Finance Assistance

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Instructions

Examine some important theories and concepts associated with interest rates. Safe investments usually have fixed interest rates. You have been asked to assemble this presentation for a weekly staff meeting, so your audience will be senior managers and a couple of vice presidents. Note their interest in this topic is very high so you need to be very succinct and clearly explain the risks and rewards of building a successful portfolio. In reference to term structure, interest rate risks, and duration supported by numerical illustration where applicable, in a PowerPoint presentation, evaluate the following:

1. The pricing of bonds, the calculation of the bond yield, and how bond prices adjust across time for premium, par, and discount bonds.

2. An evaluation of the yield curve and the theories to explain the shape. Discuss how these theories can be helpful in bond investing.

3. The interest rate risk for bond investments. Form a graphical presentation of the concepts.

4. The concept of duration and how it is useful in the context of bond portfolio analysis. You want to clearly discuss both the price risk measurement value for duration as well as how duration can measure the dynamics of price and re-investment rate risk across time for a bond portfolio.

It is critical that with each discussion above that examples are formed to illustrate the concept. Whenever possible, you want to demonstrate concepts using graphical approaches.

The required length of the PowerPoint Presentation option for this assignment is 12-15 slides (with a separate reference slide). Your presentation MUST include notes that contain 100-150 words per slide (this is your script). Be sure to include citations for quotations and paraphrases with references in APA format and style. Save the file as a PPT file with the correct course code information in the name.

The required length of the Video option for this assignment is 7-10 minutes. The video file must be saved in a .wmv format and be less than 8 MB is size. If you do not have video software or are unable to create a video please choose the PowerPoint option.

 
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market value proportions.

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A firm has determined its optimal capital structure, which is composed of the following sources and target market value proportions.

Table 1:

Source of capital: long term debt   Target Market Proportions: 20% Source of capital: preferred stock Target Market Proportions: 10 Source of capital: common stock equity Target Market Proportions: 70

Debt: The firm can sell a 12-year, $1,000 par value, 7 percent bond for $960. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40.

Preferred Stock: The firm has preferred stock selling at $72 per share par value. The stock pays a $10 annual dividend.

Existing Common Stock: A firm’s common stock is currently selling for $18 per share. The dividend expected to be paid at the end of the coming year is $1.74 and the dividend rate has grown at 5% per year and should continue to do so for the forseeable future.

New common stock if issued must be underpriced $1 per share in floatation costs.

Additionally, the firm’s marginal tax rate is 40 percent.

Questions are:

1) What is the firm’s before-tax cost of debt? (See Table 1)

2) What is the firm’s after-tax cost of debt? (See Table 1)

3) What is the firm’s cost of preferred stock? (See Table 1)

4) What is the firm’s cost of a new issue of common stock?

5) The firm’s cost of retained earning is?

6) The weighted average cost of capital up to the point when retained earnings are exhausted is?

7) If the target market proportion of long term debt is reduced to 15 percent- increasing the proportion of common stock equity to 75 percent, what will be the revised weighted average cost of capital?

4) What is the weighted

 
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Paraphrase Answers

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1. Do you believe that union shop agreements are violations of a worker’s freedom of choice in the workplace?  Do you think open shop agreements unfairly penalize workers who pay dues to unions they have elected to represent them in the workplace?

I do not believe union shop agreements are violations of a worker’s freedom of choice in the workplace and I do not believe open shop agreements unfairly penalize workers who pay dues to unions. I believe in people being able to choose where they work knowing if there are union shop agreements or open shop agreements and people can decide whether or not they want to participate in unions or the company that they are interested in working for. For a union shop agreement, as long as the person applying for the job is aware of the agreement, they can decide whether they want to do it or not, so it is not unfair. For the open shop agreement, the ones who decided to join the union did so knowingly and willingly so they are not being unfairly penalized as others were hired and decided not to join the union. It’s all about choice and living with the choices one makes.

2.   2. Some college football and basketball coaches earn huge incomes.  Should college volleyball and swimming coaches be paid comparably?  Should players in the Women’s National Basketball Association (WNBA) be paid the same as their male counterparts in the National Basketball Association (NBA)?  What role should market forces and government play in determining such wages?

This is another example of people choosing their career paths and knowing what they are deciding to do for themselves. If college football and basketball coaches get paid more, it is because college football and basketball generate more revenue than college volleyball and swimming. Because of this, the football and basketball jobs are worth more to the college because of the revenue they generate and the coach positions for them are of higher importance from a business standpoint. I don’t believe market forces or the government should be involved at all in determining such wages. I am totally for less government involvement in the lives of people and business and allowing people and business to have as much freedom as possible. And if colleges want to pay more for basketball and football coaches than they do for swimming and volleyball coaches, that is their choice just as it is the choice of the coaches to accept the jobs or not.

 

3.  3. If a company provides employer-paid child care services to workers with children, should those who don’t have children or don’t need child care services be paid extra?

No, I do not believe workers who don’t have children or don’t need child care services should be paid extra. When someone decides to apply for a job at a company, they should be aware of what they are applying for, what the job is as well as the pay and benefits. If the person accepts the position, then that person accepts the pay, benefits and rules of the company. Just because a benefit is offered that does not apply to someone does not mean that someone should be paid more because he or she does not use it. What if that person did get paid more and then has a family later and decides to partake in the childcare benefit? Then should that person’s extra earnings be taken away? I’m sure they wouldn’t like taking a pay cut now that they want to enjoy the benefits they are now choosing to partake in. Here are the benefits, if one choses to or not to utilize them, that is up to the individual and pay will not be affected either way. You decided to work here, you knew what you were getting into, and it is your free choice to work elsewhere just as it was your free choice to work here knowing what this company’s benefits are and aren’t.

 

 

 
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Roles and Responsibilities for Compliance

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This Project for Final Project Part I Rubric Only. The work must meet the rubric requirements.

Final Project Part I Part I

Overview

Business professionals typically need to demonstrate a core set of financial knowledge to earn the job and to succeed on a job.

For this part of the assessment, you will be given a scenario in which you are asked to illustrate your financial management knowledge. This part of the final project addresses the following course outcomes:

ď‚· Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements

ď‚· Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments

Part I

Prompt You have completed an internship in the finance division of a fast-growing information technology corporation.

Your boss, the financial manager, is considering hiring you for a full-time job. He first wants to evaluate your financial knowledge and has provided you with a short examination. When composing your answers to this employment examination, ensure that they are cohesive and read like a short essay.

Your submission must address the following critical elements:

I. Analyze Roles and Responsibilities for Compliance

A. Examine the types of decisions financial managers make. How are these decisions related to the primary objective of financial managers?

B. Analyze the various ethical issues a financial manager could potentially face and how these could be handled.

C. Compare and contrast the different federal safeguards that are in place to reduce financial reporting abuse. Why are these considered appropriate safeguards?

II. Investment Options

A. If a private company is “going public,” what does this mean, and how would the company do this? What are the advantages of doing this? Do you see any disadvantages? If so, what are they?

B. How do the largest U.S. stock markets differ? Out of those choices, which would be the smartest private investment option, in your opinion? Why?

C. Compare and contrast the various investment products that are available and the types of institutions that sell them.

Review the attached rubric for  Final Project Part I Rubric  only for this assignment.

No copy of this assignment anywhere else, Take note.

Due: 03/25/2018 latest by 8PM Eastern Time.

I have also attached sample previous work by some old student from Coursehero for a guide along with your own personal best research. No copywork of old student work.

Thank you

Running head: FIN 320 FINAL PROJECT PART I 1

 

FIN 320 Final Project Part I 11

 

 

 

 

FIN-320 Final Project Part I

Kimberely J. Casey

Southern New Hampshire University

 

Final Project Part 1

I. Analyze Roles and Responsibilities for Compliance

A. Examine the types of decisions financial managers make. How are these decisions related to the primary objective of financial managers?

Every financial manager has three major decisions they must make to ensure the business runs smoothly. The first decision for financial managers to make is an investment decision or capital budgeting decision. The firms have many options to invest their funds with the firms selecting the most appropriate investment that will bring the maximum benefit for the firm (Pujari). One factor that affects the investment decisions is the cash flow project because it will need to be assessed properly before investing in the proposal (Pujari). Another factor that affects the investment factor is the return on investment because it will be able to bring back for the company (Pujari). The final factors that affect the investment decisions are the risks involved and the investment criteria. There are risks involved with any investment, so every proposal should be prepared with a moderate degree of risk only and the finance manager must compare all the available alternatives carefully by deciding where to invest the scarce finance of the firm (Pujari). It relates to the primary objective of financial managers by the careful selection of assets, which the funds will be invested for the firms.

Another decision for financial managers to make is financing decisions because a company can raise finance from various sources what include shares, taking loans and advances, or debentures. The main sources of finance can be divided into two categories which are owner’s funds and borrowed funds. The owner’s funds include retained earnings and share capital while borrowed funds include debentures, bonds, loans, and extra (Pujari). Some factors that affect the financing decisions include the cost, risks, cash flow position, control considerations, floatation cost, fixed operating cost, and state capital market. It relates to the primary objective of financial managers because the finance manager’s main concern is deciding how much to raise from both the owner’s funds and borrowed funds while comparing the advantages and disadvantages (Pujari). The borrowed funds will have to be paid back and involve some risks where the owner’s funds have no fixed commitment of repayment and no risk involved. The last decision for financial managers to make is working capital management decisions. Working capital management is concerned with short term cooperate financing by focusing on the management of association between the short term liabilities and short assets of a company (Working Capital Management). The main purpose of the working capital management is to make sure the company is capable of carrying out its functions and the company is meeting the short term obligations by receiving adequate cash flow.

As a company grows, the more strategic planning and outsourced functions coming in expands the financial manger’s roles and responsibilities. One responsibility of a financial manager is planning by using a long term financial strategy for the company when they delegate bookkeeping to the staff (Ashe-Edmunds). The financial managers will set goals for achieving specific gross profits, revenues, and profit margins with setting targets for production and overhead expenses (Ashe-Edmunds). This will create a master budget which is tied to the business’s accounts receivable, balance sheet, and payable reports that include cash flow and profit or loss statements. Another major key responsibility for a financial manager is cost containment by controlling the company’s expenses with setting spending levels and cutting costs (Ashe-Edmunds). They can create a request for proposals and purchasing polices for contractors to make sure the business is getting a combination of quality and price.

The most important role of a financial manager is cash flow management because it refers to the receipt of the actual money and payment of bills. It includes the monitoring of the receivables turnover by keeping enough cash and credit reserves available that keep the company financially stable (Ashe-Edmunds). If the company did not negotiate customer credit terms or supplier and vender terms right then the company will be waiting to collect the sales invoices after the bills are due (Ashe-Edmunds).

B. Analyze the various ethical issues a financial manager could potentially face and how these could be handled.

A financial manager could potentially face ethical issues that may include gross misconduct and demonstrate incompetence. Some financial managers may find themselves in unethical traps by misrepresenting cash flows in attempt to pad financial figures from the operating activities with allocating expense to invest in activities (Atton, 2015). They could be handled by doing third party audits, the laws passed into Congress to ensure transparency with an equal playing field in regards to trade and information, and the separation of the Board of Directors to ensure the measures of objectivity to the financial conduct (Atton, 2015). The financial manager must meet legal compliances because they need to make sure the company is meeting all of the legal obligations. It includes the employee benefits contributions, sales and income tax, state and federal labor wage requirements, and many more (Ashe-Edmunds).

C. Compare and contrast the different federal safeguards that are in place to reduce financial reporting abuse. Why are these considered appropriate safeguards?

A federal safeguard that is in place to reduce reporting abuse is the Chief Financial Officers Act of 1990 (CFO Act). The CFO Act lays down the foundation for the comprehensive reform of the federal financial management (Hatch, 2013, Pg. 6). It is considered appropriate safeguard because it establishes a leadership structure and requires the audit for financial statements (Hatch, 2013, Pg. 6). Another different federal safeguard that is in place to reduce reporting abuse is the Government Management Reform Act of 1994 (GMRA). It expanded the number of agencies covered by the CFO Act’s reporting provisions (Hatch, 2013, Pg. 7). It is considered appropriate safeguard because it allows the CFO to submit financial statements for previous years for the accounts and activities to the director of the OMB (Hatch, 2013, Pg. 7). The final federal safeguards that is in place to reduce reporting abuse is the Accountability of Tax Dollars Act of 2002 (ATDA) and considered appropriate safeguard because it further expands the CFO Act’s reporting requirements by covering all executive branches agencies to submit audited financial statements (Hatch, 2013, Pg. 7).

II. Investment Options

A. If a private company is “going public”, what does this mean, and how would the company do this? What are the advantages of doing this? Do you see any disadvantages? If so, what are they?

The two types of structures for companies are public and private. Public companies allows for any person to buy shares on the public stock exchange while private companies are those that are invite only for investors (Thakor, 2010). A private company going public means the company is opens its shares to the rest of the world through an initial public offering (Thakor, 2010). The company does this by filing a registration statement with the Securities and Exchange Commission (SEC) to become a SEC reporting company and register its securities with SEC (How Does My Company Go Public?). A company that went public was Whole Foods Market in 1992. In 2008, the company was ranked 369 on the Fortune 500 with the company posting $6.5 billion in revenues and $3.2 billion in assets (Springer, 2009). This is a great example of what a small company can do if it goes public. An example of a company that went public and failed was Pets.com. It lasted about two years because the company forgot to take into account the cost of shipping (Springer, 2009). The advantages of going public are access to capital, increased liquidity that can help a company by enabling it to grant stock options, public offerings provides the company with the currency to acquire other businesses, and the act of going public provides marketing for a company (Wasserman). This will help raise capital for companies so they can pay of their debts and buy equipment for the company. Some disadvantages of going public are the loss of control over the company for the management and founders, the SEC will require public companies to revel sensitive information, and is the stock does poorly then it can may generate negative publicity that will hurt the company (Wasserman). This means the company will not be able to make decisions all by themselves and have to reveal all of their financial statements to the public.

B. How do the largest U.S. stock markets differ? Out of those choices, which would be the smartest private investment option, in your opinion? Why?

The two largest U.S. Stocks markets are the New York Stock Exchange (NYSE) and the National Association of Security Dealers and Automated Quotations (NASDAQ) for which there are many differences between the two. The main difference between the two is NASDAQ trading location takes place electronically through the internet while the NYSE takes place on the floor of exchange in person (“Difference Between,” 2013). Another difference is the NYSE stocks are well established companies with a huge turnover compared to NASDAQ primary stocks being for technological companies (“Difference Between,” 2013). The best private investment option would be the NASDAQ because it is the largest stock exchange and it merged with the American Stock Exchange (AMEX).

C. Compare and contrast the various investment products that are available and the types of institutions that sell them.

Investing one’s hard earned money is an important decisions and there are many ways to invest. The various investment products that are available are bonds, stocks, mutual funds, money markets, capital markets, and exchange traded funds. Bonds are an investment security which obligates the issuer to pay the bond holder the specified sum of money (Individual Bonds). The types of bonds include U.S. Treasury bonds, agency, municipal, corporate, and high yield. Stocks are a type of security that gives stockholders ownership of a company with shares and also called equities (Stocks).

However, mutual funds are when a company pools money from multiple investors and invests that money into securities which includes stocks, bonds, or short term debt (Mutual Funds). The exchange traded funds (ETFs) are funds which track indexes from the NASDAQ-100 Index, Dow Jones, and extra. When buying the shares of an ETF, it means buying shares of a portfolio that tracks return and yields of its native index (What are ETFs?). The ETFs are similar to stocks because they are traded just like the stocks. In Brazil, there are two forms of investments that are direct and indirect. The direct investments happen when the creation of a new company entity or through an already existing Brazilian company (Options for foreign investment in Brazil). Any non-resident must enroll with the Federal Individual Taxpayer Registration with the Brazilian diplomatic representation within their country. The indirect investments are made by investing in financial and security markets when there is no requirement to participate in a Brazilian company (Options for foreign investment in Brazil).

The different types of institutions that sells investment products are investment banks, stock exchanges, brokers, and businesses. Investment banks are a financial institution which helps assist wealthy individuals, corporations, and governments (Investment Banking FAQ-Industry Overview). The stock exchange allows for investors to purchase and sell stocks on the stock market. The brokers are individuals or firm employed by others which negotiate contracts for commissions or plan and organize sales (Broker). There are multiple types of brokers such as commercial or merchandise broker, insurance, real estate, and stockbrokers. A business will sell stocks to investors to raise capital for the business. All of these institutions that sells investment products will help investors invest their money responsibly.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Ashe-Edmunds, Sam. What are the Functions of the Corporate Financial Manager? Our Everyday life. Website. Retrieved June 12, 2016 from http://oureverydaylife.com/functions-corporate-financial-manager-14164.html

Atton, Spencer (March 24, 2015). Ethical Pressures Facing the Financial Manager. Linked In. Retrieved June 10, 2016 from https://www.linkedin.com/pulse/ethical-pressures-facing-financial-manager-spencer-atton-mba-pmp

Brian, Marshall and Roos, David (June 22, 2011). How Stocks and the Stock Market Work. How Stuff Works Money. Website. Retrieved June 27, 2016 from http://money.howstuffworks.com/personal-finance/financial-planning/stocks.htm

Broker. The Free Dictionary. Website. Retrieved June 27, 2016 from http://legal-dictionary.thefreedictionary.com/broker

Difference between the Two Largest Stock Exchanges in the U.S. (August 5, 2013). International Finance. Retrieved June 10, 2016 from

http://www.internationalfinancemagazine.com/article/Difference-Between-the-Two-Largest-Stock-Exchanges-in-the-US.html

Hatch, Garrett (October 22, 2013). Federal Financial Reporting: An Overview. Congressional Research Service. Website. Retrieved June 10, 2016 from https://www.fas.org/sgp/crs/misc/R42975.pdf

How Does My Company Go Public? Securities Lawyer 101. Website. Retrieved June 10, 2016 from https://www.securitieslawyer101.com/going-public/

Individual Bonds. Fidelity. Website. Retrieved June 27, 2016 from https://www.fidelity.com/fixed-income-bonds/individual-bonds/overview

Investment Banking FAQ-Industry Overview. Wall Street Prep. Website. Retrieved June 27, 2016 from https://www.wallstreetprep.com/knowledge/investment-banking-faq/

Investment Types and Terminology. Wells Fargo. Website. Retrieved June 10, 2016 https://www.wellsfargo.com/financial-education/investing/investment-types/

Mutual Funds. U.S. Securities and Exchange Commission. Website. Retrieved June 27, 2016 from https://www.investor.gov/investing-basics/investment-products/mutual-funds

Nazar, Docstoc (December 6, 2013). The 10 best and Worts IPOs: Where are they Now. Business Insider. Website. Retrieved June 28, 2016 from http://www.businessinsider.com/the-10-best-and-worst-ipos-2013-12

Options for foreign investment in Brazil. The Brazil Business. Website. Retrieved June 28, 2016 from http://thebrazilbusiness.com/article/options-for-foreign-investment-in-brazil

Pujari, Saritha. Finance Manager: Three Major Decisions which Every Finance Manager Has to Take. Your Article Library. Website. Retrieved June 10, 2016 from http://www.yourarticlelibrary.com/management/finance-manager-three-major-decisions-which-every-finance-manager-has-to-take/8746/

Springer, Jeff (March 1, 2009). 10 Fortune 500 Companies that Started with Next to Nothing. Business Pundit. Website. Retrieved June 28, 2016 from http://www.businesspundit.com/fortune-500-rags-to-riches/

Stocks. U.S. Securities and Exchange Commission. Website. Retrieved June 27, 2016 from https://www.investor.gov/investing-basics/investment-products/stocks

Thakor, Manisha (October 4, 2010). Public vs. Private: What Does It Mean for a Company to go Public? LearnVest. Website. Retrieved June 10, 2016 from https://www.learnvest.com/knowledge-center/public-company-vs-private-company-what-does-it-mean-for-a-company-to-go-public/

Titman, S., Keown, A. J., & Martin, J. D. (2014). Financial management: Principles and applications (12th ed.). Upper Saddle River, NJ: Prentice Hall.

Wasserman, Elizabeth. How to Prepare a Company for an Initial Public Offer. Inc. Website. Retrieved June 10, 2016 from http://www.inc.com/guides/preparing-for-initial-public-offering.html

What are ETFs? NASDAQ. Website. Retrieved June 27, 2016 from http://www.nasdaq.com/etfs/what-are-ETFs.aspx

Working Capital Management. Finance Maps of World. Website. Retrieved June 28, 2016 from http://finance.mapsofworld.com/corporate-finance/management/working-capital.html

 
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