1. An estate leaves $700,000 to three children ages 11, 17 and 20. Each child is to receive the same amount at age 25. How much does each receive if the fund is invested at 6.5% interest compounded quarterly?
2. How is beta affected by mergers in the airline industry. For example, is the beta of merged American Airlines/U.S. Airways higher, lower, or unchanged from their betas as stand-alone companies? Prior to their merger in December 2013, the beta of American was 1.7 and the beta of U.S. Airways was .37. Consider whether the merged company is riskier or less risky than the 2 stand-alone companies.