition to solving
the problem, write a 100 to 200 word essay on the term structure of fixed
income securities.
One method used to obtain an estimate of the term structure of interest
rates is called bootstrapping. Suppose you have a one-year zero coupon
bond with a rate of r1 and a two-year bond with an annual coupon
payment of C. To bootstrap the two-year rate, you can set up the
following equation for the price (P) of the coupon bond:
Because you can observe all of the variables except r2, the spot rate for
two years, you can solve for this interest rate. Suppose there is a zero
coupon bond with one year to maturity that sells for $949 and a two-year
bond with a 7.5 percent coupon paid annually that sells for $1,020. What
is the interest rate for two years? Suppose a bond with three years until
maturity and an 8.5 percent annual coupon sells for $1,029. What is the
interest rate for three years?

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BUS 405 Week 3 DQ 1 Forward Interest Rates
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Forward Interest Rates. Complete Problem 16 from the Questions and
Problems section of Chapter 9: According to the pure expectations
theory of interest rates, how much do you expect to pay for a one-year
STRIPS on February 15, 2011? What is the corresponding implied
forward rate? How does your answer compare to the current yield on a
one-year STRIPS? What does this tell you about the relationship
between implied forward rates, the shape of the zero coupon yield curve,
and market expectations about future spot interest rates? Remember to
complete all parts of the questions, and report the results of your
analysis. Respond to at least two of your classmates’ postings outside of
your own thread.
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BUS 405 Week 3 DQ 2 Bond Prices versus Yields
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Bond Prices versus Yields. Complete Concept Question 9 of Chapter 10:
(a) What is the relationship between the price of a bond and its YTM?
(b) Explain why some bonds sell at a premium to par value, and other
bonds sell at a discount. What do you know about the relationship
between the coupon rate and the YTM for premium bonds? What about
discount bonds? For bonds selling at par value? (c) What is the
relationship between the current yield and YTM for premium bonds?
For discount bonds? For bonds selling at par value? Remember to
complete all parts of the questions, and report the results of your
analysis. Respond to at least two of your classmates’ postings outside of
your own thread.
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BUS 405 Week 3 Quiz Chapters 9-10 (All Possible Question)
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BUS 405 Week 3 Quiz Chapters 9-10

11. 200 Question Set
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BUS 405 Week 4 Assignment Performance Metrics Chapter
13 Problem 22
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Performance Metrics. Complete Problem 22 in the Questions and
Problems section of Chapter 13 (shown below). When you pick the best
choice for your portfolio, defend your decision in a 100 - 200 word
essay.
You have been given the following return information for two mutual
funds (Papa and Mama), the market index, and the risk-free rate. Year
Papa Fund
Mama Fund
Market
Risk-Free
2008
-12.6%

12. -22.6
-24.5%
1%
2009
25.4
18.5
19.5
3
2010
8.5
9.2
9.4
2
2011
15.5
8.5
7.6
4
2012
2.6

13. -1.2
-2.2
2
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BUS 405 Week 4 DQ 1 Expected Returns and Deviation
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Expected Returns and Deviation. Complete Problems 1, 2, and 3 from
the Questions and Problems section of Chapter 11 (shown below).
Remember to complete all parts of the questions, and report the results
of your analysis. Respond to at least two of your classmates’ postings
outside of your own thread.
a. Use the following information on states of the economy and stock
returns to calculate the expected return for Dingaling Telephone.
State of Economy
Probability of State of the Economy

14. Security Return if State Occurs
Recession
.30
-8%
Normal
.40
13
Boom
.30
23
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BUS 405 Week 4 DQ 2 Portfolio Weights
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15. Portfolio Weights. Complete Problem 10 from the Questions and
Problems section of Chapter 12: A stock has a beta of .9 and an expected
return of 9 percent. A risk-free asset currently earns 4 percent.
a. What is the expected return on a portfolio that is equally invested in
the two assets?
b. If a portfolio of the two assets has a beta of .5, what are the portfolio
weights?
c. If a portfolio of the two assets has an expected return of 8 percent,
what is its beta?
d. If a portfolio of the two assets has a beta of 1.80, what are the
portfolio weights? How do you interpret the weights for the two assets in
this case? Explain.
Remember to complete all parts of the questions, and report the results
of your analysis. Respond to at least two of your classmates’ postings
outside of your own thread.
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BUS 405 Week 4 Quiz Chapters 11-13 (All Possible
Question)
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16. BUS 405 Week 4 Quiz Chapters 11-13
300 Question Set
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BUS 405 Week 5 DQ 1 Hedging with Futures
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Hedging with Futures. Complete Concept Question 7 from Chapter 14:
The town of South Park is planning a bond issue in six months and
Kenny, the town treasurer, is worried that interest rates may rise, thereby
reducing the value of the bond issue. Should Kenny buy or sell Treasury
bond futures contracts to hedge the impending bond issue? Remember to
complete all parts of the question and support your answers with
examples from the text and other resources. Respond to at least two of
your classmates’ postings outside of your own thread.
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BUS 405 Week 5 DQ 2 Option Strategies

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Option Strategies. Complete Concept Question 12 from Chapter 15:
Recall the options strategies of a protective put and covered call
discussed in the text. Suppose you have sold short some shares of stock.
Discuss analogous option strategies and how you would implement
them. (Hint: They’re called protective calls and covered puts.)
Remember to complete all parts of the question and support your
answers with examples from the text and other resources. Respond to at
least two of your classmates’ postings outside of your own thread.
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BUS 405 Week 5 Final Project Construct a well-diversified
portfolio (2 Paper)
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Focus of the Final Project

18. The student will construct a well-diversified portfolio using an initial
investment stake of $50,000 (the portfolio should use 95% of the fund,
but they may not use more than $50,000). The student may include
stocks, common or preferred; bonds, corporate or U.S. Treasury bonds;
mutual funds; and futures contract or options. The student will use the
closing prices from the first day of the class to determine the price of
each issue. Only whole lots of any issues may be acquired, that is no less
than 100 shares of common or preferred stock; no less than 5 corporate
bonds or $10,000 for U.S. Treasury Bonds; no fewer than the minimum
required investment for any mutual fund; and no fewer than 5 contracts
for any option or futures position. The settlement date will be the first
day of Week 3. The student does not have to use all of the above
mentioned securities, but they must use more than one class. Transaction
costs are ignored in the creation of the portfolio.
The paper is to be written in accordance with the APA guidelines (6th
Edition).
The student will write a paper that:
Produces their investment strategy, including an assessment of their
willingness to bear risk.
Summarizes and executes a detailed description of the securities in the
portfolio including brief historical information about each firm.
Executes a quarterly and annualized return on the portfolio, and the
expected return for the portfolio (the student may use the closing prices
as of 31 December of last year).
Using concepts learned within the course, computes the beta of the
portfolio (MERGENT, in the Ashford Online Library, can be used to
find the historical betas of each security).

19. Summarizes the risks of their portfolio, and recognizes and interprets
any areas where they might consider reinvesting portions of their
portfolio to achieve either less risk or higher expected return.
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