Events just described reflect any behavioral biases

Reference no: EM13308738

At the beginning of 2001, Merck's CFO Judy Lewent predicted that Vioxx sales for the year would be between $3 and $3.5 billion. In June she qualified her prediction to say that although Vioxx sales would be closer to the lower end of the prediction range, four of their top five drugs would achieve the upper end of their prediction ranges. One month later, she stated that Merck's research pipeline was as productive as any other time in the firm's history. However, in August the Journal of the American Medical Association published a study linking Vioxx to an increased risk of heart attack and stroke. Immediately thereafter, sales of Vioxx began to slow. In 2001 Vioxx sales were $2.3 billion. In 2002 Vioxx sales were $2.5 billion.

In light of the graph of return on equity displayed in exhibit 1-4, discuss whether the events just described reflect any behavioral biases.

Reference no: EM13308738

Questions Cloud

Heavy concentration in mortgages : Savings institutions are exposed to credit risk as a result of their heavy concentration in mortgages, mortgage-backed securities, and other securities. They attempt to diversify their investments to reduce credit risk. Savings institutions ar..

How much do you need to put away each month : 13. You want to retire as a millionaire. How much do you need to put away each month if:

What is the equivalent present value of the prize : At the reading of the will, you learn that your inheritance will allow you to receive the amount of $5600 at the end of each year for a total of 19 consecutive years. However, because of your young age, these amounts will not begin until the en..

A bond with 4% coupon rate : 1. A bond with 4% coupon rate (paid annually), 10 years to maturity, and $1000 face value.

Events just described reflect any behavioral biases : Discuss whether the events just described reflect any behavioral biases.

Multi-period fixed income capital budgeting : Multi-Period Fixed Income Capital Budgeting

The operating power of a high-end desk top system : You have just been hired by Hewlett Packard (HP) in its capital budgeting division. Your first assignment is to determine the net cash flows and NPV of a proposed new type of portable computer similar in size to an iPhone, but which has the op..

What will be your annual return on $100 invested in fund : What will be your annual return on $100 invested in her fund if she allows you to reinvest in her fund the 1% you earn each day?

The rate of inflation for the next 12 months : The rate of inflation for the next 12 months (t=1) is expected to be 1.4 percent; it is expected to be 1.8 percent the following year (t=2); and 2.0 percent the following year (t=3).Assume that the real risk-free rate is 3 percent for all matu..

User Account

All Pages