1. What connection, if any, does a firm's market value have with its liquidation and/or goingconcern value? 2. Could a security's intrinsic value to an investor ever differ from the security's market value? If so, under what circumstances? 3. In what sense is the treatment of bonds and preferred stock the same when it comes to valuation? 4. Why do bonds with long maturities fluctuate more in price than do bonds with short maturities, given the same change in yield to maturity? 5. A 20-year bond has a coupon rate of 8 percent, and another bond of the same maturity has a coupon rate of 15 percent. If the bonds are alike in all other respects, which will have the greater relative market price decline if interest rates increase sharply? Why? 7. Suppose that the controlling stock of IBM Corporation was placed in a perpetual trust with an irrevocable clause that cash or liquidating dividends would never be paid out of this trust. Earnings per share continued to grow. What would be the value of the company to the stockholders? Why? 8. Why is the growth rate in earnings and dividends of a company likely to taper off in the future? Could the growth rate increase as well? If it did, what would be the effect on stock price? 9. Using the constant perpetual growth dividend valuation model, could you have a situation in which a company grows at 30 percent per year (after subtracting out inflation) forever? Explain. 10. Tammy Whynot, a classmate of yours, suggests that when the constant growth dividend valuation model is used to explain a stock's current price, the quantity (keg) represents the expected dividend yield. Is she right or wrong? Explain