The summary has been written in English, except for C2 and C9 for understanding. This course has been given for the first time by the current professor and everything changed. Het vak werd voor de eerste keer gedoceerd en er is geen boek aan verbonden. Deze SMV is dan ook in het ENgels geschreven, ...
,This summary has been mainly written in English to increase the clarity of the course. The provided
course by the professor consists only out of slides and no manual. These slides consist mainly of data
tables.
The exam will be in English, so the answers should be in English too.
Sometimes the NL explanation will be included (L2 + L9), so the understanding of a situation will be
better, but the rest is mainly in English.
Also the headings used during the lessons will be found in the summary with the answers.
At the end, a few pages are included that will show the links throughout the whole course, made it
myself, so cannot guarantee that it is complete. Only key ideas and concepts have been
implemented. Space has been left to write extra additional information on paper, afterwards.
- Exam type questions are embedded within every chapter, however, when there are none at
the end of the chapter, this means that they were included within the summary as a subtitle.
Or the question existed out of a headline.
- From L9 – L12: no exam type questions were given, except for the one in L10.
2
,Inhoud
BASICS + LECTURE 1................................................................................................................................6
Formula has to been known...............................................................................................................6
Circle of this course............................................................................................................................6
Vocabulaire.........................................................................................................................................6
LECTURE 2: CROSS-SECTIONAL PREDICTABILITY.....................................................................................9
CAPM..................................................................................................................................................9
SMB en HML.....................................................................................................................................10
Momentum investing.......................................................................................................................11
What can investors do about it?.......................................................................................................12
Question prof 1.................................................................................................................................14
Question prof: 2................................................................................................................................14
Question prof: 3................................................................................................................................14
Question Prof: 4................................................................................................................................14
Question prof: 5................................................................................................................................14
LECTURE 3: BEHAVIORAL FINANCE.......................................................................................................15
Bernouilli and St Petersburg Paradox Consumption........................................................................15
Newspaper dates..............................................................................................................................16
M&A in waves?.................................................................................................................................16
M&A and uncertainty.......................................................................................................................17
Differences between horizontal and vertical merger.......................................................................17
Exam example questions..................................................................................................................17
LECTURE 4: INDIVIDUAL INVESTORS.....................................................................................................18
What mistakes do they make?.........................................................................................................18
Buy or rent........................................................................................................................................18
Do active managers outperform the market?..................................................................................19
What is non-proportional thinking?.................................................................................................19
Does gold pay off as an HF? No........................................................................................................19
Does wine/art pay off as an HF?.......................................................................................................19
Types of investors we have...............................................................................................................19
An investor with “skewness preferences”?......................................................................................19
Question from prof...........................................................................................................................20
Exam type questions.........................................................................................................................20
LECTURE 5: INSTITUTIONAL INVESTOR.................................................................................................21
What is an institutional investor?.....................................................................................................21
3
, Does it matter who owns you?.........................................................................................................21
Effect on stock market volatility/liquidity?.......................................................................................22
Clientele effect in dividend policy? Do they have an impact on dividend policy?............................24
Shorting and superior info................................................................................................................24
Squeeze and Gamestop....................................................................................................................25
IPO....................................................................................................................................................25
SEO...................................................................................................................................................26
Common ownership and impact on prices.......................................................................................26
Exam type questions.........................................................................................................................27
LECTURE 6: FINANCIAL COMMENTATORS............................................................................................28
Difference between buy-side and sell-side.......................................................................................28
Why do buy recommendations on average not work, but top picks do?.........................................28
What is the relation between rating changes and political party? Does it affect stock prices?........29
If home-journalists want to cater to home-investors, is this positive or negative for stocks?..........29
If you can’t access news, what happens to price discovery?............................................................29
Is there a premium or discount in neglected stocks?.......................................................................29
LECTURE 7: CORPORATE FINANCE........................................................................................................30
Dividends..........................................................................................................................................30
Repurchases.....................................................................................................................................31
Debt or equity?.................................................................................................................................32
Fraudcases........................................................................................................................................33
Question prof...................................................................................................................................37
Exam type questions.........................................................................................................................38
LECTURE 8: ALTERNATIVE INTERMEDIAIRIES........................................................................................39
HF: hedge funds................................................................................................................................39
Do all hedge funds hedge?...............................................................................................................40
Why does a short long strategy create more problems than a normal long-portfolio?....................40
Can HF impact firm policies?............................................................................................................41
How can HFT help financial markets?...............................................................................................41
Question 1: Prof................................................................................................................................41
Question 2: Prof................................................................................................................................42
Life insurances..................................................................................................................................42
LECTURE 9: FINANCIAL INTERMEDIAIRIES............................................................................................44
Broker...............................................................................................................................................44
Financial intermediary + link between banking and the economy...................................................44
Link between banking and the financial markets.............................................................................44
4
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