Eric is interested to invest in shares. However, he realizes there would be a risk if he invests in only similar industry. Identify and explain the concept that Eric should apply to encounter this risk.
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- Kelley wants to purchase shares in Classic Kars, Inc., but is torn between buying shares of common stock or shares of preferred stock. What should he consider before determining the type of share he should purchase?Shamir is a bondholder of Sentiasa Ceria Bhd. His friend, Amran has purchase a stock in the same company. Discuss why Shamir and Amran might have different perception when it comes to riskiness of projects that Sentiasa Ceria Bhd chooses.Stephen's friend Jane is trying to decide if she should purchase stock from a company that makes a good product that is appropriately priced by the market. Stephen has a diversified portfolio however Jane does not. Based on the relationship between risk and return should Stephen be willing to pay a higher price for the stock than Jane? Explain
- A stockbroker advises a client to “buy preferred stock. . . . With that type of stock, . . . [you] will never have to worry about losing the dividends.” Is thebroker correct?If you were investing in the stock market today, how would your decisions be affected based on what you learned over the years? If you already invest in the stock market, will you start doing anything differently?what will you suggest to a relative, to invest in a low risk outlet such as the money market or to a high risk outlet such as equity?
- Assume that Mr James wants to invest his savings in less risky financial instruments with minimum rate of return per annum. Therefore he invested his savings in some financial assets in which returns will be guarantee even if the company will be in losses also. The financial instruments purchased by Mr James is known as: O a. Preference shares b. Equity shares c. Partnership shares d. DebenturesAssume that Mr James wants to invest his savings in less risky financial instruments with a minimum rate of return per annum . Therefore he invested his savings in some financial assets in which returns will be guarantee even if the company will be in losses also . The financial instruments purchased by Mr James is known as : a . Debentures b . Equity shares Oc . Preference shares d . Partnership sharesRonaldo is the CFO of Manchester, Inc. The company currently has an investment portfolio that includes a variety of both debt and equity securities. Ronaldo’s bonus is based on Manchester meeting certain earnings projections. How can Ronaldo take advantage of the classification of investment securities to improve his chances of receiving his bonus? Discuss the ethical and legal implications.
- Which of the following may be considered your indirect investment? Investments made by a fund that you hold, where you have no control or ability to influence the fund's investment decisions Stocks that your dependent child received as a birthday gift An ownership stake that you hold in your family business Shares in a public company that were purchased by your spouse Shares in a public company that were purchased by your spouseWhen purchasing shares is it preferrable to purchase in anticipation of appreciation or of dividends? Do certain investors have different needs?Jill Davis tells her broker that she does not want to sell her stocks that are below the price she paid for them. She believes that if she just holds on to them a little longer they will recover, at which time she will sell them. Which behavioral characteristic is the basis for Davis’s decision making?a. Loss aversion.b. Conservatism.c. Representativeness.