(i) Discuss the three theories of the term structure of interest rates. Include in your discussion the...
Question:
(i) Discuss the three theories of the term structure of interest rates. Include in your discussion the differences in the theories, and the advantages/disadvantages of each.
(ii) Discuss the M2 measure of performance by answering the following questions. Why is M2 better than the Sharpe measure? What measure of risk does M2 use? How do you construct a managed portfolio, P, to use in computing the M2 measure? What is the formula for M2? Draw a graph that shows how M2 would be measured. Be sure to label the axes and all relevant points.
(iii) Discuss some of the factors that might be included in a multifactor model of security returns in an international application of arbitrage pricing theory (APT).
(iv) Why are many bonds callable? What is the disadvantage to the investor of a callable bond? What does the investor receive in exchange for a bond being callable? How are bond valuation calculations affected if bonds are callable?
(v) Discuss some of the accounting comparability problems involved in international investing.
Project Management A Systems Approach to Planning Scheduling and Controlling
ISBN: 978-0470278703
10th Edition
Authors: Harold Kerzner