Capstone Investment Alternatives
In order to properly utilize the assets of an organization, an organization needs to understand how to properly analyze various investments, how to project cash flows from alternative investments and how to raise funds to finance alternative projects. Having a thorough understanding of how the stock market works and how individual stocks are performing in comparison is a key to making sound investment decisions. The alternatives explored in this case are whether an investment should be made in Coca-Cola, a well-established United States (U.S.) based beverage company, or in Amazon, an internet cloud U.S. based retailer. Similarities are that they are both U.S. based companies with retail divisions, and in …show more content…
The NASDAQ Stock Market is the second largest stock exchange in the U.S. with approximately 3,200 publicly traded companies (Hom, 2012). In order to be listed on the NASDAQ, companies must meet a minimum requirement of maintaining $1 stock price, and the value of outstanding stocks must total at least $1.1 million (Hom, 2012). Trading occurs using automated trading systems and offers automatic execution of trades. The NASDAQ uses the index in order to provide a market performance snapshot by measuring the change in more than 3,000 traded stocks and is heavily focused in technology stocks (See Appendix A for performance chart of the NASDAQ from 1996 to 2016). Both Coca-Cola (KO) and Amazon (AMZN) are listed on the NASDAQ and are included in the …show more content…
Using international stocks can actually reduce risk in a stock portfolio because international equities do not move in a perfect alignment with domestic equities (Swedroe, 2010). Most advisors do agree that diversifying into international stocks is an important key to a successful portfolio. However, according to the Novel Investor (2015), global diversification did not protect investors when there where short-term market falls in 2000 and in 2002 and then again during the financial crisis of 2008. The few international stocks that were researched were unavailable to track historical data. Figure 1 below describes how U.S. and International Stocks move together in correlation which enables a conclusion that during the analysis period that any international stocks would have followed the same pattern as the domestic
In order to properly utilize the assets of an organization, an organization needs to understand how to properly analyze various investments, how to project cash flows from alternative investments and how to raise funds to finance alternative projects. Having a thorough understanding of how the stock market works and how individual stocks are performing in comparison is a key to making sound investment decisions. The alternatives explored in this case are whether an investment should be made in Coca-Cola, a well-established United States (U.S.) based beverage company, or in Amazon, an internet cloud U.S. based retailer. Similarities are that they are both U.S. based companies with retail divisions, and in …show more content…
The NASDAQ Stock Market is the second largest stock exchange in the U.S. with approximately 3,200 publicly traded companies (Hom, 2012). In order to be listed on the NASDAQ, companies must meet a minimum requirement of maintaining $1 stock price, and the value of outstanding stocks must total at least $1.1 million (Hom, 2012). Trading occurs using automated trading systems and offers automatic execution of trades. The NASDAQ uses the index in order to provide a market performance snapshot by measuring the change in more than 3,000 traded stocks and is heavily focused in technology stocks (See Appendix A for performance chart of the NASDAQ from 1996 to 2016). Both Coca-Cola (KO) and Amazon (AMZN) are listed on the NASDAQ and are included in the …show more content…
Using international stocks can actually reduce risk in a stock portfolio because international equities do not move in a perfect alignment with domestic equities (Swedroe, 2010). Most advisors do agree that diversifying into international stocks is an important key to a successful portfolio. However, according to the Novel Investor (2015), global diversification did not protect investors when there where short-term market falls in 2000 and in 2002 and then again during the financial crisis of 2008. The few international stocks that were researched were unavailable to track historical data. Figure 1 below describes how U.S. and International Stocks move together in correlation which enables a conclusion that during the analysis period that any international stocks would have followed the same pattern as the domestic