Questions from General Investment

Q: Suppose housing prices across the world double. a. Is

Suppose housing prices across the world double. a. Is society any richer for the change? b. Are homeowners wealthier? c. Can you reconcile your answers to (a) and (b)? Is anyone worse off as a result...

Q: Lanni Products is a start-up computer software development firm.

Lanni Products is a start-up computer software development firm. It currently owns computer equipment worth $30,000 and has cash on hand of $20,000 contributed by Lanni’s owners. For each of the follo...

Q: Reconsider Lanni Products from the previous problem. a. Prepare

Reconsider Lanni Products from the previous problem. a. Prepare its balance sheet just after it gets the bank loan. What is the ratio of real assets to total assets? b. Prepare the balance sheet after...

Q: Examine the balance sheet of commercial banks in Table 1.3

Examine the balance sheet of commercial banks in Table 1.3. a. What is the ratio of real assets to total assets? b. What is the ratio of real assets to total assets for nonfinancial firms (Table 1.4)...

Q: Consider Figure 1A, which describes an issue of American gold certificates

Consider Figure 1A, which describes an issue of American gold certificates. a. Is this issue a primary or secondary market transaction? b. Are the certificates primitive or derivative assets?

Q: Discuss the advantages and disadvantages of the following forms of managerial compensation

Discuss the advantages and disadvantages of the following forms of managerial compensation in terms of mitigating agency problems, that is, potential conflicts of interest between managers and shareho...

Q: Oversight by large institutional investors or creditors is one mechanism to reduce

Oversight by large institutional investors or creditors is one mechanism to reduce agency problems. Why don’t individual investors in the firm have the same incentive to keep an eye on management?

Q: Give an example of three financial intermediaries and explain how they act

Give an example of three financial intermediaries and explain how they act as a bridge between small investors and large capital markets or corporations.

Q: In what ways is preferred stock like long-term debt?

In what ways is preferred stock like long-term debt? In what ways is it like equity?

Q: What are some advantages and disadvantages of top-down versus bottom

What are some advantages and disadvantages of top-down versus bottom-up investing styles?