Answer all 4 parts if you can, thank you!

Short Answer Questions: 1. Tor F. Analyze the statement A coupon bond is called a discount bond when its market price is less than its fair value. 2. Implication of HW6 #13. Analyze the statement A company is not expected to pay any future dividends; an investor who is already holding the company's shares says that he is okay with receiving no future dividend because future cashflow does not have to be future dividends but can also be future selling price. He says as long as he sells it to get future cash, he is fine with receiving no future dividends." 3. Numerically make up two projects, each of which has three cashflows: CFO, CF1, CF2. Compute PI (or IRR) and NPV (pick your own required rate of return) for the two projects. Show that PI (or IRR) conflicts with NPV regarding ranking the two projects. Briefly explain why such conflict could happen when ranking projects. 4. CAPM describes risk-return relation as a straight line in x-y plane (x for risk, measured by either beta or standard deviation; y for expected return), whereas in the graph below real data of individual stocks shows scatter plot in the same x-y plane (y for mean monthly return, x for standard deviation of monthly returns). Risk and Return of Individual Stock, 2005-2015, Monthly 6.0% 5.0% Expected (mean) Return -4.0% 3,0% 2.0% 1.0% 0.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% Risk (standard deviation) Assume that CAPM holds true for these individual stocks. 1) Why are individual stocks not on a straight line? 2) If you were to place the CAPM straight line in the graph, where do you put it? 3) What is the bullet-shaped curve