1. Briefly explain what you understand by Earnings per share (EPS). How is EPS calculated and why it is important for investors to gauge the value of a share? Refer to the relevant web links that I have put on course website and use any other references that you like. (Your answer should not exceed 250 words)
2. Why do firms buy back the shares from investors? What do they gain? Briefly explain the economics of such a decision and its effects on value of a firm. Refer to the relevant web links that I have put on course website and also do your own research. (Your answer should not exceed 250 words).
3. What are price earnings (PE) ratios? Refer to the notes on PE ratios that I have added on course website and also do your own research on internet. (Your answer should not exceed 250 words).
4. What is the meaning of cost of equity? Who pays this cost of equity and to whom? How do you calculate the cost of equity (use any formulas from Chapter 4 which are also given in my Power Point slides already posted on E-learning). (Your answer should not exceed 250 words).
5. What is a bond? Who issues bonds and why? Who buys bonds and why? (Your answer should not exceed 200 words).
6. What determines the value of a bond? Write down the formula for determining the price of the bond and explain it briefly. To answer this refer to Chapter 3 of Brealey and Myers course textbook or any other reference you like which gives the same information with the same rigor.