Category: Finance

Specific Country conduct and experience

Posted on | by Kelvin

 

Write a research project discussing a topic on Specific Country conduct and experience
The paper should follow the basic structure:
I. The paper should start with a short introduction/motivation section. Why should anyone care about your topic? Here talk about specifics, current events, politics, etc. (~1 pg). Be sure to establish a clear thesis (argument/focus) and lay out preliminary support you will reference throughout the next section.
– Use sources from reputable publications here (NY Times, Wall Street Journal, Economist, etc)
II. Next, you are expected to review the major contributions on the topic and the current state of the literature, citing at minimum five sources scholarly sources. This should be the bulk of your paper (~3-4 pgs). It is a literature review of your topic. If you have a specific topic (e.g. a specific trade deal, etc) then be sure to generalize your topic for this section. So if you were discussing NAFTA or Brexit, you would want to discuss recent literature on free trade agreements/areas for the literature review. Here you want to discuss general theories on your topic so that you can establish the necessary economic relationships.
– Use scholarly sources here (Journal Articles, Federal Reserve, IMF or NBER Studies, etc)
III. Extension. You just reviewed the literature on a specific subject. Here you should suggest an extension to the current literature (~.5 pgs). What is missing from the literature you reviewed (could be a new data set, case study, research methodology)?
IV. Conclusion. Wrap it up. Tie together the support presented above to call back to main thesis (~ .5 pg).
V. Reference Section that links to in-text citations. Use any citation format you choose (APA, MLA, etc), just be consistent throughout the paper. If you choose to, you can simply footnote within the text and forego this section.

Conduct of Monetary Policy and Effectiveness

Posted on | by Kelvin

Write a research project discussing a topic on Conduct of Monetary Policy and Effectiveness
The paper should follow the basic structure:
I. The paper should start with a short introduction/motivation section. Why should anyone care about your topic? Here talk about specifics, current events, politics, etc. (~1 pg). Be sure to establish a clear thesis (argument/focus) and lay out preliminary support you will reference throughout the next section.
– Use sources from reputable publications here (NY Times, Wall Street Journal, Economist, etc)
II. Next, you are expected to review the major contributions on the topic and the current state of the literature, citing at minimum five sources scholarly sources. This should be the bulk of your paper (~3-4 pgs). It is a literature review of your topic. If you have a specific topic (e.g. a specific trade deal, etc) then be sure to generalize your topic for this section. So if you were discussing NAFTA or Brexit, you would want to discuss recent literature on free trade agreements/areas for the literature review. Here you want to discuss general theories on your topic so that you can establish the necessary economic relationships.
– Use scholarly sources here (Journal Articles, Federal Reserve, IMF or NBER Studies, etc)
III. Extension. You just reviewed the literature on a specific subject. Here you should suggest an extension to the current literature (~.5 pgs). What is missing from the literature you reviewed (could be a new data set, case study, research methodology)?
IV. Conclusion. Wrap it up. Tie together the support presented above to call back to main thesis (~ .5 pg).
V. Reference Section that links to in-text citations. Use any citation format you choose (APA, MLA, etc), just be consistent throughout the paper. If you choose to, you can simply footnote within the text and forego this section.

 

 

 

Monetary Policy

Posted on | by Kelvin

Write a research project discussing a topic on Monetary Policy
The paper should follow the basic structure:
I. The paper should start with a short introduction/motivation section. Why should anyone care about your topic? Here talk about specifics, current events, politics, etc. (~1 pg). Be sure to establish a clear thesis (argument/focus) and lay out preliminary support you will reference throughout the next section.
– Use sources from reputable publications here (NY Times, Wall Street Journal, Economist, etc)
II. Next, you are expected to review the major contributions on the topic and the current state of the literature, citing at minimum five sources scholarly sources. This should be the bulk of your paper (~3-4 pgs). It is a literature review of your topic. If you have a specific topic (e.g. a specific trade deal, etc) then be sure to generalize your topic for this section. So if you were discussing NAFTA or Brexit, you would want to discuss recent literature on free trade agreements/areas for the literature review. Here you want to discuss general theories on your topic so that you can establish the necessary economic relationships.
– Use scholarly sources here (Journal Articles, Federal Reserve, IMF or NBER Studies, etc)
III. Extension. You just reviewed the literature on a specific subject. Here you should suggest an extension to the current literature (~.5 pgs). What is missing from the literature you reviewed (could be a new data set, case study, research methodology)?
IV. Conclusion. Wrap it up. Tie together the support presented above to call back to main thesis (~ .5 pg).
V. Reference Section that links to in-text citations. Use any citation format you choose (APA, MLA, etc), just be consistent throughout the paper. If you choose to, you can simply footnote within the text and forego this section.

 

 

 

MarketWatch

Posted on | by Kelvin

 

Visit one of the websites or library databases below to find a finance article that interests you.
Yahoo! Finance (finance.yahoo.com)
MarketWatch (www.marketwatch.com)
Click on “Markets,” “Personal Finance,” or “Economy”
Motley Fool (www.fool.com)
Click on any sections at the top or see the Trending section
Other credible financial sites
In at least one page (double-spaced) in a Word document, write a summary of your chosen article. Describe the main purpose of the article and three ideas or issues you learned about. Explain how each idea affects the financial markets.

 

 

Fundamentals of Real Estate

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You want to become a successful multifamily housing developer. Your plan is to start small and
grow the business over time. You’re looking for a small multifamily property that you can buy,
manage, and someday redevelop into a bigger property. You spot this five-unit property on the
market at 1288 San Gabriel Blvd in San Gabriel, CA:
This building was constructed in 1949. It has 12 beds, 9 baths, 4,900 SF, and a lot of 0.37 acres.
The seller is offering it for $1.98 million. To determine whether this is a good deal, you want to
build a detailed financial model. You make the following assumptions:
• The average monthly rent for the building will be $2,300 in year 1, and it will grow 3% per
year.
• Property prices in this neighborhood will grow 3.5% per year.
1. Based on this information, what direction will cap rates move in? Is this a reasonable
assumption? Where are we “in the cycle” right now? Do you agree with this forecast?
You also make the following assumptions:
2
• The current market is a little weak. You plan to offer every tenant a free month of rent to
keep them loyal in year 1, but you don’t plan to renew this offer in year 2 and beyond.
• Every year, with the turnover in the market, you assume one unit will be vacant for half a
year. When that vacancy appears every year, you’ll have to pay 5% of NOI to your leasing
broker to fill it.
• You have an operating expense ratio of 45%, but tenants pay for utilities, which cost 20%
of EGI.
• It’s an old property. You see a lot of deferred maintenance. You plan to set aside 30% of NOI
every year for renovations.
• You plan to hold the building for six years, at which point you’ll sell it and pay 2% in selling
expenses.
• You expect this type of investment to earn an 8% annual return.
2. Using the PBTCFs and the advertised purchase price…
a. …what is the property value?
b. …what is the NPV?
c. …what is the IRR?
d. Based on this information, is it a good deal? Should you buy the property?
You show your calculations to your mentor in the industry, and he says you’re making a mistake.
You can make more money by continuing to defer maintenance. He says your tenants will thank
you because the units will be cheaper. He advises you to do the bare minimum and let the building
deteriorate. We’ll call this “Option A.”
3. Please copy-and-paste your model onto a second tab and change the assumptions to see
whether this approach will improve your investment. Following your mentor’s advice,
reduce the renovations to 5% of NOI, the operating expense ratio to 35%, and the rental
growth to 2.5% per year.
a. How does this change your property value, your NPV, and your IRR?
3
b. Do you think this strategy is ethical? Would you follow your mentor’s advice? Why or
why not?
Let’s consider one more scenario. We’ll call this “Option B.” Your long-term goal is to redevelop
this property into a bigger, more profitable building. Please copy-and-paste your original financial
model from question #3 onto a third tab and change the assumptions for this scenario:
• You get a 15-year, IO loan with a 6.3% interest rate. You convince the lender to give you
80% LTV so that you can purchase and redevelop the property.
• In year 1, you kick out all your tenants for construction to proceed. You then spend 75% of
the purchase price to double the size of the building. You now have 10 units. For the
remaining years, your vacancy rate stays the same as what you calculated previously.
• Because the building is newer, you won’t need to spend as much on maintenance or
renovations. The operating expense ratio drops to 35%, and the renovations are 10% of
NOI.
• This beautiful new building commands higher rents. Instead of growing 3%, the rent jumps
30% in year 2, and then it grows 3% every year after that.
• Your CAGR isn’t useful anymore because the building has changed so much. So, when you
resell the property, you have to revalue it with a cap rate. I’m not going to give you a cap
rate. I want you to make your own assumption.
4. Using these new assumptions…
a. …what is the NPV for your equity investment?
b. …what is the levered IRR?
c. What terminal cap rate did you assume? Why did you pick that number?
d. Comparing this approach to your previous approach, would you prefer the first
investment strategy or the second investment strategy? Do you have enough
information with just these numbers to make the decision?
Extra Credit: Do you think the lender got a good deal? Put yourself in their shoes. Would you have
made the same offer? Would you have changed any of the terms? Based on what’s happening in
the commercial lending market right now, do you foresee any risks that concern you? What
underwriting metrics would you use? Can you calculate any of them with the information above?
If so, do they change your opinion of the deal?

Are Industry Funding Structures Similar?

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You are asked to choose four firms from the same industry in the same country. You can do this easily by visiting financial websites such as Reuters and clicking on the “industries” link. Download the financial accounts of four similarly sized companies from the same industry and prepare a table with the financial structure of each firm.
Based on that information answer the following 4 research questions:
Research Question 1: Calculate the relative proportions of debt and equity in each company’s capital structure. Are they similar? If not, can you explain why they are not similar?
Research Question 2: Explain how you dealt with securities that had debt and equity characteristics.
Research Question 3: What is the total book value of each company’s assets? What is the total book value of each company’s debt and equity?
Research Question 4: Find the market value of each company’s equity. How does this compare with the book value? Can you explain the difference?
Write a brief report following the indicated structure based on your findings for answering each one of the research questions above.

Purchasing capital expenditures

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As a health care manager, you have been tasked with setting up a new service in your department. As part of the preparation for this new venture, you must research and decide on the best investment.
Businesses often use their profits (cash assets or revenue) to expand their portfolios, such as investments, which may include stocks, bonds, and capital expenditures. This can be used to increase revenue streams. They also invest for protection purposes so they don’t have all of their money invested in 1 place. According to Accounting, there are several reasons why a business must practice sound financial management when using its profits.
Select business investment
Selected:Purchasing capital expenditures (e.g., MRI, PET scan, electronic medical records system, or other large purchases)
Using your selected business investment option, respond to the following:
• Explain the investment option.
• Discuss what you might need to do during your analysis to decide to invest using the selected option.
• Identify the financial statement you would use to help you make the decision.
• Provide a rationale for why you think the health care organization would benefit from using their cash assets to invest in the option you selected.

Investing in other businesses or mergers

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As a health care manager, you have been tasked with setting up a new service in your department. As part of the preparation for this new venture, you must research and decide on the best investment.
Businesses often use their profits (cash assets or revenue) to expand their portfolios, such as investments, which may include stocks, bonds, and capital expenditures. This can be used to increase revenue streams. They also invest for protection purposes so they don’t have all of their money invested in 1 place. According to Accounting, there are several reasons why a business must practice sound financial management when using its profits.
Select business investment
Selected:Investing in other businesses or mergers
Using your selected business investment option, respond to the following:
• Explain the investment option.
• Discuss what you might need to do during your analysis to decide to invest using the selected option.
• Identify the financial statement you would use to help you make the decision.
• Provide a rationale for why you think the health care organization would benefit from using their cash assets to invest in the option you selected.

 

 

 

Investing in stocks and bonds

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As a health care manager, you have been tasked with setting up a new service in your department. As part of the preparation for this new venture, you must research and decide on the best investment.
Businesses often use their profits (cash assets or revenue) to expand their portfolios, such as investments, which may include stocks, bonds, and capital expenditures. This can be used to increase revenue streams. They also invest for protection purposes so they don’t have all of their money invested in 1 place. According to Accounting, there are several reasons why a business must practice sound financial management when using its profits.
Select business investment
Selected: Investing in stocks and bonds
Using your selected business investment option, respond to the following:
• Explain the investment option.
• Discuss what you might need to do during your analysis to decide to invest using the selected option.
• Identify the financial statement you would use to help you make the decision.
• Provide a rationale for why you think the health care organization would benefit from using their cash assets to invest in the option you selected.

The values of each of the bonds

Posted on | by Brian Leakey

Pacific Marine Transport Corporation is considering the purchase of a new bulk carrier for $10 million. The forecasted revenues are $5.5 million a year and operating costs are $4 million. A major refit costing $2 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold for scrap at $1.5 million.
What is the NPV if the opportunity cost of capital is 8%? (10 points)
Should the company accept the purchase of the carrier? (5 points)
What is the IRR of this project (10 points)
What is the payback period (10 points)
Here are data on $1,000 par value bonds issued by Microsoft and GE Capital. Assume you are thinking about buying these bonds.
Microsoft GE
Coupon 5,25% 4,25%
Years to Maturity 30 10
Required Return 6% 8%
Answer the following questions:
a) Assuming interest is paid annually, calculate the values of each of the bonds (10 points)
b) How would these values change if the coupon was paid semiannually (10 points)
c) Assume that the bonds with the coupon that is paid annually (point a) are selling for the following amounts:
Microsoft $1,100
GE Capital $1,030
What are the expected rates of return (YTM) for each bond? (10 points)
d) How would change the price of each bond if the required rate of return (current 6% for Microsoft and 8% for the GE Capital) increased by 2% (10 points). What will you deduce about the relationship between market interest rate and bond prices? (10 points).