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I tremendously enjoyed the article The End, by Michael Lewis

Thesis Help Finance I tremendously enjoyed the article The End, by Michael Lewis

Finance

I tremendously enjoyed the article The End, by Michael Lewis

I tremendously enjoyed the article The End, by Michael Lewis. After reading the article carefully,… Show more I tremendously enjoyed the article The End, by Michael Lewis. After reading the article carefully, think about the implications of the article and explain some of the more important things you learned and how they might affect your investing in the future. In the video interview with Michael Lewis he talks about the Oakland A’s and the unusual success they had by investing in “defective” baseball players. Is there anything about this situation that can be applied to the investing world? Describe the thought process behind the CAPM. In other words, translate the formula into words. Is the CAPM successful in completely explaining all the factors that affect expected return? Explain. What is an efficient market? What is it that causes a market to be efficient or inefficient? Based on what you have learned so far this semester, do you believe that U.S. equity markets are efficient? Explain. Describe what happened in the tulip market in the Netherlands in the 1600’s. What can we learn from that historical period? Do you believe that this type of situation could happen again, given the sophistication of today’s investors and markets? Why or why not? Briefly list and describe three anomalies that appear to indicate that the stock market is not efficient. What is behavioral finance? List and briefly describe three cognitive errors that investors sometimes make when managing their investments. It is possible to be reasonably diversified using less than ten carefully chosen stocks, but be hardly diversified at all with twenty carelessly chosen stocks. Explain precisely why this is true. What is the difference between an efficient portfolio and an optimal portfolio? What is the “bid-ask spread”? Does it convey any information to investors? Explain. Explain how to make money using a short sale. (A) You have just inherited $1,000,000,000 and want to hire your own stock analyst/portfolio manager. Your firmly believe that markets are highly efficient. What activities would you have your portfolio manager focus on as they manage your portfolio? How diversified do you think your portfolio would be? (B) You have just inherited $1,000,000,000 and want to hire your own stock analyst/portfolio manager. You believe that markets are only mildly efficient and that your portfolio manager is one of the best in the world. How would your manager’s activities and your portfolio differ from that in part “A” of this question? Make sure you understand the CAPM. If a stock’s beta were to instantaneously change from 1 to 1.25 with no change in earnings, would you expect the value of the stock to increase or decrease? Explain. • Show less

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