Write a formula for what you expressed in words in question 3 above. Briefly explain the terms in the formula.

1. What is the first rule of finance?2. What is the second rule of finance?3. In words, what is the fundamental value of any asset?4. Write a formula for what you expressed in words in question 3 above. Briefly explain the terms in the formula.5. The vast majority of investors are assumed to be risk averse.a) What is meant by investor risk aversion?b) What is the basis for the assumption that investors are risk averse?
6. List the three key characteristics of Growth Stocks and the three key characteristics of Value Stocks.
7. Why are Value Stocks generally considered to be riskier than Growth Stocks?
8. Why are bonds as an asset class generally considered to be less risky than equities as an asset class?
9. What is the essential difference between an Active and a Passive investment management strategy?
10. According to S&P, what is the minimum/lowest grade a bond can have and still be considered as “Investment Grade?” What is the maximum/highest grade a bond can have?
11. Terms given to bonds whose grade is below Investment Grade are “Speculative,” “High ______________,” and “____________ Bonds.”
12. What is the Federal Funds Interest Rate?
13. How does the Federal Reserve control the Federal Funds Interest Rate?
14. What are the two key differences between the Consumer Price Index and the Personal Consumption Expenditure Deflator?15. What tax(es) are Tax Exempt bonds exempt from?
16. The two primary issuers of tax – exempt bonds are __________________ and ____________ governments.
17. How can an investor lose more than the entire amount they have invested in a security? For example, if you invested $10,000 in a stock, and the stock’s price fell to zero is it still possible to lose more than $10,000?
18. Investors who pursue passive investment management strategies usually do so by purchasing ___________________ types of open-end funds and/or ETFs.
19. Provide a precise, concise, and accurate definition of inflation.
20. The first part of the first step in the Process of Investment Management is to _______________________________________________________________________
21. Several widely used measures of risk are ____________________, ____________________ and __________________________________.