You should make original posts discussing any three of the following statements.

Question

You should make original posts discussing any three of the following statements. You are also required to post at least three responses to other student’s posts. Please note that this is a minimum requirement. Your grade will be a function of your effort. Please answer any three question. Thank you

1. If you were able to put together a portfolio that completely eliminated all risk, what return would you expect to earn and why?

2. If someone called you and told you that he/she could guarantee you high returns on your investments with little or no risk, what would you do and why.

3. When there is uncertainty in the marketplace, what happens to yield spreads and why?

4. Your grandfather has great faith in bonds and has heard about some “high yield bonds” that are available. He has asked you for your opinion. What advice will you give him?

5. Why do venture capital companies often choose preferred stock for their equity position?

6. Explain how supply and demand influences the price of common stock.

7. A company has a vacant building on its property that is completely depreciated and it proposes to use it for an expansion project. What cost if any, should it use for that building?

8. How does the use of accelerated depreciation encourage investment?

Explanation / Answer

5. Why do venture capital companies often choose preferred stock for their equity position?

First understand preferred stock is a stock in which holder have preferential rights to receive fixed dividend and proceeds of liquidation over that of ordinary share/common stock.

Most Venture capital companies often choose preferred stock for their equity position as it gives VCs special preferences and protections.

6. Explain how supply and demand influences the price of common stock.

8. How does the use of accelerated depreciation encourage investment?

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