(c) Suppose the value of the house drops to 700,000 after a year. Assume that mortgage rates and risk free rate remain the same. Repeat the…

(c) Suppose the value of the house drops to 700,000 after a year. Assume that mortgage rates and risk free rate remain the same. Repeat the calculation of (a) and (b). What do you think about Bobs advice now? 2. Some argue that Canadian companies are being taken over by foreign firms because the CEOs of these companies have huge incentive that this will happen. For example, it is common that the CEO receives a big bonus if the firm he/she manages is taken over by another firm. What do you think; are these types of incentives bad for Canadian investors?

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