Question
The reason John left you to recommend how to go forward with the drain pumps is that Barling Manufacturing has surplus liquidity that Mrs Brown
The reason John left you to recommend how to go forward with the drain pumps is that Barling Manufacturing has surplus liquidity that Mrs Brown has asked John to invest. After having spend a week in London with banks and stock brokers he has found two companies that looks very interesting. Even if the predicted market conditions are the same the outcome is different. Financial Services Plc is a finance broker that delivers well in good conditions and poorly when markets are down. However Basic Security is thriving when times are bad but faces difficulties when the economy is good.
Below you find the estimates John got from investors for the two companies:
Fin Services Plc | Basic Security Plc | ||||
Probability | Return | Return | |||
Good | 20% | 19% | -15% | ||
Normal | 45% | 15% | 11% | ||
Bad | 35% | -10% | 25% |
John spent the night hammering his Excel spread sheet with numbers and looked at each of the companies but also a combination of 80% Fin Services and 20% Basic Security. Then he looked at other combinations as well. Make the assessment John did and give your proposal for how to proceed
Step by Step Solution
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Step: 1
John is facing a decision on how to invest Barling Manufacturings surplus liquidity He has two compa...Get Instant Access to Expert-Tailored Solutions
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