1. Behavioral finance Many commentators have blamed the subprime crisis on “irrational exuberance.” What is your view? Explain briefly.
2. Terminology* Fill in the blanks, using the following terms: floating rate, common stock, convertible, subordinated, preferred stock, senior, warrant.
a. If a lender ranks behind the firm’s general creditors in the event of default, his or her loan is said to be ______ .
b. Interest on many bank loans is based on a of ______ interest.
c. A(n) ______ bond can be exchanged for shares of the issuing corporation.
d. A(n) ______ gives its owner the right to buy shares in the issuing company at a predetermined price.
e. Dividends on cannot be paid unless the firm has also paid any dividends on ______ its .