1. Discuss the CAPM (Capital Asset Pricing Model). How does the Capital Market Line differ from the Security Market Line?
2. What is the advantage of a diversified portfolio? Why invest in different types of asset classes? Are there any disadvantages associated with a diversified portfolio?
3. What is the value today of $3,000 per year, at a discount rate of 8 percent, if the first payment is received 7 years from today and the last payment is received 25 years from today?