Question: Question 2. (15 marks) Intergalactic Software Company went public three months ago. You are a sophisticated investor who devotes time to fundamental analysis as a
Question 2. (15 marks) Intergalactic Software Company went public three months ago. You are a sophisticated investor who devotes time to fundamental analysis as a way of identifying mispriced stocks. 1) Which of the following characteristics would you focus on in deciding whether to follow this stock? (10 marks) Market capitalization The average number of shares traded per day The bid-ask spread for the stock Whether the underwriter that brought the firm public is a top tier investment banking firme Whether the firm's audit company is a Big Four firme Whether there are analysts from major brokerage firms following the company Whether the stock is held mostly by retail or by institutional investors . 2) When you looked at the projection for Intergalactic Software Company's revenue in the future, you found that most of analysts assume the revenue growth rate is mean-reverting over time. What is the rationale to assume that revenue growth rate is mean-reverting over time
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