...David Y. Kim Section 004, Foundations of Financial Markets Professor Jeffrey Wurgler Homework 1 1. Bid = 102 ¼, Ask = 102 ½ a. Buy = 4,000(102.25) = $409,000 Sell = 4,000(102.50) = $410,000 Profit = $410,000 – $409,000 = $1,000 Value of Inventory at Ask price = –6,000(102.50) = –$615,000 b. New Bid = 110.25, New Ask = 110.5 Sell = 2,000(110.5) = $221,000 Buy = 8,000(110.25) = $882,000 Sold 6,000 shares yesterday for 6,000(102.50) = $615,000 Loss = $221,000 – $882,000 + $615,000 = –$46,000 Inventory = –2,000 + 8,000 – 6,000 = 0 c. A market maker’s objective is to profit off the bid-ask spread, mostly by creating a market and undercutting the market price. To improve performance, you could have avoided filling the entire buy order. If you sold only a portion of the buy order on the first day, you wouldn’t have to be short 6,000 shares overnight before the price jump. 2. d. Price bond is selling for = 1,000/(1+0.05)^5 = $783.53 e. Maturity: 325.57 = 1,000/(1+0.05)^t (1+0.05)^t = 3.072 t = log(3.072)/log(1.05) = 23 years 3. Future Value of Option A = $1,000 Future Value of Option B = 550(1+0.055)^10 = $939.40 Because the FV of Option A is larger than the FV of Option B ($1,000 < $939.40), Investment A is preferable. 4. Annual interest rate of 5% Annuity PV = (C/r)(1 – 1/(1+r)^t) PV = (10,000/0.05)(1 – 1/(1+0.05)^6) PV = $50,756.92 Perpetuity PV = (C/r)(1/(1+r)^t) PV = (10,000/0.05)(1/(1+0.05)^10) ...
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...Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones) Chapter 9 Properties and Pricing of Financial Assets Multiple Choice Questions 1 Properties of Financial Assets 1) Which of the below is NOT one of the eleven properties of financial assets? A) moneyness B) multiplicity and denomination C) reversibility D) cash flow Answer: B Comment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) reversibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status. Diff: 2 Topic: 9.1 Properties of Financial Assets Objective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status 2) Which of the below is NOT one of the eleven properties of financial assets? A) convertibility B) currency C) liquidity predictability D) tax status Answer: C Comment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) reversibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status. Diff: 2 Topic: 9.1 Properties of Financial Assets Objective: 9.1 the many key properties of financial assets: moneyness; divisibility...
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...Foundations of Financial Markets and Institutions, 4e (Fabozzi/Modigliani/Jones) Chapter 2 Financial Institutions, Financial Intermediaries, and Asset Management Firms Multiple Choice Questions 1 Financial Institutions 1) Financial enterprises, more popularly referred to as financial institutions, provide a variety of services. Which of the below is NOT one of these? A) Transform financial assets acquired through the market and constituting them into a different, and more widely preferable, type of asset–which becomes their liability. B) Exchange financial assets on behalf of customers but not for their own accounts. C) Manage the portfolios of other market participants. D) Assist in the creation of financial assets for their customers, and then sell those financial assets to other market participants. Answer: B Comment: Financial enterprises exchange financial assets both on behalf of customers and for their own accounts. Diff: 2 Topic: 2.1 Financial Institutions Objective: 2.1 the business of financial institutions 2) Financial intermediaries include ________ that acquire the bulk of their funds by offering their liabilities to the public mostly in the form of deposits; insurance companies, pension funds, and finance companies. A) depository institutions B) utilities C) initial public offerings D) preferred equity instrument. Answer: A Diff: 1 Topic: 2.1 Financial Institutions Objective: 2.1 the business of financial institutions 3)...
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...Omega Health Foundation Finances play a major role in part of decision-making of any industry that can have a conclusive affect on the processes of the business. Most health care organizations have significant changes within the industry; this is specifically because there are new trends available in the market industry which are impacted by the finance organization and the decisions that must be made. Most of the decisions within the health care industry are primarily reliant on the demand for health care services that are available to patients and the health care organization financial position. Health care administrators are enabling to analyze financial data obtained from financial report. These principles of finance report helps manager make well informed decisions. Principles of Finance The Omega Health Foundation is an example of principle of finance, which is “a complex business with two hospitals, Omega and Able Memorial, plus a number of related medical-service providers” (Cleverly & Cameron, 2007, p. 164).These principles of finances are risk-return trade off, time value of money (TVM), leverage, bond prices versus interest rates, portfolio effect, the matching principle, and liquidity versus profitability. By using the principles of finance it helps Omega Health Foundation because these are prepared to help the organizations financial statements and reports. Furthermore, the use of these financial statements like the balance sheet, income statement, statement...
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...established on 8th June, 1993 as the regulator of the country’s capital market through enactment of the Securities and Exchange Commission Act 1993. Through an amendment of the Securities and Exchange Commission Act, 1993, on December 10, 2012, its name has been changed as Bangladesh Securities and Exchange Commission from previous Securities and Exchange Commission. The Commission consists of a Chairman and four Commissioners who are appointed for fulltime by the government for a period of four years and their appointment can be renewed only for further one term, but the condition is that age cannot exceed 65 in position during the tenure. The Chairman acts as the Chief Executive Officer (CEO) of the Commission. The Commission has overall responsibility to formulate securities legislation and to administer as well. The Commission is a statutory body and attached to the Ministry of Finance. Mission of the BSEC is to: Protect the interests of the investors in securities. Develop and maintain fair, transparent and efficient securities markets. Ensure proper issuance of securities and compliance with securities laws. Financial Accounting Standards Board (FASB) Since 1973, the Financial Accounting Standards Board (FASB) has been the designated organizations in the private sector for establishing standards of financial accounting that govern the preparation of financial reports by nongovernmental organizations. Those standards are officially...
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...Omega Health Foundation Paper Malik Harris University Of Phoenix Omega Health Foundation Paper The application of sound financial decision making and investment positioning is predicated upon a sound understanding of the critical components of how a business in the healthcare market behaves. The relationship between investment fundamentals, company positioning and the action process will facilitate the enabling of the organization to move forward on concrete financial footing. The ability to understand where a company is coming from in terms of a financial standpoint and making changes in the application of what current financial goals may be and calling to action the direction of where the company needs to go completes a skill set a financial manager must have. Current principles of finance and how they relate to the Omega Health Foundation in relation to their financial strength are as (Guin, None) follows: 1. Risk-Return Tradeoff – This principle demands that the higher or increased level of risk, the high the expected return must produce. Financial advisors must determine the level of risk an organization is willing to assume before investments can be properly executed. 2. Leverage – The simplest way to apply this principle is to magnify earnings that are the direct result of fixed costs. These magnifications can be realized by operational, financial and total or combined leverage. 3. Time Value of Money – Every penny earned or invested has a time value...
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...MFRS 133 Malaysian Financial Reporting Standard 133 Earnings per Share This version includes amendments resulting from MFRSs with effective dates no later than 1 January 2012. Amendments with an effective date later than 1 January 2012 MFRS 133 has been amended by: MFRS 10 Consolidated Financial Statements* MFRS 11 Joint Arrangements* MFRS 13 Fair Value Measurement* Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101)† As those amendments have an effective date after 1 January 2012 they are not included in this edition. * † effective date 1 January 2013 effective date 1 July 2012 907 MFRS 133 CONTENTS paragraphs Preface INTRODUCTION IN1–IN3 MALAYSIAN FINANCIAL REPORTING STANDARD 133 EARNINGS PER SHARE OBJECTIVE 1 SCOPE 2–4A DEFINITIONS 5–8 MEASUREMENT 9–63 Basic earnings per share 9–29 Earnings 12–18 Shares 19–29 Diluted earnings per share 30–63 Earnings 33–35 Shares 36–40 Dilutive potential ordinary shares 41–63 Options, warrants and their equivalents 45–48 Convertible instruments 49–51 Contingently issuable shares 52–57 Contracts that may be settled in ordinary shares or cash 58–61 Purchased options 62 Written put options 63 RETROSPECTIVE ADJUSTMENTS 64–65 PRESENTATION 66–69 DISCLOSURE 70–73A EFFECTIVE DATE 74–74A WITHDRAWAL OF OTHER PRONOUNCEMENTS APPENDIX A 908 Application...
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...Foundations Hotel & Conference Center LLC Hotel Business Plan Period: 2011 – 2016 790 Indian Trail Blvd. Traverse City, MI, 49686 Phone: 231-590-2546 Fax: 866-293-0079 Email: manager@foundationshotel.com Web Site: www.foundationshotel.com Contact: Julia Hoard, Manager/Director THIS DOCUMENT CONTAINS PROPRIETARY AND CONFIDENTIAL INFORMATION AND IS NOT TO BE DISTRIBUTED WITHOUT PRIOR WRITTEN PERMISSION 1 Table of Contents ________________________________________________________ Introduction 3 Executive summary 4 Marketing 8 Foundations product mix 8 Market analysis 10 Marketing goals 11 Pricing strategy 12 Operations 12 Advertising and promotion 15 SWOT analysis 16 The organizational structure 18 Management and personnel 18 Administrative organization 19 Construction Bid Education/Skills Training/Internships 20 20 2 Introduction Business description Foundations Hotel & Conference Center is a 3-diamond hotel and offers luxury accommodation and associated amenities to local, regional, national and international tourists and travelers. For business travelers we offer a wide range of facilities such as conference and meeting rooms and exhibition space, including all necessary conferencing equipment and security. Business formation The company was started by Pine Grove Church of God in 2009. The company form is a Limited Liability Company, LLC. Registration is...
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...Fundamentals of Marketing Glossary of Marketing Terms and Concepts Account A specific category of financial information such as sales, labor expense, or cash; also can refer to a specific customer who owes the business money for credit purchases. Acquisition The process of buying another firm or business unit; a method of direct investment that allows a firm to gain country and market-specific knowledge without incurring a long and costly learning process. Advertising Mass communication with customers or prospects, usually through public media. Agribusiness Any business organization that supplies farm inputs or services, or that processes, distributes, or wholesales agricultural products, or retails them to consumers. Agribusiness management The management of any firm involved in the food and fiber production and marketing system. Analyzing facts A step in the planning process requiring answers to such questions as "Where are we?" and "How did we get here?"; helps pinpoint existing problems and opportunities, and provides insights upon which to base successful decisions. Apprenticeship A form of training where a new employee works with a more experienced person, and learns under that person's direction. Assets Items of value, including physical and financial property, that are owned by the business. Balance sheet A financial statement that shows the financial makeup and condition of a business at a specific point in time by listing what the business owns, what it owes, and what...
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...which take heritage and community assets of accrual accounting as examples and their effect on meaningful financial information. According to the Institute of Internal Auditors (2011), public sector is comprised of governments, agencies and enterprises which are all publicly controlled or publicly funded and other entities that deliver public programs, goods or services. The new website of the Investopedia (2014) considers the private sector as the part of the economy that is not controlled by state, and is individuals and companies run for profit. Depending on the definitions, public sectors are usually owned or operated by governments, such as educational and health care bodies; private sectors are usually not owned or operated by governments, like retail stores and local businesses (PrivacySense, 2014). Though the differences exist between the two sectors, people hold different views on whether accounting choices suitable for the two sectors should be identical or not. Barton (1999, p. 22) states that: The public and private sectors of the nation are not identical twins. The fundamental differences between the two must be acknowledged and accounting standards designed, where necessary, to suit the unique characteristics of the public sector. In his opinion, accounting choices adopted by the two sectors should be different as the services are provided to different markets...
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...Overview of Financial system of Bangladesh The financial system of Bangladesh is comprised of three broad fragmented sectors: 1. Formal Sector, 2. Semi-Formal Sector, 3. Informal Sector.The sectors have been categorized in accordance with their degree of regulation. The formal sector includes all regulated institutions like Banks, Non-Bank Financial Institutions (FIs), Insurance Companies, Capital Market Intermediaries like Brokerage Houses, Merchant Banks etc.; Micro Finance Institutions (MFIs). The semi formal sector includes those institutions which are regulated otherwise but do not fall under the jurisdiction of Central Bank, Insurance Authority, Securities and Exchange Commission or any other enacted financial regulator. This sector is mainly represented by Specialized Financial Institutions like House Building Finance Corporation (HBFC), Palli Karma Sahayak Foundation (PKSF), Samabay Bank, Grameen Bank etc., Non Governmental Organizations (NGOs and discrete government programs. The informal sector includes private intermediaries which are completely unregulated. | | | Related links About financial markets | Regulators | Bank & FIs | Capital market | Insurance | Micro Finance Institutions (MFIs) | Recent developments | Key financial indicators | Print this page | | | | | Financial System of Bangladesh | Formal Sector | Semi Formal Sector | Informal Sector | Financial Market | Money Market (Banks...
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...capital market, enterprise demands funds to move beyond the startup phase • For collaborative activities benefits cannot be completely captured by social enterprise • Funding agencies may not take risk to support new projects in lieu of existing programs • Time horizon may not be aligned with that of potential funders • Return expectations may be misaligned with the income generation ability of social enterprise • Hybrid structures can raise issues among the public and private sector players • Social entrepreneurs cannot rely solely on market signals & pricing to indicate to potential investors in achieving mission related impact Capital Needs of the Social Enterprise The following questions about financial drivers can direct the social entrepreneurs to the appropriate capital sources: • What opportunities & challenges exist to monetize the financial, social & environmental value (triple bottom line) • Is financial sustainability viable given mission of social enterprise? Does it require specific amount of startup capital to build operational capacity before becoming financially self sustaining? • What are the earned income opportunities for the enterprise? • Does the enterprise generate sufficient excess earned income streams to pay debt? • What assets does the enterprise own or control which can be used as collateral to support debt? • What are the working capital needs of the enterprise? • Does the enterprise project sufficient profitability to attract market rate debt...
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...helps its users make decisions. Different accounting principles grew out of the divergent economic and social environments of various nations and regions. Difference among national accounting become more disconcerting when trade barriers between nations were reduced due to international cooperation developments. Efforts have increased during the past decade to move nations toward using international standards. The International Accounting Standards Board (IASB) is an organization that regulates the accounting standards which are accepted globally by almost all the countries in the world. This paper will first discuss the history of IASB. Next it will explain the structure of IASB. After that, the paper will talk about how International Financial Reporting Standards (IFRS) are created. Finally, it will describe the effort to converge IFRS with Generally Accepted Accounting Principles (GAAP). History of IASB International Accounting Standards Board was first known as International Accounting Standard Committee (IASC) which existed from 1973 to 2001. It was responsible for developing the International Accounting Standards (IASs) and promoting the use and application of these standards. After nearly 25 years of achievement, the IASC concluded that it must find a way to converge between national accounting standards and practices, and create high-quality global accounting standards. To do that, IASC saw a need to change its structure in order to better work together toward...
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...Shinhan Bank migrates to an open system using the Big-Bang approach Financial competitiveness reinforced by World-Class IT Infrastructure Shinhan Bank has maintained continuous innovation in the pursuit of customer satisfaction and convenience. The bank was established with a total capital of 25 billion won (approximately USD 26 million) in four offices in 1982 through a merger with Chohung Bank. It now has a total capital of 180 trillion won (approximately USD 193 billion) and 1,000 branches across the country. To lift the quality of financial services in Korea, the bank has spared no effort for continuous changes and innovation in its IT division and is equipped with differentiated and strategic world-class IT infrastructure. Objectives • Early introduction of a ‘one bank/new bank’ system and preparation of the foundation for system integration • Setting-up of the foundation for the synergy base of the expansion of business areas and target markets • Strengthening of Shinhan Bank’s status as one of the market leaders in the financial industry Approach • Hardware: HP Integrity Superdome (40) • Processor: Intel® Itanium® 2 • OS: HP-UX 11.23 • DBMS: Oracle 10g RAC • Middleware: TmaxSoft, Zeus IT improvements • Enhanced operational efficiency with more than 2,000 transactions per second • 24x365 system operation ensures high reliability and availability • IT capacity is easily adapted to suit the bank’s needs with enhanced scalability • Server consolidation minimizes cost...
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...ABACUS, Vol. 45, No. 3, 2009 doi: 10.1111/j.1467-6281.2009.00295.x MARTIN BLOOM Accounting For Goodwill abac_295 379..389 This article provides a means of resolving one of accounting’s ongoing problems—how to account for goodwill in an era where the unidentifiable intangible asset is often an entity’s largest value component. Despite the general recognition that, in practice, the two classes of goodwill are indistinguishable in terms of their ability to generate streams of revenue, a distinction is traditionally drawn between internally generated and purchased goodwill. The former should not be brought to account because it is impossible to do so within the accepted rules of double entry bookkeeping and historical cost based accounting. On the other hand, there is no difficulty in bringing purchased goodwill to account, but controversy has always existed as to how to treat the amount once recognized. It can confidently be expected that, as anomalies and practical difficulties manifest themselves in practice, the current impairment regime will, in its turn, be abandoned. Key words: Accounting; Double account; Goodwill, internally generated, purchased. Controversy on how to account for goodwill has continued over many decades. It is certainly an example of Sterling’s (1975) lament that because of the way we conceive of issues ‘accountants do not resolve issues, we abandon them’ (quoted in Chambers, 1995). The ideas proposed here are based on redefining the problem. They...
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