(The answers must be concise, succinct, and substantive. If the question can be answered in one question please do it.)

1. Burton Malkiel challenges the belief that stock prices can be predicted. Dr. Malkiel concludes that no market strategy can consistently beat that of buying and holding a widely diversified portfolio of common stocks for the long-term gain.

1. According to Dr. Malkiel what is the random walk as it relates to the common stocks?

1. Describe Dr. Malkiels Castle-in-the-Air Theory.
2. Describe Dr. Malkiels Firm-Foundation Theory.
3. According to Dr. Malkiel what four (4) variables determine the intrinsic value (present value) of Common Stock?
4. Consistent with Fundamental Analysis we introduced and utilized a three-year Valuation Model to evaluate the market price of Common Stock.

Present this valuation model (Present Value formula) and discuss each of the Variables you have included in this model.

5. Once you have the information from the model you described in (5.) above how is it used?
6. Assuming that you are selecting a portfolio on the basis of Modern Portfolio Theory (MPT) of what utility is there in applying the valuation model you described in (6.) above? Why?