Discussion 1: Risk and Return
A. Take a position on the following statement: “The stand-alone risk of an individual corporate project may be quite high. However, the project’s true risk may be much lower when viewed in the context of its effect on stockholders’ risk.” Provide two (2) examples that support your response.
B. What are at least two (2) critical ways in which anchoring bias and herding behavior contribute to market bubbles? Provide real examples to support your response.
Discussion 2: Valuation of Stocks and Corporations
A. Use the Internet to research instances where a company’s stock prices are affected more by long-term or short-term performance to answer the following: are stock prices are affected more by long-term or short-term performance? Provide one or more examples that support your conclusion.
B. Using the company that you have selected for the Assignment No. 1 Financial Research Project due at the end of Week 10, value a share of the company’s stock using the constant growth dividend discount model or a discounted free cash flow model and compare that value to the current trading price of a share of the stock. Is the stock undervalued or overvalued? What is the rationale for your response? (You may use http://www.valuepro.net for the discounted cash flow valuation model.
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