1. Explain how shares are bought and sold and how you might know when to buy and...
Question:
1. Explain how shares are bought and sold and how you might know when to buy and sell.
2. Contact Energy has a P/E ratio of just over 34 and a2 has a P/E ratio of just under 45. Explain what this means about the price of their shares. Why are they so different?
3. Using the descriptions of types of shares used in class how would you classify Contact and a2.
4. Identify what risks are involved in share investments.
5. Explain which of these shares you think it might be appropriate for you to make an investment in. (2 marks)
Imagine that, in addition to your Kiwisaver funds, you've managed to accumulate $20,000 which you want to invest now for your retirement in 35-years' time. You've been told by one of your friends that the best way to increase your money is to invest in shares. You have found two particular shares of interest. The first Contact Energy, a power company, and the price seems quite reasonable at around $6.20 per share. In addition, the company does pay quite a large dividend every year to its share- holders. The second is the a2 Milk Company which produces and markets a special type of cows' milk. a2's share price is comparatively high at nearly $20 per share and the company doesn't pay dividends to its shareholders.
Marketing Real People, Real Choices
ISBN: 978-0132913171
4th Canadian Edition
Authors: Michael R. Solomon, Greg W. Marshall, Elnora W. Stuart, J. Brock Smith, Sylvain Charlebois, Bhupesh Shah