1. Describe the arguments why banks are sometimes argued to be a “special” class of corporations, and how that matters for considering the implications for the trade-off and pecking order theories of capital structure when applied to banking.

2. Briefly describe some of the main theories of optimal capital structure for corporations generally.

3. What is the value of a consol (perpetuity) that promises to pay $120 per year if the market interest is (a) 3% (b) 6% (c) 12% Be sure to both to show how you calculated your answer and to define all the variables in any mathematical equation you use.