Please
respond to one or more of the questions below. Keep a couple of things
in mind: this is a ‘classroom’ discussion so avoid lengthy calculations!
And please respond to the comments of your colleagues!
1.Risk-free assets.
Government bonds are considered to be ‘risk-free’ assets. Why, then, do
they give a return? Are they truly completely free of risk?
2.
On January 27, 2010, Steve Jobs took the stage to announce, as
expected, a new addition to the Apple’s (AAPL) product line. The iPad, a
tablet computer, recevied good reviews but the stock price fell from a
close of $205.94 on January 26th to $192.06 by the weekend. In the same
period, the Nasdaq index went from 2203.73 to 2147.35.
- Why would the price of AAPL fall just when the company announces an exciting new product?
- Comment on what part
of the move in AAPL’s price was systematic and what part was intrinsic.
Assume that AAPL has a beta of 1.28 versus the Nasdaq index.
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