FM3, Cumulative Typos
This version: 31 December 2010
Financial Modeling, 3rd edition will be reprinted a number of times. At each reprinting I will correct reported typos and add the names of those reporting to the preface.
Notation: This is a cumulative list of all known typos. The square brackets indicate in which printing the typo was corrected. Thus:
- [1] Page 20, line 4: Indicates a typo which was corrected that exists in the first printing and does not exist in later printings.
- [2] Page 890, exercise 6: Indicates a typo that exists in both the first and second printings but is corrected in the third printing.
- [3] Page 690: A typo in both the first, second and third printing; corrected in fourth.
If you have more typos to report, please write me at .
Add names to preface of second printing (names added to list on page xxvii in alphabetical order): Sara Tromp, Alexander Nagornov, Roberto Wessels, Polina Elencheva, Julian Bongo, Sali Salieski, Edwin Neave, Robert Keyfitz,Stephen R Ellis, Stanislava Prokopova, Nikolas Rokkanen, Sanjiv Sabherwal, Sumit Vakil, Jeff Levitt, Jeff Marsick, , Michael Ezewoko, Rik Albrecht, Joseph Williams, Leon Lasdon, Stephen Marley, Michael Oczkowski, Apostol Bakalov, Max Nokhrin, Gerald Strever
Names added to preface of third printing (inserted alphabetically on page xxvii): Eric D. Chason, Jean-Philippe Ducros,Luis Carlos López Wonenburguer, Todd Hildebrant,Dina Rajaona, Daniel R. Sholem, Swarup Ghosh, David Schuster, Jakob Trap Ottesen, David M. Rasul, Joseph Hamel, Jobbe Jorna, Dina Rajaona, Joshua Packwood, Sanjiv Sabherwal, Andrew Carver, Massimo di Tria
Names added to preface of fourth printing (inserted alphabetically on page xxvii): Brennan Lansing, Quinn Lewis, Shavkat Sultanbekov, Paul Ledin, Ashutosh Singh
[1] Page before title page: It says “Neither MIT press nor the authors is responsible” …. Shouldn’t this be are responsible? [My 96 year-old aunt Sara pointed this out to me …!]
[1] On the disk with the book, under the subdirectory Additional materials, there is a typo in the file “Adding Getformula to your spreadsheet.doc”. The last line of the VBA program is missing. It is added below and highlighted.
'Prints out formulas as text
'Thanks to Maja Sliwinski and Beni Czaczkes
Function getformula(r As Range) As String
Application.Volatile
If r.HasArray Then
getformula = "<-- " & " {" & r.FormulaArray & "}"
Else
getformula = "<-- " & " " & r.FormulaArray
End If
End Function
[1] Page 20, line 4:
Instead of: “years 1, 2, 9”
Should be: “years 1 to 9”
[2] Page 21, screen shot should be replaced with
[2] Page 32, exercise 4 solution on disk: Cell B2 should be =B5+NPV(B1,B6:B10) and not as printed.
[1] Page 41: The following formula has typo.
It should be:
[2] page 42, 3rd line above the bottom spreadsheet:
Instead of: P0 = $50
Should be: P0 = $60
[1] Page 72, top Excel clip; there is a mistake in cell B14. Should be:
[3] Page 91, exercise 11.b: The word “and” is missing:
Instead of: both the classic CAPM the tax-adjusted model
Should be: both the classic CAPM and the tax-adjusted model
[3] Page 116, Excel picture: Should be replaced by the following:
[2] Exercises on pages 127-129: In the following cells the NPV( ) should be multiplied by the factor (1+WACC)^0.5: B84 of Exercise 2, B82 of Exercise 3, B81 of Exercise 4, B82 of Exercise 7, B90 of Exercise 8.
[3]Page 128, exercise 3: in the answer in line 32, the depreciation in line 31 should be added to the fixed assets at cost, not subtracted. [The depreciation is written as a negative number.] Fixed on the disk that comes with the fourth printing.
[1] Page 138: In spreadsheet at top, cell A6 “before” instead of “nefore”
[1] Page 139, line 2 below spreadsheet: “some” instead of “come”
[2] Page 155. The graphic should be replaced with the following (the x-axis legend had a mistake):
[1] Page 183: “Basil” should be “Basle” or “Basel”
[2] Page 203, last word of second paragraph: “lessor” should be “lessee”
[2] Page 206, second bullet, line 2:
Instead of: “outflow, hence positive”
Should be: “outflow, hence negative”
[2] Page 206, second bullet, line 4:
Instead of: negative sign
Should be: positive sign
[2] Page 215, first sentence below the table: Insert following sentence before “Show that it will be …”
“ABC’s interest costs are 10% and XYZ’s interest costs are 7%.”
Thus the whole paragraph will read:
“ABC’s interest costs are 10% and XYZ’s interest costs are 7%. Show that it will be advantageous for ABC to lease the asset and for XYZ to purchase the asset in order to lease it out to ABC.”
[1] Page 226. The formula in cell D15 is incorrectly identified (the numbers and the actual formula in the cell are correct). The spreadsheet should look like the following:
[1] Page 229, line 10 of second bullet:
Instead of: … at the beginning of year 6
Should be: … at the beginning of year 9
[2] Page 242, first formula:
Instead of:
Should be:
[1] Page 242, 5 lines under the spreadsheet.
Instead of: Covar(SLE returns,BBY returns)
Should be: Covar(WMT returns, TGT returns)
[1] Page 244, line 2:
Instead of: “linearly related with a positive slope”
Should be: “linearly related with a negative slope”
[1] Page 246, spreadsheet cell B11: Incorrectly references cell B7 (should be cell B6). The corrected spreadsheet should look like this:
[2] Page 267, statement of Proposition 3:
Instead of: exists an envelope portfolio x
Should be: exists an envelope portfolio M
The equation following should be:
Instead of:
Should be:
[1] Page 269, bottom spreadsheet, column E: should refer to portfolio y not x.
[1] Page 270, same as above
[2] Page 271, bottom graphic should be replaced by following (correction of cell D42):
[1] Page 246: There is a mistake in cell B11 (refers to cell b7 instead of b6). Means that the picture in the book needs to be replaced.
[2] Page 249, last picture, should be replaced by the following:
[1] Page 281: The function in cell B42 contains a mistake. Should be:
[2] Page 281, text below second spreadsheet picture:
Instead of: “regress the betas of the assets on their mean returns”
Should be: “regress the mean returns of the assets on their betas”
[1] Page 281 , spreadsheet at bottom of page needs to be replaced with the following (there’s an error in cell B42):
[1] Page 282, same error in spreadsheet on bottom of page. Should be:
[1] page 301: Picture should be replaced by following (there’s a non-critical error in row 17):
[2] Page 303, the picture should be replaced with the following:
[2] Page 306, 2nd line from bottom:
Instead of: “for the 10 stocks”
Should be: “for the six stocks”
[2] Page 307, the picture should be replaced by:
[2]Page 308, picture should be replaced by:
[2] Page 309: The picture should be replaced by:
[2] Page 313: The picture on this page should be replaced by:
[1] Page 315, exercise 2: The formula for the answer is wrong. The correct answer is given below:
[2] Page 314: Top picture should be the following:
[2] Page 314: Bottom picture should be the following:
[2] Page 316, exercise 4 answer on disk: The formula in cells B11:B16 should be:
Instead of:
=TRANSPOSE(MMULT(TRANSPOSE(K2:K7),B2:G7)/MMULT(MMULT(TRANSPOSE(K2:K7),B2:G7),
K2:K7))
Should be:
=TRANSPOSE(MMULT(TRANSPOSE(K2:K7),MINVERSE(B2:G7))/MMULT(MMULT(TRANSPOSE(K2:K7),MINVERSE(B2:G7)),K2:K7))
[1] Page 344, Chapter 12: The screen clip does not include all the data. The correct clip should be:
[1] Page 361, formula at bottom of page:
Instead of:
Should be:
[1] Page 362, formula at top of page:
Instead of:
Should be:
[1] Page 367: The screen clip has a mistake in the formulas in B29:B33. Should be:
[1] Page 367, four lines up from bottom. The same mistake should be corrected:
Instead of:
=MMULT(B14:F18,H4:H8)*(B26-B12)/INDEX((MMULT(B14:F18,H4:H8)),1,1)+B12
Should be:
=MMULT(B14:F18,H4:H8)*(B26-B25)/INDEX((MMULT(B14:F18,H4:H8)),1,1)+B25
[1] Page 402: Cell B9 in the spreadsheet should be . For the particular example given this makes no difference, but to make things correct:
[1] Page 404, screen from spreadsheet contains wrongly-identified cells (the actual computations are correct). Screen should be:
[2] Page 428, 2nd bullet, line 3 & 4: The word purchaser (split between these two lines) is mispelled (“a” is left out).
[2] Page 439: Table contains two errors:
Under “Cash Flow” heading, line 2: should be +De-rt instead of +De-rT (meaning: lower-case t instead of upper case T)
Under “Cash Flow” heading, line 5: Same error. The formula as a whole should read:
-S0 + De-rt +
Xe-rT + C0
[2] Page 456, equation at bottom of page:
Instead of:
Should be:
[1] Disk, pages 485-488: Tabs wrongly numbered!
[1] Page 492, footnote 4:
Instead of:
Should be:
[1] Page 496, correct screen clip given below (was a typo in cell F3):
[1] Page 505, footnote:
Instead of: “ is discussed in Chapter 30, section 3 “
Should be: “ is discussed in Chapter 29, section 4 “
[2] Page 519: In the VBA box “CallOption” should be “BSCall” so that line 6 should be:
Instead of: If CallOption(Stock, Exercise, Time, Interest,
Should be: If BSCall(Stock, Exercise, Time, Interest,
[1] Page 538, cell C3 should say “Exercise price” instead of “Exercise prie”:
[2] Page 542, spreadsheet clip should look like this:
[2] Page 542, line below spreadsheet clip:
Instead of: is worth 4.13
Should be: is worth 3.97
[3] Page 609. The last two lines of the VBA code are missing. After Next Index (shown below) end of the program should read as below. The program on the disk for Chapter 22 is correct.
Next Index
SuccessfulRuns = Success / Runs
End Function
[3] Page 616. There is an error in cells C14 and C15 (note that the values in B14 and B15 are correct as are the calculations). The spreadsheet picture should be:
[3] Page 618. The same mistake as above. The spreadsheet clip should look like:
[2] Page 679, replace spreadsheet picture with following:
[2] Page 698, last line:
Instead of:
Should be:
[2] Page 700, the formula on the page should be corrected:
Instead of:
Should be:
[2] Page 701, the lines below the top spreadsheet clip:
Instead of: we have defined to calculate the second derivative of the duration:
Should be: we have defined to calculate
[2] Page 720, the table of “Long-term Senior Debt Ratings”, column 2
Instead of: AA3
Should be: Aa3
[1] Page 750, 4th line from bottom:
Instead of: d4raw
Should be: draw
(the program on the disk is correct)
[2] Page 789, 5th bullet at the top of the page:
Instead of: VLoopkup
Should be: VLookup
[1] Page 886: The apostrophe in front of the extension of line 9 should be removed:
Instead of: ‘(n-1)*n
Should be: (n-1)*n
[1] Page 889, second function box. The second commented expression should parallel the one previous:
Instead of:
‘Make the
‘function return
#Num!
Should be:
‘Make the function
‘return#Num!
[2] Page 890, exercise 6: The screenclip should be replaced by the following:
There is also a mistake in the VBA of the answer on the disk. The “12 * Years “ should have been enclosed in parentheses. This has been corrected on the disk.
Function Bond(Deposit, Years, FT0, FT1)
Temp1 = Deposit + Deposit * (FT1 - FT0) / FT0
Temp2 = Deposit * (1 + 0.05 / 12) ^ (12 * Years)
If Temp1 > Temp2 Then Bond = Temp1 Else Bond = Temp2
End Function
[2] Page 1089: The promised files didn’t make it to the disk. I’ve posted them here (they will be added to the disk starting with the third printing).
- fm3_chapter41_var_cov.doc
- fm3_chapter41_var_cov.xls
FM3, cumulative typosPage 1