Please help me with the following question based on the article,
there is only one option that is correct. Please also explain why
is the option correct and other options are wrong.
Please Help Me With The Following Question Based On The Article There Is Only One Option That Is Correct Please Also E 1 (788.21 KiB) Viewed 23 times
Please Help Me With The Following Question Based On The Article There Is Only One Option That Is Correct Please Also E 2 (457.08 KiB) Viewed 23 times
QUESTION 4 The following is an article on short duration stocks: GM, Kraft Heinz, Intel Make Goldman's List of Short-Duration Stocks Short-duration equities are ones that generate a larger share of their cash flows in the near future. DAN WEIL · APR 1, 2022 9:51 AM EDT Rising interest rates mean rising investor interest in short-duration stocks. Short-duration equities are ones that generate a larger share of their cash flows in the near future, making them more competitive with risk-free assets, such as Treasury bonds when interest rates rise. Long duration stocks produce a higher portion of their cash flow in the far future. Distant cash flows are less valuable to investors when rates are rising, lifting payouts on fixed-income investments. So short-duration stocks tend to rise when interest rates climb. And rates are obviously increasing now.
“Mathematically, growth stocks that are expected to generate most of their cash flows in the distant future should experience more valuation contraction than their short duration peers for a given change in the discount rate," Goldman Sachs strategists wrote in a report. Which of the following statement(s) is CORRECT according to the above? i. If a company's common stock does not pay dividends, it should have a long duration. ii. If a company is growing fast and generates growing earnings, its stock should have a long duration. iii. If there is a special purpose company that is scheduled to be liquidated in the future (sell all the assets and give the cash back to the investors) at inception, it should have a long duration. О O ji i and ii O ii and iii
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