Typos - Financial Theory and Corporate Policy - 4th edition Copeland, Weston and Shastri.

Mia Holmfeldt September 19, 2006

Ph.D Student, Lund University, Department of Economics, P.O. Box 7082, S-220 07 Lund, Sweden, Tel. +46 (0)46 222 86 55 , Fax. +46 (0)46 222 41 18, E-mail: mia.holmfeldt@nek.lu.se

Chapter 3

1. On the 4th row in the last section on p. 47, The second gamble is a 50/50 chance of winning y or z (right shoe or right shoe) Not winning x or z! 2. Last section on p. 49. Referring to Eq. 3.1 should instead be referring to Eq 3.2! 3. The subtitle in Table 3.1 column 3 on p. 51 should be Probability of Gain (not protability)

Chapter 4

1. Figure 4.3 on p. 87, the slope of the budget line should be $1 pt . Otherwise the axes of Qt and C has to be changed. 2. Problem 4.1 in the problem set should instead be, ...Security B pays $20 if state 1 occurs and $40 (Not $0 as is) if state 2 occurs

Chapter 6

1. In Eq. 6.14 there is an wi missing between the two summation signs. The equations should be
N N N

(Rp ) =
i=1

wi
i=1

wj ij =
i=1

wi COV (Ri , Rj )

2. In the problem set, exercise 6.16, the beta of asset i = 3 should be 3 = 1.2 (not 1.3 as is now). It is needed in order to solve for rf and E [rM ]. Chapter 7 1. Appendix 7A. p. 255 The stock price process should include an S in the last part of the equation, dS = Sdt + Sdz . 2. First row on p. 220. Referring to gure 7.11. (Not 7.9) 3. First equation on p. 220 is missing an S in the rst term on the right hand side of the equal sign. The formula should be, (1 + rf )S = quS + (1 q )dS , in order to yield the following result, q = ((1 + rf ) d)(u d)1 . 4. Second row on p. 233. Using Eq. 7.35. (Not 7.31) 5. Third equation on p. 233, is missing an equal sign. The equation should be cu = [pcuu + (1 p)cud ]/(1 + rf ). Appendix D 1. Error in the exponent in the rst equation in the equation array on p. 934. The correct equation should be, ln[erc n ] = ln(1 + rd )n . The exponent in the book is d instead of n. 2. Nr. 8 in the Rules of dierentiation should be, f (X ) = eg(X ) , f (X ) = g (X )eg(X )