Question 1
How has the understanding of financial markets evolved over the last 60 years? Reflect using the material covered in the module.
[25 marks]
Question 2
What is Rational Expectation? How are “rational” economic agents expected to behave? What is Bounded Rationality? As an outcome, how does bounded rationality differ from rational expectations?
[25 marks]
Question 3
What are the three broad categories of fund types? Provide examples for each category.
[25 marks]
Question 4
What are the order-driven and quote-driven markets? What are the differences between the two? Discuss their relative strengths and weaknesses.
[25 marks]
Sample Solution