Explain briefly, why it is not appropriate to say that the value of a firm can be calculated from the firm's balance sheet by subtracting the sum of all liability items from the sum of all the assets items. (maximum 150 words)

You are investing approximately $10,000 for five years purchasing a bond. One option is a typical ("vanilla") bond with a semiannual coupon payment, which has a coupon rate of 2% and is sold and redeemed at face value. Another is a "zero-coupon" bond (a bond that does not pay regular coupon payments but redeemed at an amount more than the amount paid in), which is sold at $9,052.87 and redeemed at $10,000. Finally, it is also possible to buy another vanilla bond with a coupon rate of 3%, sold at 104.74 and redeemed at face value. Consider which of the bonds is more advantageous and briefly explain your conclusion.

From the perspective of finance, explain briefly the relationship between the price of a firm's share and the cashflow of the firm. (maximum 35 words)

Explain briefly why the so-called market portfolio can be regarded as the most appropriate combination of risky assets for the average investor. (maximum 100 words)

You are trying to sell a mutual fund to a customer, who can tolerate losing more than 10% of assets during a bad year if that happened only once every twenty years. If the expected annual return of the fund you are selling is 8% and the daily volatility is 0.72%, explain briefly how likely is it that the customer would buy the fund. Assume that there are 255 trading days in a year.