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List and
explain four risks associated with the hedging efforts. (750 words)
Question 2
“Equity securities: as
Madura (2006) discusses, the most prevalent type of equity is common stock.
Common stockholders have no special dividend rights and the lowest priority
claim if the company goes bankrupt. Owners of preferred stock, in contrast,
usually receive preferential treatment over common stockholders when it comes
to receiving dividends or cash payoffs in bankruptcy.”
Required: Explain how the
Primary and Secondary Markets work for the securities trading, highlighting the
main differences of the two. (750 words)
Question 3
“As Madura (2006) describes,
during the 1980s, junk bonds became a popular form of corporate financing.”
Required: Explain what
Junk Bonds are and why an investor could decide to invest in those instruments.
Provide at least two examples of such bonds. (750 words)
Question 4
Required: Explain what
Letters of Credit are and provide 3 advantages of those instruments, using
examples. (750 words)

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