1. What is evidence that does not support an efficient market hypothesis?
2. Yearly rates are 4%, 5%, 6%, 7%, and 8% for the next five years. Please compute and explain the expected interest rate for both the three and four-year bonds if we show the liquidity premiums to be 1.25%, 1%, .75%, .5%, and 0%. (Show your work/calculations/formulas.)
3. What are the advantages of inflation targeting?
4. What are the disadvantages of inflation targeting?
5. What are the differences among the Bank of Canada, the Bank of England, and the Bank of Japan
6. How was the Federal Reserve System established? What is its organizational structure?
7. What is a "stock certificate"? What rights and privileges are offered based upon the type of stock?
8. Based upon the Gordon Growth Model, calculate the anticipated market price of a stock that is paying dividends at a constant growth rate of 6.25%, with a recent dividend of $1.00, and a required return rate of 15%. (Show all work/calculations/formulas.)
9. We are currently bidding on Treasury bills and have determined that we must have a 5% return for a $1,000 T-Bill that will mature in one year. How much would we be willing to bid on the Treasury bill? If we are bidding on a 13 weeks Treasury bill with a 1% return and a 26 weeks Treasury bill with a 2% return for a $1,000 T-bill, how much would we be willing to bid on the Treasury bills? (Show all work/calculations/formulas.)
10. Compare and contrast three models of stock valuation. What are the concepts behind each model?