Homework for Week 2

Reading Assignment:
- Investment Science: Due Monday, January 12.
  - Ch. 2, Sec. 2.1--2.3
- Lecture notes on Cash Flow Streams, Present Value, and Internal Rate of Return : Due Friday, January 16.
- Investment Science: Due Friday, January 16.
  - Ch. 3, Sec. 3.1--3.5.
- Linear Programming Introduction: Due Monday, January 19.
Homework Assignment:
- Investment Science: Ch.2, Problems 1-6, 10, 11.
- Investment Science: Ch.3, Problems 1-6, and 8.
Vocabulary List:
- Investment Science: Ch.2
  - Cash flow and cash flow stream
  - compound interest
  - continuous compounding
  - nominal and effective interest rates
  - present value of a cash flow stream
  - discount factor
  - internal rate of return
  - Main Theorem on Internal Rate of Return (statement and proof)
- Investment Science: Ch.3
  - securities
  - fixed income security
  - Bonds
  - coupon payment
  - face value
  - time to maturity
  - zero coupon bond
  - date of maturity
  - yield to maturity
  - the bond price formula
  - par
  - price-yield curve
  - interest rate risk
  - bond duration and modified duration
  - Price sensitivity formula
  - price and duration of a bond portfolio
  - immunization of bond portfolios

Investment Science: Ch.2
- Cash flow stream
- compound interest
- present value
- internal rate of return
Investment Science: Ch.3
- fixed income security
- bond pricing and duration

applying formulas for compound interest, present value, internal rate of return, bond pricing, and duration

This quiz is based on the vocabulary words and homework listed above for Investment Science: Ch.2. The first question will be a vocabulary word and the second will be computational.