Fixed Income

During the Facebook IPO the overall stock market was very volatile (S&P 500 index value fluctuated a lot). This was very beneficial to the valuation and price discovery process during the IPO.   Group of answer choices   True   False

The Financial Sector-End of Chapter Problem You are discussing buying stocks with a friend and mention that you want to buy a few shares of Amazon stock. Your friend says that's a terrible idea because Amazon has never paid dividends to its shareholders so you would never receive any of Amazon's profits or make any money off the stock. What might you say to your friend to defend your desire to purchase a few shares of Amazon stock? You explain that the price of Amazon stock will always have to rise because dividends are not paid. the fundamental value of the stock is not determined by the dividends paid, but by the present value of future profits. purchasing stock is better than purchasing bonds because stockholders are the first in line to get paid if the company goes bust. buying a few shares will give you a significant say in how Amazon will be run in the future.

Which is NOT an IPO puzzle? Huge price spikes in the first couple trading days Underperformance in the long run Extreme IPO market cycles Hiring underwriters to do the job

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Typically, people buy shares of stock in the expectation that the stock's price will increase, but it is also possible to make money by correctly anticipating that a stock's price will decline -- "selling short." Assume that you think that Volkswagen (VW) stock is going to decline in price over the next few months because of continuing uncertainty about why the company cheated on its emissions testing. A share of VW stock is currently selling for $50. You arrange to borrow 100 shares of VW stock for three months for a price of $1 per share. Three months later, sure enough, VW stock is selling for only $40 per share. You then purchase 100 shares at $40 each and return the 100 shares of VW stock that you borrowed. How much money did you make or lose? Earned $900 O Lost $1,100 Lost $1,000 Earned $1,100 Earned $1,000.

Which one of the following expressions about stocks is wrong? a.The estimated dividend payment and price of a stock that we get from the internet are just an educated guess: the average of analyst estimates. B. Shorting stocks are restricted in some market because of extremely high risk of shorting. C It is common for young companies typically do not pay dividends

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**True/false questions ** a) APR interest includes compounding effect. b) Most M&As in U.S. history were friendly, and the payment method was often cash. c) Stock A has a higher expected return and lower variance than stock B. Including B in an efficient portfolio is questioned. d) In IPO pricing, dual - class stock tends to be undervalued compared to single - class stock. e) The value of a company is not independent of its structure due to the tax shield

The PE ratio is useful because it measures: O A. how much a stock is expected to earn. O B. how much earnings are going to grow. O C. how much an investor is willing to pay for $1 of earnings. « » AMoving to another question will save this response. co search 10:14 PM 10/18/2021

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Which is NOT a potential explanation for IPO short-term underpricing? Underwriters can unload more shares at a lower price. High returns on the first trading day attracts investors. Due to asymmetric information, firms need to lower price so outside investors are willing to invest. Firms want to raise more capital

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1. How come the stock exchange price crumbled so much in a few days? What has happened in these companies exactly? (Enron, Lehman, Satyam computers)

What do you think of the price of Facebook's shares in early 2012? What sorts of performance targets would the management need to achieve to maintain the price?

J Ĉ If the public expects a corporation to lose $5 per share this quarter and it actually loses $4, which is still the largest loss in the history of the company, what does the efficient market hypothesis predict will happen to the price of the stock when the $4 loss is announced?

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Which of the following is an example of unsystematic risk? XYZ corp stock price fell when the news of a drop in GDP was released.  When the new employment numbers showed the economy is creating more jobs, the stock market rose.  ABC Manufacturing stock price falls upon the announcement that they have a parts shortage from their suppliers When news of strong consumer demand was released, proctor and gamble stock price rose The stock market rose at the announcement of higher GDP numbers

Hi can you help me with these two problem down below   1. Suppose you observe the following situation:   State of Economy Probability of State of Economy Return of Stock A Return of Stock B Bust .15 -.08 -.10 Normal .60 .11 .09 Boom .25 .30 .27   Calculate the expected return on each stock.   2.  Indicate whether the following events might cause stocks in general to change price, and whether they might cause Big Widget Corp.’s stock to change price: The government announces that inflation unexpectedly jumped by 2 percent last month. Big Widget’s quarterly earnings report, just issued, generally fell in line with analysts’ expectations. The government reports that economic growth last year was at 3 percent, which generally agreed with most economists’ forecasts. The directors of Big Widget die in a plane crash. Congress approves changes to the tax code that will decreases the top marginal corporate tax rate. The legislation had been debated…

Stock prices and intrinsic values Benjamin Graham, the father of value investing, once said, “In the short run, the market is a voting machine, but in the long run, the market is a weighing machine.” In this quote, Benjamin Graham was referring to the key difference between the “price” and the “value” of a security.   In November 2006, Citigroup’s stock (NYSE: C) was trading at $49.59. Following the credit crisis of 2007–2008 and by the end of October 2009, Citigroup’s stock price had plummeted to $4.27. Several banks went under, and others saw their stock prices lose more than 60% of their value.   Based on your understanding of stock prices and intrinsic values, which of the following statements is true? A stock’s intrinsic value is based on the fundamental cash flows and the company’s risk. OR The intrinsic value of a stock is based only on the perceived risk in the company.     You can estimate the value of a company’s stock using models such as the…

Stock prices and intrinsic values Benjamin Graham, the father of value investing, once said, “In the short run, the market is a voting machine, but in the long run, the market is a weighing machine.” In this quote, Benjamin Graham was referring to the key difference between the “price” and the “value” of a security.   In November 2006, Citigroup’s stock (NYSE: C) was trading at $49.59. Following the credit crisis of 2007–2008 and by the end of October 2009, Citigroup’s stock price had plummeted to $4.27. Several banks went under, and others saw their stock prices lose more than 60% of their value.   Q1. Based on your understanding of stock prices and intrinsic values, which of the following statements is true?   a. A stock’s intrinsic value is based only on the perceived risk of a stock.   b. A stock’s intrinsic value is based on true investor returns.   Q2. You can estimate the value of a company’s stock using models such as the corporate valuation model…