1. As a student, are you saving or borrowing? Why?

2. Divide a persons life from ages 20 to 70 into 10-year segments and discuss the likely

   saving or borrowing patterns during each period.

3. The Wall Street Journal reported that the yield on common stocks is about 2 percent,

   whereas a study at the University of Chicago contends that the annual rate of return on

   common stocks since 1926 has averaged about 10 percent. Reconcile these statements.

4. Some financial theorists consider the variance of the distribution of expected rates of re- turn to be a good measure of uncertainty. Discuss the reasoning behind this measure of

   risk and its purpose.

5. Discuss the two major factors that determine the market nominal risk-free rate (NRFR).

   Explain which of these factors would be more volatile over the business cycle.