1.1. Discrete and continuously discounted cash flows give the same result. 1.2. Cash flow C occurring in year t and discounted at the continuously compounded rate r will be worth today C *exp(r*t) 1.3. You can minimize a function using Excel's goal seek function equally well as using Excel's Solver. 1.4. In matrix form, the variance of portfolio x is given by the product x"Sx, where x is the column vector of portfolio weights and S is the variance-covariance matrix. 1.5. After finding the optimal portfolio using portfolio choice theory, you find that half of your wealth should be invested in the risk-less asset. Therefore, your portfolio risk will be twice as large as the tangency portfolio. 1.6. The weight on the optimal portfolio is increasing in the tangency portfolio mean return. 1.7. The parameter lambda in the shrinkage variance-covariance matrix can be negative. 1.8. You can construct a shrinkage variance-covariance matrix that equally weights the variance-covariance matrices of the single-index model, constant-correlation model, and the historical sample model. 1.9. The single-index model variance-covariance matrix includes the beta of the market portfolio 1.10. You want to incorporate an opinion about a single stock, Walmart, using the Black- Litterman approach. Then it follows that the correlation between Walmart and a second stock, Walgreens, is equal to the ratio of their variances multiplied by the ratio of their opinions