...the exclusive use of D. Wang, 2015. 9 -2 1 1 -0 6 3 REV: SEPTEMBER 27, 2012 TIMOTHY A. LUEHRMAN DAVID LANE Tombstones Capital markets offer corporations varied ways to raise funds. This Note presents summary information for a selection of corporate securities issued during 2009-2010 following the financial crisis of 2008–2009. They include three issues of senior unsecured notes, one floating rate note, one common stock offering, and one convertible note. The issuers are Microsoft, Coca-Cola Enterprises, Norfolk Southern, IBM, Ford Motor, and Cephalon. Selected supplementary data on the issuers are summarized in Exhibit 1. A short glossary of terms appears at the end of the Note. All three senior unsecured note issues were sold in $1,000 denominations and paid interest semiannually. For each bond or note, the semi-annual interest payment equals one half the stated coupon rate times the $1,000 face amount. Following the same convention, the annual yield to maturity for such instruments is conventionally calculated and quoted as two times the semi-annual internal rate of return of the bond’s market price and promised future payments of interest and principal. Microsoft Notes On September 22, 2010, Microsoft Corporation issued $4.75 billion in senior unsecured notes in four series, each paying a different coupon and maturing in 2013, 2015, 2020, and 2040 (see Exhibit 2). The company’s disclosures noted that the proceeds would be used for “general corporate...
Words: 5401 - Pages: 22
...information. The best example for an efficient market would be the stock market. “Primary market is a market in which new, as opposed to previously issued, securities are bought and sold for the first time” (Mayo, 2012). By doing this people are able to help finance their new/old businesses. Secondary market a market where previously issued securities i.e. bonds, shares, notes and financial instruments like bills of exchange and certificates of deposit are purchased and sold. Stock exchanges do serve as secondary markets, this helps reduce the risk of investments and maintains liquidity in financial systems. Risk is the foundation for appraising all investments. Risk is one major concept of finance due to the greater the risk the greater the anticipated return. Security is an investment instrument that signifies an ownership position in a publicly traded corporation. A security is any fungible, negotiable financial instrument that represents some type of financial value. Stocks are an important part of finance, more importantly for companies whom trade publicly. The primary advantages for stock are capital, ownership, and dividend returns. Bond a long-term promissory note that is hand out by a borrower, this note is a promise to pay the owner of the security a prearranged amount of interest every year until the note is paid in...
Words: 614 - Pages: 3
...investment decisions is widely available, thoroughly analyzed, and regularly used, the result is an efficient market. This is the case with securities traded on the major US stock markets. That means the price of a security is a clear indication of its value at the time it is traded. Primary market- The primary market is the market for new securities issues. In the primary market the security is purchased directly from the issuer. Secondary market- A secondary market is where investors purchase securities or assets from other investors, rather than from issuing companies. The national exchanges - such as the New York Stock Exchange and the NASDAQ are secondary markets. Risk- Risk is defined as the variability of returns from an investment, the greater the variability (in dividend fluctuation or security price, for example), the greater the risk. Security- Security is collateral offered by a debtor to a lender to secure a loan. For instance, the security behind a mortgage loan is the real estate being purchased with the proceeds of the loan. If the debt is not repaid, the lender may seize the security and resell it. Stock- An instrument that signifies an ownership position (called equity) in a corporation, and represents a claim on its proportional share in the corporation’s assets and profits. Bond-( A long-term debt security issued by corporations and governments offering...
Words: 476 - Pages: 2
...|Presentation on Financial |Change in Fair Value | |(nonprofit entities follow SFAS No.124) |Statements | | | | |Temporary |Other than | | | | |Temporary Loss | |Does the investor have substantial influence or control? | | | | |Investor owns 20% to 50% of stock and has significant influence but |On BS at historical cost plus |N/A |Realized loss on | |not control of the corporation |share of earnings since | |IS, new basis on | | |acquisition less dividends | |BS | |Use Equity Method |received (amortization may also be| | | | |required) | | | |Investor owns over 50% of stock or otherwise controls the |Consolidated financial statements |N/A ...
Words: 1180 - Pages: 5
...Harvard Business School 9-293-024 Rev. December 16, 1994 BEA Associates: Enhanced Equity Index Funds On the afternoon of July 13, 1992, Messrs. Jeffrey Geller and David DeRosa, derivatives portfolio managers at BEA Associates, were considering alternative ways of investing the assets of a new $100 million enhanced index account. They wanted to find the most attractive combination of derivative and cash market positions to achieve the client's objective which was to outperform the S&P 500 stock index by 50 basis points in a low risk manner. The alternatives included the use of over-the-counter equity swaps, a relatively new financial instrument that had proliferated in recent years. BEA Associates BEA Associates was an investment advisory firm founded as Basic Economic Appraisals in 1934. As of March 31, 1992, the firm managed $15.4 billion representing over 164 institutional clients. Its separate accounts clients were principally corporate, public, and multiemployer pension funds, and foundations and endowments. BEA also managed several mutual and commingled funds, and a number of closed-end country funds. The firm employed 33 investment professionals—most of whom had 10 years or more of experience—and 76 support staff. BEA offered a variety of specialized investment management services grouped under equities ($3.4 billion), fixed income ($5.6 billion), derivative-based strategies ($5 billion), and international equities ($1.6 billion). (See Exhibit 1). The firm boasted...
Words: 4619 - Pages: 19
...CIS 534 - Advanced Network Security Design 1 CIS 534 Advanced Network Security Design CIS 534 - Advanced Network Security Design 2 Table of Contents Toolwire Lab 1:Analyzing IP Protocols with Wireshark ........................................................................ 6 Introduction ............................................................................................................................................. 6 Learning Objectives ................................................................................................................................ 6 Tools and Software ................................................................................................................................. 7 Deliverables ............................................................................................................................................. 7 Evaluation Criteria and Rubrics ........................................................................................................... 7 Hands-On Steps ....................................................................................................................................... 8 Part 1: Exploring Wireshark ............................................................................................................... 8 Part 2: Analyzing Wireshark Capture Information .......................................................................... 12 Lab #1 - Assessment Worksheet...
Words: 48147 - Pages: 193
...which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. * Secondary market - Financial market where previously issued securities (such bonds, notes, shares) and financial instruments (such as bills of exchange and certificates of deposit) are bought and sold. All commodity and stock exchanges, and over-the-counter markets, serve as secondary markets which (by providing an avenue for resale) help in reducing the risk of investment and in maintaining liquidity in the financial system. * Risk - Finance: The probability that an actual return on an investment will be lower than the expected return. Financial risk is divided into the following categories: Basic risk, Capital risk, Country risk, Default risk, Delivery risk, Economic risk, Exchange rate risk, Interest rate risk, Liquidity risk, Operations risk, Payment system risk, Political risk, Refinancing risk, Reinvestment risk, Settlement risk, Sovereign risk, and Underwriting risk. * Security - Finance: A financing or investment instrument issued by a company or government agency that denotes an ownership interest and provides evidence of a debt, a right to share in the earnings of the issuer, or a right in the distribution of a property. Securities include bonds, debentures, notes, options, shares, and warrants but not insurance policies, and may be traded in financial markets such as stock exchanges....
Words: 485 - Pages: 2
...This sample document is the work product of a national coalition of attorneys who specialize in venture capital financings, working under the auspices of the NVCA. This document is intended to serve as a starting point only, and should be tailored to meet your specific requirements. This document should not be construed as legal advice for any particular facts or circumstances. Note that this sample document presents an array of (often mutually exclusive) options with respect to particular deal provisions. TERM SHEET Preliminary Note This term sheet maps to the NVCA Model Documents, and for convenience the provisions are grouped according to the particular Model Document in which they may be found. Although this term sheet is perhaps somewhat longer than a "typical" VC Term Sheet, the aim is to provide a level of detail that makes the term sheet useful as both a road map for the document drafters and as a reference source for the business people to quickly find deal terms without the necessity of having to consult the legal documents (assuming of course there have been no changes to the material deal terms prior to execution of the final documents). TERM SHEET FOR SERIES A PREFERRED STOCK FINANCING OF [INSERT COMPANY NAME], INC. [ __, 20__] This Term Sheet summarizes the principal terms of the Series A Preferred Stock Financing...
Words: 5905 - Pages: 24
...Harvard Business School 9-293-024 Rev. December 16, 1994 BEA Associates: Enhanced Equity Index Funds On the afternoon of July 13, 1992, Messrs. Jeffrey Geller and David DeRosa, derivatives portfolio managers at BEA Associates, were considering alternative ways of investing the assets of a new $100 million enhanced index account. They wanted to find the most attractive combination of derivative and cash market positions to achieve the client's objective which was to outperform the S&P 500 stock index by 50 basis points in a low risk manner. The alternatives included the use of over-the-counter equity swaps, a relatively new financial instrument that had proliferated in recent years. BEA Associates BEA Associates was an investment advisory firm founded as Basic Economic Appraisals in 1934. As of March 31, 1992, the firm managed $15.4 billion representing over 164 institutional clients. Its separate accounts clients were principally corporate, public, and multiemployer pension funds, and foundations and endowments. BEA also managed several mutual and commingled funds, and a number of closed-end country funds. The firm employed 33 investment professionals—most of whom had 10 years or more of experience—and 76 support staff. BEA offered a variety of specialized investment management services grouped under equities ($3.4 billion), fixed income ($5.6 billion), derivative-based strategies ($5 billion), and international equities ($1.6 billion). (See Exhibit 1). The firm boasted...
Words: 4619 - Pages: 19
...FIXED INCOME MARKETS Ac.F. 608 Jonatan Groba Room C42a 1 OUTLINE • PART I: DEBT SECURITIES AND MARKETS 1) Features of debt securities 2) Risks associated with investing in bonds 3) Overview of bond sectors and instruments 4) Understanding yield spreads 5) Introduction to the valuation of debt securities 6) Yield measures, spot rates and forward rates PART II: MEASUREMENT OF INTEREST RATE RISK 7) Introduction to the measurement of interest rate risk 8) Term structure and volatility of interest rates PART III: EMBEDDED OPTIONS AND INTEREST RATE DERIVATIVES 9) Valuing bonds with embedded options 10) Interest rate derivative instruments 11) Valuation of interest rate derivative instruments 2 • • 1. Features of Debt Securities • Issuers: – Central government (e.g. US government) – Government agency (e.g. Fannie Mae, Freddie Mac) – Municipal government (e.g. city of Detroit) – Corporation (e.g. Coca-cola) – Supranational government (e.g. World Bank) Categories of Fixed income securities 1. Debt Obligations: • Borrower promises to pay amounts x1…x2 at times t1…tn to Lender (creditor) • Interest and Principal 2. Preferred stock: • Ownership interest in a corporation • Priority over common stockholders Bond’s indenture: – Contains promises of the issuer and bondholder rights – Identifies a trustee as representative of the interests of bondholders – Contains covenants • • • • • • • Affirmative covenants – What borrower should do, e.g.: • Pay...
Words: 1576 - Pages: 7
...immediately to available information. Stock markets are considered the best examples of efficient markets. Primary Market: 1) Market in which buyers and sellers negotiate and transact business directly, without any intermediary such as resellers. 2) Financial market in which newly issued securities are offered to the public. Secondary Market: Financial market where previously issued securities (such bonds, notes, shares) and financial instruments (such as bills of exchange and certificates of deposit) are bought and sold. All commodity and stock exchanges, and over-the-counter markets, serve as secondary markets which (by providing an avenue for resale) help in reducing the risk of investment and in maintaining liquidity in the financial system. Risk: The quantifiable likelihood of loss or less-than-expected returns. Security: An investment instrument, other than an insurance policy or fixed annuity, issued by a corporation, government, or other organization which offers evidence of debt or equity. Stock: 1) Equity capital raised through sale of shares. 2) Proportional part of a firm's equity capital represented by fully paid up shares. Bond: A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year. Capital: Measure of the accumulated financial strength of...
Words: 523 - Pages: 3
...Identity is: Assets ≡ Liabilities + Stockholder’s Equity 2-2 U.S. Composite Corporation Balance Sheet 2-3 Alphabet Inc. - Assets Assets As of December 31, 2014 As of December 31, 2015 Current assets: Cash and cash equivalents Marketable securities Total cash, cash equivalents, and marketable securities Accounts receivable Receivable under reverse repurchase agreements Income taxes receivable, net Prepaid revenue share, expenses and other assets Total current assets Prepaid revenue share, expenses and other assets, non-current Non-marketable investments Deferred income taxes Property and equipment, net Intangible assets, net Goodwill Total assets $ 18,347 46,048 $ 16,549 56,517 64,395 9,383 11,556 875 450 591 1,903 3,412 3,139 78,656 90,114 3,187 $ 73,066 3,181 3,079 176 23,883 4,607 15,599 129,187 5,183 251 29,016 3,847 15,869 147,461 $ 2-4 Alphabet Inc. –Liabilities and shareholders’ equity As of December 31, 2014 Current liabilities: Accounts payable Short-term debt Accrued compensation and benefits Accrued expenses and other current liabilities Accrued revenue share Securities lending payable Deferred revenue Income taxes payable, net Total current liabilities Long-term debt Deferred revenue, non-current Income...
Words: 2843 - Pages: 12
...markets. • Efficient market- Efficient market is the market where all pertinent information is available to all participants at the same time, and where prices respond immediately to available information. Stock markets are considered the best examples of efficient markets. • Primary market- Primary market is the location where the securities are issued for the first time on exchange. In a primary market, the investor does not buy from another investor and the issue price is the same for the buyers. • Secondary market- A secondary market is a place where an investor can buy securities from another investor rather than the issuing companies for more or less than the actual price. • Risk- Risk is the uncertainty involved in any transaction, as the actual return earned on investment may be different from expected. The chance that there is a difference is also known as risk. • Security- The instrument which represents right on the profit which is generated by the use of assets of business is called security. Some securities are interest based and some are dividend based securities. Some of the securities are common stock, preferred stock, bonds, notes, debenture, option, future, swap, right, warrant or any other financial assets. • Stock- Stock represents the ownership in the business and a claim on part of the company’s assets and earnings. • Bond- It is a debt instrument, which describes the amount of money loaned, the rate of interest, the maturity date and method of payment...
Words: 498 - Pages: 2
...Chapter 5 Gross Income and Exclusions SOLUTIONS MANUAL Problems 46. [LO 1] Clyde is a cash method taxpayer who reports on a calendar-year basis. This year Paylate Corporation has decided to pay Clyde a year-end bonus of $1,000. Determine the amount Clyde should include in his gross income this year under the following circumstances: a. Paylate Corporation wrote the check and put it in his office mail slot on December 30 of this year, but Clyde did not bother to stop by the office to pick it up until after year-end. b. Paylate Corporation mistakenly wrote the check for $100. Clyde received the remaining $900 after year-end. c. Paylate Corporation mailed the check to Clyde before the end of the year, (and it was delivered before year end). Although Clyde expected the bonus payment, he decided not to collect his mail until after year-end. d. Clyde picked up the check in December, but the check could not be cashed immediately because it was postdated January 10. a. Clyde is taxed on the $1,000 under the constructive receipt doctrine. b. Clyde is taxed on the $100 – the remaining $900 is taxed in the next year. c. Clyde is taxed on $1,000 unless the mail was not delivered until after year-end. Clyde would need to check his mail on December 31 or he would have the burden of proving he didn’t receive the check before year-end if the IRS alleges that the check was delivered before year-end. d. Clyde is not...
Words: 2994 - Pages: 12
...xxxx, Assistant Accountant of Tyler Corporation Date: January 15, 2011 Re: Classification of Note Payable on the December 31, 2010 Balance Sheet After checking the Generally Accepted Accounting Principles, I want to explain how to classify the $100,000 note payable on the December 31, 2010 balance sheet. According to Accounting Standard Codification 470-10-45-14, “A short-term obligation shall be excluded from current liabilities if the entity intends to refinance the obligation on a long-term basis”, and “After the date of an entity's balance sheet but before that balance sheet is issued or is available to be issued, a long-term obligation or equity securities have been issued for the purpose of refinancing the short-term obligation on a long-term basis. If equity securities have been issued, the short-term obligation, although excluded from current liabilities, shall not be included in owners' equity.” Tyler Corporation has the same situation above. On January 5, 2011, Tyler Corporation sold 2,000 shares of its $10 par common stock for $80,000. It intends to use these plus $20,000 cash on hand to repay the note payable on March 6. Therefore, the company should get $80,000 common stock out of owner’s equity and report the $80,000 as note payable in long-term liabilities on the December 31, 2010 balance sheet. For the $20,000 cash on hand, the company should report it as note payable in current liabilities on the December 31, 2010 balance sheet. Thank you for your...
Words: 277 - Pages: 2
