Corporate Finance Assignment

Corporate Finance Assignment Words: 710

Still, it is the most cited and most widely recognized of the stock market indices. Additionally, the DEJA is criticized for being a price-weighted average, which gives higher-priced stocks ore influence over the average than their lower-priced counterparts, but takes no account of the relative industry size or market capitalization of the components. For example, a $1 increase in a lower-priced stock can be negated by a $1 decrease in a much higher-priced stock, even though the lower-priced stock experienced a larger percentage change.

In addition, a $1 move in the smallest component of the DEJA has the same effect as a $1 move in the largest component of the average. The DOD would see the negative effects of this price-weighted average during September- October 2008 with a former component GAG. Before its reverse-split adjusted stock price change, the stock collapsed from $22. 76 on September 8 to $1. 35 on October 27; contributing to a roughly 3,000-point drop in the index. As of June 2013, IBM and Chevron are among the highest priced stocks in the average and therefore have the greatest influence on it.

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Alternately, Bank of America and Alcoa are among the lowest priced stocks in the average and have the least amount of sway in the price movement. Many critics of the DEJA recommend the float-adjusted market-value weighted S&P 500 or the Wilshire 5000, the latter of which includes all U. S. Equity securities, as better indicators of the U. S. Stock market. Correlation among components A quantitative analysis from 72 years of financial data from the DOD Jones Industrial Average reveals that in times of financial crises, stocks start to move in a more synchronized fashion, increasing the risk of a stock portfolio.

The research is published in the Journal Scientific Reports. Financial traders try to reduce the inherent risk of holding only one stock by building portfolios, which carry a lower risk, mainly because individual stocks do not tend to experience daily gains and losses in completely synchronized manner. Tibias Preps and colleagues analyzed daily closing prices of the 30 stocks that form the DOD Jones Industrial Average, from March 1939 to the end of 2010. They found that the average correlation between these stocks increased at the same rate as market stresses.

Consequently, the diversification effect, which should protect a portfolio, melts away in times of market losses Just when it would be needed most. CISCO Company Description Cisco Systems, Inc. Designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information genealogy (IT) industry and provide services associated with these products and their use. It provides a line of products for transporting data, voice, and video within buildings, across campuses, and around the world.

Its products are designed to transform how people connect, communicate, and collaborate. It has five segments: Japan. In December 2012, the Company acquired Mermaid, Inc. Effective January 31, 2013, the Company acquired Carried Technologies Inc. Effective February 13, 2013, the Company acquired Broad Inc. In February 2013, it acquired Inductile. In May 2013, the Company acquired Ubiquitous. Cisco (ticker symbol: COCO) is the world’s largest supplier of networking equipment and systems, playing an important role in a wide variety of computing fields.

The company was founded in 1984 in San Francisco, California, by a pair of Stanford University computer engineers – Len Backs and Sandy Learner. The two named the company after a common nickname for San Francisco. Entering the market as computers began to play a more widespread role in business, Cisco focused on developing routers. In particular, the company emphasized the development of multiple-protocol routers, eventually expanding into Ethernet switching after the acquisition of several companies in that field.

Coco’s strong pursuit of service providers in the early days of the internet provided it a dominant market position in the late sass and early sass, at one point becoming the most valuable company in the world. Routers, switches and other network systems still account for a significant proportion of Coco’s overall product offerings, but its portfolio has since expanded to include software services such as security and video conferencing. The company still largely targets businesses, but its Links access points and switches are a prominent part of the consumer market.

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