Essays on Bodie

Bodie, Z., Kane, A. & Marcus, A. J. (2014). Investments. New York: McGraw-Hill Education. The book reviews investments on a broader aspect when it comes to the business market. The authors of the book got the information through secondary sources on the topic. The secondary sources had to be during the period not more than ten years from the publication of the book. The book focuses on how financial prediction is used to determine a worthy investment in the business market. The book is useful as it looks at asset allocation and its treatment for future options and derivative security ...

Risk, Return, and Portfolio Allocation: Why Stocks Are Less Risky Than Bonds in the Long Run

Risk, Return, and Portfolio Allocation: Why Stocks Are Less Risky Than Bonds in the Long Run

Summary of Chapter 2:

In the current article by Siegel J. J, the main idea explained is that the risk associated with the corporate bonds and the stocks is based on the market value in the future. The main focus of the article is on the lower risk levels long term investments in stocks as compared to the investments in the bonds. The techniques used in the article are analyzing the historical data and few statistical formulas such as correlation and the standard deviation. At the same ...

The cost which the organization incurs the production and acquisition of products and services which it intends to sell is very important. The pricing strategy of the organization is significantly affected by costs. Therefore, costs designed to tackle the challenges of the economic and the noneconomic factors very efficiently. The objective of the costing models is to categorize the factors of the marketing objectives of the company and the mission of the company (Gitman, 2003).

Accurately determination of cost is important in organization to remain profitable. Costing does not only require including direct and indirect cost associated with business ...

Techniques for analyzing capital budgeting have changed a lot in due course. With different techniques, many analysts believe that techniques that consider the time value of money are more useful. Methods, like payback period, which is old, have a disadvantage of not using the time valuably and which at the end will fall. The older methods will be replaced by the newer and better methods. There are different capital budgeting techniques that investors use and there is no specific technique that every investor would be using. So it is the choice of the investors to select which method he wants to. ...

Communication principles and misconceptions

As a newly married couple, it is important for each of you to understand the basic principles of interpersonal communication. Peter and Rose, communication is irreversible. Once one of you says something to his or her partner, it is not possible to take it back. The impact of what is initially said remains in the mind of the partner in an inventible way. This is why it is important for a married couple to think before saying hurting words out of anger. Abuses and arrogance should get no place in marriage context since the partner may forgive you, but the initial ...

- Worksheet entry figures

Cash flow figures and adjustments:

The price used for sales estimation is the £50/MWh tariff that is guaranteed by the government. On the other hand, the megawatts used for the two projects over the 15years period include 60,000 MWh for the small wind-farm and 120,000 MWh for the large wind-farm project.

Cash flow items from the profit and loss account

Adjusted figures - Government grant cash-flow is accounted for in year 1 since it is received in the first year although spread over the 15 years for purpose of profit and loss computation. In that respect the grant receipts for the two projects is calculated as ( ...

Introduction

Investments have two aspects; returns and risks that determine their desirability to an investor. In that respect, analyzing the two is crucial, and several models have been advanced for the purpose of identifying most suitable portfolios. In addition, investor's preferences and risk profile determine their investments choices. Thus, a portfolio construction is based on the involved assets return and risk as well as the client’s risk profile. To demonstrate the process of portfolio construction in view of the clients’ profile, this report uses a case of a client with identified investments goals. The report uses a questionnaire to evaluate the clients risk ...

- Introduction Return on investments (ROI) is one of the most crucial calculations that organizations’ management need to make as a way of ensuring that their businesses have a long-term viability. Thus, it is becoming crucial for businesses not only to identify their operations profitability but also to measure the efficiency of their investments in providing a return. However, the metric’s application varies with different business types, and that forms the objective of this study in establishing the various ROI standards that are applied by companies with a focus on the service oriented businesses. (Vinci, 2010) In that respect, the analysis ...

Introduction

Investors prefer safer to riskier stocks since it provides a perceived security and there alternative to a risky investment or stock is the incentive in form of higher returns. In depth, the market prices are to be set such that investors expect riskier stocks to deliver higher returns although the higher returns are not to be viewed as dependable since if the risky stocks are to be counted on to deliver higher returns than the safer investments or stocks then they are to be considered not risky like demonstrated (LAOPODIS 2012). This expected high returns are valuated so as to attract ...

Personal financial planning is a process of setting financial goals based on your current financial situation and prospect, most importantly future prospects. It is a matter of asking yourself these questions, financially, where do I want to be, when do I want to be there, and how will I get there based on where I am now. Because this is a process certain parameters must be looked into keenly and carefully before one thinks of coming up with a financial plan (Charupat, Huang and Milevsky, 2012). One, your personal financial plan should be based on the financial resources that one currently has at ...

Question one

The major type of risk that Pasiminco faces are: - Interest rate risk- this risk is due to financial market conditions. Pasminco borrowings may be based on a fixed on floating rate of interest. It is obvious Pasminco has debt financing in its portfolio and if they are charged variable interest rates on their loans then there is a risk that the level of interest charged may be unfavorable if market interest rates are high. Pasiminco most probably failed to raise intermediate financing because their credit rating had fallen to warrant the difficulty in raising additional capital from lenders. In ...

1. An efficient market hypothesis which also known as the random walk theorem assumes that the obtaining stock prices completely reflect all the information available about the value of a firm or stock. It proposes that in no way can the excess profits be made on the overall (Clark, et al). It is also given that most investors try to be on a look out for undervalued stocks and securities which are expected to increase in value in the near future, especially securities that are more volatile than others. These investors who include investment managers have believe that they can select ...

Introduction

Budgeting is one of the most important parts of financial management. Budgeting allows the management to identify the areas where the company will be making expenses along with identifying cash inflows. Thus it helps the management to analyze the difference between the expenses and revenues and therefore by comparing these two, budget can provide estimated profits that the firm would make. Budgeting therefore helps the management of the firm to make decisions, to analyze the future cash inflows and outflows and thus make decisions accordingly (Besley, & Brigham, 2007). This report has been divided into three parts. The first ...

INTRODUCTION

Conch Republic Electronics is a medium sized electronic manufacturing organization. The company has been operating over the last 70 years and during this time period; it has expanded its product range. The company also manufactures Smartphone. The previously introduced Smartphone has been highly successful in the market and therefore the management is planning to decide whether to invest in the new Smartphone or not. For this purpose, this report uses different capital budgeting techniques to analyze whether the company should accept the project and start manufacturing new Smartphone or not. Different capital budgeting techniques have been applied such as payback ...

In markets and financial analysis, Efficient Market Hypothesis (EMH) that is also popularly known in finance language as the Random Walk Theory is a phenomenon that gives that the current stock prices fully reflect all and any available information or data pertaining to the value of the firm or company. According to this hypothesis, it is assumed that there is no way an earning of excess profits is possible by the investors when this information is used. According to Mendelker. G, Clarke J & Jandik T, the efficient market hypothesis deals with one of the most fundamental and interesting( exciting) issues ...

Introduction

This report analyses how Down East Pharmaceuticals is managing its receivables. Different companies in the industry are facing issues regarding management of their receivables and therefore it has become important for the firms to manage their receivables appropriately. This report analyzes the average collection period (ACP) in days for the firm along with average daily sales of the firm. Moreover, the report also uses the given data in order to forecast the uncollected balance schedule of the company.

Average collection period

Average collection period shows the time the company takes in order to receive the cash for the accounts receivables (Weygandt, Kieso, & ...

Executive summary

Regan Inc. has been involved in the installation and manufacturing of commercial heating, ventilation and cooling (HVAC) units. This report uses dividend growth model to estimate the price of the stock. The report calculates the price of the stock of Regan Inc. after including the super growth period that the company would observe after advancement in technology. Price to earnings ratio of the company has been used and compared it with the industry to analyze how the investors think about the company’s future as well as the industry future. Return on equity has also been calculated if the ...

Introduction

The European financial crisis has extended beyond borders and is now affecting other countries in various condiments. The world is facing a critical problem brought about by the financial crisis, and financial experts are yet to determine the solution to this problem. The global economic meltdown of 2008 found the European Union struggling with the unshakable financial crisis that has been slowing the growth of European currency, the Euro. As the crisis enters its third year, the European and the whole world is worried whether it would end up affecting the world economy leading to world financial crisis (European Commission ...

Introduction to the company

Warner cable communications is an American cable telecommunications company. It is a $165 billon mega merger company. It is a product that was formed after the merging of AOL and The Time Warner it was approved by the FCC in the year 2001, it has 31 operation divisions and it operates within 28 states. Its headquarters are in Northeastern New York City. The Time Warner Cable is the largest known media merger. In addition it has other corporate offices in Columbus, Ohio; Charlotte, North Carolina; Cambridge, Massachusetts and Herndon, Virginia. This company was originally controlled by Time Warner (Nathanson et al. ...

In the labor market, employers have different expectations from the organisational strategy about their employees and the employees have different expectations from their employer. Employers have expectations in reference to their vision of the future of their business and creating a competitive edge in the marketplace for their business through their employees. Employees have changing expectation in reference to the current labor market which is looking at employment levels and rates and wages being awarded. These expectations from the employer’s point of view and the employee’s point of view differ in different communities. This leads to a psychological contract ...