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. When composing your answers to these decisions, ensure that they are cohesive and read like a short essay. Your submission must address the following critical elements: 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 any of your 500 shares of Apple stock you bought five years ago, 100 Apple bonds (each with a $1,000 face value and a 3.25% coupon rate) that are five years from their 10-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

A)The current price of stock = $112.76

No. of shares of Apple stock = 1000 shares

Market value of Apple stock = $112.76*1000 shares = $112,760

No. of bonds = 1000

Denomination = $100

Coupon Rate = 4.25%

No. of years to maturity = 30 Years -5 years = 25 years

Let us assume the rate equal to the coupon rate

When coupon rate is equal to the rate, the price will be same as the face value = $100*1000 bonds = $100,000.

Market Price of bonds = $100,000

It would be appropriate to take half amount by selling the bonds and half amount by selling the apple stock

B)As far as the associated advantages are concerned, the shared cost in handling securityissues form one of the greatest benefits to be enjoyed in the combination of stock and bondselling. One will not be committed to handle any cost that is associated with security issuesassociated with the organizational selling of both its bonds and stocks. Moreover, it is alsoevident that stock and bond combination selling is associated with risk versus return parityjudgment by investors. Such engaged investor judgment offer a credible advantage in the sellingof a combination of stock and bonds. Relevantly, given the ability to engage huge money inreturn, associated with the combination of both stock and bonds selling, an affected organizationwill be entitled a safe environment to ascertain capital costs and both stock and bond pricingdecisions. The combination sale also means that an investor will reap a high amount of moneyfrom the committed business effort at once. Such a lump sum money flow is a potentialreflection of an encouraging advantage to the stock and bonds selling combination.

c)My choice would be the combination of both, to take half amount by selling the bonds and halfamount by selling the apple stock, 50% of 100,000 = $50,000 out of bonds and 50% of $100,000= $50,000 out of selling shares. Financial Reasoning behind this would be there will bediversified portfolio and risk will be hedged.

D) No job mentioned

A)Mathematically, It is indifferent to choose any of the options

B)Advantages of Bonus will be that, there will be definitely cash received in case of bonus.Disadvantage of bonus is that if the price of stock will be increased in case of other option, therewill be a financial loss.Advantages of taking the company stock will be that, if the price will be increased in future,capital gain will be there. Disadvantage of taking shares will be that, for receiving cash by sellingwill involve the transaction costs.

C)I will ultimately choose to get $5,000 bonus, as there will be cash in hand with less or no riskinvolve.

A)

A.1933 act prohibits offers to sell or buy before a registration is filed. SEC takes a broad view of what constitutes an offer. Example, SEC takes position that great or abnormal publicity by issuer about the business or prediction of the particular industry may arouse such public interest that the publicity appears to be part of the selling effort.

The 1933 act provide for civil liability for damages arising from misstatements or omissions in the registration statement, or for offers made in violation of the law. In addition, the law provides for civil liability for misstatements or omission in any offer or sale of securities, whether or not the security is registered. At last, the general antifraud provision in the law makes it illegal to engage in fake or deceitful practices in connection with any offer or sale of securities, whether they are registered or not.

Generally, a person who acquire an equity whose registration statement, at the time it became effective, contained an "untrue statement of a material fact or omitted to state a material fact" may sue to recover difference between the price paid for the security (but not more than that public offering price) and a price for which it was disposed or (if it is still owned) its value at the time of lawsuit. A purchaser have to show that only the registration statement contained a material misstatement or omission and that he or she lost money. In many conditions the purchaser need not show that he or she relied on the misstatement or oversight or that a prospectus was even received. The SEC defines "material" as information an average prudent investor would sensibly need to know before purchasing a security.

B)

B. As a financial manager it is significant to make sure that the organization sticks onto all the constitutional requirements. It is necessary for the organization to be entirely complaint with the federal and State formalities such that legal or criminal proceedings are avoided. The federal and shareholder needs that are required to be familiar in order to be wholly complaint are as follows:

1. Details of the non-public offerings
2. Regulation of D with respect to Rules 504, 505 and 506
3. Updation with respect to the Government orders
4. Details of Exemptions
5. Restrictions of Offer, other Federal and State Rules

Above are some of the areas in which a financial manager is supposed to be familiar in order to handle shareholder and federal requirements.