1.

Suppose a firm's stock price has increased dramatically with no changes to the underlying fundamental characteristics of the firm. Which of the following external factors would best explain this phenomenon?

	fear by stock market participants
	an economy wide recession
	greed by stock market participants
	steep increases in interest rates

2.

Which of the following best describes the economic conditions typically prevalent during phase III (expansion) of the business cycle?

	eventually falling inflation, eventually falling interest rates, falling unemployment, eventually falling bond market, eventually the peak in the stock market, expanding economy
	eventually rising inflation, eventually rising interest rates, rising unemployment, eventually rising bond market, eventually the trough in the stock market, expanding economy
	eventually falling inflation, eventually rising interest rates, falling unemployment, eventually falling bond market, eventually the peak in the stock market, contracting economy
	eventually rising inflation, eventually rising interest rates, falling unemployment, eventually falling bond market, eventually the peak in the stock market, expanding economy