Fundamentals Of Finance
1. Explain the major purposes of a stock exchange.
2. Identify THREE separate companies, that is, one company whose ordinary shares, one company whose preference shares, one company whose convertible notes an individual investor can purchase on the ASX. (Please make sure they are different companies).For each company briefly explain the type of business it conducts, what industry it is in and the ASX code.
(Note: Companies that have issued Convertible Notes and Preference Shares (Hybrid Securities) can be found in the “Interest Rate Securities” table in the COMPANIES & MARKETS section of the Australian Financial Review newspaper.)
3. Discuss, in detail, the characteristics and features of each of the THREE types of securities mentioned in the assignment requirements above as well as the differences between them.
4. Explain what direct costs buyers or sellers of the securities (fromdiscussion point 3) would incur in their buying or selling of these securities.
5. Is there any chance that an investor might lose their entire investment in any or all of these securities? In the unfortunate event of the company going bankrupt, identify the relative order or ranking (of each of the three types of securities) – of a possible return of some capital or money to an investor. Justify your answer and identify your source.
6. Discuss in detail the main factors that need to be considered by an investor when choosing to invest in a particular type of financial asset.
7. If you had 5,000 Australian dollars to invest in any of the above three securities you identified from discussion point 2, which security would you buy if you wanted to resell in one month, if any? Justify the choice you have made and include in your answer why you did not choose the other securities.