...Project in FPS 4 Why is important to continuously manage and control your portfolio? It is important to manage and control my portfolio is one of the most difficult things about maintaining a portfolio is that, even if you don't touch it, it's always evolving. A change in the value of one type of investment tends to affect the dollar-value proportion of other asset classes. If you own more than one security, you have an investment portfolio. You build the portfolio by buying additional stocks, bonds, mutual funds, or other investments. Your goal is to increase the portfolio's value by selecting investments that you believe will go up in price. According to modern portfolio theory, you can reduce your investment risk by creating a diversified portfolio that includes enough different types, or classes, of securities so that at least some of them may produce strong returns in any economic climate. Be sure that your portfolio is diversified. Diversification can help reduce your portfolio’s market risk under various market conditions. It can also dampen the impact of a volatile market. Diversification cannot assure a profit or protect against loss in a declining market. Why is important to continuously manage and control your portfolio? It is important to manage and control my portfolio is one of the most difficult things about maintaining a portfolio is that, even if you don't touch it, it's always evolving. A change in the value of one type of investment tends to...
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...a. Why is it important to keep paid-in capital separate from earned capital? The owner's equity is subdivided into two categories, which represent the two ways that owners can make contributions to the corporation: * Contributed capital, which includes the contributions to the corporation in return for common stock * Earned surplus (also called retained earnings), which is comprised of the corporation's cumulative earnings, less distributions of those earnings (i.e., dividends) Thus Paid in capital is capital received from investors in exchange for stock. This is recorded as an entry on the balance sheet. Investopedia Says: This term is sometimes also referred to as contributed capital or share capital. Paid in Capital is capital that is brought in by investors in return for stock. It is not capital that is generated as a result of the operation of the company. Also referred to as Contributed Capital or Paid in Surplus. Paid-in capital comes from the corporation’s stockholders who invested in the company. The contributed capital (common stock) is further divided into the minimum or stated capital (amount paid in for par value or, absent a special allocation, the total amount paid in for no par stock) and the capital surplus (amount paid in above minimum, or stated capital) Earned capital is generated through profits of the business. It come from the corporation’s customers. It is important to keep paid in separate from earned capital as: Paid-in capital...
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...|Governance; FARS [Chapter 1 – |Table 3.39 Regulated Industry; |Issued by FASB?; 2: Dissents |Agenda of FASB; [Case 8 Related:| |The Financial Accounting |Table 3.40 Specialized Industry |Portending Future?; 32: What |Does It Matter Where Guidance Is| |Research System (FARS) Primer.] |Considerations |Makes One GAAP Preferable to |Located?]; [Case 12 Related: Are| | | |Another?; 30: When Can Analogies|Accounting Rules to Blame?] | | | |Be Used?; 31: What Are the 10 | | | | |Most Important Assumptions?; 33:| | | | |Are Independent Directors Good | | | | |for Accounting? | | |...
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...2011 Karen Miller Owners Equity Paper This paper will address three questions. The first is “Why is it important to keep paid-in capital separate from earned capital?” The second question is “As an investor, is paid-in capital or earned capital more important?” The third question answered will be “As an investor, are basic or diluted earnings per share more important?” Why is it important to keep paid-in capital separate from earned capital? The reason it is important to keep paid-in capital separate from earned capital is due to the amount of money that received from each investors for exchange of stock. When a company earns capital, the amount of money generated as profitable operations of the company (Intermediate Accounting, 12th ed., pg. 792). It is important to keep paid-in capital separate from earned capital because paid-in capital is not a true reflection of a company’s performance. Net income is the source of earned capital. If the two types of capital not kept separate, the net income would be overstated and show that the company is more profitable than it really is. As an investor, earned capital is more important when attempting to figure out how profitable the company paid-in capital is money exchanged for stock; this amount has nothing to do with how profitable the company’s operations are. Basic earnings per share are earrings per share of common stock. Calculate earnings per share by dividing net income available for the common shareholders by the weighted...
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...Non U.S. Equities The stocks we are investing 19 percent of our money in are JBJAX and EMGCX. The reason for us investing in these two stocks are the positions they hold in the Morningstar JBJAX has a 3 out of 5 rating and EMGCX has a 5 out of 5 rating. So by looking at these stocks we are in a good position to come out of it in a positive way. To further break down where we will be investing the 19 percent of the $1,900 and why, 15 percent or 1,500 will be going into JBJAX just for the simple fact in each investment category Morgan Stanley is in the top 50 percentile. Then 4 percent or 400 we will be investing in EMGCX. But investing in these two stocks we don't want to put all our money in one basket like Morgan Stanley and added a percentage of the 1,900 to Evergreen Emerging Markets and with the growth being made in other countries we did not feel we should have all our money in US stock. JBJAX has a NAV (net asset value) of $9.37 per share and EMGCX NAV is $16.25 per share. Just by looking at The NAV of these two stocks it seem like pretty good stock to invest money into with the return percentages being among the best. EMGCX has an above average 3 year Morningstar rating with below average risk, so that shows in the short term the return vs. risk rate is very high and the 5 year Morningstar return rating is high with the risk being low so that shows some of the stability of EMGCX stock. EMGCX as of November of 2009 had a 66.10% total return percentage. JBJAX as of November...
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... 1. Why do corporations sell stock? Corporations sell stock to finance their business start-up costs and help pay for expansion and their ongoing business activities. Since stock is a form of equity financing, it does not have to be repaid and dividends are not necessary. (p. 325) 2. Investors purchase stock for the three reasons listed below. Explain how each reason could help you reach your investment goals. |Dividend income | |Dollar appreciation | |Possible increased value from stock splits | Basically, there are three ways that an investor can make money with a common stock investment: (1) income from dividends; (2) dollar appreciation of stock value; and (3) possibility of increased value from stock splits. Since dividends are generally paid on a quarterly basis, dividend income provides a steady source of income for investors. Stocks can also provide growth if they increase or appreciate in value. Finally, there is the possibility that a stock will increase in value because of stock splits. Be warned: There are no guarantees and stock splits are not an overnight way to gain investment wealth. (pp. 325 -329) 3. Why do corporations split their stock? Is a stock split good or bad for investors? A corporation splits their stock because management has a theoretical ideal price range for the firm’s stock. If the market price of the stock rises...
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...If You Face Any Problem E- Mail Us At JohnMate1122@gmail.com MBA 570 assignment 1 This writing assignment should be in an essay format. It should use twoor more published news or academic articles which are less than a year old as cited references. In your essay, you should answer the following questions: • What are value stocks? • What are growth stocks? • What is the reasoning that investorsuse for purchasing valueor growth stocks? • Has valueor growthinvesting worked best over the long term? • Do you prefer one of the Find recent examples of news articles in which someone is described as a valueor growthinvestor . How successful have theybeen with this method? The essay will be in APA format and be 500-1,000 words in length . See the rubric on the next page for complete grading criteria Hint: One wayto find information for this assignment is to use the library’s database for the Wall Street Journal or Barron’s and search for a recent article with the words “value investor” or “growthinvestor” in the text of the article MBA570 assignment 2 Assume that you are a corporate manager that needs to make an important decision. Your company currently has its largest factory (700 employees) located in the Midwestern United States. This factory is currently not competitive in international markets and its poor results are threatening to force the entire company into bankruptcy. The company employs 3,000 in other areas of the U.S. You have to decide...
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...pools. How important are the investment returns for the overall activity of the organization? Partners Healthcare depended heavily upon investment pools due to extremely low and management believed they needed minimum of 3% to maintain adequate investment in new clinical and research facilities. Hence, LTP has played a crucial role in maintaining the financial health of the organisation and served as a financial buffer against possibility of operating losses. 2) What are the motives behind the suggestion to add real assets to the Long-Term investment pool? Motives for adding real assets to the Long-Term Investment pool include: -Concern about the future risk and return from traditional financial assets such as stocks and bonds, want to search for untraditional asset classes which may help to diversify the risk exposure of the LTP -Economy was performing well and real assets provided a strong subportfolio with strong growth as experienced in 2004 with REITS and commodity futures that tracked the GSCI. This led to 3) Estimate the Sharpe ratio of the baseline-mix Long-Term pool (before adding real-assets). Next, estimate the weights of the tangent portfolio (before adding real assets) and calculate its Sharpe ratio. Was the baseline-mix efficient? If not, what could be the reason? 4) Plot mean-variance frontiers (without risk-free rate) for the following assets classes along the same mean return-st. deviation axes : a) US stocks, foreign stocks, corporate...
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...Chapter 1 The Financial Manager and the Firm Learning Objectives 1. Identify the key financial decisions facing the financial manager of any business firm. 2. Identify the basic forms of business organization used in the United States, and review their respective strengths and weaknesses. 3. Describe the typical organization of the financial function in a large corporation. 4. Explain why maximizing the current value of the firm’s stock price is the appropriate goal for management. 5. Discuss how agency conflicts affect the goal of maximizing stockholder wealth. 6. Explain why ethics is an appropriate topic in the study of corporate finance. I. Chapter Outline 1.1 The Role of the Financial Manager A. It’s All about Cash Flows • The financial manager is responsible for making decisions that are in the best interest of the firm’s owners. • A firm generates cash flows by selling the goods and services produced by its productive assets and human capital. After meeting its obligations, the firm can pay the remaining cash, called residual cash flows, to the owners as a cash dividend, or it can keep the money and reinvest the cash in the business. • A firm is unprofitable when it fails to generate sufficient cash flows to pay operating expenses, creditors, and taxes. Firms that are unprofitable over time will be forced into bankruptcy by their creditors. In bankruptcy, the company will be reorganized, or the company’s...
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...financial transactions, actual or planned. By using the figures given you can produce financial information. Here are some reasons why accounting in a business is important. Recording transactions is important for Sainsbury’s because by keeping up to date records this will allow them to have a smooth running business. Monitoring activity is important for Sainsbury’s because there records will be updated on a daily basis and by using monitor activity it will provide good information on how Sainsbury’s is doing in paying expenses, sales and receiving payment. Another reason why accounting is important for Sainsbury’s because it provides managers important information for decision making. Also it is important for accounting in Sainsbury’s because Sainsbury’s need to provide up to date information to the stakeholders about financial information. P2: Difference between Revenue Income, Revenue Expenditure, Capital Income and Capital Expenditure. Capital income: Capital income is when money is invested by other investors or by the owner to buy equipment and start up a business. The equipment brought will stay in a business long and medium periods of time for example equipment, premises and vehicles and they are called fixed assets. When you buy opining stock the money will come out of the capital income and after a month or so your stock will be paid by revenue income. Capital expenditure: Capital expenditure is the amount of money spent to upgrade or acquire...
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...Many individual investors will find it agonizing to talk about China’s stock market bubble in 2007. I fully appreciate their feelings since many lost as much as 60% of their fortune in the stock market that year. When Shanghai Stock Exchange Composite Index fell from 6000 to 5500 points, almost everyone who lost money still believed in the market’s strength and hoped it would bounce back so that they could recoup all their losses in the near future. Few were willing to withdraw their investments though most knew that “stop losses” is a basic investment principle. Shanghai Stock Exchange Composite Index is struggling against 3000 points these days and the investors who watched their investments shrank from when the Index was 6000 points are suffering huge losses. A lot of my friends who are not investors ask the same question when we talk about the bear market: why didn’t those investors get out of a falling market sooner? I always laugh at the question because the answer is quite simple: This is human behavior. People set reference points when they start investing. Selling off their positions at a loss is against their natural instinct. An Interesting Study A 1979 study by Daniel Kahneman and Amos Tversky showed an interesting phenomenon. Subjects were told to choose between two prospects: Prospect 1: A 100 percent chance of losing $3,000 Prospect 2: An 80 percent chance of losing $4,000, but a 20 percent chance of losing nothing. Ask yourself which one...
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...Investing in the Philippine Stock Market: Worth it! A Term Paper Presented to Ms. Auracel Laplana-Alejandro Humanities Division Ateneo de Davao University In Partial Fulfillment of the Requirements for the subject ENGL 23 – Writing Across the Disciplines Second Semester, SY 2014-2015 By Ronsard-Novem N. Timan Adlin Joey Almencion February 20, 2015 Investing in the Philippine Stock Market: Worth it! By: Ronsard-Novem N. Timan Adlin Joey Almencion Thesis Statement: This paper aims to discuss that although Investing in Stock Market is volatile, risky, and the maintenance is costly, it is a secondary of income, Highly Profitable and has a Long Term Benefits. Outline: 1.0 Introduction 2.0 Background 2.1 Stock 2.1.1 Types of Stocks 2.2 Stock Market 2.2.1 Purpose and Function of Stock Market 2.3 Philippine Stock Market 2.3.1 Brief History of the Philippine Stock Exchange 2.4 Income Bracket for Investment 2.5 Attitude of Filipinos on Investments 3.0 Advantages of Investing in Stock Market 3.1 Earn more Money 3.2 Long Term Growth Benefits 3.3 Highly Profitable 4.0 Disadvantages of Investing in Stock Market 4.2 Risky 4.3 Costly Maintenance 5.0 Refutation 6.0 Conclusion Investment can be considered as a Capital for each company to start their operations. Investment is not only limited to companies, but also for individuals. It is designed to be a source of income for those who have no interest in...
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...It will make it easier for you to relate the questions in the workbook to those in the book. Your input to the workbook will appear in a dark green font while the questions appear in blue. The different font colors can make it easier for you to see your work. You’ll need to do some number crunching to complete your annual report analysis. The Big Calculating Tool, located on your CD, can save you a great deal of time and make the number crunching nearly painless. Every ratio and calculation for the book is included in the Big Calculating Tool. You’ll have more time for analysis if you use the Big Calculating Tool. Table of Contents Questions for Chapter 2 4 Question 2.0 – What do you want to learn about company and why? 4 Question 2.1 - Fundamental Information Set For Your Company 4 Question 2.2 - The Marketplace Context 5 Question 2.3 - Challenges and Success for Your Company 6 Questions for Chapter 3 8 Question 3.1 – What is Management saying about your company? 8 Question 3.2 – What did the Chairman say? 9 Question 3.3 – Internal Controls and Auditors 10 Questions for Chapter 4 11 Question 4.0 – What is your company’s fiscal year 11 Question 4.1 – Current Assets 11...
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...Marciano Tony Course Syllabus TENTATIVE I. Course Materials A. Packet I (Required): 1. Syllabus 2. Assignments 3. Cases 4. Readings B. Text (Very Highly Recommended but probably have it already): Brealey Myers Allen, Principles of Corporate Finance, McGraw Hill. (BM) You may already have this text. C. There will be some miscellaneous handouts during the course. AND THERE ARE FILES ON BLACKBOARD WHICH CONTAIN SPREADSHEETS FOR THE CASES WE WILL ANALYZE IN THE COURSE. EACH SPREADSHEET CONTAINS ONE OR MORE OF THE EXHIBITS IN THE CASE. THIS WILL MAKE IT EASIER FOR YOU TO SPEND TIME ON THE ANALYSIS, RATHER THAN PUNCHING IN NUMBERS. II. Course Objectives This course will use the case method to study the practical aspects of important topics in corporate finance. We will apply some of the concepts and techniques learned in intro...
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...Lecture Handouts for Chapter 5 Chapter 5 is covered in lectures 31 and 32. Risk and Return The return from an investment is the change in market price, plus any cash payments received due to ownership, divided by the beginning price. The risk of a security can be viewed as the variability of returns from those that are expected. Measurement of Risk The expected return is simply a weighted average of the possible returns, with the weights being the probabilities of occurrence. The conventional measure of dispersion, or variability, around an expected value is the standard deviation σ. The square of the standard deviation σ2 is known as the variance (σ2). The standard deviation can sometimes be misleading in comparing the risk, or uncertainty, surrounding alternative investments if they differ in size. To adjust for the size, or scale, problem, the standard deviation can be divided by the expected return to compute the coefficient of variation (CV) – a measure of “risk per unit of expected return.” Investor’s Attitude towards Risk Investors have different attitudes while deciding between the risk and return in an investment. Investors are, by and large, risk averse. This implies that they demand a higher expected return, the higher the risk. The expected return from a portfolio The expected return from a portfolio (or group) of investments is simply a weighted average of the expected returns of the securities comprising that portfolio. The weights are equal to the proportion...
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