1. Understand the concept of duration and the relationship with price volatility. Be able to sort out a list of bonds according to their duration. Be able to use duration to estimate a percent price change in a bond.

2. Understand the concept of convexity. Be able to use convexity and duration to better estimate the percent change in a bond.

3. Understand the concept of immunization. What is it and how do you use it?

4. Be able to find the actual return on a bond given a change in yield to maturity during the life of the bond.

5. Be able to price a zero coupon bond or a coupon bearing bond given the years to maturity and the yield to maturity.

1. How do you calculate beta? How would you find the beta of a portfolio of stocks? What does beta measure?

2. What is important in choosing stocks if you have a dual goal of minimizing the portfolio variance and maximizing the expected return?

3. Understand the concept of MPT and the opportunity set, efficient frontier, CML, SML, SCL, CAL, etc.

4. Know how to apply MPT concepts to create a diversified portfolio (practical application).

5. Know how to apply the different concepts of stock valuation. For example, how do you use the dividend discount model.

1. Know the key features of a dealer, broker, direct search, and auction markets.

2. What is a bid-ask spread?

3. Sort out the definitions of systematic, unsystematic, diversifiable, non-diversifiable, unique, firm-specific, and market risks.

4. Be able to calculate forward interest rates. Define forward rates.