Finance: Fair Markets and Assessing Risk
consideration of risks associated with the options in an opportunity set.
Measuring the risk of available options can drastically alter the decisions
made by an organization’s senior management team.
Are markets like the NYSE, NASDAQ, and CME fair markets?
Why? Why is it important that such markets are fair markets? In your response,
be sure to assess the relationship between market prices and discount rates
used in decision making.
Compare a real estate investment in Baghdad with a similar investment in Chicago. What are the appropriate risk-adjusted discount rates for each? How do the risks differ between them?
Would a fast-food a restaurant chain like McDonald’s incur more risk by offering a new sandwich or opening a new store? Why?
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