Business in action

Bovée, Courtland L.; Thill, John V

Chapter 19 Financial Markets and Investment Strategies - all with Video Answers

Educators

Chapter Questions

02:05

Problem 1

If speculators are barred from investing in futures contracts, how will that change Chesapeake's approach to financial management? (Assume that natural gas distributors and other major customers would still be able to engage in futures contracts from a commodity buyer's perspective.)

Norman Atentar

Numerade Educator

Problem 2

Why do you suppose accounting regulations require companies to report paper losses or gains from futures contracts in their financial statements?

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01:22

Problem 3

Should the government continue to allow speculation in natural gas futures as a way to keep developing domestic energy sources, even if it can be proven that speculation contributes to price volatility for producers and customers? Why or why not?

Daniel Cisneros

Numerade Educator

Problem 4

Define market value. How do you differentiate it from intrinsic value?

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01:11

Problem 5

What is the money market?

Jennifer Stoner

Numerade Educator

01:21

Problem 6

What will be the significance of the stock buyback to an investor?

Pragya Ahuja

Numerade Educator

03:10

Problem 7

Why are investors attracted to preferred stocks and common stocks?

Tommy Nguyen

Numerade Educator

Problem 8

Why are commodities futures an important tool for many organizations?

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02:45

Problem 9

If an investor had enough money to diversify adequately through buying individual securities, why might he or she still consider buying mutual funds instead?

Mihir Nayar

Numerade Educator

04:35

Problem 10

As an investor, how do you diversify against risk?

Tommy Nguyen

Numerade Educator

Problem 11

Why may different analysts arrive at different intrinsic values for the same stock?

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02:44

Problem 12

When will investors contact their brokers to buy or sell the securities?

Mihir Nayar

Numerade Educator

01:48

Problem 13

Would it be ethical for you to write in your personal blog about the positive outlook on a stock that you own, without telling readers that you own the stock? Why or why not?

Oluwadamilola Ameobi

Numerade Educator

Problem 14

How will investors maximize the returns of corporate bonds or redeem their corporate bonds?

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01:21

Problem 15

If you are worried that a panicked market might cause the price of one of your stocks to plunge, what type of sell order could you use with your broker to limit your losses?

Pragya Ahuja

Numerade Educator

04:11

Problem 16

If your bank specializes in lending money to home builders, and the forecast for new home sales is predicting a decline in the coming months, what type of financial instrument could you use to protect against builders defaulting on loans because they are unable to sell the houses they’ve built?

Mihir Nayar

Numerade Educator

Problem 17

Review the discussion of mission statements on page 150 in Chapter 7. Suppose you were thinking about purchasing 100 shares of common stock in General Electric. Why might you want to first review the company's mission statement? What would you be looking for in the company's mission statement that could help you decide whether or not to invest?

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Problem 18

Think you might be interested in a job in the securities and commodities industry? This industry has one of the most highly educated and skilled workforces of any industry. View the Securities, Commodities, and Financial Services Sales Agents page at www .bls.gov/ooh to read more about these professions.
What are the licensing and continuing education requirements for securities brokers?

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09:30

Problem 19

Think you might be interested in a job in the securities and commodities industry? This industry has one of the most highly educated and skilled workforces of any industry. View the Securities, Commodities, and Financial Services Sales Agents page at www .bls.gov/ooh to read more about these professions.
What is the typical starting position for many people in the securities industry?

Mihir Nayar

Numerade Educator

01:44

Problem 20

Think you might be interested in a job in the securities and commodities industry? This industry has one of the most highly educated and skilled workforces of any industry. View the Securities, Commodities, and Financial Services Sales Agents page at www .bls.gov/ooh to read more about these professions.
What factors are expected to contribute to the projected long-term growth of this industry?

Tanner Fonjweng

Numerade Educator

02:07

Problem 21

Learning smart investment choices will reduce the risk of losing money in the securities market. Practice your communication skills by developing two sets of questions on an investor of your choice:
Questions you might ask on the profile of the investor.

Lauren Shelton

Numerade Educator

02:26

Problem 22

Learning smart investment choices will reduce the risk of losing money in the securities market. Practice your communication skills by developing two sets of questions on an investor of your choice:
As a newbie in investing, you want to ask the investor on building and protecting personal capital.

Jon Southam

Numerade Educator

02:52

Problem 23

Stock market analysts advise investors (both individuals and institutions) on which stocks to buy, sell, or hold. Changes in their opinions are called upgrades or downgrades, depending on the direction of their outlook. Changing a "hold" recommendation to a "buy" recommendation is an upgrade, for example. Find a stock that has been recently upgraded or downgraded (you can use New Ratings, www.newratings.com, or a similar source), and then perform some research on that company so you can answer the following questions.
Why did the analysts change their rating on this stock? Was it in response to something the company said or did? Is the company performing better or worse than its competitors? Do you think the rating change is fair to the company?

Sheryl Ezze

Numerade Educator

01:11

Problem 24

Stock market analysts advise investors (both individuals and institutions) on which stocks to buy, sell, or hold. Changes in their opinions are called upgrades or downgrades, depending on the direction of their outlook. Changing a "hold" recommendation to a "buy" recommendation is an upgrade, for example. Find a stock that has been recently upgraded or downgraded (you can use New Ratings, www.newratings.com, or a similar source), and then perform some research on that company so you can answer the following questions.
How did the rating change affect the company's stock price?

Prashant Bana

Numerade Educator

02:21

Problem 25

Stock market analysts advise investors (both individuals and institutions) on which stocks to buy, sell, or hold. Changes in their opinions are called upgrades or downgrades, depending on the direction of their outlook. Changing a "hold" recommendation to a "buy" recommendation is an upgrade, for example. Find a stock that has been recently upgraded or downgraded (you can use New Ratings, www.newratings.com, or a similar source), and then perform some research on that company so you can answer the following questions.
How has the company's stock been performing relative to the Dow Jones Industrial Average (DJIA) and S&P 500 indexes?

Nick Johnson

Numerade Educator

01:34

Problem 26

What are two key reasons investors choose index funds over actively managed mutual funds or individual stocks?

Achintya Suden

Numerade Educator

Problem 27

Assume you are trying to save money for a down payment on a house, and your goal is to have enough within three years. The stock market is raging and has been for nearly four years. Should you invest your current savings in the stock market with an eye toward pulling the money back out when you're ready to buy in three years? Why or why not?

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