Question

The results of both sections of your employment examination have finally been received, and you were offered the position. You have a few important decisions to make before you can formally accept or decline the position.

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 your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-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?

Answer 1

Although , there are many questions and shouldn't be asked as single question due to limitation in time. I try to give answers as much as possible

Answer I ) A .....I would prefer to attend school and will sell all 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) bonds to pay the fee of $ 100,000 . As the bonds are giving return of just 4.25% while shares of APPLE(AAPL) had a average annual retun more than 14.5% from 2002 .On the return parameter , it is better to hold Apple shares for long term . Even Apple is a well established and high rated company , indicates low risk in investment.

B........... Advantage and disadvantages of selling combination of shares and bond

Advantages

A good mix of portfolio A moderate risk A moderate return ( as combination stock and bond will remain invested) A better strategic move for investors

Disadvantage

Low in overall return due to low investment in shares Study both market (debt and Stock ) for better understanding

C).... I would prefer to sell the bonds 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) bonds to pay the fee of $ 100,000 . As the bonds are giving return of just 4.25% while shares of APPLE(AAPL) had a average annual retun more than 14.5% from 2002 .On the return parameter , it is better to hold Apple shares for long term . Even Apple is a well established and high rated company , indicates low risk in investment.

D)......The selection of job will provide a good situation for earning ,as job will not only provide a regular cash inflow but there is no need to sell any part of my current investments . The current invesments in Apple shares and bond will remain and grow in future along with a regular income from job .

Answe II) A.... I would prefer a Cash bonus of $ 5000 as taking shares from company at market price i.e $50 each will not add any benefit to me . I can buy shares of many companies (multiples shares) from the same amount to reduce my risk and chances of better return.

B....

Cash Bonus

Advantages

Can purchase multiple shares or bonds from open market Can create a good portfolio

Disadvantage

Have to conduct research to buy and invest in open market Chances of opportunity cost loss is there

Shares as bonus

Advantages

Holding shares of own company Can expect good return as known to insider information about company

Disadvantage

High risk as invested in one stock only

C.....  I'll take Cash bonus of $ 5000 as taking shares from company at market price i.e $50 each will not add any benefit to me . I can buy shares of many companies (multiples shares) from the same amount to reduce my risk and chances of better return.

Answer III)

Yes , it will influence me , but as a potential shareholder not as potential employee. There are many companies working as partnership or proprietorship . Thes companies are also a very good place to work with.

under the act ;

Securities Act of 1933

Often referred to as the "truth in securities" law, the Securities Act of 1933 has two basic objectives:

• investors receive financial and other significant information concerning securities being offered for public sale; and

• prohibit deceit, misrepresentations, and other fraud in the sale of securities.

B).... Some federal acts for better perormance as finance manager are :

• Securities Act of 1933 and the Securities Exchange Act of 1934
• Rules and regulations of the Securities and Exchange Commission (SEC)
• Financial Accounting Standards Board (FASB)
• REGISTRATION OF NEW SECURITIES norms
• Regulation of dividend payments
• Regulations of sell of securities