The U.S. stock market hit an all-time high in October 1929 before crashing dramatically. Following the market crash, the U.S. entered a prolonged economic downturn dubbed The Great Depression. Using Figure, estimate how long it took for the stock market to fully rebound from its fall which began in October 1929. How did bond investors fare over this same period?
Answer to relevant QuestionsWhat is the difference between assets expected return and its actual return? Why are expected returns so important to investors and managers? How can the weight given to a particular stock in a portfolio exceed 100 percent? Describe the scale problem and the timing problem and explain the potential effects of these problems on the choice of mutually exclusive projects, using IRR versus NPV. For each of the projects shown in the following table, calculate the internal rate of return (IRR). What is meant by potential investments relevant cash flows? What are sunk costs and cannibalization, and do they affect the process of determining proposed investments incremental cash flows?
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