I need a discussion response to my professors questions on my discussion post
Here is my discussion
1. How can you compare "tulip mania" from 17th century Holland to the dot.com debacle of the 20th century from a financial point of view?
During the tulip mania, the markets were moving up very tremendously. This is because of the increased need for the tulips. The involvement of very many people in the business made many people venture into the company, exhausting the resource thereby leading to scarcity. On the other hand, the dot.com debacle caused a rapid rise in profits for the companies in their share prices. This is because the companies could increase their stock prices by simply adding a â.com.' To their name or âeâ. However, the companies lost heavily when the boom was over. This was caused majorly by the mentality of the companies valuing growth over capitals. Subsequently, the companies ran out of money to sustain the practices. Therefore, the dot.com bubble came to an end with most of the companies on the losing end (Rapp, 2014).
2. Name and explain three ways in which the Internet revolution changed the lives of ordinary citizens.
The internet has made work easier- the internet revolution and its integration in the industrial sector has made the companies shift from the physical offices to online working schedules and programs. The internet has also led to the development and creation of more jobs. This is because the already established companies recruit staff members in the technological sector to help it stay relevant in the technological and social network fields. The internet has made trade easy- the ordinary citizens can make online purchases and be sure that they will get the commodity delivered at their doorsteps.
3. How did the birth of online discount stock brokerages impact the Internet revolution?
Internet revolution became more intense when there was the introduction of online stock. This is because the online stock programs attracted a large number of people (Jennings, 2013).
4. if you were an investor during the dot.com revolution, and you invested primarily in technology stocks, what fundamental principle of finance did you ignore and how did it affect the value of your portfolio?
The principle of ensuring cash flow was ignored during the dot.com bubble. This is because most companies opted for the growth rather than going for profit related ventures (Jennings, 2013).
5. What is diversification and what is its value for investors' portfolios?
Diversification in the investorâs portfolio helps to lower the chances of risks as the returns have higher chances than the portfolios of single investments (Reilly & Brown, 2011).
6. Explain the relationship between the potential return on common stock and the risk of that stock.
Low levels of risk on the common stock result into low levels of potential return on the some stock. This is because an investment that is risked in the market is has a high potential of accruing massive gains for the investor (Reilly & Brown, 2011).
WC: 486
References:
Jennings, M. M. (2013). Ethics and Financial Markets: The Role of the Analyst. Research Foundation Literature Reviews, 8(1), 1-89.
Rapp, D. (2014). Bubbles, booms, and busts: The rise and fall of financial assets. Springer.
Reilly, F., & Brown, K. (2011). Investment analysis and portfolio management. Cengage Learning.
My professors questions I need a response to
The internet has also led to the development and creation of more jobs.
Dr. M: How has the Internet changed the way(s) you work and live? Please reflect, then comment and discuss
I need a discussion response to my professors questions on my discussion post
Here is my discussion
1. How can you compare "tulip mania" from 17th century Holland to the dot.com debacle of the 20th century from a financial point of view?
During the tulip mania, the markets were moving up very tremendously. This is because of the increased need for the tulips. The involvement of very many people in the business made many people venture into the company, exhausting the resource thereby leading to scarcity. On the other hand, the dot.com debacle caused a rapid rise in profits for the companies in their share prices. This is because the companies could increase their stock prices by simply adding a â.com.' To their name or âeâ. However, the companies lost heavily when the boom was over. This was caused majorly by the mentality of the companies valuing growth over capitals. Subsequently, the companies ran out of money to sustain the practices. Therefore, the dot.com bubble came to an end with most of the companies on the losing end (Rapp, 2014).
2. Name and explain three ways in which the Internet revolution changed the lives of ordinary citizens.
The internet has made work easier- the internet revolution and its integration in the industrial sector has made the companies shift from the physical offices to online working schedules and programs. The internet has also led to the development and creation of more jobs. This is because the already established companies recruit staff members in the technological sector to help it stay relevant in the technological and social network fields. The internet has made trade easy- the ordinary citizens can make online purchases and be sure that they will get the commodity delivered at their doorsteps.
3. How did the birth of online discount stock brokerages impact the Internet revolution?
Internet revolution became more intense when there was the introduction of online stock. This is because the online stock programs attracted a large number of people (Jennings, 2013).
4. if you were an investor during the dot.com revolution, and you invested primarily in technology stocks, what fundamental principle of finance did you ignore and how did it affect the value of your portfolio?
The principle of ensuring cash flow was ignored during the dot.com bubble. This is because most companies opted for the growth rather than going for profit related ventures (Jennings, 2013).
5. What is diversification and what is its value for investors' portfolios?
Diversification in the investorâs portfolio helps to lower the chances of risks as the returns have higher chances than the portfolios of single investments (Reilly & Brown, 2011).
6. Explain the relationship between the potential return on common stock and the risk of that stock.
Low levels of risk on the common stock result into low levels of potential return on the some stock. This is because an investment that is risked in the market is has a high potential of accruing massive gains for the investor (Reilly & Brown, 2011).
WC: 486
References:
Jennings, M. M. (2013). Ethics and Financial Markets: The Role of the Analyst. Research Foundation Literature Reviews, 8(1), 1-89.
Rapp, D. (2014). Bubbles, booms, and busts: The rise and fall of financial assets. Springer.
Reilly, F., & Brown, K. (2011). Investment analysis and portfolio management. Cengage Learning.
My professors questions I need a response to
The internet has also led to the development and creation of more jobs.
Dr. M: How has the Internet changed the way(s) you work and live? Please reflect, then comment and discuss
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