QUESTION 3 The value of a financial asset depends on the expected cash flow(s) and the required rate of return by investors. the historical cash flow(s) up to the present time. business conditions. the risk-free rate. QUESTION 4 Asma has 3 alternative investments to choose one. However, she observes that at a required rate of return higher than 12% option is prefereable, while at an iterest rate less than 12% investments A and C are preferable. Given that the economy faces inflationary pressure which investment should Asma choose? option A and/or C because inflation takes time to manifest in an economy If inflation is rising better to keep the money in a bank acount and not invest in financial assets. Option B because inflation is high options A and/or C because inflation is high QUESTION 5 If the value of the firm is AED 1,000 and the debt holders are promised AED 800. The bondholders and shareholder's claim are: AED 200 and AED 800 respectively AED 500 and AED 500 respectively AED 1,000 and AED O respectively AED 800 and AED 200 respectively