Problem 1. Should investors be concerned about the ethics of the firms in which they invest? Why or why not? If most investors worry about, ethics how will that affect corporate behavior?
Problem 2. The tax treatment of capital gains is a big political issue. Republicans generally favor lower rates on capital gains, while Democrats do not. Why is the issue so politically sensitive?
Problem 3. Stocks and bonds are traded in separate markets, and interest rates are set in bond (debt) markets. Why then does there seem to be an inverse relationship between the movements of stock prices and interest rates (they move in opposite directions)?
Problem 4. Why are bond ratings so important to companies?
Problem 5. Preferred stock is said to be a hybrid security having similarities to both common stock and bonds. Explain the similarities and differences between preferred stock, bonds, and common stock.
Problem 6. How can a stock have a different risk characteristic in and out of a portfolio?
Problem 7. Define IRR and NPV, and discuss which one you find more usable and why?
Problem 8. The money paid to investors is a cost to the company and a return to the investor. Why then arenâ??t component costs equal to investor returns?
Problem 9. What are the advantages and disadvantages of more rather than less financial leverage?
Problem 10. Discuss the idea of stretching payables clearly indicating the pros and cons of the idea?