Question 1. Your friend has suggested you to invest $150,000 US Dollars into one of the below projects with future cash you can earn listed in the below table. Suppose that the discount rate 15% per year. Which investment project you will invest if you must select only one project (hint: use Net Present Value estimation method) (5 marks)

Year Costmetics shop Hair Salon Gym 1 35,000 90,000 10,000 2 35,000 70,000 10,000 3 35,000 20,000 10,000 4 35,000 10,000 5 35,000 10,000 6 35,000 180,000 total cash 210,000 180,000 230,000

Question 2. Suppose you are an investment consultant. You have produced below analysis of the key financial ratios of 5 companies.

Zoom Video Communications, Inc. (ZM) Merck & Co., Inc. (MRK) Starbucks Corporation (SBUX) Caterpillar Inc. (CAT) Alibaba Group Holding Limited Average return 1.95 0.18 0.54 0.61 0.31 Standard deviation 8.844 3.190 4.498 4.546 4.740 Variance 78.214 10.177 20.230 20.663 22.469 Skewness 0.113 -0.138 0.162 -0.479 -0.295 Kurtosis -0.127 0.081 3.678 1.984 1.641

You are required: Based on the above analysis, please advise your client which of these companies he/she needs to invest as the first choice. Which company he/she must not invest. Clearly explain your client the reasoning behind your advice. Explain the limitations of your analysis.

Question 3. Suppose you are an investment consultant. You have produced below analysis of the key financial ratios of 5 companies. Zoom Video Communications, Inc. (ZM) Merck & Co., Inc. (MRK) Starbucks Corporation (SBUX) Caterpillar Inc. (CAT) Alibaba Group Holding Limited Average return 1.95 0.18 0.54 0.61 0.31 Jensen's Alpha 1.87 -0.01 0.10 0.26 0.07 Beta 0.20 0.47 1.12 0.89 0.60 R-squared - 0.10 0.24 0.67 0.41 0.18

Based on the above analysis, please advise your client which of these companies he/she needs to invest as the first choice. Which company he/she must not invest. Clearly explain your client the reasoning behind your advice. Explain the limitations of your analysis.

Question 4.

Companies outside the United States often have two classes of stock outstanding. One class of shares is voting and is held by the incumbent managers of the firm. The other class is nonvoting and represents the bulk of traded shares. What are the consequences for corporate governance? Question 5. ( 5 marks)

Please go to the websites of any 3 companies listed below and assess the quality of their corporate governance. Which company has the best quality of corporate governance and why it matters for you as an investor? Which company has the worst corporate governance structure and why? Explain why you should not invest into company with poor corporate governance.

Zoom Video Communications, Inc. (ZM) Merck & Co., Inc. (MRK) Starbucks Corporation (SBUX) Caterpillar Inc. (CAT) Alibaba Group Holding Limited

Question 6. There is a conflict of interest between stockholders and managers. In theory, stockholders are expected to exercise control over managers through the annual meeting or the board of directors. In practice, why might these disciplinary mechanisms not work?