A clear and short answer, please

Problem Set 3 Problems 1. Identify the cash flows available to an investor in stock. How reliably can these cash flows be estimated? Compare the problem of estimating stock cash flows to estimating bond cash flows. Which security would you predict to be more volatile? 2. Compute the price of a share of stock that pays a $1 per year dividend and that you expect to be able to sell in one year for $20, assuming you require a 15% return, 3. After careful analysis, you have determined that a firm's dividends should grow at 7% on average in the foreseeable future. Its last dividend was $3. Compute the current price of this stock, assuming the required return is 18% 4. Some economists think that the central banks should try to prick bubbles in the stock market before they get out of hand and cause later damage when they burst. How can monetary policy be used to prick a bubble? Explain how it can do this using the Gordon growth model. 5. If stock prices did not follow a random walk, there would be unexploited profit opportunities in the market. Is this statement true, false, or uncertain? Explain your answer. 6. Suppose that increases in the money supply lead to a rise in stock prices. Does this mean that when you see that the money supply has had a sharp rise in the past week, you should go out and buy stocks? Why or why not? 7. If you read in a financial magazine that experts expect stock prices to fall, should you follow that lead and sell all your stocks? 8. "An efficient market is one in which no one ever profits from having better information than the rest. Is this statement true, false, or uncertain? Explain your answer. 9. "Foreign exchange rates, like stock prices, should follow a random walk. Is this statement true false. or uncertain? Explain your answer. 10. What are the empirical evidence in favor of and against the efficient market hypothesis