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FINC311 Lecture Notes - Lecture 1: Portfolio Manager, Limited Liability Company, Corporate Finance

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redwalrus66
12 Jun 2016
School
University of Delaware
Department
Finance
Course
FINC311
Professor
John Stocker

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Document Summary

The course provides and introduction to fundamental concepts of finance: emphasis on decision-making techniques relevant to financial and non-financial managers. By the end of the course students should be able to understand and utilize basic tools and concepts of finance. Corporate finance/business finance: business finance is appropriate for more than a corporation, can answer questions such as: Investments: can be done from a business setting or an individual setting, work with financial assets such as stocks and bonds. Must understand how value is determined for each type of instrument. Risk: value of financial assets risk vs return and asset allocation, job opportunities: Financial advisor helps an individual company come up with the right mix of stocks and bonds. Evaluates which combinations of assets would produce a greater gain based on current conditions and the individuals" wants/needs. In depth-detailed analysis on a class of assets and the factors that will affect the value of the assets based on current events.

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Related Questions

Part III Overview To make corporate finance decisions, take an advanced finance course, or pursue a career in finance, you will need to understand basic concepts. This includes going beyond the number crunching and reading graphs in order to analyze various financial indicators. This analysis can lead to many important decisions in your financial career. For this part of the final project, you will be given a scenario in which you are asked to illustrate your financial knowledge and analysis skills.

This part of the assessment addresses the following course outcomes: · Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements · Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments · Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success · Analyze corporate financial data for multiple companies in evaluating past and future financial performances

Part III Prompt The results of both sections of your employment examination have finally been received, and you were offered the position. You have a few important decisions to make before you can formally accept or decline the position. When composing your answers to these decisions, ensure that they are cohesive and read like a short essay. Your submission must address the following critical elements:

I. School Versus Work A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.

B. What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.

C. Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

D. Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.

II. Bonus Versus Stock A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?

B. What are the advantages and disadvantages of each option? Be sure to support your answers.

C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

III. Compliance A. While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.

B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager, what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Many businesses find it generally more efficient to enlist the services of a financial institution when it comes time to raise capital: IE. Investment Banks: An organization that underwrites and distributes new investment securities and helps business obtain financing. Commercial Banks: The traditional department store type of financing serving a variety of savers and borrowers. Financial Service Corporations: A firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking. Credit Unions: Cooperative association whose members have a common bond such as employees of the same firm. Pension Funds: Retirement plans funded by corporations or government agencies. Life Insurance Companies: Take annual premium payments and invest these funds in stocks, bonds, or real estate and make payments to beneficiaries of the insured parties. Mutual Funds: Corporations that accept money from savers and then use these funds to buy stocks, long-term bonds, or short-term debt issued by business or government. They typically pool funds to reduce risk by diversification. Exchange Traded Funds (ETFs): Buy a portfolio of stocks of a certain type of business sector. IE. media companies, oil companies, Chinese companies, etc. and then sell their own shares to the public. Hedge Funds: Not regulated by the Securities and Exchange Commission (SEC). Typically have large minimum investments of over $1 million and marketed to individuals an institutions with high net worth. Private Equity Companies: Target, buy, and then manage entire firms. Most of the money used to buy these companies is borrowed. Why are the various financial instruments considered claims against a company's future cash flows ?

Final Project Part III

Part III

Overview To make corporate finance decisions, take an advanced finance course, or pursue a career in finance, you will need to understand basic concepts. This includes going beyond the number crunching and reading graphs in order to analyze various financial indicators. This analysis can lead to many important decisions in your financial career. For this part of the final project, you will be given a scenario in which you are asked to illustrate your financial knowledge and analysis skills. This part of the assessment addresses the following course outcomes:

 Analyze the roles and responsibilities of financial managers in confirming compliance with federal and shareholder requirements

 Differentiate between various financial markets and institutions by comparing and contrasting options when selecting appropriate private and corporate investments  Compute financial ratios, time value, variables, and returns using industry standard tools for optimizing financial success

 Analyze corporate financial data for multiple companies in evaluating past and future financial performances

Part III Prompt The results of both sections of your employment examination have finally been received, and you were offered the position. You have a few important decisions to make before you can formally accept or decline the position. When composing your answers to these decisions, ensure that they are cohesive and read like a short essay. Your submission must address the following critical elements:

I. School Versus Work

A. The school you would like to attend costs $100,000. To help finance your education, you need to choose whether or not to sell your 1,000 shares of Apple stock, 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-year maturity date, or a combination of both. Provide the appropriate data and calculations that you would perform to make this decision.

B. What are the advantages and disadvantages of selling a combination of stocks and bonds? Be sure to support your answers.

C. Suppose that you choose to sell your stocks, bonds, or a combination of both. What is your choice, and what is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

D. Suppose that you choose to accept the job. What is your financial reasoning behind this choice? Be sure to support your answer with quantitative data.

II. Bonus Versus Stock

A. The company has offered you a $5,000 bonus, which you may receive today, or 100 shares of the company’s stock, which has a current stock price of $50 per share. Mathematically, what is the best choice? Why?

B. What are the advantages and disadvantages of each option? Be sure to support your answers.

C. What would you ultimately choose to do? What is your financial reasoning behind this choice? Consider supporting your answer with quantitative data.

III. Compliance

A. While investigating the shares offered to you by your potential boss, you discover that the company you are considering working for is not registered as required under the Securities Act of 1933. How does this influence you as a potential employee and as a potential shareholder? Be sure to reference any applicable statutes or laws.

B. You know that accepting this job may eventually lead to a promotion into the role of the financial manager. As the potential financial manager, what federal and shareholder requirements would you need to be familiar with in order to ensure that you are being completely compliant?

Guidelines for Submission: Please ensure that your decision plan is submitted as one comprehensive and cohesive short essay. It should use double spacing, 12- point Times New Roman font, and one-inch margins. Citations should be formatted according to APA style.