See the attachment

The final exam will be from 255pm to 420pm on May 7th

There will be one Time Value of Money Question (similar to midterm 1) and one Bond Valuation question (similar to midterm 2). I will provide you with the three equations on the exam (the present value of an ordinary annuity (with non-annual compounding), the Present Value of a Future Sum (with non-annual compounding), and the effective interest rate.

There will also be about 6 essay questions from the below list.

1. Explain the law of small numbers.

2. Why do losses hurt more than gains help?

3. Why do we become risk-adverse with gains and risk-seeking with losses?

4. Explain the disposition effect. How would you trade if you believe in the disposition effect? Why?

5. Why do we value something more after we have owned it?

6. Give two reasons for the Financial Crisis and explain them.

7. Why does a downward sloping treasury yield curve predict a recession?

8. Why is valuing a U.S. Treasury Bond so much easier than valuing a stock?

9. According to the Campbell-Shiller model when should investors buy stock? Why?

10. Explain how the dividend discount model works. Then explain the problems with the model (all of the problems).

11. What is type of stocks does Warren Buffett’s like to buy? Why?

12. Explain the Winner’s Curse theory for why Initial Public Offerings are underpriced on the Primary Market.

13. Why are IPOs usually poor investments in the long-run?

14. What is the difference between precipitating and amplifying mechanisms in terms of the causes of a bubble? Explain

15. What is the reason for why market efficiency breaks down over the last 20-25 years?