1. What is the meaning of "beta"? How is it used to calculate "k", the rate of return required by the investor ?.
2. Your brother has asked you to help him with choosing an investment. He has $7,700 to invest today for a period of two years. You identify a bank CD that pays an interest rate of 0.0300 annually with the interest being paid quarterly. What will be the value of the investment in two years?
3. A bond has a face value of $1,000, a coupon rate of 15% and a maturity of 7 years. If the agents in the market are expecting to yield 10% on this bond. Calculate the price for this bond at time = 0.