Question

1. Explain the difference between primary, secondary markets. Then tell me when did UnitedHealth UNH Columbia, go public, at what price and where does it trade now?

   Include at least 1 live link.

2. Identify each of the categories included on the Statement of Cash Flows and give 2 examples of the type of transaction UnitedHealth UNH Columbia, does/can do in relation to each of your examples and category.

3. Identify 3 tools that companies can use to analyze their performance and give an example of each. Do not include ratio analysis as this is a given with any company.

4. Why is the effective annual rate (EAR) superior to the annual percentage rate (APR) in measuring the true economic cost or return? When will the EAR and the APR be the same?

5. What is the difference between the expected rate of return and the required rate of return? What does it mean if they are different for a particular asset at a particular point in time?

Answer 1

Solution:

1)The main difference between Primary market and Secondary Market is about the issue of Share. As in case of Primary market the share is introduced for the first time for public offering whereas in latter case the shares are traded frequently i.e it is frequently bought and sold.

2) The UNH Colombia is now trading in NASDAQ at price $323.23.

3)Three category of cash flow statement with two example are :

1)Operating Activities: 1)Receipt of donation 2)Receipt of medical funds

2)Investment Activities: 1) Purchase of medical requirements 2)Purchase of medical appratus

3)Financing Activities: : 1)Receipt of dividend 2)Payment of dividend to shareholders.

4) 3 tool for analysis:

1)S-W-O-T : Company can evaluate its performance by using SWOT techniques like by identifying its opportunity and weakness. For Example : A spread of new desiease is a threat for the organisation.

2)P-E-S-T : Company can evaluate its political,social,technological ,social arena. For example to spread awareness organisation can use social media .

3)MOST:With this method can perform internal analysis.For example company can evaluate internal analysis.

5) EAR is superior from APR in terms of interest computation method as EAR uses compounding method unlike APR which uses simple Inerest.

6)In case of monthly interest loans APR and EAR will be same.

7)Expected rate of return differers from required rate of return.As expected rate of return is from the point of view of investor which they expect as compensation for risk involved in investestment. It can be more/low from required rate.When it is different for different assets it means the difference in risk associated with it on the basis of which investor expects different return.