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1. Explain why bond prices fluctuate in response to changing interest rates. What adverse effect might occur if bond prices remain fixed prior to their maturity?
2.
Discuss the capital asset pricing model in general, the CAPM method of determining expected returns, and how the SML can be used to help predict the movement of a stocks price.
3.
Contrast the Dow Jones Industrial Average and the Standard and Poors Composite Index.