\ Which of the following is a clear and unambiguous example of managers putting their interests over stockholder interests? (Pick only one) (1 marks) i. Negotiating for a large compensation contract ii. Focusing on increasing the market share of the company iii. Paying green mail to a bidder to avoid being taken over (in a hostile bid) iv. Acquiring another company v. Paying a large dividend If you were a bondholder lending to a firm and you were worried that stockholders would take advantage of you, which of the following actions would concern you the most? (Pick only one) (1 marks) i. A cut in the dividends paid to stockholders ii. A reduction in debt iii. Expansion into a risky new business iv. A new stock issue v. Accumulation of cash in the company The stock prices of companies often jump when they report their earnings. In an efficient market, you would expect stock prices to increase when companies report an increase in earnings and to drop when they report lower earnings. (1 marks) i. True ii. False If we choose firm value maximization as our objective in decision making, we do not need to assume that markets are efficient. (1 marks) i. True ii. False In no more than two sentences, define a Eurobond and provide an example. (2 marks) The financial system is most regulated in many economies including Zambia. This is mainly done for two reasons, list these reasons. (2 marks) To protect the public and the economy from financial panic, government regulates the financial system through four distinct measures. Name three. Define a floating exchange rate regime and the two forms of regimes that exist. (4 marks) Write brief notes on the determinants of exchange rates. (6 marks)

In no more than 4 points, describe the differences between Forward and future contracts.