Question
Consider yourself as a professional currently thinking about switching industry, and finance is the way to go. You registered for a finance course in the
Consider yourself as a professional currently thinking about switching industry, and finance is the way to go. You registered for a finance course in the nearby university, and at the same time you left the old job and started working as an investment adviser at CD Projekt Red Inc., a leading financial institution of Bangladesh. Interestingly, your first client at the firm is Mashrafee Bin Mortaza, Skipper of the Bangladesh cricket team. Mashrafee expects to invest substantial amounts of money through CD Projekt Red. However, before making any decisions, Mashrafee would like to understand, in general terms, what will happen to his money. Your boss has developed the following questions that you must use to explain the financial system to Mashrafee.
1. If Square Pharmaceuticals decided to issue additional common stock and Mashrafee purchased 100 shares of this stock from CD Projekt Red, the underwriter, would this transaction be a primary or a secondary market transaction? What kind of transaction would it be, if Mashrafee purchased previously outstanding Square stocks from DSE or CSE? Explain.
Mashrafee also seemed interested in a new Bangladeshi venture, which will be making products out of jute. The skipper watched a video which was uploaded on a closed facebook group about the business. The video highlighted that there is great potential for the products, and soon the business will start exporting to multiple countries. On the basis of this “hot” information, Mashrafee wants to buy many shares of that company.
2. Assuming the stock market is highly efficient, what advice would you give him?
Mashrafee has also read a number of newspaper articles about a huge IPO being carried out by a leading technology company. He wants to purchase as many shares in the IPO as possible and would even be willing to buy the shares in the open market immediately after the issue.
3. What would you recommend Mashrafee to do regarding the IPO?
Mashrafee is also thinking about investing in cryptocurrency, as he heard from someone that bitcoin is increasing in value every single day, and because of some recent activities, the value of bitcoins jumped overnight. Although he is not sure about the legal basis of cryptocurrency usage in Bangladesh, Mashrafee is very much interested to invest in cryptocurrency?
4. Should Mashrafee invest in cryptocurrency? Why or why not?
Mashrafee also overheard that one could generate, or in other words, mine cryptocurrencies, and wants to invest in machineries/equipments/software to do so.
5. Conduct a cost-benefit analysis for Mashrafee and show him whether an investment to mine cryptocurrency is a viable one in the context of Bangladesh.
Step by Step Solution
3.39 Rating (149 Votes )
There are 3 Steps involved in it
Step: 1
Question 1 If Square Pharmaceuticals decided to issue additional common stock and Mashrafee purchased 100 shares of this stock from CD Projekt Red the underwriter would this transaction be a primary o...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started