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BUS3062 Fundamentals of Finance UNIT#3 (Example)

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BUS3062 Fundamentals of Finance UNIT#3 – Section 4 Student’s name: Institutional affiliation: Answer 1 Proficient I would have the right to claim the worth in a corporation after accounts payable have been settled in the event of dissolution of such an entity CITATION MFi \l 1033 (Cornett Adair & Nofsinger 2016). In addition I would have the right to claim the amount of profits left. Likewise there would be advantages such as disposing off the shareholding in the corporation during a trading day. In addition appreciation of the value of It is the scenario since dividends are always the same Answer 8 Proficient P = P/E * EPS P = 42.48 * $1.56 P = $66.27 Distinguished The value of shares at end of the period is first of all subtracted from the value at the beginning. In addition adjustments are made for stock splits. The model compares the value of shares within a specific corporation to others to determine if the pricing is reasonable. Reference BIBLIOGRAPHY Cornett M. Adair T. & Nofsinger J. (2016). M: Finance. New York: McGraw-Hill. [...]

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Order name is BUS3062 Fundamentals of Finance UNIT#3- DUE DATE FEB 27TH 2018 Please do Section-#1,2, 3, & 4 below for this order and the due date is Feb 27th 2018. Required Textbooks/eBooks Cornett, M., Adair, T., & Nofsinger, J. (2016). M: Finance (3rd ed.). New York, NY: McGraw-Hill. ISBN: 9780077861773. [u03d1] Unit 3 Discussion 1 Readings Use your Cornett, Adair, and Nofsinger text, M: Finance, to complete the following: • Read Chapter 7, "Valuing Bonds," pages 160–189. This chapter covers bond features and types of bonds, bond valuation, bond pricing, and how interest rates affect bond prices. • Read Chapter 8, "Valuing Stocks," pages 190–215. This chapter covers various components of stock returns and stock valuation. SECTION-#1 U03D1-Bonds Are Big Review the Discussion Participation Scoring Guide. Chapter 7 in the M: Finance textbook by Cornett, Adair, and Nofsinger provides an introduction to the main concepts of bonds and bond valuations. Bond concepts are important in finance, because the bond market is vital to finance and actually comprises a larger market than does the stock market. Review Chapter 7, with particular emphasis on the "Bond Market Overview" and "Credit Risk" sections. For this discussion post, address the following: • Describe the different reasons that the U.S. government, local governments, and corporations might issue bonds. • One company has issued two bond classes. One issue is a mortgage bond and the other is a debenture. Which issue will have a higher bond rating and which issue will offer a higher yield? Why? • If you were purchasing bonds, would you prefer debentures or mortgage bonds? Why? SECTION-#2 WRITES 2 DISCUSSIONS -Response Guidelines BELOW Read your peers' initial discussion posts and respond to at least two of them. Compare your post to those of your peers and note any differences. Explain why you agree or disagree with your peers' views and analyses. Your responses are expected to be substantive in nature and should reference the assigned readings or other professional literature, as applicable, to support your views. Resources • Discussion and Participation Scoring Guide. SECTION- #3 U03A1-Valuing Bonds Introduction In this assignment, you will learn about bonds and the financial terms used in bond markets. In addition, you will differentiate between discount and premium bonds, identify the factors that influence bond value, and learn how the TVM concept is used to price bonds. Instructions Answer the following questions and complete the following problems, as applicable. You may solve the following problems algebraically, or you may use a financial calculator or Excel spreadsheet. If you choose to solve the problems algebraically, be sure to show your computations. If you use a financial calculator, show your input values. If you use an Excel spreadsheet, show your input values and formulas. Note: In addition to your solution to each computational problem, you must show the supporting work leading to your solution to receive credit for your answer. • Question 1: o Proficient-level: "What does a call provision [call feature] allow [bond] issuers to do, and why would they do it?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: State what additional compensation is paid, in addition to the bond principal, when a bond is called. • Question 2: o Proficient-level: "Provide the definitions of a discount bond and premium bond. Give examples." (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Explain why market interest changes are reflected in bond prices. • Question 3: o Proficient-level: "Describe the differences in interest payments and bond prices between a 6 percent coupon bond and a zero coupon bond." (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Given a change in market interest rates, determine which of the two bonds (coupon paying bond or zero coupon bond) would remain closer to its par value. • Question 4: o Proficient-level: "Calculate the price of a zero coupon bond that matures in 20 years if the market interest rate is 4 percent." (Cornett, Adair, & Nofsinger, 2016).  Assume semi-annual compounding. o Distinguished-level: State why zero coupon bonds are sold at steep discounts. • Question 5: o Proficient-level: "Compute the price of a 3.8 percent coupon bond with 18 years left to maturity and a market interest rate of 7 percent." (Cornett, Adair, & Nofsinger, 2016).  Assume interest payments are paid semi-annually, and solve using semi-annual compounding. o Distinguished-level: Explain why the bond is either a discount bond or a premium bond. • Question 6: o Proficient-level: "A 6.50 percent coupon bond with 18 years left to maturity is offered for sale at $1,035.25. What yield to maturity [interest rate] is the bond offering?" (Cornett, Adair, & Nofsinger, 2016).  Assume interest payments are paid semi-annually, and solve using semi-annual compounding. o Distinguished-level: Explain what effect a decrease in the offered sales price would have on the yield to maturity. Submit your completed assignment as an attachment in the assignment area. You may use either a Word document or an Excel spreadsheet for your work, but not both. Prior to submitting your assignment, review the Valuing Bonds Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Reference Cornett, M. M., Adair, T. A., & Nofsinger J. (2016). M: Finance (3rd ed.). New York, NY: McGraw-Hill. Resources • Valuing Bonds Scoring Guide. [u03a2] Unit 3 Assignment 2 SECTION-#4-U03A2-Valuing Stocks Introduction Companies can raise money through common stocks. Investors buy stocks and get the benefits of ownership of a firm. How to price stocks is the main objective of this assignment, in which you will learn about the differences between common and preferred stocks, the different stock valuation models, and the major stock market indexes. Instructions Answer the following questions and complete the following problems, as applicable: You may solve the following problems algebraically, or you may use a financial calculator or Excel spreadsheet. If you choose to solve the problems algebraically, be sure to show your computations. If you use a financial calculator, show your input values. If you use an Excel spreadsheet, show your input values and formulas. Note: In addition to your solution to each computational problem, you must show the supporting work leading to your solution to receive credit for your answer. • Question 1: o Proficient-level: "If you were an owner of shares of stock, what rights and what advantages would you have as a shareholder?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Describe the disadvantages to owning stock. • Question 2: o Proficient-level: "Why might the Standard and Poor's 500 Index be a better measure of stock market performance than the Dow Jones Industrial Average?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Explain how the Dow Jones Industrial Average is more popular than the Standard and Poor's 500. • Question 3: o Proficient-level: "What are the differences between common stock and preferred stock?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Describe the similarities between common stock and preferred stock. • Question 4: o Proficient-level: "On September 20, 2017, the Dow Jones Industrial Average set a new high. The index closed at 22,412.59 which was up 41.79 points from the previous day's close of 22,370.80. What was the return (in percent to four decimal places) of the stock market for September 20, 2017?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Identify the three most recognized U.S. market indexes. • Question 5: o Proficient-level: "At your brokerage firm, it costs $9.50 per stock trade. How much money do you need to buy 300 shares of Time Warner, Inc. (TWX), which trades at $42.62?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Based on the amount of commission paid, state whether a traditional full-service broker or a discount broker is being used. • Question 6: o Proficient-level: "Financial analysts forecast Safeco Corporation (SAF) growth for the future to be a constant 8 percent. Safeco's recent dividend was $0.88. What is the value of Safeco stock when the required return is 10 percent?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Re-calculate the value of stock, assuming a one percent increase in the growth rate. • Question 7: o Proficient-level: "A preferred stock from Duquesne Light Company (DQUPRA) pays $3.55 in annual dividends. If the required return on the preferred stock is 7.7 percent, what is the value of the stock?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Explain why the growth rate of preferred stock is 0%. • Question 8: o Proficient-level: "Ultra Petroleum (UPL) has earnings per share of $1.56 and a P/E ratio of 42.48. What is the stock price?" (Cornett, Adair, & Nofsinger, 2016). o Distinguished-level: Explain how the P/E model computes what is referred to as the stock's relative value. Submit your completed assignment as an attachment in the assignment area. You may use either a Word document or an Excel spreadsheet for your work, but not both. Prior to submitting your assignment, review the Valuing Stocks Scoring Guide to ensure you have met all of the requirements and as a self-assessment of your work. Reference Cornett, M. M., Adair, T. A., & Nofsinger J. (2016). M: Finance (3rd ed.). New York, NY: McGraw-Hill. Resources • Valuing Stocks Scoring Guide.

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