LECTURE 1: Market Efciency 0 What are the three versions of Efcient Market Hypothesis (EMH)? o What is the Fair Game model and what the Random Walk model? How they relate to the EMH? a Comment on the empirical evidence in favour of EMH. o Derive Shiller's upper bound of a stock's price variability in testing for EMH. o Derive Shiller's upper bound of a stock's price change variability in testing for EMH. LECTURE 2: Capital Markets, Consumption 85 Investment :- Fisher's Separation Principle: 0 Describe agents' consumption and investment decisions in the absence of capital markets. 0 Describe agents1 consumption and investment decisions in the presence of capital markets. 0 What are implications of market frictions in capital markets on agents' decisions? 0 Show that the value of a stock is always equal to the discounted value of the stream of dividends that is assumed to grow at a constant rate, independently of the investor's possible capital gains. 0 Explain the properties that capital budgeting techniques should satisfy in order to maximise the investors1 return. Dene four popular budgeting techniques used by managers and discuss whether they satisfy the properties that maximise investors" wealth. 0 Compare and contrast the N PV and IRR budgeting techniques. I Exercise on capital budgeting techniques [as in slides). LECTURE 3: Choice Under Uncertainty o What are the axioms of cardinal utility? Derive the properties of the utility function using these axioms. 0 Explain how risk attitudes are classied. 0 Dene and derive the Markowitz and Arrow-Pratt risk premia. I Exercise on the computation of the two risk premia and discussion on their comparison. LECTURE 4: Capital Markets 85 Risk Pricing I Exercise similar to examples 6, 7, 8 and exercise 2; discussion on common and independent risks, and risk diversication