Exhibit 15.1 shows how (cumulative) returns on investments in the equity market index have consistently exceeded returns on investments in government bonds over the past 200 years. This being the case, would you recommend that investors consider not investing in government bonds at all? What would a chart of annual returns on investment in equity and bonds look like—and does its shape influence your recommendation?
Answer to relevant QuestionsFundamentals explain less of the variation in TRS than in market-valueto- book-value or market-value-to-earnings ratios (as measured by the R2 shown in Exhibits 15.7 and 15.10). This holds true even when TRS is measured over ...Empirical research shows that goodwill impairments have no impact on a company’s share price. But these impairments do reflect an auditor’s best estimate of the value lost in an acquisition by the company. Does the stock ...Discuss the possible factors underlying differences in price for the same stock on two different markets, such as the spread between the London and New York prices for a share of Shell’s common equity stock. Why do noise traders have limited impact on a company’s share price even when they make the largest volume of trades in the company’s stock over a given time period? Explain how and why the best owner of a business might change over time.
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