Stock market, Corporate Finance

Assignment Help:

Let there be a village with two farmers, Tommy and Freddy. Tommy grows rice and Freddy grows cactus. When the weather is dry then Tommy's investment in cactus has an above average return and Freddy's investment in rice has a below average return. When there is a lot of rain the reverse is true: the cactus has below average return and the rice has above average return.

Suppose that a now a mini 'stock market' is introduced into this village where Tommy and Freddy can trade shares of their investment before the weather is decided. Depending on their risk-preferences will the introduction of this mini-stock market improve the welfare or both parties? Explain graphically or with a simple numerical example.


Related Discussions:- Stock market

Equal division - forecasting methods, Equal division divides M equally over...

Equal division divides M equally over the SKUs in N. Thus, There are two main reasons for including this simplistic approach. First, the approach is used by the case compan

IRR, Hello, can you help me to calculate the Discount rate and Internal Rat...

Hello, can you help me to calculate the Discount rate and Internal Rate of Return?

Replacement decisions , Your boss is trying to figure out when to replace a...

Your boss is trying to figure out when to replace an important piece of machinery in your main production facility.  The Siemens NR550, costs $5.45 million brand new and generally

Calculate the cost of capital for the project, Calculate the cost of capita...

Calculate the cost of capital for the project? (a) Describe how the weighted cost of capital for an MNC can be calculated? (b) Assume that a foreign project has a beta of 0.

INVESTMENT DECISION, You are a ceo of a sotware firm that has limited acces...

You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be

Touring enterprises, what is the major value of the weighted cost of capita...

what is the major value of the weighted cost of capital calculation for the firm?

Risk, Risk means balancing between profitability and long-term growth. If a...

Risk means balancing between profitability and long-term growth. If a company looks at short-term goals, it may go in for profit maximization but it will find it difficult to susta

Portfolio duration, how to calculate duration of a portfolio by using the a...

how to calculate duration of a portfolio by using the average maturity, average coupon rate and average yield of maturity?

Forecasting demand, The problem considered is that of forecasting demand fo...

The problem considered is that of forecasting demand for single-period products before the period starts. We study this problem for the case of a mail order apparel company that ne

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd