1. What are the differences between equity and fixed-income securities?
2. What is the difference between asset allocation and security selection?
3. What are the differences between real and financial assets?
4. Why would you expect securitization to take place only in highly developed capital markets?
5. Give an example of three financial intermediaries, and explain how they act as a bridge between small investors and large capital markets or corporations.
6. The average rate of return on investments in large stocks has outpaced that on investments in Treasury bills by about 7% since 1926. Why, then, does anyone invest in Treasury bills?
7. Discuss the advantages and disadvantages of the following forms of managerial compensation in terms of mitigating agency problems, that is, potential conflicts of interest between managers and shareholders.

a.	A fixed salary.
b.	Stock in the firm that must be held for five years.
c.	A salary linked to the firm's profits.