Finc 351 and 440 Week 2

Finc 440:

1.  Types of Risk –

The textbook explains that there are two types of risk.  What are these two types of risk and should investors be concerned about them?  By what methods are these risks measured by analysts?

 2. Market Efficiency –

Are security markets efficient?

In formulating your response, provide evidence that demonstrates that markets are efficient; also, offer specific evidence that suggests that markets are not efficient? 

Why is the view about market efficiency important to the valuation process?

 3. Beatitude of Efficient Markets –

The beatitude of efficient markets suggests that “blessed are those who believe in the inefficiency of financial markets and the predictability of prices, for it is through their efforts to prove that markets are inefficient that we are truly blessed with efficiency.”  What does this statement mean?

 4. Risk-free Rate –

How should an analyst determine the risk-free rate that is to be used in any particular valuation assignment?

 5. Most Important Things Learned –

What are the most important things you learned from the study of this week’s readings and assignments?