Your Company Makes Copper Pipes

question 60

Essay

Your company makes copper pipes.Over the years,you have collected a large inventory of raw copper.The production process involves melting the copper and shaping it into pipes.You also have a large stockpile of pennies.Suppose the price of copper rises so much that the copper in the penny becomes worth more than one cent.Should you melt down your pennies?

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Definitions:

Bottom-Up

An investment approach that focuses on the analysis of individual stocks and fundamental factors affecting a company, as opposed to market-wide trends.

Portfolio Construction

The process of selecting and managing a collection of investments to meet long-term financial goals and risk tolerance.

Securities

Instruments evidencing ownership in a public corporation, a creditor's claim against a corporation or government body via bonds, or ownership entitlements through option contracts.

Financial Intermediaries

Entities such as banks, insurance companies, and investment firms that facilitate transactions between savers and borrowers by channeling funds from those who save to those who need to borrow.