Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Introduction to Investments in Securities

Financial Accounting

7. Receivables and Investments

Introduction to Investments in Securities

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

In the context of investments, if a stock has a negative alpha, what should an investor generally do?

Ignore the alpha value, as it is not relevant to investment decisions.

Hold the stock indefinitely, since negative alpha means it is less risky.

Consider selling the stock, as it is underperforming relative to its expected return.

Buy more of the stock, as a negative alpha indicates strong future performance.

Previous problemNext problem

Verified step by step guidance

Understand the concept of alpha in investments: Alpha measures the performance of an investment relative to a benchmark index, adjusted for risk. A positive alpha indicates outperformance, while a negative alpha indicates underperformance.

Analyze the meaning of a negative alpha: A negative alpha suggests that the stock is underperforming compared to its expected return based on its risk level.

Evaluate the implications for investment decisions: If a stock has a negative alpha, it may not be meeting the investor's expectations or the market's risk-adjusted return standards.

Consider the appropriate action: Based on the underperformance indicated by the negative alpha, an investor might consider selling the stock, especially if there are better-performing alternatives available.

Avoid common misconceptions: Do not ignore the alpha value, as it is a critical metric for assessing performance. Also, a negative alpha does not imply lower risk or strong future performance, so holding or buying more of the stock may not be advisable.