long assignment on international eco
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need someone solving assignment with 12 questions about international economics in a word file
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1. The Home country has 2,800 units of labor available while the Foreign country has 1700 units
of labor. The two countries produce two goods, textiles and soybeans. The unit labor
requirements in textile production for the Home and Foreign countries is 7.2 and 2.7,
respectively, while soybean production requirements is respectively 3.1 and 5.5.
a.) Graph the Home and Foreign production possibilities frontiers.
b.) What is the opportunity cost of textiles in terms of soybeans for both countries?
c.) What is the opportunity cost of soybeans in terms of textiles for both countries?
d.) What will be the no trade Terms of Trade (or PS/PT) for each country?
e.) How will the Terms of Trade (or PS/PT) change for each country if they trade?
d.) Show the trade triangles for the two trading countries.
2. Describe the Specific Factor Theory of Trade, the assumptions, and give an example of
your choice that demonstrates an autarky (no trade) to a free trade solution. Use a PPC type
graph/model with values of your choice to demonstrate the solution stages.
3. Describe the “Product Cycle” Theory of Trade, its phases and why it may result in a type of
two-way trade over time. You may use the diagram in 2. for guidance:
4. Describe the Factor Proportions of Heckscher-Olin Theory of Trade, the assumptions,
and give an example of your choice that demonstrates an autarky (no trade) to a free trade
solution. Make sure you label exports, imports, trade triangles, and terms of trade in the
solution. You may use the PPC type graph/model below for structure to demonstrate the
solution stages.
5. Calculate the before and after consumer surplus (CS) from a tax, before and after producer
surplus (PS) from the tax, Tax revenue from the tax, deadweight loss from the tax, when Pbuyers
price=$6.80, Psellers price=$5.30, P*= $6.10, Dintercept=$8.60, Sintercept=$2.15, Qwith tax =2500, and Qwithout
tax=4200.
6. Use the Figure below to answer parts a.) and b.).
a.) Calculate the loss to consumers if the government levies a tariff on the imported good
above if Pworld=3.50 Pdomestic=3.80 Pworld+tariff=3.65 Qsdomestic=4 Qs1=16 Qdomestic=19 Qd2=27
Qddomestic=33
b.) Calculate the deadweight loss to society if the government levies a tariff on this imported
good if Pworld=3.20 Pdomestic=3.95 Pworld+tariff=3.45 Qsdomestic=5 Qs1=14 Qdomestic=21 Qd2=28
Qddomestic=35
7. Using the figure below, calculate the before and after consumer surplus (CS), Producer
Surplus (PS), deadweight losses, and tariff revenue from the implementation of a tariff. Note: S0
= 140, S1 = 189, D0 = 290, and D1 = 235
8.
a.) In the “medium-run” where both product and asset markets have enough time to adjust, what will
E euro
happen to the euro-$ exchange rate
spending (G) increase?
and US output if both the $ interest rate and government
$
b.) In the “medium-run” where both product and asset markets have enough time to adjust, what will
happen to the $-yen exchange rate E $ and US output if government spending (G), the foreign price
yen
level, and the domestic price level all rise?
9.
When combined with money demand and money supply, the theory of purchasing power parity
(PPP) leads to a useful “long-run” theory of how exchange rates and monetary factors interact. Use the
following formula for the US dollar ($) - euro exchange rate to answer parts a. – c. below:
E
$
euro
=
S
( L( R$ , YEurope ))( M US
)
S
( L( Reuro , YUS ))( M euro
)
a. If R$ decreases, will the US dollar ($) appreciate or depreciate?
S
b. If M US
decreases, will the euro appreciate or depreciate?
c. If Reuro increases, will the euro appreciate or depreciate?
10.)
a.) In the “medium-run” where both product and asset markets have enough time to adjust, what will
happen to the $-pound exchange rate E $ and output if both Taxes (T) and the expected future Ee)
pound
exchange rate increases?
b.) In the “medium-run” where both product and asset markets have enough time to adjust, what will
happen to the $-Mexican peso exchange rate E $ and output if the domestic price level (P) increases?
peso
11.)
Explain the basic components of the Balance of Payments and explain how are they related to
comparative advantage and the pattern of trade in a country?
12.)
Looking at Exchange Rate Determination in the “short-run,” use the information on the following
interest parity-money market model to answer the questions below:
E(SF/PESO)
R0
E0
R(PESO)+expected rate of
depreciation of the currency
R(SF)
R(SF)
M(s)/P
M/P(0)
L(Y,R)
M/P
a.) What will happen to the peso in the short-run if the central bank in Switzerland increases the money
supply in Switzerland?
b.) What will happen to the SwissFranc (SF) in the short-run if income increases in Switzerland?
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University of Maryland Business Finance Discussion
Step 1: Read the articles. These articles contain examples of evaluating P/E ratio. You will be using these examples to an ...
University of Maryland Business Finance Discussion
Step 1: Read the articles. These articles contain examples of evaluating P/E ratio. You will be using these examples to answer the questions listed at the bottom of the topic description.1) Does Chicago Rivet & Machine Co’s (CVR) PE Ratio Signal A Buying Opportunity? by Kelly Murphy, Simply - Wall St. October 5, 2017https://finance.yahoo.com/news/does-chicago-rivet-machine-co-201613354.html2) Is Cynergistek Inc’s (CTEK) PE Ratio A Signal To Buy For Investors? by Mary Ramos Simply, Wall St. October 5, 2017https://finance.yahoo.com/news/cynergistek-inc-ctek-pe-ratio-144611055.html3) Does Katana Capital Limited’s (ASX:KAT) PE Ratio Signal A Selling Opportunity? by Kyle Sanford , Simply Wall St. October 5, 2017https://finance.yahoo.com/news/does-katana-capital-limited-asx-074409705.htmlYou must use Lowes (LOW)Your assignment:Please also note that your answers should be written in your own words. Don’t use quotes from the articles. You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.For this question we will be using P/E ratio.To find a company's P/E ratio, use www.morningstar.com , enter the desired stock symbol to get to the company's front page. The P/E ratio is listed on the company's front page.Compare the P/E ratio of Lowe's (LOW) with the industry average or with major competitors. Is there a difference between these numbers? Is the stock overvalued, undervalued, or properly valued? Why? In accordance with your findings, is it reasonable to buy the stock? Please explain your answers.Reflection – the students also should include a paragraph in the initial response in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace.
AJS 574 University of Phoenix Morrison Security Agency Budget Proposal Paper
A chief financial officer (CFO) is responsible for overall financial management in justice or security. He or she oversees ...
AJS 574 University of Phoenix Morrison Security Agency Budget Proposal Paper
A chief financial officer (CFO) is responsible for overall financial management in justice or security. He or she oversees disbursements and accountability processes, as well as operational planning, budgeting, and analysis.Imagine you are the CFO for a criminal justice or private security agency. You are tasked with developing and presenting an operating budget proposal to your agency director. Your starting point for the operating budget is the current year. You will then build an operating budget for the next year.Select a state or local criminal justice or security agency.Research the most recent budget for that agency. Use the resource at the end of the assignment as an example of an operating budget and how to search for one online.Write a 525- to 700-word budget proposal that contains operating expenses and revenue.
Colorado State University Capital Rationing Memorandum
OPTION #1: CAPITAL RATIONINGTable with Cash Flows for 5 projects.Project AProject BProject CProject DProject EInitial Inve ...
Colorado State University Capital Rationing Memorandum
OPTION #1: CAPITAL RATIONINGTable with Cash Flows for 5 projects.Project AProject BProject CProject DProject EInitial Investment-$100,000-$25,000-$40,000-$10,000-$150,000Year 1$50,000$15,000$20,000$7,000$100,000Year 2$40,000$10,000$15,000$4,000$25,000Year 3$20,000$5,000$5,000$2,000$10,000Year 4$10,000$1,000$5,000$1,000$10,000Year 5 $1,000 $10,000Year 6 $1,000 $10,000Calculate the IRR for each of the projects presented. Rank the projects based on their IRR.Graph the projects on an Investment Opportunity Schedule (interest rate on the vertical axis and initial investment on the horizontal). Suppose the firm has a capital rationing amount of $170,000 and a required rate of return of 10%.Which projects should the firm implement based on your analysis using the IRR approach above? Write an email to your CFO explaining your rationale proving the choices based on the considerations of shareholder value and the maximum investment budget.Submit your 3 to 4 page paper in a Word document, showing all of your calculations (attach Excel File if necessary) with a minimum of four references.Use terms, evidence, and concepts from class readings.Your paper must be formatted according to CSU Global Writing Center.
FIN 673 Capital Market Theory Applied Portfolio Management Questions
Learning Goal: I'm working on a finance multi-part question and need a sample draft to help me learn.Part 1250 word minimu ...
FIN 673 Capital Market Theory Applied Portfolio Management Questions
Learning Goal: I'm working on a finance multi-part question and need a sample draft to help me learn.Part 1250 word minimumIn your journal, be sure to address the following: Summarize capital market theory.Compare
the various estimates of the risk premium from your capital market line
and your classmates’ capital market lines in the discussion forum.
Explain what these differences mean relative to the assumption of the
market portfolio in the Capital Market Theory discussion forum.Explain
why the client (in the discussion forum) does not have to make the
investment decision with respect to the market portfolio but does have
to make the decision with respect to the weights of the blended
portfolio.Summarize the relationship between the CML and the Markowitz efficient frontier. Part 2 No minimum specified just thoroughCapital
market theory is a positive theory in that it hypothesizes how
investors do behave rather than how investors should behave” (Jones
& Jensen, p. 225, 2020). In this discussion, you will explore the
implications of capital market theory on portfolio construction.A
new client has asked you to determine the portfolio weights for a
blended portfolio of risk-free securities and a diversified equity
portfolio, the optimal portfolio M.For the purposes of this discussion Set the expected rate of return between 10 and 14% for the equity portfolio.Assume a standard deviation of 0.20, which approximates the historical standard deviation of the market.Assume a risk-free rate of 5%. In your initial post, Create
a table with data to illustrate nine different blended portfolios,
ranging from 100% risk free to 100% equity to 200% equity (which assumes
buying on margin). Include your table in your post. The table should
include the following:Weight of the risk-free securities and the equity portfolio.The blended portfolio expected returns.The blended portfolio risk.Graph
the capital market line of your equity and risk-free security
portfolio. Plot portfolio risk on the x-axis and expected portfolio
returns on the y-axis. Feel free to use Microsoft Excel to run these
calculations. Include your graph in your post, and on your graph, the following: Label the optimal market portfolio M.Label the 100% bond portfolio B.Label the section of the capital market line that involves buying the equity portfolio on margin. Discuss the following: Explain what is meant by the market portfolio.Compare
the equity portfolio you created in Stock-Trak (attached) to the
assumed optimal portfolio M. Does this 20-security equity portfolio
approximate the optimal portfolio? Why or why not?
FIN 501 Trident University Strategic Corp Finance Case Worksheet
Module 2 - CaseSTOCK AND BOND VALUATIONAssignment OverviewBefore starting on this assignment, make sure to thoroughly revi ...
FIN 501 Trident University Strategic Corp Finance Case Worksheet
Module 2 - CaseSTOCK AND BOND VALUATIONAssignment OverviewBefore starting on this assignment, make sure to thoroughly review the required background materials. This assignment will require you to use the various discounted cash flow methods and dividend models to make computations. In addition to knowing the computational steps involved in stock and bond valuation, make sure you also understand the basic concepts.Submit your answers as a Word document. Make sure to show your work for all quantitative questions, and make sure to fully explain your answers using references to the background readings for any conceptual questions. Questions 1 and 3 will require Excel, so submit an Excel file that shows your computational steps as a separate file in addition to your Word file. Question 4 is purely conceptual, no computations are necessary but make sure to apply and reference concepts from the required readings in your answers to each of the scenarios.Case AssignmentSuppose you buy a bond that will pay $1000 in ten years along with an annual coupon payment of $50 and the interest rate is 4%. Answer the following questions:What is the value of this bond?Now suppose the bond has no coupon payments (it is a “zero coupon” bond) but still pays $1000 in ten years. What is the value of this bond?What would happen to the value of the bond if the inflation rate unexpectedly goes up? What the bond value increase or decrease?Now suppose the bond still pays an annual coupon of $50 but the interest rate drops to 2%. What is the new value of this bond?The XYZ Corporation pays a dividend of $1 for each share and its required rate of return is 8%. Answer the following questions:Assuming zero growth in dividends, what is the value of each share?Now assume a 4% annual growth rate in the dividend paid. What is the value of each share?Assume the growth rate is still 4%, but the required rate of return drops to 6%. What is the new value of each share?Acme Medical Corp. is expecting the cash flows from 2018-2022 in the table below. After 2022 it is expecting growth in cash flow at an annual rate of 3%. The firm has determined that its weighted average cost of capital (discount rate) is 7%. Using the table below calculate the following:What is the present value of Acme’s future cash flows using the discounted cash flow model?If the firm has 200,000 common shares outstanding, zero preferred shares, and debt with a market value of $10,000,000 what would be the value of each share?Now suppose the discount rate increases to 10%. How would your answers to a) and b) above change based on the new discount rate?YearCash flow2018500,0002019550,0002020620,0002021700,0002022800,000Suppose the Alpha Manufacturing Corporation is experiencing extreme financial difficulties and is considering bankruptcy. Its shareholders are currently almost equally divided about whether or not the company should go bankrupt, with one outspoken faction pushing for bankruptcy and the other strongly opposing it. They have $50 million in debt all in the form of bonds, and bondholders are pretty well united in that they want the firm to declare bankruptcy.The CEO announces that he is leaning against bankruptcy. This means one faction of shareholders is happy, but another faction of shareholders is very upset and the bondholders are also unhappy. Can the unhappy faction of shareholders team up with the bondholders to vote out the CEO? Explain your reasoning using references from the background readings.Suppose Alpha ends up declaring bankruptcy. They do not have any cash in the bank but they own $60 million worth of real estate. They only have one type of shareholder—common shareholders. If they sell the real estate, how much of this will bondholders get and how much with shareholders get? Explain your reasoning using references from the background readings.Now suppose that Alpha has two classes of shareholders—common shareholders and preferred shareholders. Preferred shareholders are owed $20 million in dividends that have been unpaid in the last two years. If Alpha goes bankrupt and sells its $60 million worth of real estate, how much will bondholders get, how much will common shareholders get, and how much will preferred shareholders get? Explain your reasoning using references from the background readings.Assignment ExpectationsAnswer the assignment questions directly.Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.For computational problems, make sure to show your work and explain your steps.For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.Module 2 - BackgroundSTOCK AND BOND VALUATIONRequired ReadingStart off with these two tutorials that will give you an overview of the basic methods of valuing stocks and bonds from Subjectmoney:Subjectmoney. (2013, January 2). How to price/value bonds - formula, annual, semi-annual, market value, accrued interest [Video file]. Retrieved from https://www.youtube.com/watch?v=7zCqoED8MVkSubjectmoney. (2013, January 3). Dividend discount model (DDM) - constant growth dividend discount model - how to value stocks [Video file]. Retrieved from https://www.youtube.com/watch?v=n76Pz3HOBPoNow dig much deeper into bond and stock valuation with the following books chapters. They cover not only the computational methods but also provide a general overview of stock and bond markets:Read “The Basics of Bond Valuation,” from Volume I (pp. 207-224) in:Fabozzi, F. J. (2013). Encyclopedia of Financial Models. “Bond Valuation.” John Wiley & Sons, Inc. ISBN:1-118-00673-9, 978-1-118-00673-3. Available in the Trident University Library.Fabozzi, F. J., & Peterson Drake, P. (2009). Chapter 7: Asset valuation: Basic bond and stock valuation models. In Finance: Capital markets, financial management, and investment management. Wiley. Available in the Trident Online Library.Finally, for some examples of valuation calculations in Excel see the following videos:Moy, M. (2014). Bond valuation in Excel. Retrieved from https://www.youtube.com/watch?v=H-_NP0UxX_UGirvin, M. (2010). Stock valuation with dividend growth model. ExcellsFun. Retrieved from https://www.youtube.com/watch?v=cbRIhwkGAnQGirvin, M. (2010). Stock value based on present value of future dividend cash flows. ExcellsFun. Retrieved from https://www.youtube.com/watch?v=G2VIY5E3I3s&t=163s
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University of Maryland Business Finance Discussion
Step 1: Read the articles. These articles contain examples of evaluating P/E ratio. You will be using these examples to an ...
University of Maryland Business Finance Discussion
Step 1: Read the articles. These articles contain examples of evaluating P/E ratio. You will be using these examples to answer the questions listed at the bottom of the topic description.1) Does Chicago Rivet & Machine Co’s (CVR) PE Ratio Signal A Buying Opportunity? by Kelly Murphy, Simply - Wall St. October 5, 2017https://finance.yahoo.com/news/does-chicago-rivet-machine-co-201613354.html2) Is Cynergistek Inc’s (CTEK) PE Ratio A Signal To Buy For Investors? by Mary Ramos Simply, Wall St. October 5, 2017https://finance.yahoo.com/news/cynergistek-inc-ctek-pe-ratio-144611055.html3) Does Katana Capital Limited’s (ASX:KAT) PE Ratio Signal A Selling Opportunity? by Kyle Sanford , Simply Wall St. October 5, 2017https://finance.yahoo.com/news/does-katana-capital-limited-asx-074409705.htmlYou must use Lowes (LOW)Your assignment:Please also note that your answers should be written in your own words. Don’t use quotes from the articles. You are expected to make your own contribution in a main topic as well as respond with value added comments to at least two of your classmates as well as to your instructor.For this question we will be using P/E ratio.To find a company's P/E ratio, use www.morningstar.com , enter the desired stock symbol to get to the company's front page. The P/E ratio is listed on the company's front page.Compare the P/E ratio of Lowe's (LOW) with the industry average or with major competitors. Is there a difference between these numbers? Is the stock overvalued, undervalued, or properly valued? Why? In accordance with your findings, is it reasonable to buy the stock? Please explain your answers.Reflection – the students also should include a paragraph in the initial response in their own words reflecting on specifically what they learned from the assignment and how they think they could apply what they learned in the workplace.
AJS 574 University of Phoenix Morrison Security Agency Budget Proposal Paper
A chief financial officer (CFO) is responsible for overall financial management in justice or security. He or she oversees ...
AJS 574 University of Phoenix Morrison Security Agency Budget Proposal Paper
A chief financial officer (CFO) is responsible for overall financial management in justice or security. He or she oversees disbursements and accountability processes, as well as operational planning, budgeting, and analysis.Imagine you are the CFO for a criminal justice or private security agency. You are tasked with developing and presenting an operating budget proposal to your agency director. Your starting point for the operating budget is the current year. You will then build an operating budget for the next year.Select a state or local criminal justice or security agency.Research the most recent budget for that agency. Use the resource at the end of the assignment as an example of an operating budget and how to search for one online.Write a 525- to 700-word budget proposal that contains operating expenses and revenue.
Colorado State University Capital Rationing Memorandum
OPTION #1: CAPITAL RATIONINGTable with Cash Flows for 5 projects.Project AProject BProject CProject DProject EInitial Inve ...
Colorado State University Capital Rationing Memorandum
OPTION #1: CAPITAL RATIONINGTable with Cash Flows for 5 projects.Project AProject BProject CProject DProject EInitial Investment-$100,000-$25,000-$40,000-$10,000-$150,000Year 1$50,000$15,000$20,000$7,000$100,000Year 2$40,000$10,000$15,000$4,000$25,000Year 3$20,000$5,000$5,000$2,000$10,000Year 4$10,000$1,000$5,000$1,000$10,000Year 5 $1,000 $10,000Year 6 $1,000 $10,000Calculate the IRR for each of the projects presented. Rank the projects based on their IRR.Graph the projects on an Investment Opportunity Schedule (interest rate on the vertical axis and initial investment on the horizontal). Suppose the firm has a capital rationing amount of $170,000 and a required rate of return of 10%.Which projects should the firm implement based on your analysis using the IRR approach above? Write an email to your CFO explaining your rationale proving the choices based on the considerations of shareholder value and the maximum investment budget.Submit your 3 to 4 page paper in a Word document, showing all of your calculations (attach Excel File if necessary) with a minimum of four references.Use terms, evidence, and concepts from class readings.Your paper must be formatted according to CSU Global Writing Center.
FIN 673 Capital Market Theory Applied Portfolio Management Questions
Learning Goal: I'm working on a finance multi-part question and need a sample draft to help me learn.Part 1250 word minimu ...
FIN 673 Capital Market Theory Applied Portfolio Management Questions
Learning Goal: I'm working on a finance multi-part question and need a sample draft to help me learn.Part 1250 word minimumIn your journal, be sure to address the following: Summarize capital market theory.Compare
the various estimates of the risk premium from your capital market line
and your classmates’ capital market lines in the discussion forum.
Explain what these differences mean relative to the assumption of the
market portfolio in the Capital Market Theory discussion forum.Explain
why the client (in the discussion forum) does not have to make the
investment decision with respect to the market portfolio but does have
to make the decision with respect to the weights of the blended
portfolio.Summarize the relationship between the CML and the Markowitz efficient frontier. Part 2 No minimum specified just thoroughCapital
market theory is a positive theory in that it hypothesizes how
investors do behave rather than how investors should behave” (Jones
& Jensen, p. 225, 2020). In this discussion, you will explore the
implications of capital market theory on portfolio construction.A
new client has asked you to determine the portfolio weights for a
blended portfolio of risk-free securities and a diversified equity
portfolio, the optimal portfolio M.For the purposes of this discussion Set the expected rate of return between 10 and 14% for the equity portfolio.Assume a standard deviation of 0.20, which approximates the historical standard deviation of the market.Assume a risk-free rate of 5%. In your initial post, Create
a table with data to illustrate nine different blended portfolios,
ranging from 100% risk free to 100% equity to 200% equity (which assumes
buying on margin). Include your table in your post. The table should
include the following:Weight of the risk-free securities and the equity portfolio.The blended portfolio expected returns.The blended portfolio risk.Graph
the capital market line of your equity and risk-free security
portfolio. Plot portfolio risk on the x-axis and expected portfolio
returns on the y-axis. Feel free to use Microsoft Excel to run these
calculations. Include your graph in your post, and on your graph, the following: Label the optimal market portfolio M.Label the 100% bond portfolio B.Label the section of the capital market line that involves buying the equity portfolio on margin. Discuss the following: Explain what is meant by the market portfolio.Compare
the equity portfolio you created in Stock-Trak (attached) to the
assumed optimal portfolio M. Does this 20-security equity portfolio
approximate the optimal portfolio? Why or why not?
FIN 501 Trident University Strategic Corp Finance Case Worksheet
Module 2 - CaseSTOCK AND BOND VALUATIONAssignment OverviewBefore starting on this assignment, make sure to thoroughly revi ...
FIN 501 Trident University Strategic Corp Finance Case Worksheet
Module 2 - CaseSTOCK AND BOND VALUATIONAssignment OverviewBefore starting on this assignment, make sure to thoroughly review the required background materials. This assignment will require you to use the various discounted cash flow methods and dividend models to make computations. In addition to knowing the computational steps involved in stock and bond valuation, make sure you also understand the basic concepts.Submit your answers as a Word document. Make sure to show your work for all quantitative questions, and make sure to fully explain your answers using references to the background readings for any conceptual questions. Questions 1 and 3 will require Excel, so submit an Excel file that shows your computational steps as a separate file in addition to your Word file. Question 4 is purely conceptual, no computations are necessary but make sure to apply and reference concepts from the required readings in your answers to each of the scenarios.Case AssignmentSuppose you buy a bond that will pay $1000 in ten years along with an annual coupon payment of $50 and the interest rate is 4%. Answer the following questions:What is the value of this bond?Now suppose the bond has no coupon payments (it is a “zero coupon” bond) but still pays $1000 in ten years. What is the value of this bond?What would happen to the value of the bond if the inflation rate unexpectedly goes up? What the bond value increase or decrease?Now suppose the bond still pays an annual coupon of $50 but the interest rate drops to 2%. What is the new value of this bond?The XYZ Corporation pays a dividend of $1 for each share and its required rate of return is 8%. Answer the following questions:Assuming zero growth in dividends, what is the value of each share?Now assume a 4% annual growth rate in the dividend paid. What is the value of each share?Assume the growth rate is still 4%, but the required rate of return drops to 6%. What is the new value of each share?Acme Medical Corp. is expecting the cash flows from 2018-2022 in the table below. After 2022 it is expecting growth in cash flow at an annual rate of 3%. The firm has determined that its weighted average cost of capital (discount rate) is 7%. Using the table below calculate the following:What is the present value of Acme’s future cash flows using the discounted cash flow model?If the firm has 200,000 common shares outstanding, zero preferred shares, and debt with a market value of $10,000,000 what would be the value of each share?Now suppose the discount rate increases to 10%. How would your answers to a) and b) above change based on the new discount rate?YearCash flow2018500,0002019550,0002020620,0002021700,0002022800,000Suppose the Alpha Manufacturing Corporation is experiencing extreme financial difficulties and is considering bankruptcy. Its shareholders are currently almost equally divided about whether or not the company should go bankrupt, with one outspoken faction pushing for bankruptcy and the other strongly opposing it. They have $50 million in debt all in the form of bonds, and bondholders are pretty well united in that they want the firm to declare bankruptcy.The CEO announces that he is leaning against bankruptcy. This means one faction of shareholders is happy, but another faction of shareholders is very upset and the bondholders are also unhappy. Can the unhappy faction of shareholders team up with the bondholders to vote out the CEO? Explain your reasoning using references from the background readings.Suppose Alpha ends up declaring bankruptcy. They do not have any cash in the bank but they own $60 million worth of real estate. They only have one type of shareholder—common shareholders. If they sell the real estate, how much of this will bondholders get and how much with shareholders get? Explain your reasoning using references from the background readings.Now suppose that Alpha has two classes of shareholders—common shareholders and preferred shareholders. Preferred shareholders are owed $20 million in dividends that have been unpaid in the last two years. If Alpha goes bankrupt and sells its $60 million worth of real estate, how much will bondholders get, how much will common shareholders get, and how much will preferred shareholders get? Explain your reasoning using references from the background readings.Assignment ExpectationsAnswer the assignment questions directly.Stay focused on the precise assignment questions. Do not go off on tangents or devote a lot of space to summarizing general background materials.For computational problems, make sure to show your work and explain your steps.For short answer/short essay questions, make sure to reference your sources of information with both a bibliography and in-text citations. See the Student Guide to Writing a High-Quality Academic Paper, including pages 11-14 on in-text citations. Another resource is the “Writing Style Guide,” which is found under “My Resources” in the TLC Portal.Module 2 - BackgroundSTOCK AND BOND VALUATIONRequired ReadingStart off with these two tutorials that will give you an overview of the basic methods of valuing stocks and bonds from Subjectmoney:Subjectmoney. (2013, January 2). How to price/value bonds - formula, annual, semi-annual, market value, accrued interest [Video file]. Retrieved from https://www.youtube.com/watch?v=7zCqoED8MVkSubjectmoney. (2013, January 3). Dividend discount model (DDM) - constant growth dividend discount model - how to value stocks [Video file]. Retrieved from https://www.youtube.com/watch?v=n76Pz3HOBPoNow dig much deeper into bond and stock valuation with the following books chapters. They cover not only the computational methods but also provide a general overview of stock and bond markets:Read “The Basics of Bond Valuation,” from Volume I (pp. 207-224) in:Fabozzi, F. J. (2013). Encyclopedia of Financial Models. “Bond Valuation.” John Wiley & Sons, Inc. ISBN:1-118-00673-9, 978-1-118-00673-3. Available in the Trident University Library.Fabozzi, F. J., & Peterson Drake, P. (2009). Chapter 7: Asset valuation: Basic bond and stock valuation models. In Finance: Capital markets, financial management, and investment management. Wiley. Available in the Trident Online Library.Finally, for some examples of valuation calculations in Excel see the following videos:Moy, M. (2014). Bond valuation in Excel. Retrieved from https://www.youtube.com/watch?v=H-_NP0UxX_UGirvin, M. (2010). Stock valuation with dividend growth model. ExcellsFun. Retrieved from https://www.youtube.com/watch?v=cbRIhwkGAnQGirvin, M. (2010). Stock value based on present value of future dividend cash flows. ExcellsFun. Retrieved from https://www.youtube.com/watch?v=G2VIY5E3I3s&t=163s
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