Business Essentials (11th Edition)
11th Edition
ISBN: 9780134129969
Author: Ronald J. Ebert, Ricky W. Griffin
Publisher: PEARSON
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Chapter 17, Problem 17.6QA
Summary Introduction
To research: The stocks online and find the reason for the fluctuation in price as well as determine whether the higher priced stocks are better than the lower priced stocks, and determine the factors considered for purchasing the stocks.
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Now that we've looked at the operations of the stock market, let's review how well we can predict the future. If you had an aunt who offered to buy you 50 shares of any stock you desired, which company would you choose, and why would you select them? Part of your post should address 1. the current price and 2. if you intend to hold on to the stock for a long time or see it as a short term investment.
While I won't be in touch to remind you, write down the particulars of stock somewhere and check it out around the same time next year... see how you did "in the market"!
Choose a publicly-traded company, and then estimate your company's common stock price, using one of the valuation models presented in the assigned readings or outside readings. (If you want to analyze a dividend paying company, you can find a robust list at http://www.dividenddetective.com/big_dividend_list.htm.)
Defend your choice of model, and explain why it is appropriate to use for your company's stock. Be sure to explain how you arrived at any assumptions regarding values used in the model. Determine whether your company appears to be correctly valued, overvalued, or undervalued based on your company's stock current price and model result. Check Yahoo Finance for current stock prices. Finally, explain why your company's stock appears to be over-, under-, or correctly valued.
What are the implications of unequally distributed information for investors and the management of a firm?
Chapter 17 Solutions
Business Essentials (11th Edition)
Ch. 17 - Prob. 17.1QRCh. 17 - Prob. 17.2QRCh. 17 - Prob. 17.3QRCh. 17 - Prob. 17.4QRCh. 17 - Prob. 17.5QRCh. 17 - Prob. 17.6QACh. 17 - Prob. 17.7QACh. 17 - Prob. 17.8QACh. 17 - Prob. 17.11ACh. 17 - Prob. 17.12A
Ch. 17 - Prob. 17.13ACh. 17 - Prob. 17.14ACh. 17 - Prob. 17.15ACh. 17 - Prob. 17.20EECh. 17 - Prob. 17.21EECh. 17 - Prob. 17.22EECh. 17 - Prob. 17.23CCh. 17 - Prob. 17.24CCh. 17 - Prob. 17.25CCh. 17 - Prob. 17.26CCh. 17 - Prob. 17.27CCh. 17 - Prob. 17.28CCh. 17 - Prob. 17.29CCh. 17 - Prob. 17.30CCh. 17 - Prob. 17.31C
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- Read the article “How To Overcome The Fear Of Investing In The Stock Market” on the College Investor website and answer the following questions. Please provide explanations for your answers. Do you fear investing? If yes or no, explain why. Can an effective asset allocation strategy assist in overcoming the fear of investing? In your opinion, which is worse – not investing at all or investing close to retirement?arrow_forwardUnsystematic risk can be reduced by buying:a. Stock in less interest rate sensitive companies.b. Stock of companies in the same industry.c. Stocks in numerous unrelated industries.d. Stocks in natural resource companiesarrow_forwardThere is a debate on conflicts of interest that exist between certain bond ratings agencies, such as Moody’s and Standard & Poor’s, and the corporation’s bonds that they rate. There is also a debate on conflicts of interest that exist between financial firms, such as Goldman Sachs and J.P. Morgan, and the corporation’s equity that rate. Discuss strategies that would reduce these conflicts of interest.arrow_forward
- A small catering business in your city is for sale for $250,000. The company specializes in business luncheons and small social events. The owner has been running the business for four years from her home but is expecting her first child and wants to sell. You will need outside investors to help you purchase the business. Develop questions to ask the owner about the business and its prospects, as well as a list of documents you want to see. What other types of information would you need before making a decision to buy this company? Summarize your findings in a memo to a potential investor that explains the appeal of the business for you and how you plan to investigate the feasibility of the purchase.arrow_forwardWhat are the implications of the joint hypothesis problem for empirical tests of the informational efficiency of financial markets?arrow_forwardAn investor is worried that his/her investment price movement is veryvolatile. What type of trader is she/he? Explain your answer.arrow_forward
- Corporate bonds often have higher yields than government bonds to compensate investors for which additional risk? A Default B ESG C Market D Liquidityarrow_forwardaccording to the theory of reflexivity financial markets: A. actively affect the social and institutional reality underlying financial markets. B. Neutrally reflect the intrinsic values of securities C. passively channel funds from lenders to borrowersarrow_forwardIf the weak form of efficient markets holds, then Both B and C Both A and B Stock prices reflect all information contained in past prices. Technical Analysis is useful Stock prices reflect all information contained in past prices.arrow_forward
- Is it advisable for investors to make decisions solelybased the company’s EBITDA? Why?arrow_forwardwhat should you consider when deciding which mutual funds to buy?arrow_forwardAn investor is considering putting their investment dollars into real estate. They ask for your advice about the pros and cons of real estate as an investment. Which of these is one of the disadvantages you would tell them about? The rate of return on most real estate investments is lower than other investment options It's difficult to find a lender willing to give you a loan to purchase real estate It can be hard to access your investment capital quickly. The market fluctuates wildly on a day-to-day basis.arrow_forward
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