Questions from General Investment

Q: What is the major difference between the approach of international financial reporting

What is the major difference between the approach of international financial reporting standards versus U.S. GAAP accounting? What are the advantages and disadvantages of each?

Q: If markets are truly efficient, does it matter whether firms engage

If markets are truly efficient, does it matter whether firms engage in earnings management? On the other hand, if firms manage earnings, what does that say about management’s view on efficient markets...

Q: What financial ratios would a credit rating agency such as Moody’s or

What financial ratios would a credit rating agency such as Moody’s or Standard & Poor’s be most interested in? Which ratios would be of most interest to a stock market analyst deciding whether to buy...

Q: We said that options can be used either to scale up or

We said that options can be used either to scale up or reduce overall portfolio risk. What are some examples of risk-increasing and risk-reducing options strategies? Explain each.

Q: In this problem, we derive the put-call parity relationship

In this problem, we derive the put-call parity relationship for European options on stocks that pay dividends before option expiration. For simplicity, assume that the stock makes one dividend payment...

Q: Hatfield Industries is a large manufacturing conglomerate based in the United States

Hatfield Industries is a large manufacturing conglomerate based in the United States with annual sales in excess of $300 million. Hatfield is currently under investigation by the Securities and Exchan...

Q: Jane Joseph, a manager at Computer Science, Inc. (

Jane Joseph, a manager at Computer Science, Inc. (CSI), received 10,000 shares of company stock as part of her compensation package. The stock currently sells at $40 a share. She would like to defer s...

Q: Some agricultural price support systems have guaranteed farmers a minimum price for

Some agricultural price support systems have guaranteed farmers a minimum price for their output. Describe the program provisions as an option. What is the asset? The exercise price?

Q: In what ways is owning a corporate bond similar to writing a

In what ways is owning a corporate bond similar to writing a put option? A call option?

Q: What are the trade-offs facing an investor who is considering

What are the trade-offs facing an investor who is considering buying a put option on an existing portfolio?