Discuss the advantages and disadvantages of common stock ownership, relative to other investment alternatives : Corporate Finance, Assignment, Malaysia

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Assignment Type

Individual Assignment

Subject

Corporate Finance

Uploaded by Malaysia Assignment Help

Date

09/21/2024

Topic 2 Exercise

Question 1: Discuss the advantages and disadvantages of common stock ownership, relative to other investment alternatives.

Question 2: List at least three listing requirements for the Kuala Lumpur Stock Exchange.

Question 3: The Dow Jones Industrial Average and the New York Stock Exchange Index have unique characteristics. Discuss how these indices are calculated and any problems/advantages associated with the specific indices.

Topic 3 Exercise

Question 1: Discuss why common stocks must earn a risk premium.

Question 2: Discuss some reasons why an investor with a long time horizon might choose to invest in common stocks, even though they have historically been riskier than government bonds or T-bills.

Question 3: Discuss the historical distributions of each of the following in terms of their average return and the dispersion of their returns: U.S. small company stocks, U.S. large company stocks, and U.S. long-term government bonds. Would any of these investments cause a loss in purchasing power during a 1926-2009 holding period?

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Topic 5 Exercise

Question 1: Could the use of sensitivity analysis and scenario analysis by banks, mortgage companies, construction conglomerates, and home buyers have helped to mitigate the Sub-Prime crisis of the early part of this century?

Question 2: Numerically, the NPV calculations seem quite straightforward. To what extent do you think the accuracy of the NPV depends on the judgment and skill of the managers involved in the decision?

Question 3: James King, states that his firm uses the equity cost of capital, or the return on the funds the firm invests, to determine the rate that a project must achieve, and that Limitless has a predetermined rate for each market, adjusted for the type of project and other factors. What kinds of adjustments do you think his firm makes and what does he mean by the equity cost of capital?

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