...Complexity of the US Financial System Michelle Bates Professor: Ahmad Zia Rawish Strayer University May 6, 2015 Principle of Finance 100 Complexity of the US Financial System How does the US financial market impact the economy? The financial market has different financial products including derivatives, bonds, and stocks among others. Derivatives are very complicated financial products that gain value from stocks and bonds (Altig, Christiano, Eichenbaum & Linde, 2011). These financial products are futuristic in the sense that they are based on future investments. Their effect on the economy is that they reduce its volatility. How does the US financial market impact business? One of the most significant impacts of financial markets on businesses is access to credit (Garbade, 2014). When the financial markets are not doing well, the general access to credit for businesses is also affected. Banks and financial institutions reduce their lending rates as a precautionary measure to avoid defaulters. As a result, businesses cannot get access to loans hence impeding their ability to continue running and expanding. How does the US financial market impact individual? When the financial markets are failing, the borrowing rates increases while the number of investors reduces (Garbade, 2014). Due to the raised borrowing rates, the prices of commodities go up reducing individuals’ purchasing power. As the prices go up, people are left...
Words: 733 - Pages: 3
...Question 2 a. Security E: E(Re) = 0.45 * 8.00 + 0.40 * 10.00 + 0.15 * 14.00 = 9.7% σe2 = 0.45 (8 - 9.7)2 + 0.4 (10 - 9.7)2 + 0.15 (14 – 9.7)2 = 4.11 σe = 2.027313 Security F: E(Rf) = 0.45 * 4.00 + 0.40 * 7.00 + 0.15 * 9.00 = 5.95% σf2 = 0.45 (4 - 5.95)2 + 0.40 (7 – 5.95)2 + 0.15 (9 – 5.95)2 = 3.5475 σf = 1.883481 Security R: E(Rr) = 0.45 * 2.00 + 0.4 * 7.00 + 0.15 * 10.00 = 5.2% σr2 = 0.45 (2 - 5.2)2 + 0.40 (7 – 5.2)2 + 0.15 (10 – 5.2)2 = 9.36 σr = 3.059412 b. Coefficient of correlation between Security E and itself: ρee = 1 Coefficient of correlation between Securities E and F: COVef = 0.45(8 – 9.7)(4 – 5.95) + 0.4(10 – 9.7)(7 – 5.95) + 0.15(14 – 9.7)(9 – 5.95) = 3.585 ρef = 3.585 / (2.027313 * 1.883481) = 0.9389 Coefficient of correlation between Securities R and F: COVrf = 0.45(2 – 5.2)(4 – 5.95) + 0.4(7 – 5.2)(7 – 5.95) + 0.15(10 – 5.2)(9 – 5.95) = 5.76 ρrf = 5.76 / (3.059412 * 1.883481) = 0.9996 c. Expected return and standard deviation for portfolio consisting of 55% Security R and 45% Security F: E(Rp) = 0.45[(4 * 0.45) + (2 * 0.55)] + 0.40[(7 * 0.45) * (7 * 0.55)] + 0.15[(9 * 0.45) + (10 * 0.55)] = 5.5375% σp2 = (0.45)(1.883481) + (0.55)(3.059412) + 2(0.45)(0.55)(0.9996)(1.883481)(3.059412) = 5.281462571 σp = 2.319798 She should invest 55% in Security R and 45% in Security F because this portfolio gives her a higher return at a lower risk than Security R by itself. ...
Words: 929 - Pages: 4
...Assignment 1 1. How has the composition of federal, state, and local government spending changed over the past 40 years? What social and economic factors might have contributed to this change in how governments spend their funds? In the 1960’s 49.5% of federal spending was on national defense. The shift from then until 2007 was mostly comprised of decreasing spending on national defense and an increase on spending of healthcare from 2.9% to 24.9%, also an increase of social security spending from 13.4% to 20.3%. Which is a very large increase in healthcare spending, almost a 100% increase from the year 1960 to 2007; also a very large increase in social security spending. Social security spending is the largest portion of government spending. At the state and local levels most of the spending has remained relatively the same. The only exception is healthcare spending, which has more than doubled from 1960 to 2007. Health spending at state and local levels went from 8.2% to 20.7%. The increases in social security and healthcare costs could be attributed to the aging baby boomer population (approximated at 75 million people). This large portion of the US population has had increasing social security needs and increasing healthcare needs. The decrease in national defense could be attributed to several different things including globalization, diminishing international trade laws, the break up of the Soviet Union...
Words: 1612 - Pages: 7
...Assigment 1 Problem 1 a) “The fact that firms so heavily rely on their internal capital market as a source of financing is strong evidence that internal markets are more efficient than external markets.” Firms use internal capital because it is much easier for managers to use profits from previous years to finance their investments, management don´t have to prove their investment decisions to investors. If management would need to finance investment with external capital, the cost of the capital would much higher than using internal capital. Issues would cause direct costs for (järjestämisestä) and take time and effort from the management. Indirect costs could also (accure) when management would need to underprice the issue to make sure it would succeed. Firms rely on their internal capital because it is easier and cheaper way to finance investments. It does not mean that external markets are more unefficent than internal and the (väite) is false. b) “When underwriting equity or bond issues, investment banks are merely acting as financial intermediaries without taking any risk of their own. Therefore, they are charging unrealistically high fees for their services.” Underwriters act in three different roles. Firstly, they provide financial advisory and make careful analysis what the issue is likely to be worth. Underwriters also have dialogies with the potential investors to find out how high the demand is with different prices. Secondly, underwriters will...
Words: 700 - Pages: 3
...Tasks Read the WileyPLUS Student Support Review the Week 1 Study Guide. Familiarize yourself with the textbook used in this course. Visit the Student Finance Lab Learning Community. Objectives/Competencies Foundations of Finance 1.1Differentiate between financial statements. 1.2Differentiate between legal and tax structures for businesses. 1.3Identify the axioms of finance. Learning Activities Required Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 1 48 Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 2 25 Reading WileyPLUS Assignment: Fundamentals of Corporate Finance, Ch. 3 27 Website WileyPLUS Gradebook: Week 1 Gradebook ERR Week 1 Electronic Reserve Videos Recommended Reading Fundamentals of Corporate Finance, 2e Interactive/Tutorial WileyPLUS Assignment: Week 1 Vocabulary Activity 14 Interactive/Tutorial WileyPLUS Assignment: Week 1 Interactive Tutorials Activity Interactive/Tutorial WileyPLUS Read, Study & Practice: Week 1 Practice Interactive/Tutorial WileyPLUS Assignment: Week 1 Excel Resources Activity Video WileyPLUS Assignment: Week 1 Videos Activity 21 Assignments ASSIGNMENT STATUS FRIENDLY NAME TITLE DUE DATE POINTS UNREAD COMMENTS Participation Week 1 Participation Quiz WileyPLUS Assignment: Week 1 Practice Quiz Paper Business Structures Week2. Financial Statement Analysis. Jan 20 - Jan 26Week2 Financial Statement Analysis Jan 20 - Jan 26 12...
Words: 1170 - Pages: 5
...PRINCIPLES OF FINANCE COMPLETE COURSE NEW To purchase this visit following link: http://www.activitymode.com/product/fin-100-principles-of-finance-complete-course-new/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 100 PRINCIPLES OF FINANCE COMPLETE COURSE NEW FIN 100 Principles Of Finance Complete Course New FIN 100 WK 4 Assignment 1 – Complexities of the U.S. Financials FIN 100 WK 8 Assignment 2 – Business Financing and the Capital Structure Fin 100 assignment 1 Fin 100 Assignment 2 FIN 100 HW Assignment 3 FIN 100 HW Assignment 4 FIN 100 HW Assignment 5 FIN 100 HW Assignment 6 FIN 100 HW Assignment 7 FIN 100 HW Assignment 8 FIN 100 Homework Assisgnment Week One FIN 100 Week 3 homework Homework Week 5 Homework Week 7 FIN 100 Week 3 – Lab Assignment 3 – Chapters 5 and 6 FIN 100 Week 5 – Lab Assignment 4 – Chapters 9 and 10 FIN 100 Week 6 – Lab Assignment 5 – Chapters 11 and 12 FIN 100 Week 7 – Lab Assignment 6 – Chapters 13 and 14 Week 8 DQ Week 9 DQs FIN 100 QUIZ 1 FIN 100 QUIZ 2 CHAPTER 1,4,5 FIN 100 QUIZ 3 CHAPTER 6,7,8,10 FIN 100 Quiz 4 FIN 100 Week 3 – Quiz 2 Chapters 3, 4, and 5 FIN 100 Week 5 – Quiz 3 Chapters 7 and 8 FIN 100 WEEK 9 QUIZ 6 FIN 100 Week 10 – Quiz 7 – Chapters 17 and 18 FIN 100 Quiz 5 FIN 100 Quiz 6 FIN 100 Quiz 7 FIN 100 Quiz 8 Activity mode aims to provide quality study notes and tutorials to the students of FIN 100 Principles Of Finance Complete Course New in order to ace their studies. FIN 100 PRINCIPLES OF FINANCE COMPLETE...
Words: 853 - Pages: 4
...FIN 320 Entire Course (UOP Course) For more course tutorials visit www.tutorialrank.com FIN 320 Week 1 Individual Assignment Ethics Article Analysis FIN 320 Week 1 DQ 1 FIN 320 Week 1 DQ 2 FIN 320 Week 2 Assignments from the Readings FIN 320 Week 2 Team Assignment Financial Performance Case Study FIN 320 Week 2 DQ 1 FIN 320 Week 2 DQ 2 FIN 320 Week 3 Assignments from the Readings FIN 320 Week 3 Individual Assignment Working Capital Management Paper FIN 320 Week 3 DQ 1 FIN 320 Week 3 DQ 2 FIN 320 Week 4 Team Assignment Working Capital Case Study FIN 320 Week 4 Individual Assignments from the Readings FIN 320 Week 4 Individual Assignment Utilizing the TVM Simulation Summary FIN 320 Week 4 Team Assignment Cost of Capital Memo FIN 320 Week 4 DQ 1 FIN 320 Week 4 DQ 2 FIN 320 Week 5 Individual Assignment International Risk Paper FIN 320 Week 5 Individual Assignment Financial Intermediaries Paper FIN 320 Week 5 Team Assignment Capital Investment Decisions Case Study and Presentation FIN 320 Week 5 DQ 1 FIN 320 Week 5 DQ 2 ________________________________________________ FIN 320 Week 1 Individual Assignment Ethics Article Analysis (UOP Course) For more course tutorials visit www.tutorialrank.com Locate an article regarding ethics considerations in financial management. Write a 350- to 700-word article analysis in which you address the following items: • Discuss how ethics affects the financial decision-making process. • Explain...
Words: 553 - Pages: 3
...FIN 370 Week 1 Individual Assignment Defining Financial Terms Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser https://hwguiders.com/downloads/fin-370-week-1-individual-assignment-defining-financial-terms/ For More Courses and Exams use this form ( http://hwguiders.com/contact-us/ ) Feel Free to Search your Class through Our Product Categories or From Our Search Bar (http://hwguiders.com/ ) Finance System including circulation for money, grant of credit, investment opportunities, and banking faculties Without finance, there would be no resource allocations for operating or functional expenditures. Efficient market Efficient market, information is simultaneously available with corresponding funds example – stock market To make intellectual and well-intended fiscal decisions, information pertaining to funds must be readily accessible and available to provide insight and information for clients/investors/brokers. Primary market A market where the security is purchased directly from the issuer by the investor The primary market allows companies to offer bonds and stock to the public for the first time. It is closely related to the secondary market dependent upon one another to be most effective. Secondary market The transactions of stock from investors and dealers without the involvement of the company This market allows for the trading and selling of shares in stock. Without this market, the stock market would not exist...
Words: 3811 - Pages: 16
...Assignment front sheet Qualification Unit number and Title Pearson BTEC Level 5 HND Diploma in Business HNBS 102: Managing Financial Resources and Decisions Student Name Assessor Date issued 29/09/2015 Internal Verifier MUHAMAMD SAJID Task 1 / Task 2 F Khan Task 3 / Task 4 Week 8 Week 14 Assignment title Learning Outcome Corporate finance in decision making Assessment In this assignment you will have the opportunity to Criteria present evidence that shows you are able to: Task no LO1 Understand the sources of finance available to a Business 1.1 identify the sources of finance available to a business 1 1.2 assess the implications of the different sources 1 1.3 1 2.1 evaluate appropriate sources of finance for a business project analyse the costs of different sources of finance 2.2 explain the importance of financial planning 2 2.3 2 2.4 assess the information needs of different decision makers explain the impact of finance on the financial statements 3.1 analyse budgets and make appropriate decisions 3 3.2 explain the calculation of unit costs and make pricing 3 3.3 assess the viability of a project using investment appraisal techniques 3 4.1 discuss the main financial statements 4 4.2 compare appropriate formats of financial statements for different types of business 4 4.3 interpret financial statements using appropriate ratios and comparisons, both internal and external. 4 LO2 Understand the implications of finance as a resource...
Words: 3222 - Pages: 13
...BA 350 PRINCIPLES OF FINANCE ENTIRE COURSE A+ Graded Tutorial Available At: http://hwsoloutions.com/?product=principles-of-finance-entire-course Visit Our website: http://hwsoloutions.com/ Product Description BA 350 PRINCIPLES OF FINANCE ENTIRE COURSE, BA 350 PRINCIPLES OF FINANCE ALL ASSIGNED PROBLEMS AND FINAL EXAM ALL PREVIEWS available on website Related Products !! Week 1 Assignment Chapters 1 and 2 Questions Questions 1.1, 1.3, 1.5, 1.8 Problems 2-14 Week 2 Assignment Chapter 3 Questions Questions 3.3, 3.5, 3.6 Problems 3-1, 3-6, 3-11 Week 3 Assignment Chapter 12 Questions Questions 12.3, 12.5 Problems 12-3, 12-5, 12-7 Week 4 Assignment Effects of Financial Planning Week 5 Assignment Assigned Problems Questions 4.2, 4.4, 4.5 Problems 4-3, 4-7, 4-10, 4-29 Week 6 Assignment Assigned Problems Question 5.1 Problem 5-1, 5-4, 5-9, 5-13 Week 7 Assignment Assigned Problems Questions 6.3, 7.2 Problems 6-2, 6-6, 7-1, 7-8 Week 8 Final Exam Problems 2-4, 2-7, 3-8, 3-10, 12-1, 12-4, 13-6, 13-7, 13-8, 4-4, 4-5, 4-20, 4-22, 5-15, 5-21, 6-4, 6-10, 7-4, 7-10, 8-4, 8-5, 8-6, 9-3, 9-3, 9-13 Week 1 Assignment Chapters 1 and 2 Questions Questions 1.1, 1.3, 1.5, 1.8 Problems 2-14 Week 2 Assignment Chapter 3 Questions Questions 3.3, 3.5, 3.6 Problems 3-1, 3-6, 3-11 Week 3 Assignment Chapter 12 Questions Questions 12.3, 12.5 Problems 12-3, 12-5, 12-7 Week 4 Assignment Effects of Financial Planning Week 5 Assignment Assigned Problems Questions 4.2,...
Words: 408 - Pages: 2
... | |ASSIGNMENT |Assignment 1- The Role of Financial Resources – Costs & Budgets | |TUTOR NAME | | |STUDENT NAME | | |DATE ISSUED |Please refer to your scheme of work. Dates are recorded when handed out (as assignment is issued at different times | | |for different programmes). | |DEADLINE |Please refer to your scheme of work. Dates are recorded when assignment needs to be submitted (as assignment are to be| | |handed in at different times for different programmes). | |DATE SUBMITTED |This date is recorded when the student submits the work. | |By submitting this assignment online you validate that the work submitted is your own. You need to input your name...
Words: 660 - Pages: 3
...FP/101 FOUNDATIONS OF PERSONAL FINANCE Start Date: 04/23/2012 Print COURSE DESCRIPTION This course provides an overview of the elements necessary for effective personal financial planning and the opportunity to apply the techniques and strategies essential to this understanding. Primary areas of study include creating and managing a personal budget, understanding and paying taxes, working with financial institutions, wise use of credit cards and consumer loans, financing automobiles and homes, and the use of insurance for protecting one’s family and property. WEEK 1 - TOPIC 1: PERSONAL FINANCIAL PLANNING Objectives List the five steps in the personal financial planning process. Summarize what influences personal financial planning. Identify parts of a financial plan. Materials READING: Read Ch. 1 of Personal finance - Personal Financial Planning in Action: Developing a Personal Financial Plan. SUPPLEMENT: Appendix A: How to Install Quick Time Movie Player SUPPLEMENT: Appendix B: Personal Financial Planning Worksheet WEB LINK: Decision to Own a Home vs. Rent Video SUPPLEMENT: Video Transcript - Decision to Own a Home vs. Rent Assessment Please see instructor's syllabus for details on assignments. Participation/Discussion Questions WEEK 2 - TOPIC 1: MONEY MANAGEMENT Objectives Describe how to organize and prepare personal financial statements. Identify cash management products and services. Complete a personal cash flow statement. Materials ...
Words: 1051 - Pages: 5
...Course outline for BUSN85 STRATEGIC CORPORATE FINANCE, Fall 2014, 7.5 credits Introduction The main objective of the course is to further your understanding of the theory and econometrics of corporate finance beyond what is covered in previous courses in corporate finance (esp BUSN92 Empirical Corporate Finance). It is not necessary to have completed BUSN92 Empirical Corporate Finance (corporate finance students), nor BUSN80 Financial Econometrics and BUSN81 Theory of Corporate Finance (MSc finance students), but you are expected to hold equivalent knowledge of the theory and econometrics of corporate finance. The course emphasizes three perspectives: behavioral corporate finance, corporate governance, and microeconometrics. Behavioral corporate finance integrates psychology into the study of corporate financial decisions, while corporate governance focuses on implicit and explicit contracting, supervision, and control for ensuring accountability and reconciliation of conflicting interests. Microeconometrics, finally, refers to econometric tools for analysis of individual-level data on the economic behavior of individuals or firms. Assessment and grading The intention with the assessment is for you to give account for your knowledge and demonstrate your capacity to undertake the abilities you are expected to learn in the course. All assessment tasks must be carried out in English. In the grading, we make use of scoring system where you collect points on different assessment...
Words: 1853 - Pages: 8
...designate Friday as a Reading Day. Please DO NOT schedule any travel until after your obligation for the exercise ends at 5:30pm Thursday evening. COURSE DESCRIPTION First-Year Financial Management and Policies (FMP) reflects three important features of the Darden MBA Program: (1) it is a general management program; (2) the program, through its frequent use of the case method of instruction, has a practical, pragmatic bias and a decision- orientation; and (3) the first-year program provides the basic training on which students can build in the second-year. Consistent with the first-year program, FMP aims to provide: 1. An Introduction. The course provides the basic framework necessary to pursue further study in finance in the second-year of the MBA program and on his or her own thereafter. This framework is an orientation towards valuation. 2. Basic Mastery. The course emphasizes essentials, the tools and concepts that every general manager, entrepreneur, or manager in other functional fields should know. 3. A Corporate Perspective. Because we seek to understand the problems of general managers, this is a corporate finance course, rather than a course in investments, banking, or personal finance. While elements of these related subjects must be brought to bear, our ultimate focus is corporate policy and tactics. 4. An Underpinning for Addressing Broad and Challenging...
Words: 4860 - Pages: 20
...as MSN Money, Google Finance, Yahoo Finance, etc. The incorporation of computer technology in finance classes has become more popular than ever in this information technology rich environment. Mediated classrooms have rapidly grown in numbers throughout the universities worldwide. Based on my experience as a finance professor, I have summarized this teaching note to demonstrate an alternative pedagogical tool in performing financial ratio analysis. The class assignment presented hereinafter is designed to help students learn how to assess the company's overall operations and current financial standing via an on-line database available in MSN Money website. It can be used in any corporate flnance class. I collected student feedback on the assignment, and the vast majority of the survey participants perceived the assignment as a very good learning experience. Keywords: financial ratio analysis. Du Pont analysis INTRODUCTION inancial ratio analysis is an important topic and is covered in all mainstream corporate finance textbooks. It is widely used to summarize the information in a company's financial statements so as to analyze its financial condition and performance. In today's information technology world, real time financial data is readily available via many financial websites, such as MSN Money, Google Finance, Yahoo Finance, etc. As students now have easy access to on-line financial databases, professors can now modify class assignments on ratio analysis accordingly...
Words: 5231 - Pages: 21
