Discussion question
After reviewing this week’s content, when you think about securities (i.e., stock and bond) valuation, you should be able to view securities from both an investor’s perspective as well as a corporation’s perspective. Explain how an investor’s expected rate of return on a stock and a bond is linked to an organization’s required rate of return on that stock and bond. In addition, provide an example of a company whose stock (Note: You could use Yahoo! Finance to search for companies and their historical performance) was affected when it released its earnings (i.e., 10K-Annual Report or 10Q-Quarterly Report) and indicate, from a business perspective, why the value of that company’s equity fell or rose as a result of a business outcome.
Hint: One way to find news about a particular company and its earnings is to use Google Search and type the company’s name and the word ‘earnings’ into the search bar.
Note, that you are still required to provide two references for your response and that they should be references to a scholarly article or a business publication (i.e., Wall Street Journal, Forbes, Financial Times, Barron’s, etc.)
Recommended Reading:
Buffett, W. (1984). The Superinvestors of Graham-and-Doddsville. Hermes. Retrieved from https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/Buffett1984.pdf.
Farrell, J. (1985). The Dividend Discount Model: A Primer. Financial Analysts Journal, 41(6), 16-19 + 22-25.
Black, F. (1986). Noise. The Journal of Finance, 41(3), 529-543.
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