Problem Set 6

Problem Set 6 - Michael Samuels 11/28/06 G12358459 Problem...

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Michael Samuels 11/28/06 G12358459 Problem Set 1a. My parents are a very safe family in terms of investing. We own a house, 3 cars, and a few savings accounts. Clearly we have assets, and retirement funds, but no unique investments or risks. My parents got out of the stock market a long time ago, and have no plan to go back in. 1b. BBY – Best Buy Co Share price: 55.69 Market Cap: 26.53B Beta: 1.05 Dividend: .40 BBY has a higher Beta then the Dow and over the last 5 years has grown more then that of the DOW SBUX – Starbucks Share price: 35.68 Market Cap: 26.98 Beta: 1.17 Dividend: N/A SBUX has a much higher Beta then the Dow, and over the last 5 years has done exceptionally well compared to that of the Dow. I have learned that successful stocks typically do better then the Dow, and that you want to find stocks that have a Beta higher then 1.0 1c. Rice farm- Not having the right equipment or specialized workers could be a unique problem. If one does not have the right tools to run the farm, they are taking an extraordinary risk. Higher people who know what they are doing. K-mart Worker - This risk I am taking is that there is not a bright enough future in this position. I have to worry about retirement and raising a family. If I have any desire to do either I would need a better job. Drive 100 Miles – I am risking ruining my car and raise the risk of getting in an accident. I should really find a job that is closer to my home so I do not have to spend so much time driving and I will reduce my unique risk.
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Scranton PA – The only problem here is that you are living in an area that more or less isn’t economical. There is no potential here to grow or anything. So you are risking
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This note was uploaded on 10/20/2010 for the course ECON 011 taught by Professor Yezer during the Fall '07 term at GWU.

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Problem Set 6 - Michael Samuels 11/28/06 G12358459 Problem...

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