Question

1-How do financial markets that run freely and efficiently affect the standard of living in a country?

2-What does it mean for a financial market to be considered (a) informationally efficient and (b) economically efficient?

3-Do you think investors can earn abnormal returns in financial markets that are at least semistrong-form efficient?

4-When the SEC approves a stock issue, it does not provide an opinion about the value of the stock. Do you think the SEC should give an opinion to investors on the appropriate value of the stock being issued? Explain.

5-What economic functions do financial intermediaries perform?

6-Do you think that the financial services industry will be more reregulated or deregulated in the future? Explain.

7-How do you think intermediaries' characteristics will change in the future?

8-How do financial institutions in the United States differ from financial institutions in other parts of the world? Why?

9-Express Courier (EC) needs $141 million to support future growth. If it issues common stock to raise the needed funds, EC will have to pay its investment banker 6 percent of the issue's total value. If EC can issue common stock at a market price of $80 per share, how many shares must be issued so that the company has $141 million after flotation costs to fund the planned growth?

10-Jewel Regal Cars (JRC) must raise $240 million to support operations. To do so, JRC plans to issue new bonds. Investment bankers have informed JRC that the flotation costs will be 4 percent of the total amount issued. If the market value of each bond is $1,000, how many bonds must JRC sell to net $240 million after flotation costs? Assume that fractions of bonds cannot be issued.

Answer 1