Problem 17: Miscellany (5 points) 17.1 (1 point) Why is the yield curve typically upward sloping? 17.2 (1 point) If a project with conventional cash flows has a negative NPV, its discounted payback period is never. Please give an example of a zero NPV project with conventional cash flows that has a discounted payback period equal to infinity. Or please argue why such an example is impossible. 17.3 (1 point) Surveys show that CFOs of corporations rely on DCF-based techniques (e.g., NPV) for investment decisions, whereas private equity managers predominantly use multiples (as opposed to DCF) to evaluate investment opportunities. Why do you think this dichotomy exists? 17.4 (1 point) You are choosing a stock for your first equity investment; this will be the only stock in your portfolio for some time. The stock broker reminds you that total risk consists of systematic and idiosyncratic risk and that only systematic risk is priced. Please explain if you should disregard idiosyncratic risk when making this investment or not? And why? 17.5 (1 point) Which firms, small or large, do you think are more likely to make capital structure decisions consistent with the pecking order theory of capital structure? And why?