Scenario: Capital Markets And The Ability To Raise Funds

Question

Scenariocapital Markets And The Ability To Raise Funds For Corporate U Scenario: Capital markets and the ability to raise funds for corporate uses are essential to the U.S. economic system. For this assignment, imagine that you have $25,000 to invest in U.S. companies. You are buying used stock. The company received the money when it issued the stock originally, but now you are purchasing it from an existing owner. You are investing because you believe the company will generate profits and pay dividends. Each share of stock entitles you to dividends and voting rights at the annual stockholders' meeting. Additionally, you can sell the stock later to recover your investment, although stock prices can fluctuate, and the company is not obligated to buy back your shares. Using this scenario, select three publicly traded U.S. companies, ensuring diversification across different industries. Explain how you plan to allocate your $25,000 investment across the three companies (e.g., $10,000 in Company 1, $10,000 in Company 2, and $5,000 in Company 3). Provide reasons for choosing each company based on your knowledge and experience. Identify how many shares of each stock you will buy and at what share price, based on current market values. For example, if Company 1's stock price is $42.16, and you are investing approximately $10,000, you would divide $10,000 by $42.16 to determine how many shares you could purchase, rounding down to the nearest whole share. Remember, you cannot buy fractional shares. Summarize your allocation plan, including the number of shares for each company and the rationale behind your choices. Use at least two credible sources—such as reputable finance websites, the New York Stock Exchange, NASDAQ, Yahoo! Finance, or academic resources—to support your decisions. Ensure proper citation of all sources used.

Dr. Jack HW Helper · Accepted Answer

Investing in stocks is a fundamental way to participate in the growth prospects of companies and to generate potential returns through dividends and stock appreciation. For this analysis, I selected three prominent U.S.-based, publicly traded companies representing diverse industries to ensure appropriate diversification, aligned with investment best practices. My goal was to allocate a total of $25,000 across these companies, balancing risk and potential return while strategically selecting assets based on recent performance and market outlook. Selection of Companies and Allocation Strategy The three companies I chose are Apple Inc. (AAPL), Johnson & Johnson (JNJ), and Ford Motor Company (F). These companies were selected because they operate within different sectors—technology, healthcare, and automotive—which helps in spreading investment risk and capitalizing on various industry growth drivers. Apple is a leader in consumer electronics and digital services, Johnson & Johnson is a stalwart in healthcare and pharmaceuticals, and Ford represents the automotive manufacturing sector with innovations in electric vehicles. My planned allocation was $10,000 for Apple, $10,000 for Johnson & Johnson, and $5,000 for Ford. This distribution emphasizes a slightly higher investment in technology and healthcare, both of which have strong growth prospects and relatively stable earnings, contributing to a balanced diversified portfolio. The automotive sector, while promising, is more cyclical, so a smaller allocation aligns with risk management principles. Stock Purchase Calculations and Rationale Based on recent market prices, Apple’s stock was approximately $173 per share, Johnson & Johnson’s stock was around $164 per share, and Ford’s stock was approximately $13 per share. Using these prices, I calculated the number of shares I could acquire with my designated investment amounts: Apple (AAPL): $10,000 / $173 ≈ 57.8, rounded down to 57 shares. Total investment:

Scenario: Capital Markets And The Ability To Raise Funds

Scenariocapital Markets And The Ability To Raise Funds For Corporate U

Paper For Above instruction

Selection of Companies and Allocation Strategy

Stock Purchase Calculations and Rationale

Reasons for Company Selection

Conclusion

References