Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me with the following question based on the article, there is only one option that is correct. Please also explain why is the

Please help me with the following question based on the article, there is only one option that is correct. Please also explain why is the option correct and other options are wrong.

image text in transcribed

image text in transcribed

QUESTION 4 The following is an article on short duration stocks: GM, Kraft Heinz, Intel Make Goldman's List of Short-Duration Stocks Short-duration equities are ones that generate a larger share of their cash flows in the near future. DAN WEIL APR 1, 2022 9:51 AM EDT Rising interest rates mean rising investor interest in short-duration stocks. Short-duration equities are ones that generate a larger share of their cash flows in the near future, making them more competitive with risk-free assets, such as Treasury bonds when interest rates rise. Long duration stocks produce a higher portion of their cash flow in the far future. Distant cash flows are less valuable to investors when rates are rising, lifting payouts on fixed-income investments. So short-duration stocks tend to rise when interest rates climb. And rates are obviously increasing now. Mathematically, growth stocks that are expected to generate most of their cash flows in the distant future should experience more valuation contraction than their short duration peers for a given change in the discount rate," Goldman Sachs strategists wrote in a report. Which of the following statement(s) is CORRECT according to the above? i. If a company's common stock does not pay dividends, it should have a long duration. ii. If a company is growing fast and generates growing earnings, its stock should have a long duration. iii. If there is a special purpose company that is scheduled to be liquidated in the future (sell all the assets and give the cash back to the investors) at inception, it should have a long duration. O ji i and ii O ii and

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

Use the ROPE model to develop a campaign for a client.

Answered: 1 week ago