On May 20, 2004, The Wall Street Journalran a front page story entitled Biotechs Dismal Bottom Line:
Question:
On May 20, 2004, The Wall Street Journalran a front page story entitled “Biotech’s Dismal Bottom Line: More Than $40 Billion in Losses.” The article makes several points. First, the majority of biotechnology firms have produced losses, with the result that the return to investments in the biotechnology sector between 1981 and 2004 lies below the return from holding Treasury Bills. At the same time, a few biotechnology firms, such as Amgen and Genentech have been spectacularly successful. The article quotes one investor who likens biotechnology stocks to a lottery. Despite its track record, in 2003 U.S. biotechnology firms succeeded in issuing almost $4 billion in new equity. The article mentions that venture capitalists also provided funding to biotechnology startups hoping to earn a profit when these firms go public. Discuss whether there are any behavioral issues involved in the issues raised in the article.
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...
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Behavioral Phenomena The issues that are discussed in this article are that even thought the investm...View the full answer
