Macroeconomics Econ 231 Investment Assignment 707461

Macroeconomics Econ 231 Investment assignment

Describe each way in which you can profit (make money) from a business you don’t operate or own. What category of Investment does this fit into, and how does it differ from the other category?

Pick three publicly traded companies; over the last week how much has the companies “value” changed by? You will need to determine the number of shares outstanding and find the high and low trading price over the week. What percentage has the companies value changed by over these seven days? Has anything happened with these companies that would warrant the change in price?

Why do companies want to offer stock? What benefits do they receive? Why is it important for a company to monitor its stock price, even after they sold off shares (meaning they no longer make money off secondary sales)?

Paper For Above instruction

Investing in the business world offers multiple avenues for profit, particularly for individuals who choose not to operate or own a business directly. The primary methods include purchasing stocks, bonds, or other securities, engaging in real estate investments, and participating in funds or mutual funds. Each of these categories falls under different investment classifications, primarily classified as equity or debt investments. Equity investments, such as stocks, involve purchasing ownership shares in a company, allowing investors to benefit from capital appreciation and dividends. Conversely, debt investments, like bonds, involve lending money to entities with the expectation of fixed interest payments. These categories differ mainly in ownership rights, risk exposure, and return profiles. Equity investments typically carry higher risk but offer potentially higher returns, while debt investments are more conservative with steady income streams.

When examining publicly traded companies, analyzing their valuation changes over short periods provides insight into market dynamics. By selecting three prominent companies—say Apple Inc., Microsoft Corp., and Amazon.com Inc.—and tracking their stock prices over the last week, we can assess their valuation fluctuations. To determine the change in value, one must identify the number of shares outstanding, which can be found in each company’s quarterly reports or financial statements. Next, by noting the highest and lowest trading prices during the week, the weekly percentage change can be calculated. For example, if Apple’s stock fluctuated from $150 to $165, the percentage change in value would be approximately 10%. Significant price swings could be driven by earnings reports, news releases, market sentiment, or macroeconomic factors, which influence investor perception and stock valuation.

The desire of companies to offer stock stems from various strategic benefits. An initial public offering (IPO) allows a company to raise substantial capital to fund growth initiatives, pay off debts, or invest in research and development. It also enhances the company's visibility and credibility within the industry. Once public, the company can access secondary markets to raise additional funds via secondary offerings, leveraging the established market presence. Monitoring stock prices even after the initial sale is crucial because fluctuations can impact the company's reputation, employee stock options, and future financing options. A declining stock price may signal underlying problems or loss of investor confidence, prompting management to take corrective actions, while a rising stock price can foster growth opportunities. Maintaining awareness of stock performance also helps companies gauge market sentiment, guide strategic decisions, and plan for future capital raises.

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