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Standard & Poor's Questions
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1. Your text defines the wealth of a business firm as the sum of all its assets. To determine its net wealth (or total equity) you have to subtract the firm's liabilities from its assets. Net wealth is the value of the firm and should be reflected in its market capitalization (or stock price times the number of shares outstanding). Firms in different industries will require different amounts of wealth to create the same market value (or market capitalization). You are asked in this problem to compare wealth (total assets), net wealth (assets less liabilities), and market capitalization of a large firm in each of the following industries: Financial Services (Citigroup, ticker symbol C); Manufacturing (General Motors, GM); and High Tech (Microsoft, MSFT). Use the S&P Market Insight website at www.mhhe.com/edumarketinsight where you can key in each firm's ticker symbol and find its most recent balance sheet under Excel Analytics and its market capitalization under Financial Hits (Highlights). Are you surprised by how different these firms are in terms of the dollar value of assets required to create one dollar of market value?







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