The one$-$year interest rate over the next $10$ years will be $3\%,4\mathrm{.}5\%,6\%,7\mathrm{.}5\%,9\%,$

$10\mathrm{.}5\%,13\%,14\mathrm{.}5\%,16\%,$ and $17\mathrm{.}5\%.$ Assume that investors prefer holding short$-$term

bonds so that a liquidity premium of $10$ basis points is required for each year of a bond's

maturity. What will be the interest rates on a six$-$year bond and a nine$-$year bond? $(2$pts$)$

Predict what will happen to interest rates on corporate bonds if governments adopt a new

regulation that guarantees payment of principal in case of default in order to encourage

investment in corporate bonds. Will it affect the demand for Treasury securities$?(2$pts$)$

If the public expects a corporation to lose $$5$ a share this quarter and it actually loses $$4,$

which is still the largest loss in the history of the company, what does the efficient market

hypothesis say will happen to the price of the stock when the $$4$ loss is announced? $(2$pts$)$

Suppose that you decide to play a game. You buy stock by throwing a dice a few times,

using that method to select which stock to buy. After $10$ months you calculate the return

on your investment and the return earned by someone who followed "expert" advice

during the same period. If both returns are similar, would this constitute evidence in favor

of or against the efficient market hypothesis? Briefly explain your answer. $(2$pts$)$

The one$-$year interest rate over the next $10$ years will be $3\%,4\mathrm{.}5\%,6\%,7\mathrm{.}5\%,9\%,$

$10\mathrm{.}5\%,13\%,14\mathrm{.}5\%,16\%,$ and $17\mathrm{.}5\%.$ Assume that investors prefer holding short$-$term

bonds so that a liquidity premium of $10$ basis points is required for each year of a bond's

maturity. What will be the interest rates on a six$-$year bond and a nine$-$year bond? $(2$pts$)$

Predict what will happen to interest rates on corporate bonds if governments adopt a new

regulation that guarantees payment of principal in case of default in order to encourage

investment in corporate bonds. Will it affect the demand for Treasury securities$?(2$ pts $)$

If the public expects a corporation to lose $$5$ a share this quarter and it actually loses $$4,$

which is still the largest loss in the history of the company, what does the efficient market

hypothesis say will happen to the price of the stock when the $$4$ loss is announced? $(2$ pts $)$

Suppose that you decide to play a game. You buy stock by throwing a dice a few times,

using that method to select which stock to buy. After $10$ months you calculate the return

on your investment and the return earned by someone who followed "expert" advice

during the same period. If both returns are similar, would this constitute evidence in favor

of or against the efficient market hypothesis? Briefly explain your answer. $(2$pts$)$

The one$-$year interest rate over the next $10$ years will be $3\%,4\mathrm{.}5\%,6\%,7\mathrm{.}5\%,9\%,$

$10\mathrm{.}5\%,13\%,14\mathrm{.}5\%,16\%,$ and $17\mathrm{.}5\%.$ Assume that investors prefer holding short$-$term

bonds so that a liquidity premium of $10$ basis points is required for each year of a bond's

maturity. What will be the interest rates on a six$-$year bond and a nine$-$year bond? $(2$pts$)$

Predict what will happen to interest rates on corporate bonds if governments adopt a new

regulation that guarantees payment of principal in case of default in order to encourage

investment in corporate bonds. Will it affect the demand for Treasury securities$?(2$ pts $)$

If the public expects a corporation to lose $$5$ a share this quarter and it actually loses $$4,$

which is still the largest loss in the history of the company, what does the efficient market

hypothesis say will happen to the price of the stock when the $$4$ loss is announced? $(2$ pts $)$

Suppose that you decide to play a game. You buy stock by throwing a dice a few times,

using that method to select which stock to buy. After $10$ months you calculate the return

on your investment and the return earned by someone who followed "expert" advice

during the same period. If both returns are similar, would this constitute evidence in favor

of or against the efficient market hypothesis? Briefly explain your answer. $(2$pts$)$