Why should Ms Jheng not expect to be rewarded

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BHP Billiton Ltd has obtained the rights to explore for gold in Ghana. BHP Billiton Ltd. decides to establish a new subsidiary company that will carry out this high-risk venture. The new company will be listed on the stock exchange. The gold exploration company expects to complete its exploratory search over the next 12 months, at which time it will report back to shareholders and make recommendations on the viability of the project.

Question 1: Advise BHP Billiton Ltd. on what form of legal structure the gold exploration company incorporate? Why would you recommend this structure?

Question 2: What are the advantages to the company and also to the shareholders of the structure you recommended?

Question 3: Ms Yu-Chun Jheng has an investment portfolio comprising Australian shares. At a meeting with you, her investment advisor, she requests explanations of the following: The difference between systematic risk and unsystematic risk and the factors that are responsible for the two types of risk.

Question 4: Why should Ms Jheng not expect to be rewarded for the unsystematic risk element in a share portfolio?

Reference no: EM132606608

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