1. If the stated or nominal interest rate is the real interest rate plus the rate of inflation, wouldn’t this be incorrect thinking?
2. How might Wal-Mart (or another large company) take advantage of each of the following: Do not merely provide a definition. Provide a specific example of each
3. What would be the risk of investing in the primary market (especially IPO’s) vs. the secondary market? And what might this imply about returns?
4. The risk-free rate is 3%, and expected inflation is 1.5%. If inflation expectations change such that future expected inflation rises to 2.5%, what will the new risk-free rate be?