1. Explain why cash flows occurring at different times must be adjusted to reflect their value as of a common date before they can be compared, and be able to calculate the present value and future value of multiple cash flows 2. Explain the relationship between interest rates and bond prices. Why are long-term bonds more sensitive to changes in interest rates than shorter-term bonds? 3. How are preferred shares different from ordinary shares? How do you estimate the required rate of return of a preferred share if you know its market price and its dividend? 4. What is an Initial Public Offering (IPO)? What are its various advantages and disadvantages? 5. Discuss which type of risk matters to investors and why. In addition, describe how investing in more than one asset can reduce risk through diversification. 6. What does beta measure? How do we use beta? Describe and justify what the value of the beta of an Australian government bond should be. 7. According to the CAPM, the expected return on a risky asset depends on three components. Define each of these three components and explain the meaning of a beta value of 1.