2. When you short-sell a security, under what circumstances would you have to unwillingly buy it back?

3. Why can't real assets be "sold short" the same way financial assets can be?

4. Your financial planner has a fondness for studying charts of stock prices that he downloads from the Web. He particularly likes the multi-colored ones. He has noticed that stock prices have generally increased over the most recent ten years period. Therefore, he can conclude from this evidence that stock returns cannot be random walks.

A) True

B) False

5. Define the following two portfolios: A) "Value-weighted portfolio" B) "Equal-weighted portfolio"

6. Name three parameters that are needed to be estimated for the Capital Markets Assumptions?

1: Expected return of each asset class

2: Volatility for each asset class

3: Correlations across all asset classes

earnings). If the earnings growth rate is estimated to be 2.5% and the S&P 500 is fairly priced, what would the Dividend Discount Model say is the expected return of the S&P 500?