1. What are the differences between traditional and derivative instruments? Why do companies use derivative instruments? Are derivatives a good investment? Explain why or why not.
2. How do the various classifications of investments affect financial statements? What is the rationale behind the different accounting methods for the various investment classifications? Which is more important when determining the accounting methods for securities, influence or ownership? Explain why.
3.Why do companies make investments in other companies? What are the differences between debt and equity investments? What would influence a company to choose equity or debt as an investment?
4. So can anyone in our class explain whether those holding a significant amount of stock in a corporation always are heavily involved in running the company? Please provide a real world example.
5. So can anyone in our class explain whether debt or equity investments are typically more profitable over time?
6. What are Derivatives? and what type are there?
Each question answer separately.