1. In what circumstances would you choose to use a dividend discount model rather than a free cash flow model to value a firm? Why?

2. Johnson & Johnson has a ROE of 19% and a plowback ratio of 50%. If the coming year's earnings are expected to be $2 per share, at what price will the stock sell? The market capitalization rate is 12%.

What price do you expect Johnson & Johnson shares to sell for in three years?

3. Performance evaluation of a portfolio is difficult. What challenges can investment managers face and what recommendations would you make in effort to meet these challenges?

Portfolio insurance has always had an intuitive appeal to investors, particularly if the cost isn't too great. What are some advantages and disadvantages that investment managers should be aware of?