1. Which of the following conditions will give the issuers of callable bonds the greatest incentive to call their bonds?
A. Interest rate fluctuates
B. Interest rate falls significantly
C. Interest rate equals coupon rate
D. Interest rate rises significantly
E. Interest rate remains stable
2. Real estate market inefficiency:
a. Briefly describe 5 factors that cause the stock market to be more efficient than the real estate market.
b. Can investors make money in an efficient market? Briefly explain.
c. Do educated and informed investors rather operate in an efficient or inefficient market? Briefly explain.