Suppose rents in Dubai on an average 2-bedroom apartment are about 120,000 AED per year. The rents are expected to grow at 3 percent per year forever and long term interest rates are at 5% per year. If current apartment price is 20,000,000 AED, do you believe this price to be a fair market price? What can be said about the housing market under these circumstances?

5). Suppose you suspect gold price to have a bubble. Explain what to look for. If there is a bubble in gold prices and the bubble bursts, what is the bottom price you expect?

6). Suppose you are a Goldsmith and you want to become a banker. If the gold withdrawal rate is 20 percent, how much in total can you issue in gold paper receipts if you have 10,000 gold units?