Stocks Overview Investing in stocks is an option when planning for retirement or other financial management decisions. In this activity, you will research how to evaluate stocks as an investment...

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Stocks

Overview

Investing in stocks is an option when planning for retirement or other financial management decisions. In this activity, you will research how to evaluate stocks as an investment option.

Instructions

In a 1–2-page paper, please respond to the following:

  1. Explain the differences in stock trading between two different stock exchanges.
    1. Identify two different stock exchanges in the United States.
    2. Describe the similarities and differences between the two stock exchanges.
    3. Explain how a company’s free cash flow impacts its growth potential. Cite the free cash flow of example companies.
      1. Identify one company on each of the two stock exchanges you researched in 1.
      2. Determine the free cash flow from 2019 and 2020 for each company.
      3. What inferences can you draw from the companies’ free cash flow?
    4. Apply financial ratios to evaluate the strengths and weaknesses of stocks as investments.
      1. Using the 2019 and 2020 financial statements for both stocks, prepare two financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year.
      2. What challenges, strengths, or weaknesses do you see when you examine these ratios? 
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Answered 1 days AfterApr 15, 2022

Solution

Parul answered on Apr 17 2022
10 Votes
Answer 1. Stock Exchange is a platform where buyers of stocks can connect with each other and sell the stocks. It is a marketplace which holds the aggregation of different sellers and buyers who essentially trade in stocks. On the other hand, stock trading can be explained as an activity where investors can sell their stocks based on the opportunities presented in the market. Therefore, trading the shares and equity is a traction that are executed on stock exchanges. Two different stock exchanges which are most widely is used for trading and investing in stocks are NYSE which is the New York Stock Exchange, and second popular stock exchange is Nasdaq.
Answer 2. Similarities and Differences between the two stock exchanges
The stock exchange that I have selected is Nasdaq and New York Stock Exchange (NYSE) which witness the participation from global clientele and traders making them biggest stock exchanges in the world. Another point of similarities is that both are based out in the New York City and offers massive trading platform for trading various securities.
Although there are certain inherent similarities between both the stock exchanges, yet the point of difference depends...
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