Business risk is comprised of (a) price risk, (b) credit risk and (c) pure risk Defined these terms and give an example of each.
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Time value Personal Finance Problem You have $1,800 to invest today at 8% interest compounded annually.
a. Find how much you will have accumulated in the account at the end of (1) 3 years, (2) 6 years, and (3) 9 years.
b. Use your findings in part a to calculate the amount of interest earned in (1) the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third 3 years (years 7 to 9).
c. Compare and contrast your findings in part b. Explain why the amount of interest earned increases in each succeeding 3 dash year period.
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Here are forecasts for next year for two stocks:
Stock A |
Stock B |
|||||
Return on equity | 12 | % | 10 | % | ||
Earnings per share | $ | 3.00 | $ | 2.50 | ||
Dividends per share | $ | 2.00 | $ | 2.00 | ||
a. What are the dividend payout ratios for each firm? (Do not round intermediate calculations. Enter your answers as a percent rounded to the nearest whole number.)
Payout Rate
Stock A: ____%
Stock B: _____%
b. What are the expected dividend growth rates for
each stock? Assume dividend has a steady growth for both stocks.
(Do not round intermediate calculations. Enter your answers
as a percent rounded to 2 decimal places.)
Growth Rate
Stock A: _____%
Stock B:_____%
c. If investors require a return of 12% on each
stock, what are their values? (Do not round intermediate
calculations. Round final answers to 2 decimal
places.)
PV
Stock A: _____%
Stock B:_____%
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How would you advise your parents or grandparents regarding their asset allocation?
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What should be the resource for asset allocation? Should it be 60/40 a reasonable allocation strategy?
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3.-Competitive Advantage. In deciding whether to invest abroad, management must first determine whether the firm has a sustainable competitive advantage that enables it to compete effectively in the home market. What are the necessary characteristics of this competitive advantage?
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1.-Evolving into Multinationalism. As a firm evolves from purely domestic into a true multinational enterprise, it must consider (1) its competitive advantages, (2) its production location, (3) the type of control it wants to have over any foreign operations, and (4) how much monetary capital to invest abroad.
Explain how each of these considerations is important to the success of foreign operations.
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Consider the following two banks: Bank 1 has assets composed solely of a 10-year, 14.00 percent coupon, $3.0 million loan with a 14.00 percent yield to maturity. It is financed with a 10-year, 10 percent coupon, $3.0 million CD with a 10 percent yield to maturity. Bank 2 has assets composed solely of a 7-year, 14.00 percent, zero-coupon bond with a current value of $2,677,410.23 and a maturity value of $6,699,600.06. It is financed by a 10-year, 8.25 percent coupon, $3,000,000 face value CD with a yield to maturity of 10 percent. All securities except the zero-coupon bond pay interest annually. a. If interest rates rise by 1 percent (100 basis points), what is the difference in the value of the assets and liabilities of each bank? (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))
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Elsa is a data analytics intern at a financial firm.
Her company has obtained their customers bank transaction records
recently. Elsa has been asked by her manager to find out all the
attributes (variables) that can be delivered from those bank
transaction records for creating the machine learning algorithm.
The machine learning algorithm will help Elsa's firm to determine
whether someone is likely to get a loan approval or not.
List 5 attributes (variables) and explain why they should be
considered in the Machine Learning Assignment
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You have been asked to assess the expected financial impact of each of the following proposals to improve the profitability of credit sales made by your company. Each proposal is independent of the other. Answer all questions. Showing your work may earn you partial credit.
Proposal #1 would extend trade credit to some customers that previously have been denied credit because they were considered poor risks. Sales are projected to increase by $200,000 per year if credit is extended to these new customers. Of the new accounts receivable generated, 7% are projected to be uncollectible. Additional collection costs are projected to be 3% of incremental sales (whether they actually end up collected or not), and production and selling costs are projected to be 80% of sales. Your firm expects to pay a total of 30% of its income after expenses in taxes.
If the receivable turnover ratio is expected to be 4 to 1 and no other asset buildup is needed to serve the new customers…
Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days.
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5.-Competitiveness of the Home Market. A strongly competitive home market can sharpen a firm’s competitive advantage relative to firms located in less competitive markets. Explain what is meant by the “competitive advantage of nations.
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What is the advantage of RRSP over TFSA? What is the advantage of TFSA over RRSP? What is the advantage of each (RRSP and TFSA) over a regular taxable investment account?
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