Questions from Financial Management

Q: Describe the ways in which international business has changed over the last

Describe the ways in which international business has changed over the last 60 years. Include the concepts of an MNC and the different types of foreign investment.

Q: A British importer has to pay for American goods, but the

A British importer has to pay for American goods, but the exchange rate is temporarily very unfavorable from the British perspective. Describe the Eurodollar market and tell how it might help the imp...

Q: Define and discuss the idea of separating risk into two parts.

Define and discuss the idea of separating risk into two parts. Describe each part carefully.

Q: Describe the goal of a portfolio owner in terms of risk and

Describe the goal of a portfolio owner in terms of risk and return. How does he or she evaluate the risk characteristics of stocks being considered for addition to the portfolio?

Q: Discuss lowering portfolio risk through diversification. Consider a. Unsystematic

Discuss lowering portfolio risk through diversification. Consider a. Unsystematic (business-specific) risk. b. Systematic (market) risk.

Q: Define risk aversion in words without reference to probability distributions. If

Define risk aversion in words without reference to probability distributions. If people are risk averse, why are lotteries so popular? Why are trips to Las Vegas popular? (Hint: Think in terms of t...

Q: The following definition applies to both investing and gambling: Putting money

The following definition applies to both investing and gambling: Putting money at risk in the hope of earning more money. In spite of this similarity, society has very different moral views of the tw...

Q: Why does it make sense to think of the return on a

Why does it make sense to think of the return on a stock investment as a random variable? Does it make sense to think of the return on a bond investment that way? How about an investment in a saving...

Q: In everyday language, risk means the probability of something bad happening

In everyday language, risk means the probability of something bad happening. Risk in finance, however, is defined as the variance of the probability distribution of returns. a. Why do these definitio...

Q: Analyze the shape of the probability distribution for a high-risk

Analyze the shape of the probability distribution for a high-risk stock versus that of a low risk stock. (Hint: Think in terms of where the area under the curve lies.)