What "Blue Chip" Companies Are?
The phrase “blue chip
companies”, according to the definitions is, “Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends. Gilt-edged security.” (ANON, 2005, http://www.trading-glossary.com/b0167.asp).
Thus, in general, we can say that blue chip companies are the ones with the
largest market capitalization and largest liquidity. “Liquidity refers to how quickly and cheaply an asset can be
converted into cash. Money (in the form of cash) is the most liquid asset.”
(Moffatt, 2005, http://economics.about.com/cs/economicsglossary/g/liquidity.htm) Now, that these two phrases have been defined, it is now
time to proceed with the actual valuation of the blue chip companies and their
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