Analyze financial ratios and their relationships with a firm’s performance.
Module 02 introduced the four main financial statements, financial ratios, and analysis. For this activity, consider a public for-profit corporation that is listed on the Standard and Poor’s (S&P) 500 stock index. The S&P 500 index contains the largest publicly listed companies in the United States and is typically considered a measure of the overall market. This will likely ensure that the company you consider has reported numerous financial statements. You may need to do an Internet search of the companies within the S&P 500. Sources like Yahoo! Finance are listed below as tools to find the ticker symbol and relevant information. There are three components to this activity: (10 points on the basis of completeness and quality of work submitted.)
1) Introduce the company and determine its industry. Have you used or heard of its products or services? Is there a lot of competition in this industry? Is the industry growing or declining? What are your thoughts on the short-term and long-term growth for this company and industry? (30 points)
2) For the company you selected, calculate one ratio from each of the following sections in Module 02:
3) Given the financial ratios you calculated and the company outlook, consider a recommendation for the stock. For this assignment, use the following choices: (30 points)
Buy (typically positive opinions on outlook and ratios from the company)
4 assignment requirement. Please utilize 5 sources for each assignment and have at least 10 different in text citations. utilize the template provided. Early submission is appreciated. Please conduct all calculations on excel as described below.
Topic 1: Prof. Ed’s video and image resources. I have put together the following multimedia resources (i.e., videos and images) to help you learn about the concepts we’ll be exploring in this course. You can find them at the hyperlink below:
You are also welcome to visit my entire website devoted to students of Accounting and Finance by visiting http://www.penn-oaks.com/.
Topic 2: Module 1 case 1. Module 1 Case 1 is really designed to give you the opportunity to work with time value of money concepts. I hope that all of you will choose to work them using Excel functions, but you are also welcome to tackle time value of money concepts with Excel formulas, with calculators (either online or physical), or with tables. Ideally, you will all submit your work as an Excel file, but you are welcome to submit your work as a Word or .pdf file as well.
Be sure to take advantage of my video and image (i.e., multimedia) presentations since I work through many time value of money exercises for you.
Topic 3: Finance topics document. Class, I came across this Finance Topics document. It contains many useful concepts related to the topics we explore in this course. I think the most useful part of this document falls under Topic 1.1b, “Ten Principles that form the foundation of Financial Management.” You may find some of these principles helpful to you as you tackle the graded assignments and discussions in this course. You can view and download it from the hyperlink below.
Topic 4: Do not post early in the discussions. Our class discussions have starting and ending dates. Posting early is equivalent to speaking to the class before they arrived, just as posting late is equivalent to speaking to the class after everyone has left.
If you have posted early, please be sure to make an EXTRA value-added post, since the post you made early will not count, and please do not post early in all future discussions.
Topic 5: Discussion Expectations. In each graded discussion, I wanted to share my expectations about what I’m looking for.
Keep in mind that you will graded using the discussion grading rubric. I have attached an image of it at the bottom of this post.
I will be looking for a minimum of three discussion posts in each graded discussion (but keep in mind that posting the minimum does not mean that you will earn the maximum score). You can expect to earn the maximum score when you make five or more value-added posts in each graded discussion.
I will be looking to see that you participated on at least three unique days in each graded discussion. If you cannot participate on three unique days, but still make meaningful posts, you can expect to earn a score that will not exceed 89%.
Late discussion participation will earn only partial credit. The discussions are meant for maximum student participation and should take place during the time frame in which they are scheduled. For late posts in our graded discussions, only your original discussion post will be graded (since at the time you will be posting in the discussion all others will have already moved on to a subsequent discussion in a subsequent module). Full credit won’t be possible, since you would not have participated with others on a timely basis (and the discussions are designed for maximum student participation). Expect partial credit for late discussion posts to fall near 70% but no higher.If you do make your original discussion post late in any module, you must contact me to let me know. You can either make a post in the ungraded Questions, Ask area of the Cyber Café, or you can contact me via email at edward.kaplan@trident.edu. If you don’t contact me, I won’t know that you have posted late in an earlier module, since I grade in batch and once I grade, I don’t go looking for late posts.
Single-sentence posts earn no credit, and simple “I agree” or “Nice work fellow student” posts will not earn any credit. It is okay to agree with or compliment your fellow classmates, but you must then follow up with some substantive comments as well.
Posts that are nothing more than the exact words of others earn no credit, even if they appear in quotes and are properly referenced. I think it is great and very beneficial when students discover relevant information to our discussion topics from other sources they have found over the internet. In the discussion threads, the correct way to post information you have found involves summarizing what you have found (in your own words) and then providing the web link to where the source of your summary originated. If the link has a few ideas that you want to quote word for word, you certainly can do that. Just be sure you put those words in quotes so everyone reading your post understands you are quoting the work of others. Your posts should never simply be a cut and paste of someone else’s words–even if it appears in quotes and has the web site listed as a reference. Instead, summarize the main points and provide the web link. That way, it is clear you understand how the topic relates to our discussion and others interested in learning more can visit the web site you have provided.
Posts made early earn no credit and should be avoided.
Module 1 – Case
PRESENT VALUE AND THE RISK/RETURN TRADE-OFF
ASSIGNMENT OVERVIEW
For this assignment, make sure to first carefully review all of the required readings about present value, future value, risk and return, and the CAPM. Once you are relatively comfortable with these concepts, try working through some of the examples in the background readings and try computing the answers on your own. Once you are confident you both understand the concepts and the computational steps, complete the assignment below.
CASE ASSIGNMENT
Present your answers to the problem below in a Word document, and also upload an Excel file with your computations. Excel is required for Questions 2 and 3. Excel is optional for Questions 1 and 4, but you are required to show your steps for all quantitative problems. Even if you get the answer wrong, you can still get partial credit if you show your work.
Calculate the following:
Suppose you wish to raise some money for your favorite local charity. This charity needs $50,000 a year to run its operation and you want to make sure that it is ensured an annual payment of this amount from now on for every year in the foreseeable future. Given an interest rate of 5%, how much would you have to fund this perpetuity to guarantee the charity a payment of $50,000 per year?
You decide to put $1,000 in a new bank account and don’t plan to withdraw the money for 10 years. If your bank does continuous compounding and the interest rate is 1%, what will be the value of this bank account in 10 years?
Suppose you won the lottery but not all of your winnings will come in one year. Instead, you will get a series of annual payments over the next five years. The table below tells you what your payment will be every year for the next five years. Use the information in the table to make the following computations:
The present and future value of your lottery ticket if the interest rate is 8%
The present and future value of your lottery ticket if the interest rate is 10%
Year
Payment
1
5000
2
6000
3
7000
4
8000
5
9000
The table below gives the probability of different returns for three different assets. Using this table, calculate the following:
The expected return of each asset
The standard deviation of returns of each asset
The coefficient of variation of each asset
Based on your answers to B) and C) above, which asset has the highest total risk and highest relative risk?
Asset A
Asset B
Asset C
Probability
Return
Probability
Return
Probability
Return
0.3
5
0.1
25
0.1
4
0.4
8
0.3
20
0.8
5
0.3
9
0.5
15
0.1
6
0.1
14
Suppose the market return is 8%, the risk-free rate is 1% and the beta for a given stock is 1.2. Answer the following questions based on this information:
What is the required return for this stock?
If the beta increases by 50% (but risk-free rate remains 1%), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above?
If the market return increases by 50% (but beta remains at 1.2), what will be the new required return for the stock? What is the percentage-wise change in required return compared to your answer to A) above?
Suppose there are three different companies. The first one, Trendy Tech Inc., has investors who are “fair-weather friends.” When the stock market is going up, everybody wants to invest in Trendy Tech, but as soon as the market goes down everyone jumps ships and sells their shares. The second company is Oily Oil Inc. Oily’s stock price seems to depend only on the price of oil and nothing else. Finally, there is Conglomerated Conglomerate Inc. Conglomerated is a giant company with holdings in almost every industry imaginable—from cell phones to grocery stores and even amusement parks. Based on this information, which company would you think has the highest beta? The lowest beta? Which one do you think has a beta closest to 1?
ASSIGNMENT EXPECTATIONS
Answer the assignment questions directly.
Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.
For computational problems, make sure to show your work and explain your steps.
For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.
Module 1 – Background
PRESENT VALUE AND THE RISK/RETURN TRADE-OFF
To begin the module, start off with these two videos to give yourself an overview of the main concepts covered in this module. The first video is from Professor Holthausen of the Wharton School of Business at the University of Pennsylvania. He explains the concept of the time value of money and also goes through some calculations using Microsoft Excel. The second video is from Professor Pinder of the University of Melbourne and covers some basic concepts of risk and return.
A second video from Dr. Pinder on the capital asset pricing model is highly recommended but not required. A link to Dr. Pinder’s video is included under the optional reading list below.
Once you have finished viewing the videos, take a closer look at the concepts covered in the videos by reading through these book chapters. In addition to reading about the basic concepts, make sure to work through some of the numerical examples as these will help you with your assignments:
time and money scale
Vishwanath, S. (2007). Chapter 2: Time value of money. Corporate finance: Theory and practice. SAGE Publications India. Available in the Trident Online Library.
risk and reward tightwire
Vishwanath, S. (2007). Chapter 3: Risk and return. Corporate finance: Theory and practice. SAGE Publications India. Available in the Trident Online Library.
If you have any difficulty with the material above, it is highly recommended that you take a look at some of the optional readings below. The materials below cover the same material but sometimes concepts can be absorbed better if you see some explained in a different manner or see additional examples.
Finally, if you don’t have much experience with Microsoft Excel then please take a look at the following videos:
Module 2 – Case
STOCK AND BOND VALUATION
ASSIGNMENT OVERVIEW
Before starting on this assignment, make sure to thoroughly review the required background materials. This assignment will require you to use the various discounted cash flow methods and dividend models to make computations. In addition to knowing the computational steps involved in stock and bond valuation, make sure you also understand the basic concepts.
Submit your answers as a Word document. Make sure to show your work for all quantitative questions, and make sure to fully explain your answers using references to the background readings for any conceptual questions. Questions 1 and 3 will require Excel, so submit an Excel file that shows your computational steps as a separate file in addition to your Word file. Question 4 is purely conceptual, no computations are necessary but make sure to apply and reference concepts from the required readings in your answers to each of the scenarios.
CASE ASSIGNMENT
Suppose you buy a bond that will pay $1000 in ten years along with an annual coupon payment of $50 and the interest rate is 4%. Answer the following questions:
What is the value of this bond?
Now suppose the bond has no coupon payments (it is a “zero coupon” bond) but still pays $1000 in ten years. What is the value of this bond?
What would happen to the value of the bond if the inflation rate unexpectedly goes up? What the bond value increase or decrease?
Now suppose the bond still pays an annual coupon of$50 but the interest rate drops to 2%. What is the new value of this bond?
The XYZ Corporation pays a dividend of $1 for each share and its required rate of return is 8%. Answer the following questions:
Assuming zero growth in dividends, what is the value of each share?
Now assume a 4% annual growth rate in the dividend paid. What is the value of each share?
Assume the growth rate is still 4%, but the required rate of return drops to 6%. What is the new value of each share?
Acme Medical Corp. is expecting the cash flows from 2018-2022 in the table below. After 2022 it is expecting growth in cash flow at an annual rate of 3%. The firm has determined that its weighted average cost of capital (discount rate) is 7%. Using the table below calculate the following:
What is the present value of Acme’s future cash flows using the discounted cash flow model?
If the firm has 200,000 common shares outstanding, zero preferred shares, and debt with a market value of $10,000,000 what would be the value of each share?
Now suppose the discount rate increases to 10%. How would your answers to a) and b) above change based on the new discount rate?
Year
Cash flow
2018
500,000
2019
550,000
2020
620,000
2021
700,000
2022
800,000
Suppose the Alpha Manufacturing Corporation is experiencing extreme financial difficulties and is considering bankruptcy. Its shareholders are currently almost equally divided about whether or not the company should go bankrupt, with one outspoken faction pushing for bankruptcy and the other strongly opposing it. They have $50 million in debt all in the form of bonds, and bondholders are pretty well united in that they want the firm to declare bankruptcy.
The CEO announces that he is leaning against bankruptcy. This means one faction of shareholders is happy, but another faction of shareholders is very upset and the bondholders are also unhappy. Can the unhappy faction of shareholders team up with the bondholders to vote out the CEO? Explain your reasoning using references from the background readings.
Suppose Alpha ends up declaring bankruptcy. They do not have any cash in the bank but they own $60 million worth of real estate. They only have one type of shareholder—common shareholders. If they sell the real estate, how much of this will bondholders get and how much with shareholders get? Explain your reasoning using references from the background readings.
Now suppose that Alpha has two classes of shareholders—common shareholders and preferred shareholders. Preferred shareholders are owed $20 million in dividends that have been unpaid in the last two years. If Alpha goes bankrupt and sells its $60 million worth of real estate, how much will bondholders get, how much will common shareholders get, and how much will preferred shareholders get? Explain your reasoning using references from the background readings.
ASSIGNMENT EXPECTATIONS
Answer the assignment questions directly.
Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.
For computational problems, make sure to show your work and explain your steps.
For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal
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Spring 2018 BUS 335: Midterm Section II
Please read all questions carefully.
Please provide LEGIBLE answers. You are encouraged to use word processors, for example Microsoft Word, as much as possible Where you use formulas, show them.
For full credit, show all your work.
1. Suppose you make an investment of $3,750. This first year the investment returns 11%, the second year it returns 7.5%, and the third year in returns 9%. How much would this investment be worth, assuming no withdrawals are made? (3 points)
2. A business you inherited will pay you $25,000 per year for 25 years. You will receive the first payment today. Suppose the fair return on the business is 7.5%, how much should you ask for it if you decide to sell the business? (3 points)
3. Suppose you received an offer in the mail to sign up for a new credit card with no annual free. The offers states that you will be charged an annual percentage rate (APR) of 16% on outstanding balance. You will be billed monthly. What is the effective annual
interest rate for this credit card? (2 points)
4. Suppose that the monthly mortgage payment on your house is exactly $800. You have 180 payment remaining on the mortgage. Your mortgage has an interest rate of 6% compounded monthly. The next payment is due immediately. What is the balance
of the mortgage? (3 points)
I certify that I have acted honorably.
Signed:
5. What is the price of a 5 year zero-coupon bond with a face value of $1000 and a yield
of 8%? (2 points)
6. TSW Inc. had the following data for last year: Net income = $800; Net operating profit after taxes (NOPAT) = $700; Total assets = $3,000; and Total operating capital = $2,000. Information for the just-completed year is as follows: Net income = $1,000; Net operating profit after taxes (NOPAT) = $1,000; Total assets = $2,600; and Total operating
capital = $2,500. How much free cash flow did the firm generate during the just completed
year? (3 points)
7. Suppose that, two years ago, you purchased a 10 year bond with 8% annual coupon at par. You figure out that the current yield on the bond is 5.5% after you receive the second annual coupon payment. What is the value of the bond today? If you buy the
bond at today’s price, what is the yield to maturity on the bond? (4 points)
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Your spreadsheets should be well planned and should look attractive. You are expected to add tables, charts and graphics to enhance the appearance. Use shading, colors, font changes, and any other formatting changes that might add to the appearance of your spreadsheet. Remember to make your spreadsheets and charts easy to understand and attractive to look at. This will be part of your grade.
INSTRUCTIONS
You have been given $20,000 to invest in publicly traded stocks, ETFs or Mutual Funds on one of the major US Stock markets (NYSE or NASDAQ). BY 2/27 Wednesday, you must have used this money to purchase the shares of between 7 and 15 different company, ETFs or Mutual Funds that are traded on one of these exchanges. You are expected to spend no more than $20,000 but rounding may mean that you will have negligible small amount of cash left (no more than $25 is acceptable depending on the share price.
By COB (close of business Wednesday night) you must have purchased all your shares and calculated the total value of your portfolio using the share price at the end of the day of purchase (I will assume shares more purchased by closing time of the day of purchase). You can use search engines https://finance.yahoo.com/portfolios or https://www.bloomberg.com/markets/stocks to find the value of the shares you intend to purchase.
First I am going to need from you an Excel Spreadsheet with the following information (as a Minimum) in table form.
Title worksheet: Name of group members
Worksheet: Initial portfolio (title). Table: name, symbol, share price at time of purchase, purchase date, total cost.
you will add a new sheet to your workbook as follows:
Week 1 close, Week 2 close, Week 3 close.
(You can create these worksheets anytime from Friday 4:30
cst to Sunday midnight. The markets and closed and
therefore the current price will not change until
Monday morning when markets reopen). These worksheets will contain the following information: name, symbol, share price at time of purchase, purchase date, total cost, current price, current value, total gain/(loss), % gain(loss) rounded to 2 decimal places and total value of the portfolio, % gain (loss) of the whole portfolio.
Your final worksheet should contain a sparkline.
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Diversification and its relation to the opportunity cost of capital
Diversification and its relation to the opportunity cost of capital
i. the concept of diversification and its relation to the opportunity cost of capital. ii. the concept of a call option. iii. Draw a decision tree for analyzing a practical investment decision.
The essay should not be more than 3000 words in length.
For each concept that you discuss, clearly explain the concept.
Also discuss why the concept is important for financial decision making and the analysis of investments.
Your grade for the traditional essay component will be based in part on (i) how clearly you explain the concepts you choose to discuss and (ii) how well you
explain why the concepts are important for financial decision making in general and for the analysis of investments.
You must not quote from any source without explicitly acknowledging that source.
Kindly refer to the specific questions about the decision tree from the uploaded pdf file.
Please be thorough and be time sensitive as i might not have enough time to go through the paper before the submission deadline.
BU5596: International Finance 2019 J. Swierzbinski
Course Assessment – Essay Assignment.
Instructions
The essay part of the assessment for BU5596 International Finance consists of two parts – a problem and a traditional essay component. The combined essay assignment is worth 80 % of the total mark for the course. The remaining 20 % of the marks for the assessment are based on an in-class
quiz held on Wednesday 27 February.
The problem part of the essay assignment is worth 25 % of the grade for the essay assignment. The traditional essay component is worth 75 % of the total marks for the essay assignment. The essay assignment is an individual assignment. You may use whatever books, lecture notes, etc. you wish, but
you may not discuss either part of the essay assignment with anyone. In particular, you should not discuss either part of the assignment with
other students. Nor should you read another student’s assignment. You may ask me questions about the assignment.
For full-time students, the essay assignment must be submitted no later than 10:00 AM, Monday, 4 March 2019.
For part-time students, the essay assignment must be submitted no later than 10:00 AM, Monday, 11 March 2019.
Two paper copies of the essay assignment should be submitted. The traditional essay component of the essay assignment must be typed. The problem part of the essay assignment, which involves a decision tree, does not need to be typed. However, it should be written neatly and clearly. In order to grade the assignment, I must be able to read it.
For the paper copies, fasten both the problem part and the traditional essay component together with a stapler or other fastener before
submitting it. The paper copies should be submitted in the box labeled PGT Management near the Business School office on the second floor of the
Edward Wright Building. Click on the Assessment link of the My Aberdeen course webpage to download a copy of the cover sheet that should be
attached to each paper copy.
In addition, a copy of the traditional essay component must be submitted via Turnitin. See the regulations governing School Policies on
MyAberdeen for more details. Also, click on the Assessment link on the MyAberdeen course webpage. You do not have to submit the problem part of
the essay via Turnitin.
Note. If you have questions about either the format or content of the assignment, you should contact Prof. Joseph Swierzbinski.
Part A. Traditional Essay Component of the Essay Assignment (75 % of the total mark)
The traditional essay component of the essay assignment should not be more than 3000 words in length.
I would like you to write an essay discussing at least two and not more than three of the four concepts listed below.
i. the concept of diversification and its relation to the opportunity cost of capital.
ii. the concept of the law of one price and the idea of arbitrage.
iii. the concept of a call option.
iv. any other concept which was discussed in the course and which you believe to be interesting and important.
For each concept that you discuss, clearly explain the concept.
Also discuss why the concept is important for financial decision making and the analysis of investments.
Your grade for the traditional essay component will be based in part on (i) how clearly you explain the concepts you choose to discuss and (ii) how well you
explain why the concepts are important for financial decision making in general and for the analysis of investments. A well written, well organized
essay is also likely to earn a higher grade.
Part B. Problem Part of the Essay (25 % of the total mark) An investor (a venture capitalist) is considering whether or not to set up a
company to produce a new product. There are two periods, period 0 and period 1. The investor must decide whether to set up the company in period 0,
in period 1, or not to set up the company at all.
If the investor sets up the company in period 0, then the investor must pay a setup cost with a present value of F = 450 in period 0. In addition to paying
this cost, the investor will receive the net present value produced by the company in period 0, V0 = 100, and the net present value V1 produced in period 1. The net present values V0 and V1 include the revenue obtained from the sale of the new product minus varying operating costs and taxes.
However, as is common practice, these present values do not include the setup cost, F, which is specified as a separate item in this paragraph.
For simplicity, we also assume that setting up the company is instantaneous, so that the new product can be produced in the same period that the company
is set up. Note that the cost of setting up the company, F, is paid only in the period in which the company is first set up.
3
From the perspective of period 0, the net present value V1 produced by the company in period 1 is uncertain because of uncertainty in the future demand for the new product. The investor believes that there is a 50% chance that the
demand for the new product will be high at the beginning of period 1. In other words, there is a probability of 0.5 that the demand for the new product is high in period 1. In this case, the net present value produced by the company in
period 1 will take the high value VH = 600.
With probability 0.5, the demand for the new product will be low in period 1. In this case, the net present value produced by the company in period 1 will take
the low value VL = 150.
.
Suppose, for simplicity, that the net present value produced by the company in period 1 is the same whether the company is set up in period 0 or in
period 1. Suppose also that the present value of the cost setting up the company, F, is the same whether the company is set up in period 0 or in
period 1.
All numerical values for the net present values produced by the company and for the cost of setting up the company, F, are present values denominated in millions of pounds.
Suppose also that the investor is risk neutral and wishes to maximise the expected net present value of the opportunity to set up the company
(including the cost of setting up the company and, if necessary, the cost of the marketing study described below).
The investor has three choices in period 0. (i) The investor can choose to pay the setup cost F in period 0 and set up the company immediately in period 0.
(ii) The investor can choose in period 0 to abandon the opportunity to set up the company in either period 0 or period 1. In this case, the investor neither
receives nor loses anything and so obtains an expected net present value of 0. (iii) The investor can choose to defer the decision to setup the company
until period 1 and, in period 0, commission a marketing study to determine whether or not the demand for the new product will be high or low in period 1.
Let M indicate the present value of the cost of the marketing study. The cost M must be paid at the beginning of period 0.
By deferring the decision to setup the company and commissioning the marketing study, the investor learns whether or not the net present value
obtained by setting up the company in period 1 will be high or low before having to decide whether or not to pay the setup cost F to set up the company
in period 1. Of course, by choosing to wait until period 1, the investor also loses the net present value V0 that could have been produced by the company in period 0.
Suppose that the investor needs the results of the marketing study to know whether the demand for the new product will be high or low before he or she
must decide whether to set up the company in period 1. Hence, it makes no 4 sense for the investor in this example to defer the decision to set up the
company until period 1 unless the investor also commissions the marketing study.
Questions
(i) Draw a decision tree representing the decision problem facing the investor.
(ii) Suppose that M = 30 million pounds. What is the optimal policy for the investor to follow? Carefully explain your answer.
(iii) For what positive values of M would the investor’s optimal choice be to commission the marketing study and wait until period 1 to decide whether or not to set up the company? Carefully explain your reasoning.
(iv) Suppose now, for simplicity, that the cost of the marketing study is negligible. In particular, let M = 0. To what extent would you agree that, if
M = 0, then, for any positive values of V0, VH and VL, it would always be optimal to commission the marketing study and wait until period 1 to decide
whether or not to set up the company? Explain your answer.
(v) Continue to suppose that M = 0. To what extent would you agree that the expected net present value obtained by choosing to commission the
marketing study and wait until period 1 to decide whether or not to set up the company would always be at least as large as the expected net present value obtained by choosing in period 0 to abandon the opportunity to set up the company in either period 0 or period 1? Explain your answer. To what extent
does your explanation depend on the assumption that M = 0?
End of Questions.
Plagiarism. Plagiarism is taken very seriously by the University. You should read the section on plagiarism in the course booklet and the school policy on
Academic Integrity and ask me if you have any questions.
You must not quote from any source without explicitly acknowledging that source. If you copy from a source without a proper reference it is likely that Turnitin or I will detect it, and the consequences for you could be severe.
See the guidelines for reference and citation in the course booklet and the reference to the library guide to referencing and citation in the school policy
section on Academic Integrity.
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Explain the causes of the global financial and economic crisis that started in the U.S. in 2007. What effect did it have on the global economy? How did the global economy recover? What kind of fiscal and monetary policies were implemented? What are the challenges that remain for the global economy?
Your well-written paper should meet the following requirements:
5-6 pages in length
Support your analysis by referencing and citing at least three scholarly sources in addition to embedding course material concepts and principles. Use University academic writing standards and APA style guidelines, citing references as appropriate.
Module Introduction
In this module, you will explore the international monetary and financial environment. You will learn about exchange rates and currencies in international business, as well how exchange rates are determined and the emergence of the modern exchange rate system. You will also be introduced to the key players in the monetary and financial systems and learn about the global debt crisis.
Readings
Note: The following readings may require you to be logged in to the Saudi Digital Library. You may do that here.
Recommended
• Chapter 9 PowerPoint slides – International Business: The New Realities
• Obstfeld, M., &Taylor, M. A. (2017). International monetary relations: Taking finance seriously. The Journal of Economic Perspectives, 31(3), 3-28.
• Prasad, E. (2016). The international monetary system: Is it fit for purpose? Brookings. Retrieved from https://www.brookings.edu/research/the-international-monetary-system-is-it-fit-for-purpose/
For Your Success
This week, you will complete a Critical Thinking Assignment. You need to explain the causes of the global financial and economic crisis that started in the U.S. in 2007. What effect did it have on the global economy? How did the global economy recover? What kind of fiscal and monetary policies were implemented? What are the challenges that remain for the global economy?
Remember to complete the Check Your Understanding quiz to ensure that you have mastered this week’s concepts. There will also be a required Live Session this week.
Learning Outcomes
1. Discuss the exchange rates and currencies in international business.
2. Evaluate monetary and financial systems.
3. Identify the key players in the monetary and financial systems.
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This part of the assessment addresses the following course outcomes:
• Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements
• Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments • Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success • Analyze corporate financial data for multiple companies in evaluating past and future financial performances
Your submission must address the following critical elements:
I. School Versus Work
A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell any of your 500 shares of Apple stock you bought five years ago, 100 Apple bonds (3.25% coupon rate) that are five years from their 10-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.
B. What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.
C. Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.
D. Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.
II. Bonus Versus Stock
A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?
B. What are the advantages and disadvantages of each option? Be sure to support your answers.
C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.
III. Compliance
A. While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.
B. You know that accepting this job may eventually lead to
a promotion into the role of the financial manager.
As the potential financial manager, what federal and
shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?
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Cite 3 peer-reviewed, scholarly, or similar references to support your chosen trends and issues.
Note: This assignment is meant to be a high-level look at these issues. You will cover the issues in more depth in the Week Five Finance Trends assignment.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
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Identify ethics and compliance issues associated with those trends.
Cite 3 peer-reviewed, scholarly, or similar references to support your chosen trends and issues.
Note: This assignment is meant to be a high-level look at these issues. You will cover the issues in more depth in the Week Five Finance Trends assignment.
Use at least three (3) quality references Note: Wikipedia and other related websites do not qualify as academic resources.
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Your team has been asked by a local community college instructor to speak to a class about health care accounting. The instructor has asked you to prepare a 10- to 15-slide presentation that includes the following:
Describe the relationship between financial statements and the supplemental components in an annual report.
Explain how the accounting equation affects financial statement components.
Determine the effects of transactions on the accounting equation.
Include the following with your presentation:
Detailed speaker notes
Specific examples
Format your presentation according to APA guidelines.
Cite 3 peer-reviewed, scholarly, or similar references to support your paper. Include citations in speaker notes and slides as appropriate.
Determine the effects of transactions on the accounting equation.
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