...questions posed ii. Cite the sources of the information in the last page (references) iii. Your work should be typed The assignment question MINI CASE Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage firm of Balik & Kiefer Inc. your first assignment is to explain the nature of the Kenya financial market to Michelle Cheruiyot, a professional athlete who has just come to Kenya from Poland. Cheruiyot is a highly ranked long distance runner who expects to invest substantial amounts of money through Balik & Kiefer. She is also very bright and therefore would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions which you must ask and answer to explain the Kenya financial system to Cheruiyot. a. What is a market? How are the physical asset market diffentiated from financial markets? b. Differentiate between money markets and capital markets c. Differentiate between a primary market and a secondary market. If Equity Bank Ltd decided to issue additional common stock and Cheruiyot purchased 10,000 shares of this stock from Dye Inc, the underwriter, would this transaction be a primary market transaction or a secondary market transaction? Would it make a difference if Cheruiyot purchased previously outstanding Equity Bank stock in the over the counter market? d. Describe the three primary ways in which capital is transferred between...
Words: 442 - Pages: 2
...with regard to the questions posed ii. Cite the sources of the information in the last page (references) iii. Your work should be typed MINI CASE Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage firm of Balik & Kiefer Inc. your first assignment is to explain the nature of the Kenya financial market to Michelle Cheruiyot, a professional athlete who has just come to Kenya from Poland. Cheruiyot is a highly ranked long distance runner who expects to invest substantial amounts of money through Balik & Kiefer. She is also very bright and therefore would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions which you must ask and answer to explain the Kenya financial system to Cheruiyot. a. What is a market? How are the physical asset market diffentiated from financial markets? b. Differentiate between money markets and capital markets c. Differentiate between a primary market and a secondary market. If Equity Bank Ltd decided to issue additional common stock and Cheruiyot purchased 10,000 shares of this stock from Dye Inc, the underwriter, would this transaction be a primary market transaction or a secondary market transaction? Would it make a difference if Cheruiyot purchased previously outstanding Equity Bank stock in the over the counter market? d. Describe the three primary ways in which capital is transferred...
Words: 452 - Pages: 2
...Mini Case Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre. a. Why is corporate finance important to all managers? The importance of corporate finance is that it helps managers understand the health of the company and how to act accordingly with a common guideline. The responsibility for controlling company assets falls upon management as a whole. Managers need to be able to make decisions that will benefit the company and in order to make those decisions they need to have insight into the financial health of the business. If not they could possibly lose funding and find their projects continually short on financial support. Every decision made by management essentially has a financial impact. Managers have a responsibility to increase the shareholders’ stake in the firm. b. Describe the organizational forms a company might...
Words: 1388 - Pages: 6
...Financial management (2-6) In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in dividends was paid to shareholders during the year? Retained Earnings Opening $ 780 Net Income $ 50 Cash dividends $(20) Closing $ 810 (2-7) The Talley Corporation had a taxable income of $365,000 from operations after all operating cost but before (1) interest charges of $50,000, (2) dividends received of $15,000, (3) dividends paid of $25,000, and (4) income taxes. What are the firm's income tax liability and its after-tax income? What are the company's marginal and average tax rates on taxable income? Operating income $365,000 Interest charges ( $ 50,000) Dividends $4,500 (15000x0.30) Taxable income $319,500 Tax on base $22,250 Amount over base =$319,500-$100,000 = $219,500 Marginal tax rate = 39% Tax liability = $22,250 + 0.39($219,500) = $22,250 + $85,605 = $107,855 Average tax rates = 107855/319500 = 33.76% Taxable income $319,500 Tax liability ($107,855) Add non taxable dividend* $10,500 After tax income $ 222,145 *($15,000-$4,500=$10,500) (2-9) The Shrieve Corporation has $10...
Words: 1614 - Pages: 7
...Mini Case Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre. a. Why is corporate finance important to all managers? Corporate finance enables managers to know what strategies or tools would be best for adding value to the organization. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. The organizational forms a company might have as it evolves are sole proprietorship, partnerships, and corporations. The advantages of a sole proprietorship are that it is easily and inexpensively formed, there are fewer government regulations, and it’s not subject to corporate tax code. The disadvantages are it is difficult to obtain large amounts of capital, it has an unlimited personal liability for the proprietor, and the life of the business...
Words: 1902 - Pages: 8
...Mini Case (p. 45) Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a professional tennis player who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to ex- plain the U.S. financial system to DellaTorre. a. Why is corporate finance important to all managers? Corporate finance provides the skills managers need to identify and select the corporate strategies and individual projects that add value to their firm and forecast the funding requirements of their company, and devise strategies for acquiring those funds. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. Business Organization from Start-up to a Major Corporation: Sole proprietorship, Partnership and Corporation. Form of Business: Characteristics: Advantages: Disadvantages: Proprietorships Unincorporated business owned by one individual. • Easily and inexpensively formed • It is subject to few...
Words: 1899 - Pages: 8
...FIN515_Homework1:9/9/2013 CASE: pg. 45 Assume that you recently graduated and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm's clients is Michelle DellaTorre, a professional tennis player who has just come to the United States who has just come to the United States from Chile. DellaTorre is a highly ranked tennis player who would like to start a company to produce and market apparel she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. DellaTorre is very bright, and she would like to understand in general terms what will happen to her money. Your boss has developed the following set of questions you must answer to explain the U.S. financial system to DellaTorre. A. Why is corporate finance important to all managers?Corporate finance is the department that handles strategic financial issues associated with achieving goals such as how the corporation should raise and manage its capital, what investments the firm should make, what portion of profits should be returned to shareholders in the form of dividends, and whether it makes sense to merge with firms or other companies. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. • A proprietorship, or sole proprietorship, is a business owned by one individual. A partnership exists when...
Words: 2001 - Pages: 9
...Chapter 1 An Overview of Corporate Finance and The Financial Environment MINI CASE Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre, a professional tennis player who has just come to the United States from Chile. Dellatorre is a highly ranked tennis player who would like to start a company to produce and market apparel that she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. Dellatorre is also very bright, and, therefore, she would like to understand, in general terms, what will happen to her money. Your boss has developed the following set of questions which you must ask and answer to explain the U.S. financial system to Dellatorre. a. Why is corporate finance important to all managers? Answer: Corporate finance provides the skills managers need to: (1) identify and select the corporate strategies and individual projects that add value to their firm; and (2) forecast the funding requirements of their company, and devise strategies for acquiring those funds. b. Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form. Answer: The three main forms of business organization are (1) sole proprietorships, (2) partnerships, and (3) corporations. In...
Words: 3524 - Pages: 15
...Chapter 1 ------------------------------------------------- An Overview of Corporate Finance and ------------------------------------------------- The Financial Environment MINI CASE ------------------------------------------------- Assume that you recently graduated with a degree in finance and have just reported to work as an investment advisor at the brokerage firm of Balik and Kiefer Inc. One of the firm’s clients is Michelle Dellatorre, a professional tennis player who has just come to the United States from Chile. Dellatorre is a highly ranked tennis player who would like to start a company to produce and market apparel that she designs. She also expects to invest substantial amounts of money through Balik and Kiefer. Dellatorre is also very bright, and, therefore, she would like to understand, in general terms, what will happen to her money. Your boss has developed the following set of questions which you must ask and answer to explain the U.S. financial system to Dellatorre. ------------------------------------------------- a. Why is corporate finance important to all managers? Answer: Corporate finance provides the skills managers need to: (1) identify and select the corporate strategies and individual projects that add value to their firm; and (2) forecast the funding requirements of their company, and devise strategies for acquiring those funds. ------------------------------------------------- ...
Words: 3523 - Pages: 15
...Chapter 5 The Financial Environment: Markets, Institutions, and Interest Rates ANSWERS TO END-OF-CHAPTER QUESTIONS 5-1 a. A money market is a financial market for debt securities with maturities of less than one year (short-term). The New York money market is the world’s largest. Capital markets are the financial markets for long-term debt and corporate stocks. The New York Stock Exchange is an example of a capital market. b. Primary markets are the markets in which newly issued securities are sold for the first time. Secondary markets are where securities are resold after initial issue in the primary market. The New York Stock Exchange is a secondary market. c. In private markets, transactions are worked out directly between two parties and structured in any manner that appeals to them. Bank loans and private placements of debt with insurance companies are examples of private market transactions. In public markets, standardized contracts are traded on organized exchanges. Securities that are issued in public markets, such as common stock and corporate bonds, are ultimately held by a large number of individuals. Private market securities are more tailor-made but less liquid, whereas public market securities are more liquid but subject to greater standardization. d. Derivatives are claims whose value depends on what happens to the value of some other asset. Futures and options are two important types of derivatives...
Words: 6653 - Pages: 27
...Licensed to: iChapters User Eugene F. Brigham UNIVERSITY OF FLORIDA Joel F. Houston UNIVERSITY OF FLORIDA Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Eugene F. Brigham UNIVERSITY OF FLORIDA Joel F. Houston UNIVERSITY OF FLORIDA Copyright 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it. Licensed to: iChapters User This is an electronic version of the print textbook. Due to electronic rights restrictions, some third party content may be suppressed. Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. The publisher reserves the right to remove content from this title at any time...
Words: 16711 - Pages: 67
...*IS1347* //integrafs1/cengage/3-Pagination/Cengage_US/Business_and_Economics/FFM13e/3B2/brigham_endpaper.3d, 11/16/11, 17:35, page: 1 FREQUENTLY USED SYMBOLS/ABBREVIATIONS ACP Average collection period ADR American depository receipt AFN Additional funds needed AMT Alternative minimum tax APR b Annual percentage rate Beta coefficient, a measure of an asset’s riskiness bL Levered beta bU Unlevered beta BEP BVPS CAPEX CAPM CCC Basic earning power Book value per share Capital expenditures Capital Asset Pricing Model Cash conversion cycle CF Cash flow; CFt is the cash flow in Period t CR Conversion ratio CV Coefficient of variation Dp Dividend of preferred stock Dt Dividend in Period t DCF Discounted cash flow D/E Debt-to-equity ratio DEP Depreciation D1/P0 DPS DRIP Expected dividend yield Dividends per share Dividend reinvestment plan DRP Default risk premium DSO Days sales outstanding e Approximately equal to 2.7183 EAA Equivalent annual annuity EAR Effective annual rate, EFF% EBIT EBITDA EPS EVA F Earnings before interest and taxes; operating income Earnings before interest, taxes, depreciation, and amortization Earnings per share Economic value added (1) Fixed operating costs (2) Flotation cost FCF Free cash flow FVN Future value for Year N FVAN g GAAP HVN I IFRS IPER I/YR INT IP IPO IRR LIBOR ...
Words: 199840 - Pages: 800
