What company of the next couples of companies expected to be

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1. An investor has invested all his money in shares of a gold mine. What reduce portfolio risk: diversify by buying shares in silver mining shares or car factories? Why?

2. Imagine IBM lab late at night. A scientist is talking with a colleague. "He's right, Watson, I recognize that this experiment will consume the entire budget for this year. I do not know what will happen if we fail. But if this hitrio and magnesium alloy is superconducting, patents will be worth millions of dollars." Would this be a good investment for IBM? It is impossible to say. But from the point of view of investors, it is not risky. Explain why.

3. What company of the next couples of companies expected to be more exposed to macroeconomic risks?

a. A luxurious restaurant in Manhattan or well established franchise of Burger Queen?

b. A paint factory selling in small hardware shop and DIY or another selling large amount of paint to Ford, GM and Chrysler?

For the above, make a critical analysis based on the theory of risks and present numerical examples, graphs, or real specific examples.

4. In the financial capital budgeting analysis are considered Net Present Value, Internal Rate of Return-TIR, Opportunity Cost, Cost Benefit Analysis, Period of payback, etc. From your point of view, which of all these is the best indicator for making investment decisions?

Reference no: EM13839037

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