1. Discuss the concept of stationarity and non-stationarity in relation to the characteristics of financial variables, for example, prices and returns are the accumulation of income (dividends) over time, so are their statistical properties.
2. Calculate the price of a zero coupon bond that matures in 8 years if the market interest rate is 6.50 percent. (Round your answer to 2 decimal places.)
3. In evaluating new projects when is the weighted average cost of capital the appropriate discount factor and when is it not? Provide an example for both scenarios to support your answer.