The questions are:1. Scenario: A friend of mine Bill told me that the value of outstanding bonds changes whenever the going rate of interest changes. He expanded on his comments by saying that short-term interest rates are more volatile than long-term interest rates. Therefore short-term bond prices are more sensitive to interest rates than long-term bond prices. Is Bill right?The second part of the question is this: Why is good old Bill right or wrong?2. Scenario: Bob and I are looking at AT&T’s stock because we are both very wealthy stock market investors. We usually spend summers together in the Swiss Alps (at his expense?you see, he likes me and we are pals). We agree on the expected dividend AT&T will be paying. For your information, Bob has come up with an ironclad formula for projecting future dividend growth. He has franchised this information and made over $20 million on the formula in the last four years. We also agree on the level of risk for the stock (I had to buy this formula from him also). I hold my stock for two years. Bob holds his stocks for 10 years. The question is, should we or should we not pay the same price for the stock? Why or why not? (I’ve just got to make more than he does this year.)3.Scenario: A friend of mine Randy called me the other night with what he thought was a great riddle for me. He told me that if I get it right, he will send a case of fresh orange juice to me. He said two mutually exclusive projects are being considered. First, a short-term project might have a higher ranking under the NP criterion if the cost of capital is high. However, and here is where he lost me, a long-term project might be better if the cost of capital is low. Why is that?He asked me if changes in the cost of capital would ever create a change in the IRR ranking of these two projects. What do you say?4.Scenario:I am really upset! Here’s the deal?we have all heard of agency theory or agency costs, haven’t we? Well, a very large manufacturing company we will leave un-named is doing something that makes me uncomfortable and upset. They have the major share of the world market for variable widgets.Current management has been in control of the company for over 12 years and I am thinking they are doing things that will hurt shareholders and also the earnings of the company. So here is my problem: What activities should we look for in order to determine if an entrenched management is taking actions that would harm us as shareholders? Also, how will these actions harm the stockholders? Finally what can be done to insure that we will have a greatly reduced probability of agency issues with the management? Basically, how should upper management be compensated to make sure they do the right things?5.Scenario: I heard something on the radio the other day and I am not clear on what it meant. The announcer said one type of leverage affects both EBIT and EPS. Then he went on to say the other type of leverage affects only EPS. I really need some help on this one. What do you think he meant by each of his statements?