...Week 6 Portfolio Echo Koenig BUS655 Financial Investment Instructor: Keithe Wade June 23rd 2014 The main objective for this portfolio is to invest in companies that have a medium risk. I am part of the middle class society so I don’t want to invest in high risk companies since losing money isn’t an option. I will chose companies that can increase my monetary value in a long period of time, possibly for retirement. The main companies that I am looking to invest in are long term investments with a medium to high risk. I have 3 young children right now that are going to need cars in the future, college funds, and money for their weddings. I do want my savings to be geared towards the future of 20 plus years. The main objective to my portfolio is to save for my children’s’ education in the future. I would like to have about $100,000 per child in the next 18 years. I have three children so I ultimately would need $300,000 in order to have funding for all of their education. You can invest in three different types of investments. The first being a low risk (risk averse), medium risk (risk neutral), and high risk (risk seeker). A risk averse is an investor that will chose the lower risk when they are faced with two investments that have a similar expected return. A risk neutral is an investor that is indifferent to risk. A risk seeker will search for uncertain investments with the highest possibility for return. Two companies that I would invest in for this...
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...Chapter twenty-six examines how the financial system in America works and analyzes its macroeconomic role. I plan to structure my summary similar to the way chapter twenty-six does. First by talking about different financial institutions and how they work in the U.S. economy. Then by breaking down saving and investment in the national income accounts. Lastly I will explain how government policies affect society’s allocation of resources by manipulating the interest rate. The first thing chapter twenty-six does is explain what a financial system is and why they are needed. A financial system is defined in the book as a group of institutions in the economy that help to match one person’s saving with another person’s investment. Without a financial system, long-term economic growth is not going to happen. Saving and investment allows for higher capital which in return raises productivity and the living standard. Financial institutions allow for the economy's scarce resources to move from savers to borrowers. Savers only provide their money to financial institutions for one reason and that is to gain interest. Interest allows savers to ultimately make money by storing their money in financial markets. Financial markets allow savers to be able to directly supply funds to borrowers. The two main financial markets are the stock market and the bond market. Financial markets are what particularly interest me. Increasing my savings is very important to me and figuring out strategies...
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...largest economy within the region just behind Indonesia and Thailand which is more populated than Malaysia and also 29th largest economy in the world[1]. It is also the largest Islamic banking and financial centre in the world. Malaysia was once a country well known with a big variety of natural resources available, from timber, tin, natural gas, petroleum and many more. However, timber may only contribute only a small part to Malaysia’s economy today as a result of government’s intervention in order to protect the environment after serious erosion problem due to massive expansion of the timber industry during the 1960s. Petroleum and natural gas however, are still currently the backbone for the economy of Malaysia, managed by PETRONAS along with a few foreign O&G companies such as ExxonMobil to explore oil fields in Malaysia. The importance of the industry in Malaysia is so significant that 45% of the government’s federal budget relies on PETRONAS dividend. As at 3rd September 2013, Malaysia has 4 billion barrels of oil barrels which is 24th of the world while having 83 trillion cubic feet of natural gas reserves is 15th largest natural gas reserve of the world[2]. Malaysia has an unemployment rate averaging to 3% within 2005-2013. Highest during 2009 which is post financial crisis at the unemployment rate of 3.7% and since then the rate has been lowered. For year 2013, the unemployment rate of Malaysia is 3.2% which is the 6th position among the 10 South East Asia countries...
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...Wise investments to Reach Financial Security by: Jannie Gracelyn P. Aviles Financial security is what all people hoped for. It isn’t making or having a certain amount of money. It is also not limited to being independently wealthy. Being debt-free, able to control your expenses, able to increase your savings, and not being forced at a work you dislike are some signs that you are financially secured. Reaching a point of financial security is a progress that takes time, effort and some sacrifices. After all the sacrifices you made, the results are worth it. On an article of Howard University entitled “Starting on the Road to Financial Security” said that reaching financial security is like building a house. You start with a foundation, you add the floors as you go on, you put on a roof, you finish the inside and then you move in. For most people, the only way to attain financial security is to save and invest over a long period of time. You just need to have your money work for you and that’s what you call investing. You become an investor when you put your money into things that can grow in value. You can invest your money in term deposit, the safest kind of investment that most people are more likely to be engage with. This kind of investment are very appealing to conservative, low risk investors because of the fact that there is no risk of losing your money. But wait, do term deposits give you a big return from the money you invested after waiting a long period of time? If...
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...promoters from 100% to 83.33%, the PE owning the rest 16.67%.The face value of the Equity Shares of the Company is Rs. 10 each and the Issue Price is 15 times the face value of Equity Shares.The shares were valued as a multiple of 5 times the weighted average EPS for last three years i.e. 2010-2012 considering qualitative factors such as diversified business model and high growth prospects based on valuation of company. The weighted average EPS for 2010-12 is 3 (approx). • Thus shares are issued to PE @ Rs150 per share (EPS 3* 5 times*face value of share 10) • PE investment enables company to raise more loans. The capital thus raised, was also used for advertising and brand building thus increasing the net sales of the company by an average of 60% • Company is raising Debt through Secured Loans hypothecated by company assets as well as Unsecured Loans and a Bank Revolver • PE exits the business in financial year end of March 2015. It offers its stake for sale in the IPO that the company has planned in May 2015 • In May 2015 the company issues an IPO. The offer is both an offer for sale and fresh issue of shares to public. The IPO will provide liquidity to PE and raise capital for further expansion of business. • Total 80,25,000 shares are issued to...
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...POLYTECHNIC UNIVERSITY OF THE PHILIPPINES COLLEGE OF ACCOUNTANCY BACHELOR OF SCIENCE IN ACCOUNTANCY Research Topic: “Errors in Preparing Financial Plan in Investment firm” BACKGROUND Introduction It is vitally important for the investment firm to set up a financial plan in order not to experience hardships and financial difficulties in the future of their beneficiaries. Financial plan assure financial stability and financial freedom that an investors wants to possess till the end of his/her life. The process of preparing financial plan is a routine process that indeed involves not only careful financial analysis of the investors’ current situation and long-term commitment to implement and monitor that plan throughout his/her life, but also requires careful thinking for the future. In order to properly achieve the financial planning goals, one has to monitor the performance of the financial plan as well as make proper changes when necessary. While preparing the financial plan, the pre need industries should be taken it seriously. This is because a bad financial plan will lead to over capitalization or under capitalization as well as misappropriation of funds. In endeavor action, businesses are sometimes right and make correct decisions and sometimes they are wrong and prone to errors. These firms are prone to errors, because they do not have a correct perspective of the environment or lack a correct assessment of the current...
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...------------------------------------------------- MAF707 Portfolio investments and Financial Planning ------------------------------------------------- Group Assignment Group 77: Weizhe Shi_900443906 Ran Li_210037023 Yichao FU_900387184 Contents Question 1 3 Analysis of securities and the market index 3 Summary 3 Question 2 7 Question 3 8 Question 4. 9 Standard Consumption of CAPM 9 Expectation errors relied on ex-post data 12 Reference List 14 Question 1 Analysis of securities and the market index Summary Firstly we calculated the monthly return of each securities which depend on the data of adjust close price every month. The formula is the latter month’s adjust close price minus the previous monthly adjust close price then divide the latter month’s adjust close price. On the basis of the results, we moved forward the steps that calculate the mean, median, skewnes, kurtosis, variance and correlation coefficients. Those data have been calculated and presented in excels. Definition and Formula 1. Mean The mean value is the average value of monthly return from Jun 2003 to Dec 2010. The formula is: μ=i=1NXiN where N is the number of the month we count of the return and Xi is the total value of the monthly return. 2. Median The median is the value of the middle item of a set of items that has been sorted into ascending or descending order. In an odd-numbered sample...
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...Review and Evaluation on ‘Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints’ by Kaplan and Zingales (QJE,1997) The research paper written by Steven N. Kaplan and Luigi Zingales as titled above which was published in year 1997 is to test the relationship linking investment-cash flow with financial constraint. In their research, they found that firm with a low level of financial constraint have a tendency to have a high investment-cash flow sensitivity. However, the findings contradict with the other research paper especially the FHP, 1988 paper. They used the same sample used in research done by Fazzari, Hubbard, and Petersen (FHP, 1988). But they only took the firms from Class 1 in FHP research which is manufacturing firms and classified as low dividend firms with dividend payout ratio with value below 10%, where they believe to be firms with an abnormally high investment-cash flow sensitivity (Kaplan & Zingales, 1997). The reasons why Kaplan and Zingales chose Class 1 firms as their sample are because of the strong connection illustrated between the firm’s investment and cash flow, FHP argue Class 1 firms are financially constrained even the result indicates that the firms have significantly high sensitivity of investment-cash flow, and lastly because the sample size is considered manageable for a costly research design. They follow the same timeline which is from year 1970 to 1984. Research is conducted by first determining the demand...
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...FINANCIAL MARKETS & INVESTMENTS FINANCIAL MARKETS & INVESTMENTS [pic] Task: Write a brief essay (suggested length of 2–4 pages) in which you explain how foreign exchange markets facilitate international trade. In your essay: A. Differentiate between the nominal exchange rate and the real exchange rate. The nominal exchange rate is the rate at which a person can trade the currency of one country for the currency of another. For example: The dollar/yen exchange rate is the number of dollars you can get foe each yen. The real exchange rate is the level of the exchange rate factoring in inflation differences. It’s used to measure the price of foreign goods in price levels and not just in currency adjusted terms. B. Explain the theory of purchasing power parity (PPP). The principle that a unit of currency will purchase the same basket of goods anywhere in the world (Cecchetti, 2011, p. 239). PPP is useful when the currency purchasing power of two countries varies drastically, when goods are available. For example: A box of cigarettes that sells for a $1.50 in Canada should cost a $1.00 in the U.S when the exchange rate between Canada and the U.S. is $1.50. As a result both boxes of cigarettes should cost a $1.00 in the U.S. PPP solves this by calculating the price of the box of cigarettes so the price is the same when calculated in the USD/CAD currency. C. Identify at least three primary factors that influence the supply and demand for a country’s...
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...FIN-567: Options and Financial Futures Markets Final Project By Jacob C. Harris 19 Dec 2015 The objective of this project is to develop an investing strategy for a portfolio that consists of $500,000 of stock from ten different companies, $500,000 worth of US Treasury notes ranging from two to five years in maturity, and another $500,000 in money markets. The money market investment is considered safe and will provide a return at the risk-free rate. The market outlook for the next 18 months indicates a flat to slight downturn prediction. Given this predication, I developed a strategy of using various call and put options on a few of the stock assets in the portfolio in order to provide some income in a flat to down market. I will write covered calls to generate income and protective puts in order to limit the amount of losses in case of a dramatic drop in the market. The US Treasury notes portion of the portfolio is a ladder strategy consisting of various maturity dates to generate a steady stream of income from coupon payments over the next five years. The money market assets will also provide a steady stream of income at the risk-free rate equal to the rate on three-month US Treasury bills. My hedging strategy is to be conservative in a flat to down market that is predicted for the next 18 months. The portfolio of stocks consists of companies in various sectors of industry in order to diversify the unsystematic risk. I have two conglomerates...
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...NGUYEN TAT THANH UNIVERSITY NTT INSTITUTE OF INTERNATIONAL EDUCATION BTEC HND IN BUSINESS Assignment Brief #1 Unit Title: Business Strategy __ Unit ID: A/601/0796 Handout date: ........................... Hand in date: ................................ Individual Assignment 1 – Practical Strategic Planning and Formulation Processes Scenario Learners are required to select a large or medium-size firm in Vietnam (a local or a foreign company); or either learners may choose their own company (if any). Each learner is assigned to conduct a practical study on the chosen company, and to compare what he/she has learned in classes with the real business activities. The learner has therefore been set two tasks to complete that will enhance his/her knowledge of: * The practical processes of strategic planning of his/her chosen company * The applicable strategic formulation of the business Each learner is asked to prepare an individual report on the below-mentioned topics. The learner should complete the report for discussion with the selected firm’s senior management which identifies and evaluates a number of key areas and discusses them in a comprehensive way. The learner’s ideas must be supported by evidence of research and readings related to the key themes of the topics. Task 1 * Provide and explain strategic contexts and terminology– missions, visions, objectives, goals, and core competencies of the chosen company. * Review the...
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...On Accounting Flows and Systematic Risk Neil Garrod University of Glasgow Dusan Mramor University of Ljubljana Address for correspondence: Neil Garrod, Department of Accounting and Finance, University of Glasgow, 65-71, Southpark Avenue, Glasgow G12 8LE, Scotland, U.K. Tel: 00-44-141-330-5426 e-mail: n.garrod@accfin.gla.ac.uk On Accounting Flows and Systematic Risk Abstract The body of work that relates accounting numbers to market measures of systematic equity risk was largely undertaken in the 1970s and early 1980s. More recent proposals on changes in accounting disclosure of risk mean that a rigorous theoretical model of the relationship between accounting measures and market measures of risk is timely. In this paper such a model is developed. In addition, the assumptions required to develop the model are explicitly identified. By so doing it becomes possible to identify the potential cross-sectional differences which drive the empirical relationship between accounting and market based measures of risk. The model developed highlights a clear relationship between accounting and market measures of risk which can be exploited in situations where accounting data alone is available. It also provides a framework within which the environmental factors leading to cross-sectional differences between companies can be further explored. On Accounting Flows and Systematic...
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...of Economic Research Volume Title: Asymmetric Information, Corporate Finance, and Investment Volume Author/Editor: R. Glenn Hubbard, editor Volume Publisher: University of Chicago Press, 1990 Volume ISBN: 0-226-35585-3 Volume URL: http://www.nber.org/books/glen90-1 Conference Date: May 5, 1989 Publication Date: January 1990 Chapter Title: Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data Chapter Author: Michael Devereux, Fabio Schiantarelli Chapter URL: http://www.nber.org/chapters/c11476 Chapter pages in book: (p. 279 - 306) 11 Investment, Financial Factors, and Cash Row: Evidence from U.K. Panel Data Michael Devereux and Fabio Schiantarelli 11.1 Introduction Most empirical models of company investment rely on the assumption of perfect capital markets. One implication of this assumption is that, in a world without taxes, firms are indifferent to funding their investment programs from internal or external funds. However, there is a rapidly growing body of literature examining the possible existence of imperfections in capital markets and their effects on firms' financial and real decisions. In this paper we provide some econometric evidence on the impact of financial factors like cash flow, debt, and stock measures of liquidity on the investment decisions of U.K. firms. These variables are introduced via an extension of the Q model of investment, which explicitly includes agency costs. We discuss whether the significance of cash...
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...primary purpose of the audit exercises conducted by all corporate entities is to assure the related stakeholders of the financial statements and other disclosures made by the entity of presenting a true and fair view of the undertakings of the corporation. Keeping that in mind, the auditor bears a fiduciary relationship with the various users of the financial statements issued by any company. The auditors in charge of providing assurance are under a delicate relationship of trust endowed upon them by related stakeholders to the entity under auditory concern. The various stakeholders of the company define the users of the financial statements disclosed by a commercial enterprise. Employees within the organization depend on the financial depiction presented by the company in order to ascertain their relative benefit and possibility of continuing gainful employment. Beyond the actual premises of the business, the information disclosed by the entity allows people who may have interaction with the company to make educated estimates regarding the business operations and activities. These include people who are in business transactions with any organization under concern. Suppliers and other corporate entities working in unison to allow a commercial enterprise to be able to deliver on its business offering also need to be able to make a good estimate about the financial and economic viability of establishing trade relationships with an organization. The administrative and societal responsibilities...
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...phase • For collaborative activities benefits cannot be completely captured by social enterprise • Funding agencies may not take risk to support new projects in lieu of existing programs • Time horizon may not be aligned with that of potential funders • Return expectations may be misaligned with the income generation ability of social enterprise • Hybrid structures can raise issues among the public and private sector players • Social entrepreneurs cannot rely solely on market signals & pricing to indicate to potential investors in achieving mission related impact Capital Needs of the Social Enterprise The following questions about financial drivers can direct the social entrepreneurs to the appropriate capital sources: • What opportunities & challenges exist to monetize the financial, social & environmental value (triple bottom line) • Is financial sustainability viable given mission of social enterprise? Does it require specific amount of startup capital to build operational capacity before becoming financially self sustaining? • What are the earned income opportunities for the enterprise? • Does the enterprise generate sufficient excess earned income streams to pay debt? • What assets does the enterprise own or control which can be used as collateral to support debt? • What are the working capital needs of the enterprise? • Does the enterprise project sufficient profitability to attract market rate debt or equity? 2...
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