Category Archives: Announcements

Erratum – correction of typo in the Finance 4335 Course Overview document

In the Finance 4335 (Fall 2019) Course Overview reading, I discovered a typo in the put option binomial equation located on page 4, bullet point 5, which I have now (as of 10:07 am this morning) fixed.

For what it’s worth, I am impressed by the level of renewed interest in Finance 4335, as evidenced by course website and blog access statistics; specifically, had 296 page views yesterday (the most popular pages were Sample Exams (62 page views), Problem Sets (58 page views), Lecture Notes (56 page views), and Formula Sheets (25 page views. The course blog was even more popular yesterday, with a total of 447 page views…

In closing, as I indicated in my 12/9 “Virtual and real office hours going into the final exam” blog posting, if y’all have any Finance 4335-related questions or concerns going into the final exam, feel free to call, email, or text me between now and then during “regular” business hours.

New and improved (and final) version of the Final Exam formula sheet for Finance 4335 and office hours tomorrow…

I decided today to create a new and improved (and final) version of the Final Exam formula sheet for Finance 4335. If you have previously downloaded and printed this document, I recommend that you toss that version and redownload/print this version. While there weren’t any errors per se in the previous version, I have tweaked this version so that it is clearer and more likely to be helpful when y’all take the Finance 4335 final exam. When you do take the exam, you will find this new version of the formula sheet attached to the exam booklet.

As I indicated in my previous “Virtual and real office hours going into the final exam” blog posting, If y’all have any Finance 4335-related questions or concerns going into the final exam, feel free to call, email, or text me between now and then during “regular” business hours. I will also be available in my office (Foster 320.39) tomorrow afternoon from 1:30 – 3:30 p.m. if anyone cares to stop by.

Good luck on the exam!

Time to complete teacher evaluations for Finance 4335 (along with other courses in which you are enrolled)!

As I am sure you are well aware, today and tomorrow are “Study Days” which should help you prepare for your Fall 2019 final exams. If you haven’t already done so, now would be a good time to complete teacher evaluations for Finance 4335 (along with your other courses), since the window for completing teacher evaluations officially closes as of Thursday, 12/12 at 10 am.

At Baylor, all of your professors undergo annual evaluations concerning quality of teaching, research, and service.  By completing teacher evaluations, you contribute importantly by providing the University with information that may affect not only faculty compensation and promotion/tenure decisions but also provide faculty with useful information concerning ways to improve teaching. Therefore, I encourage you to complete your teacher evaluation for Finance 4335 and all of your other courses!

Finance 4335 final exam schedule and related (Baylor and Hankamer) policies

Please make sure that you take your final exam with the section of Finance 4335 in which you are enrolled.  If you are enrolled in Section 1 (which meets 11-12:15 TR in Foster 203), then your final exam will occur in Foster 203, from 9-11 a.m. on Friday, December 13.  If you are enrolled in Section 2 (which meets 2-3:15 TR in Foster 314), then your final exam will occur in Foster 314, from 4:30-6:30 pm on Monday, December 16.

Here are the official University and Hankamer policies which jointly govern any rescheduling requests for students who have three final exams scheduled for the same day.  According to University policy, having three final exams on the same day apparently constitutes a necessary condition for making a rescheduling request:

1. University Policy on End of Semester Examinations (see current Undergraduate Catalog, page 33):

“No final examination may be given on other than regularly scheduled dates unless approved by the appropriate academic dean.  A student with three final examinations scheduled on the same day may appeal to one of the teachers or the appropriate dean who will reschedule an exam during the final examination period.”

2. Hankamer School of Business procedure regarding rescheduling final exams:

There is a “Petition to Reschedule Final Examination” form that students requesting a Conflict Final Exam are required to complete before they request that you allow them to take their final exam at a time that is different from the published time.

Students should obtain the form from the Hankamer Undergraduate Programs office in Foster Suite 130 and follow the directions given to them with that petition.

Information about the Final Exam in Finance 4335

  • The exam consists of five sections; Part I consists of 12 multiple choice questions worth 2 points each, whereas Parts II, III, IV, and V all consist of “standalone” (multi-part) problems worth 24 points each.
  • You are only required to work four out of five sections. At your option, you may work all five sections, in which case you will receive credit for the four highest scores.
  • Since the maximum number of points possible is 96, all who complete this exam will be rewarded an extra 4 points for writing their names in the space provided. Thus, the maximum number of points possible for this exam is 100. 🙂
  • You may have two hours in order to complete this exam. Be sure to show your work as well as provide a complete answer for each problem; i.e., in addition to producing numerical results, also show that you understand the underlying logic behind your answers.
  • The formula sheet for the final exam in Finance 4366 is now available at  This formula sheet, along with the Standard Normal Distribution Function (“z”) Table, will both be included as part of the final exam booklet.

Problem Set 9 and tomorrow’s meeting of Finance 4335

For those of you who skip tomorrow’s meeting of Finance 4335, your absence is (obviously) unexcused and I will assign a grade of 0 for the “Why is Risk Costly to Firms” quiz that you will miss. To receive credit for Problem Set 9, you must email your completed problem set 9 assignment as a PDF file attachment to prior to the start of tomorrow’s class.  Note the following verbiage in the “Late Work” section (Section 8.3) of the course syllabus:

“Assigned problem sets are due at the beginning of class. If you expect to absent on a day when a problem set is due, it must be turned in at or before this time; otherwise, you will not receive any credit for the problem set. Furthermore, if you miss class on a day when a required reading is assigned, there will be no make-ups for the quiz that you miss.”

Problem set 9 Q&A with a Finance 4335 student…

What follows below is a Problem set 9 Q&A with a Finance 4335 student…

Hi Dr. Garven,

After working on problem set 9, I came across issues with 1d and question about problem 2.

On 1d – I attempted to solve for N(d1) and N(d2) using the call equation, but was never able to get to an answer due to too many variables. I did notice that the numbers for scenario d are almost all the same as scenario A. Would this make the volatility the same? If not, how am I supposed to solve without being able to calculate N(d1) and N(d2)?

On problem 2, I solved using dt = 1/6 for all parts. I noticed that the question mentions the options expire in 6 months making T = .5 , but I did not see a need for this in calculations. Is that correct or would it make dt=1/12 instead?

Any guidance you can provide is great.

Thank you!

Dear Finance 4335 student, here are Dr. Garven’s answers to your questions:

1D. Here, you are asked to calculate the standard deviation, which requires computation by trial and error (preferably via Solver, although a simple linear interpolation would suffice as well). Since 1) all parameter values for Scenarios A and D are the same except for option prices and volatility, and 2) Scenario D option prices are lower than Scenario A option prices, this implies that volatility must also (because of the positive relationship that exists between option prices and volatility) be lower under Scenario D compared with Scenario A.

2. Since the time to expiration is 6 months and each timestep lasts for 2 months, this is a three timestep problem.

See you on Tuesday,

Dr. Garven

Midterm 2 and Current Course Grades in Both Sections of Finance 4335

I just uploaded the midterm 2 grades, along with attendance, problem set, quiz, and current Finance 4335 course grades.

Here are the descriptive statistics for both sections of Finance 4335:

Midterm 2 Course
Mean 81.59 83.08
Standard Deviation 15.31 9.49
Minimum 32.00 53.48
25th percentile 74.25 78.10
50th percentile 84.00 83.41
75th percentile 94.00 89.94
Maximum 100.00 99.23


Although letter grades are not assigned until the semester is over, I recommend comparing your current course grade with the letter grade schedule given in the course syllabus and reproduced here:

A 93-100% C 73-77%
A- 90-93% C- 70-73%
B+ 87-90% D+ 67-70%
B 83-87% D 63-67%
B- 80-83% D- 60-63%
C+ 77-80%


If you are disappointed, particularly with your current grade situation in Finance 4335, keep in mind that these calculations do not take into account the fact that the final exam grade double counts in place of the lower of your two midterm exam grades; viz.,  if said midterm exam grade is lower than the final exam grade.