1. Why would an investor want to “beat the market” versus “hold the market”? Discuss the strategies for each and their dependence on an investor’s information and trading skills.
2. How does the leverage ratio influence a financial institution’s stability in response to bad economic news?
3. True or false and explain: A mutual fund investing in shares trading on an emerging capital market (say Turkey, for example) creates more value than one investing in shares trading on an established market.
4. What is the present value of seven $850 cash flows occurring at the end of the next 7 years at a rate of 4.75% compounded annually?
A) $4,963.29
B) $3,896.37
C) $2,947.58
D) $5,478.93