1. Compare the liquidity of an investment in raw land with that of an investment in common stock. Be specific as to why and how the liquidity differs. 2. Briefly discuss why international diversification reduces portfolio risk. Specifically, why would you expect low correlation in the rates of return for domestic and foreign securities? 3. Explain each of the following FOUR (4) considerations when investing surplus cash: Risk, Maturity, Liquidity, Return. 4. What are the advantages of investing in the common stock rather than the corporate bonds of a company? Compare the certainty of returns for a bond with those for a common stock.

1. Compare the liquidity of an investment in raw land with that of an investment in common stock. Be specific as to why and how the liquidity differs. 2. Briefly discuss why international diversification reduces portfolio risk. Specifically, why would you expect low correlation in the rates of return for domestic and foreign securities? 3. Explain each of the following FOUR (4) considerations when investing surplus cash: Risk, Maturity, Liquidity, Return. 4. What are the advantages of investing in the common stock rather than the corporate bonds of a company? Compare the certainty of returns for a bond with those for a common stock.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 11QTD

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A fundamental analyst uses the discounted cashflow method to value firms, and has a short-term perspective on purchasing stocks and bonds. True or false?
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