Problem
i. What are the potential issues with a strategy of investing in a few stocks and bonds instead of a stock or bond mutual fund of ETF? What are a few potential solutions to these issues?
ii. Discuss the beta of a stock and how the beta is related to the risk of the stock.
iii. What are the main differences between Mutual Funds and ETF's? Under what circumstances should you invest in one or the other, or both?
iv. Why should you have a portion of your long term investments in real estate? Should you include the net equity in your home and vacation property as a long term retirement investment?
v. For 4 of the variables needed to value a company using the APV or WACC methods, discuss the challenges in determining an accurate number for the variable and at least one potential solution to each challenge.
vi. It is often stated by economists that inflation can destroy the long-term value of companies. In a 1-2 page ans, describe exactly how inflation does this. Use your case study as an example to show the destruction of value. Also, under what circumstances, or unique characteristics of firms position the firm to perform well in an inflationary environment? Finally, if a company's earnings grow at the same rate as inflation, is that sufficient to fend off inflation's value destroying effects?