Understanding Business
12th Edition
ISBN: 9781259929434
Author: William Nickels
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter C, Problem 2DCS
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 solutionStudents 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?
In what circumstances might a large corporation sell stock rather than bonds to obtain long-term financing? In what circumstances would it sell bonds rather than stock?
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.4 - Prob. C.4AQCh. C.4 - Prob. 7TP
Ch. C.4 - Prob. 8TPCh. C - If you are interested in pursuing a career in risk...Ch. C - Prob. 2CECh. C - Prob. 3CECh. C - 1. Are you self-insuring your residence and your...Ch. C - Prob. 2CTCh. C - Prob. 3CTCh. C - Prob. 4CTCh. C - 1. List the ways you could reduce risk in your...Ch. C - Prob. 2DCSCh. C - 3. Much of risk management consists of reducing...Ch. C - Prob. 4DCSCh. C - Write a two-page essay on the risks of a terrorist...Ch. C - Prob. 1PPTCh. C - Prob. 2PPTCh. C - Prob. 3PPTCh. C - Prob. 4PPT
Knowledge Booster
Similar questions
- Dicuss some current trends in financial risk management?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_forwardInvestors face risk at various points throughout the investment management process. What are the measures of risk and why are they important? What are three (3) of the risk measures that you have read about?arrow_forward
- Which of the following refers to the rate that bond investors expect to get for investing in a bond?arrow_forwardToday corporations are required to send their stockholders an annual report. Assume that you are a prospective investor trying to decide if you should invest in a specific corporation. What type of information is contained in an annual report that would help you decide if this is the right investment for you?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
- In comparison to investing and financing activities, it is often said that cash from operating activities must be the main source of cash to achieve long term success of the company. Do you agree or disagree with this statement? In your own words, give reason or reasons to support your answer taking into consideration the possible consequences of the cash being provided by any of the other two activities over the long run.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_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_forward
- Assuming 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_forwardIf 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_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 - Standalone book (MindTa...MarketingISBN:9781285193946Author:William M. Pride, Robert J. Hughes, Jack R. KapoorPublisher:Cengage LearningFoundations of Business (MindTap Course List)MarketingISBN:9781337386920Author:William M. Pride, Robert J. Hughes, Jack R. KapoorPublisher:Cengage Learning
Foundations of Business - Standalone book (MindTa...
Marketing
ISBN:9781285193946
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning
Foundations of Business (MindTap Course List)
Marketing
ISBN:9781337386920
Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor
Publisher:Cengage Learning