RECESSION AND FINANCIAL CRISIS - An economic recession is typically

Paper Outline.

TOPIC: RECESSION AND FINANCIAL CRISIS.

Qn.1. Finance Question.

• Definition of economic recession and financial crisis. How the two are related.
• Siting the financial crisis of the US in 2001 and 2008 and how it led to an economic recession.
• The effects of the financial crisis and how they influenced the economy of the US.
• How excessive borrowing led to economic recession and the role policymakers played.

Qn. 2. Forum Question.

• The nature of a fairly competitive market field.
• Why the government should support all entities without favoring some big entities.
• The fate of a business entity should be dictated by the market based on the entity’s strategies

Qn. 3. Quiz.

a)

• Defining random walk in stock prices and how the stock prices exist independently.
• Why the predicting methods are not applicable in the case of random walk.
• The implication of the concept of random walk.

b)

• An example of an incidence of mispricing and siting two companies.
• The indicators that the prices were unrealistic to the purchasers.
• Question if the market is efficient or inefficient.

c)

• Price-to- earnings ratio is relevant to investors and should be considered.
• Importance of choosing a company with high P/E ratio.
• Comparison of the high P/E and the expected returns.