1-11 Assume you are looking at many companies with equal risk, which ones will have the highest stock prices? Given companies with equal risk, those companies with expectations of high return will have higher common stock prices relative to those companies with poor expectations 1-12 What changes can take place under restructuring? In recent times, what group of ng to take place Restructuring can result in changes in the capital structure(liabilities and equity on the balance sheet ) It can also result in the selling of low-profit-margin divisions with the proceeds reinvested in better investment opportunities, and sometimes restructuring results in the removal of the current management team or large reductions in the work force. Restructuring has also included mergers and acquisitions Institutional investors have been very influential in forcing restructuring to take place in recent years 1-13 What impact has the Internet had on competition for full service brokers such Merrill Lynch and salomon Smith Barney? Firms like Charles Schwab. E-Trade and Ameritrade allow customers to trade using the Internet. Full service brokers have had to follow suit, even though it is not as profitable to them for their customers to trade on the Internet rather than through the normal broker arrangement The shift to Internet trading has enabled a change in price quotes from fractions to more precise decimals. This also puts a squeeze on brokers profits Copyright o by The McGraw-Hill Companies. InCopyright © 2005 by The McGraw-Hill Companies, Inc. S-3 1-11. Assume you are looking at many companies with equal risk, which ones will have the highest stock prices? Given companies with equal risk, those companies with expectations of high return will have higher common stock prices relative to those companies with poor expectations. 1-12. What changes can take place under restructuring? In recent times, what group of investors has often forced restructuring to take place? Restructuring can result in changes in the capital structure (liabilities and equity on the balance sheet). It can also result in the selling of low-profit-margin divisions with the proceeds reinvested in better investment opportunities, and sometimes restructuring results in the removal of the current management team or large reductions in the work force. Restructuring has also included mergers and acquisitions. Institutional investors have been very influential in forcing restructuring to take place in recent years. 1-13. What impact has the Internet had on competition for full service brokers such as Merrill Lynch and Salomon Smith Barney? Firms like Charles Schwabb, E-Trade, and Ameritrade allow customers to trade using the Internet. Full service brokers have had to follow suit, even though it is not as profitable to them for their customers to trade on the Internet rather than through the normal broker arrangement. The shift to Internet trading has enabled a change in price quotes from fractions to more precise decimals. This also puts a squeeze on brokers' profits