Financial Markets and Institutions

Due Week 8 and worth 350 points

 

Choose three (3) types of securities from any of the financial markets covered in the textbook during Weeks 1 through 7. Pick securities you would enjoy researching for this assignment

Write a five to six (5-6) page paper in which you:

  1. Analyze the role financial markets play in creating economic wealth in the U.S.
  2. Provide a general overview of each of the three (3) securities you chose. Be sure to include such information as name, company it represents (if applicable), pricing, and historical performance.
  3. Assess the current risk return relationship of each of the three (3) securities.
  4. Recommend one (1) strategy for maximizing return for the current risk return relationship identified for each of the three (3) securities.
  5. Suggest how the Federal Reserve and its monetary policy affect each of the three (3) securities today.
  6. Determine whether each of the three (3) securities is a good investment in the next twelve (12) months, five (5) years, and ten (10) years. Provide a rationale for each security with your determination.
  7. Use at least six (6) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

The specific course learning outcomes associated with this assignment are:

  • Describe the various types of financial markets and the types of transactions supported by each market in the U.S. and globally.
  • Explain the operation of the Federal Reserve and describe how monetary policy is used in the U.S. and other countries to manage the economy
  • Determine the valuation of various types of securities.
  • Assess the risks in the various types of financial markets and develop strategies to manage the risks.

Use technology and information resources to research issues in financial markets and institutions.

Wr Financial Markets and Institutionsite clearly and concisely about financial markets and institutions using proper writing mechanics.

The following additional outcomes may apply depending upon the students choice of securities:

  • Develop strategies for the use of equity markets by investors and firms to meet stated financial objectives.
  • Analyze the factors that affect interest rates and forecast interest rate changes.

 

Questions

 

1. Analyze the role financial markets play in creating economic wealth in the U.S.

Weight: 15%

 

2. Provide a general overview of each of the three (3) securities you chose.
Weight: 5%

3. Assess the current risk return relationship of each of the three (3) securities.

Weight: 15%

4. Recommend one (1) strategy for maximizing return for the current risk return relationship identified for each of the three (3) securities.

Weight: 15%

Define Financial Modeling

We are analyzing the stock of the General Electric. We will estimate prices based on both the dividend-discount model and discounted free cash flow valuation methods. GE uses a cost of equity of 10.5% and a WACC of 7.5%. The expected ROE on new investments is 12%.  These rates should be inputs to your model. For all time-value of money calculations, we are using annual cash flows which we will assume take place one year from now.

 

 

 

  1. Go to Yahoo! Finance (finance.yahoo.com ) and enter the symbol for General Electric (GE). From the main page for GE, gather the following information and enter it onto a spreadsheet:
    1. The current stock price (last trade) at the top of the page.
    2. The current dividend amount, which is in the bottom-right cell in the same box as the stock price.

       

  2. Next, click “Key Statistics” from the left side of the page. From the Key Statistics page, gather the following information and enter it on the same spreadsheet:
    1. The number of shares of stock outstanding.
    2. The Payout ratio.  You will notice the current payout ratio is > 100% which would eventually drive a firm into the ground.  The analyst estimate for 2015 is $1.31 per share so you can calculate a better value for the payout ratio.

       

  3. Next, click “Analyst Estimates” from the left side of the page. From the Analyst Estimates page, find the expected growth rate for the next five years and enter it onto your spreadsheet. It will be near the very bottom of the page.

     

  4. Next, click “Income Statement” near the bottom of the menu on the left. Copy and paste the entire three years of income statements into a new worksheet in your existing Excel file. (Note: if you are using IE as your browser, you can place the cursor in the middle of the statement, right­click, and select “Export to Microsoft Excel” to download an Excel version.) Repeat this process for both the balance sheet and cash flow statement for General Electric. Keep all the different statements in the same Excel worksheet.

     

  5. To determine the stock value based on the dividend-discount model:
    1. Create a timeline in Excel for five years.
    2. Use the dividend obtained from Yahoo!Finance as the current dividend to forecast the next five annual dividends based on the five-year growth rate.  You may allow for fractions of a penny in dividend estimates.
    3. Determine the long-term growth rate based on GE’s payout ratio (which is one minus the retention ratio) using the formula in the “Estimating Dividends” slide.
    4. Use the long-term growth rate and the estimated dividend for year 6 to produce a terminal value at t=5.  Use the dividend discount model to estimate stock price.
    5. What combinations of long-term growth rate and short-term growth rates would produce the price you are currently observing?  Please create a column of short-term growth rates ranging from 3% to 9% incremented by 1%.  For each value calculate the long-term growth rate that produces the observed stock price.  You can do this using Goal Seek or solver.  Please present your results in a table.  You will note that data tables aren’t capable of handling this task and macros are very hard to use with Solver or Goal Seek.

       

Financial Research Report

Assignment 1: Financial Research Report
Due Week 9 and worth 300 points

 

Imagine that you are a financial manager researching investments for your client that align with its investment goals. Use the Internet or the Strayer Library to research any U.S. publicly traded company that you may consider as an investment opportunity for your client. (Note: Please ensure that you are able to find enough information about this company in order to complete this assignment. You will create an appendix, in which you will insert related information.)

 

The assignment covers the following topics:

 

  • Rationale for choosing the company for which to invest
  • Ratio analysis
  • Stock price analysis
  • Recommendations

 

Refer to the following resources to assist with completing your assignment:

Stock Selection

Market and Company Information

  • U.S. Securities and Exchange Commission – “Market Structure”
  • Yahoo! Finance
  • Mergent Online (Note: This resource is also available through the Strayer Learning Resource Center.)
  • Seeking Alpha (Note: Also available through the Android or iTunes App store.)
  • Morningstar (Note: You can create a no-cost Basic Access account.)
  • Research Hub, located in the left menu of your course in Blackboard.

 

Write a ten to fifteen (10-15) page paper in which you:

 

  1. Provide a rationale for the U.S. publicly traded company that you selected, indicating the significant factors driving your decision as a financial manager.
  2. Determine the profile of the investor for which this company may be a fit, relative to that potential investor’s investment strategy. Provide support for your rationale.
  3. Select any five (5) financial ratios that you have learned about in the text. Analyze the past three (3) years of the company’s financial data, which you may obtain from the company’s financial statements. Determine the company’s financial health. (Note: Suggested ratios include, but are not limited to, current ratio, quick ratio, earnings per share, and price earnings ratio.)
  4. Based on your financial review, determine the risk level of the company from your investor’s point of view. Indicate key strategies that you may use in order to minimize these perceived risks.
  5. Provide your recommendations of this stock as an investment opportunity. Support your rationale with resources, such as peer-reviewed articles or material from the Strayer Library.
  6. Use at least five (5) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.

 

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.

 

The specific course learning outcomes associated with this assignment are:

 

  • Critique financial management strategies that support business operations in various market environments.
  • Analyze financial statements for key ratios, cash flow positions, and taxation effects.
  • Review fixed income strategies using time value of money concept, bond valuation methods, and interest rate calculations.
  • Estimate the risk and return on financial investments.
  • Apply financial management options to corporate finance.
  • Determine the cost of capital and how to maximize returns.
  • Formulate cash flow analysis for capital projects including project risks and returns.
  • Evaluate how corporate valuation and forecasting affect financial management.
  • Analyze how capital structure decision-making practices impact financial management.
  • Use technology and information resources to research issues in financial management.
  • Write clearly and concisely about financial management using proper writing mechanics.

 

Click here to view the grading rubric for this assignment.

A table used to determine the location of rows in a file that satisfy some condition best describes:

Question

Question 1

1 out of 1 points

Using lists to break information into manageable pieces conforms to the SOS guideline of:

organize

shortcuts

organize

simplicity

show

Question 2

1 out of 1 points

Two different names that refer to the same data item best defines:

synonym

homonym

synonym

transitive dependency

alias

Question 3

1 out of 1 points

The set of all data types and ranges of values that an attribute can assume defines:

domain

cardinality

constraint set

domain

reference set

Question 4

1 out of 1 points

Which of the following is not a true statement regarding data flows?

A data flow can go directly back to the same process it leaves.

A fork in a data flow means that exactly the same data goes from a common location to two or more different processes, data stores, or sources/sinks.

A data flow can go directly back to the same process it leaves.

A data flow has a noun phrase label.

A data flow has only one direction of flow between symbols.

Question 5

1 out of 1 points

A named property or characteristic of an entity that is of interest to the organization defines:

attribute

relationship

instance

gerund

Question 6

1 out of 1 points

Which of the following is not a true statement regarding a relation?

Each row in a relation corresponds to an attribute of that relation.

Each relation consists of a set of named columns and an arbitrary number of unnamed rows.

Each column in a relation corresponds to an attribute of that relation.

An entry at the intersection of each row and column has a single value.

Each row in a relation corresponds to an attribute of that relation.

Question 7

1 out of 1 points

A table used to determine the location of rows in a file that satisfy some condition best describes:

index

relation

structure chart

index

domain table

Question 8

1 out of 1 points

A method that helps you to better understand how a system fits within existing business activities and data best defines:

system granularity

context development

integration depth

organizational breadth

Question 9

1 out of 1 points

Recording a customer’s payment is represented on a data flow diagram as a:

process

source

data flow

data store

Question 10

1 out of 1 points

The guideline specifying that dialogues be logically grouped and have a beginning, middle, and end is:

closure

shortcuts and sequence

consistency

control

Question 11

1 out of 1 points

Which of the following is not a rule for structuring data entry fields?

Never justify data entries.

Never require data that is already on-line or that can be computed.

Always provide default values when appropriate.

Never justify data entries.

Always place a caption adjacent to fields.

Question 12

1 out of 1 points

An Internet authoring language that allows designers to create customized tags, enabling the definition, transmission, validation, and interpretation of data between applications best describes:

XML

HTTP

BIND

HTML

XML

Question 13

1 out of 1 points

The process of migrating mainframe applications to personal computers, workstations, and networks is sometimes called:

upsizing

downsizing

downgrading

resizing

Question 14

1 out of 1 points

All of the following are usability characteristics except:

satisfaction

completeness

speed

accuracy

Question 15

1 out of 1 points

Discuss on Market efficiency vs. beating the market

– Replicating portfolio and no-arbitrage pricing

– Market efficiency vs. beating the market

– Statistical methods for characterizing returns and measuring risk

– Risk transfer role of derivatives and hedging

– Financial markets: derivatives trading and exchanges

– Financial institutions: investment banks, hedge funds, and the Fed

– Financial crisis o Excessive leverage o Government bailouts and moral hazard

 

The video also gives a great glimpse into the world of academic finance, as well as international financial markets and global crises, notably the Asian financial crisis of 1997 and Russian debt default of 1998. While we have not dealt explicitly with international aspects, you will quickly note the similarity between what got us into trouble back then and what got us into trouble today (e.g., excessive debt/leverage to fuel a property boom, underassessment of risk and/or overconfidence in our ability to deal with risk, government bailouts, etc.).

 

Assignment: Due December 8, 2015

 

Choose any five (5) of the bullet points above and discuss the topic further by describing what we learned in class about the topic and linking it to specific parts of the video in which it is mentioned or occurs. A two to three paragraph discussion for each point should suffice, totaling 2-3 pages single spaced for the entire assignme

Outline Dodd-Frank Act proposed

Question

QUESTION 1

1. When developing an ethical culture, there has to be a(n)_______element because every organization has employees that will try to take advantage if there is an opportunity for misconduct.

rules-based

statement of mission

ethical

compliance

punitive

2 points

QUESTION 2

1. The apathetic organizational culture exhibits

high concern for people but minimal concern for performance.

little concern for people but a high concern for performance.

minimal concern for people and performance

high concern for people and performance.

no concern for maintaining a cohesive organizational culture.

2 points

QUESTION 3

1. Which of the following statements about corporate culture is false?

Corporate culture refers to the patterns and rules that govern the behavior of an organization and its employees, particularly the shared values, beliefs, and customs.

The values and ethical beliefs that actually guide a firm’s employees tend not to be the same ones that management states as defining the firm’s culture.

Corporate culture includes the behavioral patterns, concepts, values, ceremonies, and rituals that take place in an organization.

The culture of an organization may be explicitly stated or unspoken.

Failure to monitor or manage an organization’s culture may foster unethical behavior.

2 points

QUESTION 4

1. A cultural audit may be used to identify

how cultured a firm’s employees are.

unethical employees

unethical organizations

an organization’s culture

organizational structure

2 points

QUESTION 5

1. The 2010 passage of the Dodd-Frank Act proposed additional monetary incentives for whistle-blowers. A primary concern about these new incentives is:

they will encourage too many employees to attempt to blow the whistle on firms, even those that have done nothing wrong

people do not generally respond at all to monetary incentives

whistle-blowers might be tempted to report to the SEC with their reports and not report the misconduct to the company’s internal compliance program.

people may exaggerate their claims in order to get a reward.

the funds paid out to whistle-blower might bankrupt companies

2 points

QUESTION 6

Outline the personal economic cycle

1. (TCO 1) The stages that an individual goes through based on age, financial needs, and family situation is called the: (Points: 5)

financial planning process

budgeting procedure

personal economic cycle

adult life cycle

tax planning process

2. (TCO 1) A lack of willingness to accept a variety of employment positions is a common career planning mistake associated with weak: (Points: 5)

common sense.

communication.

training.

flexibility.

perseverance.

3.(TCO 1) The abilities to work well with numbers, possess problem-solving skills, and have physical dexterity are examples of: (Points: 5)

interests.

survival skills.

aptitudes.

occupational attitudes.

on-the-job training

4.(TCO 1) Which of the following situations is a person who could be insolvent? (Points: 5)

Assets $56,000; annual expenses $60,000

Assets $78,000; net worth $22,000

Liabilities $45,000; net worth $6,000

Assets $40,000; liabilities $45,000

Annual cash inflows $45,000; liabilities $50,000

5.(TCO 1) Payments that do not vary from month to month are ____________ expenses. (Points: 5)

fixed

current

variable

luxury

budgeted

6.(TCO 2) Reductions from gross income for such items as individual retirement account contributions and alimony payments will result in: (Points: 5)

adjusted gross income.

taxable income.

earned income.

passive income

total exclusions.

7.(TCO 2) Tax-deferred retirement plans are a type of: (Points: 5)

exemption.

itemized deduction

passive income

tax shelter

tax credit

8.(TCO 2) A deduction from adjusted gross income for yourself, your spouse, and qualified dependents is: (Points: 5)

the standard deduction

a tax credit

an itemized deduction

an exclusion

an exemption.

9.(TCO 2) A tax credit of $50 for a person in a 28 percent tax bracket would reduce a person’s taxes by: (Points: 5)

$10

$28

$14

$50

$35

Discuss Managed Care In The United States

In the United States, managed care is becoming an increasingly popular method of administering healthcare. It influences the clinical behavior of providers, as it combines the payment and delivery of healthcare into a single system, the purpose of which is to control the cost, quality, and access of healthcare services for a single bracket of health plan enrollees (Scutchfield, Lee, & Patton, 1997).

Yet, managed care often evokes strong or negative reactions from healthcare providers because they are paid a fixed amount for treating their patients, regardless of the actual cost, which may influence their level of efficiency. This can challenge the relationships between doctors and patients (Claxton, Rae, Panchal, Damico, & Lundy, 2012; Sekhri, 2000).

Research managed care’s inception and study some examples. Be sure to investigate the perspectives about managed care from the vantage of both healthcare providers and patients. You can use the following keywords for your research—United States managed care, history of managed care, and managed care timeline.

Based on your research, answer the following questions in a 8- to 10-page Microsoft Word document:

  • What are the positive and negative aspects of managed care? Analyze the benefits and the risks for both providers and patients, and how providers should choose among managed care contracts. Conclude with your analysis and recommendations for managed care health plans. Your response should include answers to the following questions:
    • Summarize the history of when, how, and why managed care was developed.
    • Define and discuss each type of managed care organization (MCO)—health maintenance organization (HMO), preferred provider organization (PPO), and point of sale (POS).
    • Explain the positive and negative aspects, respectively, of managed care organization from the provider’s point of view—a physician and a healthcare facility—and from a patient’s point of view.
    • Explain the three types of incentives for providers for efficiency in the delivery of healthcare services. Explain who bears the financial risk—the provider, the patient, or the managed care organization.
    • Offer your recommendations, to accept or decline, for patients considering managed care health plans, with your rationale for each.

References:

Claxton, G., Rae, M., Panchal, N., Damico, A., & Lundy, J. (2012).Employer Health
Benefits Annual 2012 Survey. Retrieved from http://ehbs.kff.org/pdf/2012/
8345.pdf

Sekhri, N. K. (2000). Managed care: The US experience. Retrieved from http://www.
who.int/bulletin/archives/78%286%29830.pdf

Scutchfield F. D., Lee, J., & Patton, D. (1997). Managed care in the United States.
Journal of Public Health Medicine, 19(3), 251–254. Retrieved from http://
jpubhealth.oxfordjournals.org/content/19/3/251.full.pdf

Note:

Support your responses with examples.

Cite any sources in APA format.

 

 

Discuss on resource scarcity

Question 1

The economic concept of “opportunity cost” is most closely associated with which of the following management considerations?

market structure

resource scarcity

product demand

technology

2 points Save Answer

Question 2

Scarcity is a condition that exists when

there is a fixed supply of resources relative to the demand for the product.

there is a large demand for a product.

resources are not able to meet the entire demand for a product.

All of these

2 points Save Answer

Question 3

A critical element of entrepreneurship (as opposed to managerial skills) is

leadership skills.

risk taking.

technology.

political skills.

2 points Save Answer

Question 4

A large corporation’s profit objective may not be profit or wealth maximization, because

stockholders have little power in corporate decision making.

management is more interested in maximizing its own income.

managers are overly concerned with their own survival and may not take all prudent risks.

All of these

2 points Save Answer

Question 5

Unlike an accountant, an economist measures costs on a(n) ________ basis.

explicit

replacement

historical

conservative

2 points Save Answer

Question 6

A firm’s “normal profit” is best characterized by the

average of a firm’s profits over the past five years.

amount of profit necessary to keep the price of a firm’s stock from changing.

amount of profit a firm could earn in its next best alternative activity.

the average amount of profit earned in the firm’s industry.

2 points Save Answer

Question 7

If the price of a substitute increases, which of the following is most likely to happen in the market for the product under consideration in the short run?

Supply will increase.

Firms will leave the market.

Firms will devote more variable inputs in the production of this good.

Firms will devote less variable inputs in the production of this good.

2 points Save Answer

Question 8

Which of the following best applies to the distinction between the “long run” and the “short run”?

The short run is a period of approximately 1-6 months while the long run is any time frame which is longer.

In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market.

The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon.

All of these statements are correct.

2 points Save Answer

Question 9

A market is in equilibrium when

supply is equal to demand.

the price is adjusting upward.

the quantity supplied is equal to the quantity demanded.

tastes and preference remain constant.

2 points Save Answer

Question 10

Question 1

The economic concept of “opportunity cost” is most closely associated with which of the following management considerations?

market structure

resource scarcity

product demand

technology

2 points Save Answer

Question 2

Scarcity is a condition that exists when

there is a fixed supply of resources relative to the demand for the product.

there is a large demand for a product.

resources are not able to meet the entire demand for a product.

All of these

2 points Save Answer

Question 3

A critical element of entrepreneurship (as opposed to managerial skills) is

leadership skills.

risk taking.

technology.

political skills.

2 points Save Answer

Question 4

A large corporation’s profit objective may not be profit or wealth maximization, because

stockholders have little power in corporate decision making.

management is more interested in maximizing its own income.

managers are overly concerned with their own survival and may not take all prudent risks.

All of these

2 points Save Answer

Question 5

Unlike an accountant, an economist measures costs on a(n) ________ basis.

explicit

replacement

historical

conservative

2 points Save Answer

Question 6

A firm’s “normal profit” is best characterized by the

average of a firm’s profits over the past five years.

amount of profit necessary to keep the price of a firm’s stock from changing.

amount of profit a firm could earn in its next best alternative activity.

the average amount of profit earned in the firm’s industry.

2 points Save Answer

Question 7

If the price of a substitute increases, which of the following is most likely to happen in the market for the product under consideration in the short run?

Supply will increase.

Firms will leave the market.

Firms will devote more variable inputs in the production of this good.

Firms will devote less variable inputs in the production of this good.

2 points Save Answer

Question 8

Which of the following best applies to the distinction between the “long run” and the “short run”?

The short run is a period of approximately 1-6 months while the long run is any time frame which is longer.

In the short run, only new firms may enter, while in the long-run firms may either enter or exit the market.

The rationing function of price is a short-run phenomenon whereas the guiding function is a long-run phenomenon.

All of these statements are correct.

2 points Save Answer

Question 9

A market is in equilibrium when

supply is equal to demand.

the price is adjusting upward.

the quantity supplied is equal to the quantity demanded.

tastes and preference remain constant.

2 points Save Answer

Question 10

Which party has the primary responsibility to oversee an organization’s financial reporting and internal control process?

Part 1

Question

Question 1

6 out of 6 points

Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to ________.

Question 2

6 out of 6 points

If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:

Question 3

6 out of 6 points

If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:

Question 4

6 out of 6 points

When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:

Question 5

6 out of 6 points

When the auditor is attempting to determine the extent to which external users rely on a client’s financial statements, they may consider several factors except

for:

Question 6

6 out of 6 points

Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the:

Question 7

6 out of 6 points

In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class of transactions because:

Question 8

6 out of 6 points

When considering internal controls, an important point to consider is that:

Question 9

6 out of 6 points

Narratives, flowcharts, and internal control questionnaires are three common methods of:

Question 10

6 out of 6 points

The employee in charge of authorizing credit to the company’s customers does not fully understand the concept of credit risk. This lack of knowledge would constitute:

Question 11

6 out of 6 points

Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud?

Question 12

6 out of 6 points

Financial statement manipulation risk is arguably present for all companies’ financial statements. However, the risk is elevated for companies that:

Question 13

6 out of 6 points

Which party has the primary responsibility to oversee an organization’s financial reporting and internal control process?

Question 14

6 out of 6 points

Who is most likely to perpetrate fraudulent financial reporting?

Question 15

6 out of 6 points

Which of the following would the auditor be most concerned about regarding a heightened risk of intentional misstatement?

Question 16

6 out of 6 points

An example of a physical control is:

Question 17

6 out of 6 points