What are the risks and rewards of investing in the stock market as compared to the bond market? b. “Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.
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a. What are the risks and rewards of investing in the stock market as compared to the bond market?
b. “Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.
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- How does the equity method discourage the manipulation of net income by investors?1. How do you think today's low interest rate environment is impacting the time value of money? How might this change the value of an asset or liability? 2. What is the relationship between the concepts of net present value and shareholder wealth maximization? 3. Offer some reasons that the intrinsic value that you might calculate with the methodologies learned might yield a price different than what the stock trades at in the stock market. You can reference any method of valuation models in offering thoughts on why there might be differences between intrinsic and market values.What does it mean to say that an investor is risk-averse? Select one: a. The greater the return from an investment, the greater the risk demanded by the investor. b. The investor would invest in government bonds but would never invest in the share market. c. The investor will avoid risk at all costs. d. None of the above. Clear my choice
- A. Briefly explain the problem of moral hazard in: (i) Equity financing (ii) Debt financingB. What is the adverse selection problem in financial markets and how can it be solved?Because corporations do not actually raise any funds in markets, they are less important to the economy than primary markets. CommentWhich of the following is a constrain for the investors? a. The mentality tontake the high risk b. Tax exemption on security trading c. Getting high income d. Liquidity needs
- With a decline in the number of publicly traded companies and the growth of other investment vehicles such as private equities, hedge funds, junk bonds, etc., some people claim that the investment world is becoming more and more unfair towards smaller investors since most of the alternative investment vehicles are only available to institutions or high-net-worth individuals. Do you agree or disagree with this claim?Was the creation of the subprime issue good for the stock market or bad (trick question?)? Good for the ECONOMY or bad? Elaborate as to why or why not.2. If a bank wants to avoid volatility in its regulatory capital, which investment classification would be the most desirable, and which investment classification would be the least desirable? Does your answer differ depending on whether the bank is large or small? In other words, do large and small banks differ on how they can categorize unrealized gains/losses on AFS debt?
- 1)How does a profitable capital market help reduce the prices of goods and services? 2) The SEC attempts to protect investors who purchase newly issued securities by requiring issuers to provide relevant financial information to potential investors. The SEC does not provide an opinion on the actual value of the securities.Therefore, a reckless investor could pay too much for some shares and consequently lose a lot. Do you think the SEC should, as part of every new offering of stocks or bonds, give investors an opinion on the appropriate value of the securities being offered? Explain.“Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.How does a cost-efficient capital market help reduce the prices of goods and services? Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital. Is an initial public offering an example of a primary or a secondary market transaction? Indicate whether the following instruments are examples of money market or capital market securities. a. US Treasury bills b. Long-term corporate bonds c. Common stocks d. Preferred stocks e. Dealer commercial paper Briefly explain what is meant by the term efficiency continuum.