HW
Please answer for questions below and solve the following problems
Ch 1
1. What is the relationship between securitization and the role of financial intermediaries in the economy? What happens to financial intermediaries as securitization progresses?
2. Many investors would like to invest part of their portfolios in real estate, but obviously cannot on their own purchase office buildings or strip malls. Explain how this situation creates a profit incentive for investment firms that can sponsor REITs (real estate investment trusts). 3. Financial engineering has been disparaged as nothing more than paper shuffling. Critics argue that resources that go to rearranging wealth (i.e., bundling and unbundling financial assets) might better be spent on creating wealth (i.e., creating real assets).
Evaluate this criticism. Are there any benefits realized by creating an array of derivative securities from various primary securities?

Ch 2
1. Consider the three stocks in the following table. Pt represents price at time t, and Qt represents shares outstanding at time t. Stock C splits two for one in the last period.
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a. Calculate the rate of return on a price-weighted index of the three stocks for the first period (t _ 0 to t _ 1).
b. What must happen to the divisor for the price-weighted index in year 2?
c. Calculate the rate of return for the second period (t _ 1 to t _ 2).
2. Using the data in Problem 1,Ch 2, calculate the first-period rates of return on the following indexes of the three stocks:
a. A market-value-weighted index.
b. An equally weighted index.
3. An investor is in a 28% tax bracket. If corporate bonds offer 9% yields, what must municipals
Ch. 3
1. Who sets the bid and asked price for a stock traded over the counter? Would you expect the spread to be higher on actively or inactively traded stocks?
2. Consider the following