80.2K

Verified Solution

Link Copied!

Note: Choose any 2 to answer in a 200-300 minimum discussion post

1. The Super Bowl Indicator Theory suggests that the stock market will have a positive year if the team in the National Football Conference, or a team with an NFC origin, wins. If the American Football Conference team wins, the market will fall. According to the recent news (MarketWatch, 2/6/2017), it has accurately predicted the direction of the market for the year following 40 of the 50 Super Bowls since the first super bowl in 1967. Why do we have such phenomena? Is the finding consistent with market efficiency? Please discuss.

2. Fama and French (1992, 1993) argued that based on more recent data, beta is not helpful in explaining the relationship between risk and return. Their work has received a great deal of attention, both in academic circles and in the popular press, with newspaper articles displaying headlines such as Beta Is Dead! If the CAPM is not perfect, why do we continue to use it in corporate finance and investment?

3. Telsa Inc. on May 2 announced that it plans to raise capital through a bond and stock sale after it reported weak first-quarter earnings that heightened concerns about its dwindling reserve of cash.

The electric-car maker plans to offer investors 2.72 million shares of stock, which would raise about $650 million, and $1.35 billion of debt securities that can convert to stock at a later date, according to a regulatory filing. The plan could raise as much as $2.3 billion if demand is great enough for the banks underwriting it to sell additional stock and bonds.

Tesla shares, which have been under pressure, rose on Thursday (5/2) as investors said they welcomed the fresh injection of capital. Fidelity Investments, T. Rowe Price Group, and other fund managers have sold millions of shares in 2019 amid concerns about the firms finances and performance.

How did Tesla stock react on Thursday to its announcement that it was looking to raise as much as $2.3 billion through a bond and stock sale? Why was this response "unusual"? Why do you think Tesla shares reacted this way? Tesla has $10.3 billion in debt with $1.92 billion maturing this year and next. Is this too much? Why or why not? Please discuss.

4. General Electric Co. said it reached a deal to sell off part of its GE Digital business and set aside the rest in a separate company, as the conglomerate narrows its focus and scales back its software ambitions. Separately Thursday, one of the company's biggest skeptics JP Morgan analyst Steve Tusa removed his "sell" rating on GE, saying its business is still challenged but the risks are better understood. The company's shares jumped 10% in early trading.

Why would one of the company's biggest skeptics JP Morgan analyst Steve Tusa remove his "sell" rating on GE saying the risks are better understood? Why might ServiceMax be worth more to private-equity firm Silver Lake than to GE? Why would GE want to retain a 10% stake in the company rather than selling all of it? Is now the time to buy GE stock? Why or why not?

Answer & Explanation Solved by verified expert

See Answer