Understanding Business
11th Edition
ISBN: 9780078023163
Author: William G Nickels, James McHugh, Susan McHugh
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter C, Problem 2DWS
Summary Introduction
To discuss: The comparison and the relation between the risks involved while investing in stocks as compared to invest in bonds for a longer time period.
Introduction:
Risk refers to the probability of loss in a particular type of event.
Insurance on the contrary refers to the guarantee to an individual or company against the loss or damage caused due to various factors.
Speculative risks refer to the risks that contain the probability of both the conditions that is the chance of
Bonds are the debt securities payable by the company as a promise to the bond holder.
Share refers to the security that shows an ownership of the individual up to the amount of shares in the company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Write a 500 word essay on the importance of risk management in financial insituttion
It's a given that expenses impact a business’s profit. How would an entrepreneur navigate business risk by determining the fixed and variable expenses the business will incur?
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"!
Chapter C Solutions
Understanding Business
Ch. C.1 - Prob. C.1AQCh. C.2 - Prob. C.2AQCh. C.2 - Why are companies more aware now of the need to...Ch. C.2 - Prob. 2TPCh. C.2 - What are the four major options for handling risk?Ch. C.2 - Prob. 4TPCh. C.3 - Prob. 5TPCh. C.3 - What is the rule of indemnity?Ch. C.3 - Prob. C.3AQCh. C.4 - Prob. 7TP
Ch. C.4 - Prob. 8TPCh. C - 1. Are you self-insuring your residence and your...Ch. C - Prob. 2CTCh. C - Prob. 3CTCh. C - Prob. 4CTCh. C - Prob. 1DWSCh. C - Prob. 2DWSCh. C - 3. Much of risk management consists of reducing...Ch. C - Prob. 4DWSCh. C - Write a two-page essay on the risks of a terrorist...Ch. C - Prob. 1TITCh. C - Prob. 2TITCh. C - Prob. 3TITCh. C - Prob. 4TITCh. C - Prob. 5TIT
Knowledge Booster
Similar questions
- Dicuss some current trends in financial risk management?arrow_forwardGiven that you have excess funds, where will you invest the funds and why? (The choices are time deposits, corporate bonds and stocks. Consider risk return trade off in your investment decision)arrow_forwardClass book: Fundamentals of Corporate Finance by Brealey, Myers, and Marcus Cost of Capital. Why do financial managers refer to the opportunity cost of capital? How would you find the opportunity cost of capital for a safe investment?arrow_forward
- Which of the following refers to the rate that bond investors expect to get for investing in a bond?arrow_forwardPerform the task below. Suppose you have savings in the bank that you want to invest in stocks and bonds instead of setting up in a new business. Write one to two paragraphs discussing what method you can use to make the investment and explain the reasons for your decision.arrow_forwardImagine you were to start your own business in Kleve, manufacturing small but smart household robots. Assume your business has developed a product currently superior to any competition. You have secured an initial manufacturing facility in Kleve-Kellen, with enough space to expand. However, the manufacturing process is complex. You have already convinced a number of very wealthy investors to meet your financing needs of the next two to three years, so there is no pressing need for going public yet. 1. Why would your business "go global" early on? And how would your startup business be positioned in a global market? 2. Please propose a likely sequence of steps, that your business has to take to achieve this sort of global ambition. Don't just name the steps but also elaborate on business resources you consider essential. 3. Please identify the three biggest challenges you expect to meet in the process of "going global"! Please be as specific as you can be, the more your analysis…arrow_forward
- If you were to add a capital investment of $500,000 and a loan amount for $250,000. Can you provide the statements including those?arrow_forwardOriginally attributed to A Tribe Called Quest, American rapper MeekMill has stated “Scared money don’t make no money”. How does this reflectthe idea of the risk premium in investment?arrow_forwardAssuming you are an entrepreneur, the first 4 years of operations went smooth and income is flowing, but on the year five of your business you realized, cash flowing in the business aren’t enough already to meet the business short term obligations, what risk you did not manage properly. Choose from the following Economical Risk Competitive Risk Financial Risk Technological Riskarrow_forward
- With the success of your business, you are ready to establish a storefront. However, you do not have the necessary funds to acquire the building and pay the necessary rent. You are considering borrowing a short-term note from a bank for $130,000. Required part B. Research the lending practices of a local bank. Determine the interest rate charged for a $130,000 loan. What collateral does the bank require to secure the loan? Determine your overall payback amount if you were to repay the loan in less than one year. Choose either a payback with periodic payments or all at the end of the loan term and compare the outcomes. After conducting your research, would you consider borrowing the money? What positive and negative outcomes accompany borrowing the money? Instead of borrowing on a short-term note, you are thinking on borrowing $130,000 and signed a 5-year, note payable with a 12% interest rate. Each annual payment is in the amount of $34,920 and payment is due each Dec. 31. What is…arrow_forward. When choosing between long and short term borrowing, which of the following is not usually a relevant consideration for a company? Any costs associated with refinancing, such as arrangement fees and penalties. Likely interest rate movements. Matching the term of the loan with the nature of the assets being financed. The principal agent problem.arrow_forwardWrite an expository essay regarding the importance of the time value of money in making sound financial decisions, cite examples. After reading the material provided, you should cover as well the different reasons why time value of money is significant in finance.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Foundations of Business (MindTap Course List)MarketingISBN:9781337386920Author:William M. Pride, Robert J. Hughes, Jack R. KapoorPublisher:Cengage Learning
Foundations of Business - Standalone book (MindTa...MarketingISBN:9781285193946Author:William M. Pride, Robert J. Hughes, Jack R. KapoorPublisher:Cengage Learning
Foundations of Business (MindTap Course List)
Marketing
ISBN:9781337386920
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning
Foundations of Business - Standalone book (MindTa...
Marketing
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning