Watch the following 2 videos to get an understanding of capital investment. First, learn what a Production Possibilities Frontier is.
Next, how can companies grow through capital investment?
Read this article by Peter Thiel, co-founder of Paypal.
Discuss: Why does he think that businesses have not invested in capital goods? Why do companies buy back stock? What is the downside of this practice?
Read the following article concerning stock buy backs.
Assignment: After reading the above article, write a paper answering the following questions:
1. What are the benefits of a stock buyback?
2. Does a buyback indicate that a company is healthy or is it an indication that a company has run out of ideas? Explain your answer.
Your paper may be hand written or typed. Either way, submit your paper by the end of class.
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