Q1.a. List the main function of investment banks in the financial system. (13p) Q.lb. Betas of individual securities are unstableover time. Which factors could causea company's beta to change over time? (12p) Q2. A bond with a coupon rate of 5% annually and a face value of $1,000 matures in 7 years. If the current annual market interest rate is 6%, what are the Mac D and Mod D of the bonds? (25p) Q3.a. How is insider trading related to the strong form Efficient Market Hypothesis? (12p) Q3b.What are the main stock and firm valuation methods and is there a relationship between the stock price and the firm value? explain briefly (13p) Q4. The dividend on AB Corporation's stock will be $3 in year 1, S4 in years2, and S5 in year 3. You can sell the stock for $95 after you receive all the dividend at the end of year 3. If you require a 10% return on your investment, how much would you be willing to pay for the stock today? (25p)