...Management SPRING 2013 Problem Set #5 (team work) 1. (15 points) Suppose the economy can be .in one of the following two states: (i) Boom or “good” state and (ii) Recession or “bad” state. Each state can occur with an equal opportunity (50%). The annual return on the market and a certain security X in the two states of the economy are as follows: • Market: at the end of the year, the market is expected to yield a return of 30% in the good state and a return of (-10%) in the bad state; • Security X: at the end of the year, the security is expected to yield a return of 40% in the good state and a return of (-35%) in the bad state; Furthermore, assume that annual risk-free rate of return is 5%. A. (5 points) Calculate the beta of security X relative to the market. B. (5 points) Calculate the alpha of security X. C. (5 points) Draw the security market line (SML). Please, label the axes and all points (including the market portfolio, the risk-free security, and security X) in the graph clearly. Identify alpha in the graph. Solution: 1. (5 points) Beta of security X is: Market portfolio: (1/2) probability of getting 30% and (1/2) probability of getting -10%. So, expected/mean return and the standard deviation of the market are: [pic] [pic] Security X: (1/2) probability of getting 40% and (1/2) probability of getting -35%. So, expected/mean return and the standard deviation of security X are: [pic] [pic] The covariance between...
Words: 1422 - Pages: 6
...of Twisto Pretzel Company From: Student Date: January 23, 2011 Re: Cost Changes Impacting Company’s Net Income Scope and Objective Twisto Pretzel Company is vigilant in their decision making process, which evaluates all manufacturing costs involved to measure the Company’s growth by measuring profitability. Twisto Pretzel Company goal is determined to remain financially stable in the support of its customers, suppliers, and the Company’s associates. In conducting my research, I looked into the Company’s financial data for 2011, by utilizing additional year-end data of 2010. The data consisted of purchases of raw material, ending work-in process inventory, and indirect labor. Determining the impact of the Company’s profitability, a sensitivity analysis in cost of goods manufactured, cost of goods sold, and identifiable variable changes, impacted costs and the Company’s net income. The Company’s management team provided three scenarios that illustrate my objective. Significance of the Sensitivity Analysis Sensitivity analysis is a technique that addresses how changes in variables affect the uncertainty of a given set of assumptions. The results will illustrate how the analysis determines the estimates, upon which it is based. To better demonstrate how the analysis will work for Twisto Pretzel Company for December 31, 2011, I have conducted three separate analyses that demonstrate how each analysis impacts...
Words: 763 - Pages: 4
...Sales Returns & Allowances + $ $ + $ 201,360 2,562,000 $ 1,806,624 COGS - + - 19,200 49,200 Discounts + Income Taxes Payable - - + $ Selling & Admin Expense + $ 9,000 $ $ 9,000 58,000 $ 9,000 $ 67,000 - 522,000 Depreciation Expense Finished Goods Inventory + + - $ 257,040 $ 1,806,624 $ 1,901,952 Retained Earnings $ 2,158,992 $ 1,806,624 $ Work in Process Inventory + + 36,000 $ $ 829,560 68,576 $ 36,000 $ Capital Stock $ 1,901,952 $ 898,136 - $ 172,200 $ 811,000 $ 1,129,200 352,368 - + $ $ 2,112,400 $ 1,901,952 $ Materials + $ $ $ 110,520 $ 825,000 935,520 $ 1,512,000 (210,448) - - + - + - - + - - + - - + 811,000 811,000 $ 124,520 Direct Manufacturing Labor + $ - 492,000 Factory Overhead Indirect Manufacturing Labor + $ 198,000 Power, heat & light + $ 135,600 Social Security Taxes + $ 49,200 Prepaid Taxes & Insurance, factory + $ $ - 66,720 $ 78,000 52,800 $ 144,720 $ Supplies 52,800 $ + $ $ - 17,280 $ 66,000 91,920 61,200 $ 83,280 $ Plant &...
Words: 1571 - Pages: 7
...1. The 207th RSG, failed to provide proper representation for the Physical Security Inspection conducted on 22MAY17. The following is to address some of the major areas of concern regarding physical security. In addition, I will review appendix G of USAR Pamphlet 190-1 to become more with physical security requirements. 2. General Requirements – Physical Security Plan #1003 Deficiency: The Physical security plan has not been reviewed and approved by the PSO at the next higher. What is the Command Fix-It Plan for the 143rd ESC to review and approved the 207th RSG Physical Security Plan. a. Answer: The command has identified the unit’s AS/FP Officer and AS/FP NCO to update the command’s Physical Security Plan/ Binder. The current binder need memo to be re-signed with the current RSG...
Words: 956 - Pages: 4
...been received by the publisher. Assignment 1 — Session 2 (Winter) This assignment is based on Modules 1 through 5 and is due at the end of Module 5. It is worth 5% of your final course grade. General instructions A. If this is your first time using the Online Learning Environment, check out the Course Orientation and the quick tutorials in the Support Centre. You will find general assignment FAQs in your Assignment Submission/Group Work area. B. Prepare your answers to these assignment questions in Word and save them as one Word document on your hard drive. For the recommended format and filename, see the Assignment Submission/Group Work/FAQ area. If this assignment Word file requires you to paste Accpac.RTF reports, Excel.xls sections, or other files, you are strongly advised to refer to How To/Use Software/Excel and/or How To/Use Software/Word to ensure you successfully submit your completed assignment. C. When your file is complete and you are ready to submit it for marking, select your Assignment Submission/Group Work area. For help,...
Words: 11145 - Pages: 45
...Accounting for Investments under FASB No. 115 – A Review |For commercial enterprises |Presentation on Financial |Change in Fair Value | |(nonprofit entities follow SFAS No.124) |Statements | | | | |Temporary |Other than | | | | |Temporary Loss | |Does the investor have substantial influence or control? | | | | |Investor owns 20% to 50% of stock and has significant influence but |On BS at historical cost plus |N/A |Realized loss on | |not control of the corporation |share of earnings since | |IS, new basis on | | |acquisition less dividends | |BS | |Use Equity Method |received (amortization may also be| | | | |required) | | ...
Words: 1180 - Pages: 5
...HR and Business Acronyms AA 1.) Affirmative Action 2.) Adverse Action AACU American Association of Colleges and Universities AAO Affirmative Action Office AAP Affirmative Action Plan AAR Average Annual Return AARP American Association of Retired Persons ABF Asset Based Financing ABM Activity Based Management ABMS Activities Based Management System ABS Asset Backed Security ACH Automated Clearing House AD & D Accidental Death and Dismemberment ADA Americans with Disabilities Act ADEA Age Discrimination and Employment Act ADL Activities of Daily Living ADP Automatic Data Processing ADR Alternative Dispute Resolution AE Account Executive AED United Arab Emirates AFL-CIO American Federation of Labor and Congress of Industrial Organizations AFSCME American Federation of State, County and Municipal Employers AJB Americas Job Bank ALC Alien Labor Certification ALEX Automated Labor Exchange ALJ Administrative Law Judge ALM Asset Liability Management AM Asset Management AMA 1.) American Management Association 2.) American Medical Association AMPS Auction Market Preferred Stock ANSI American National Standards Institute AP Accounts Payable AR Accounts Receivable APB Accounting Principles Board APR Annual Percentage Rate APV Adjusted Present Value APY Annual Percentage Yield ASAE American Society of Association Executives ASB Accounting Standards Board ASHHRA American Society for Healthcare Human Resources Administration ...
Words: 3803 - Pages: 16
...What items are included in operating activities on the Statement of Cash Flows? Cash received from Customers, Interest & Dividends, Trading Securities Cash paid to Vendors, Suppliers, Interest, Taxes, Trading Securities What items are included in investing activities on a Statement of Cash Flows? Cash received: Sale of PP&E, Sale of Investments, Loan Principle Cash paid: Loans, Acquisitions, AFS or HTM Securities, Taxes, Trading Securities What items are included in Financing Activities in a Statement of Cash Flows? Cash received: Issuance of Stock, Issuance of Debt Cash paid: Dividends What is the direct method for a Statement of Cash Flows? Starts with Income from Continuing Operations Adjusts for changes in accounts like A/R, A/P, Inventory and non-cash revenues, expenses, gains, losses If used, the Indirect Method must also be shown What is the Indirect Method for a Statement of Cash Flows? Starts with Net Income Adjusts for changes in accounts like A/R, A/P, Inventory and non-cash revenues, expenses, gains, losses What is the primary purpose of statement of cash flows? To provide relevant information about the enterprise's cash receipts and cash payments during a period Is the purchase of cash equivalent using cash reported on the statement of cash flows? No - purchase of cash equivalent using cash is NOT an outflow of cash and therefore does not get reported on Statement of cash flows. Where would the collection...
Words: 3108 - Pages: 13
...POLICIES FOR VALUATION OF ASSETS & LIABILITIES (FMCG SECTOR) INDEX 1. Introduction 3 2. Godrej Consumer Products Limited 3 3. Colgate-Palmolive (India) Limited 4 4. Hindustan Unilever Limited 4 5. United Spirits 5 6. Emami Ltd. 5 7. Marico Limited 6 8. Nestle India Limited 7 9. Dabur India Limited 8 10. Britannia Industries Limited 9 11. GlaxoSmithKline Pharmaceuticals Ltd 9 12. Summary 10 Introduction The aim of this project is to study the policies followed by each company in the FMCG (Fast Moving consumer goods) industry for valuation of assets and liabilities. Since FMCG sector in itself is quite diversified, hence instead of selecting the companies on the basis of total assets or total revenues, identification has been done on the sole criteria of BSE and...
Words: 3627 - Pages: 15
...Rafiqul Matin Course Instructor Investment Theory East West University Dear sir, The term paper writing in the assigned topic by you is a part if the course, Investment Theory to judge our understanding. In response to that our group prepared this report. As you will see this report tries to find out the term paper on the of the analysis of Investment Theory & Market Investment you asked us to conduct. Our study reveals some specific trends of how DSE basically operates it’s functions. Based on annual report and website of DSE, we have tried to find out the security trade functionality of 10 individual stocks regarding different category & sectors. According to it’s process, It will help you to understand the prevailing perception of how the securities are traded considering all factors & what steps DSE usually takes to maintain the whole trade functions. Thanks for giving us the opportunity to work on this report. It’s been a real education for us. If you have any question to ask us, please contact anyone of us. Sincerely yours Name ID Number Signature A. K. M. Mamunur Rashid 2011-2-90-005 ________________ Md.Reza- E- Mostafa 2011-3-90-010 ________________ Md. Rakibul Islam 2011-1-90-011 ________________ Sabiqun Nahar 2011-1-90-005 ________________ ACKNOWLEDGEMENT This report is an outcome of...
Words: 3398 - Pages: 14
...Chapter 11: Highlights 1. For a variety of reasons, corporations often acquire the securities (bonds, preferred stock, common stock) of other entities. For example, a business may invest (in the short term) some of its excess cash in income-yielding securities such as bonds or stocks. A business may also invest in securities intending to hold them for a longer period. 2. The accounting for investments in securities depends on the expected holding period and the purpose of the investment. 3. The expected holding period determines where investments in securities appear in the balance sheet. Securities that firms expect to sell within the next year appear as “Marketable Securities” in the Current Asset section of the balance sheet. Securities that firms expect to hold for more than one year from the date of the balance sheet appear in “Investments in Securities,” which firms include in a separate section of the balance sheet between Current Assets and Property, Plant and Equipment. When a company owns sufficient number of shares to control another company, it prepares consolidated financial statements. Consolidated financial statements combine, with some adjustments, the assets, liabilities, revenues, expenses, and cash flows of both companies. 4. The accounting for the investment in securities depends on the purpose of the investment and the percentage of voting stock that one corporation owns of another. Three types of investments are: (1) minority, passive...
Words: 3287 - Pages: 14
...Chapter 7 Individual Income Tax Computation and Tax Credits INSTRUCTOR’S MANUAL Learning Objectives 1. Determine a taxpayer’s regular tax liability and identify tax issues associated with the process. 2. Compute a taxpayer’s alternative minimum tax liability and describe the tax characteristics of taxpayers most likely to owe the alternative minimum tax. 3. Calculate a taxpayer’s employment and self-employment taxes payable and explain tax considerations relating to whether a taxpayer is considered to be an employee or a self-employed independent contractor. 4. Describe the different general types of tax credits, identify specific tax credits, and compute a taxpayer’s allowable child tax credit, child and dependent care credit, American opportunity credit, lifetime learning credit, and earned income credit. 5. Explain taxpayer filing and tax payment requirements and describe in general terms how to compute a taxpayer’s underpayment, late filing, and late payment penalties. Lecture Notes 1) Regular Federal income Tax Computation a) Tax Rate Schedules i) Schedule depends on filing status. ii) Each separate range of income subject to a different tax rate is referred to as a tax bracket. iii) Each filing status has its own tax rate schedules which consists of tax brackets taxed at 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent. iv) The IRS provides tax tables that present...
Words: 2928 - Pages: 12
... BangladeshJune 23, 2012 | AssignmentDepartment of Finance & Banking Jahangirnagar University Savar, Dhaka | Introduction The Goldman Sachs Group, Inc. (Goldman Sachs) is global investment banking, securities and investment management firm that provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Goldman Sachs reports activities in four segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management. As of December 2011, it had offices in over 30 countries, including office in financial centers worldwide. Mission Goldman Sachs Group use Business Principles rather than a Mission Statement: 1. Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow. 2. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard. Vision A commitment to integrity, team work and the pursuit of excellence is at the core of everything we do History Goldman Sachs was founded in 1869 by German immigrant Marcus Goldman when he opened a commercial paper business on New York City's Pine...
Words: 2769 - Pages: 12
...Attractive yield play BUY; RM15.00; TJN MK; Price Target: 12-month RM19.25 HONG KONG PUBLIC HOLIDAY THAILAND Charoen Pokphand Foods – See Spotlight (TB) Charoen Pokphand Foods: Earnings surge, costs remain low BUY; Bt7.95; CPF TB; Price Target: 12-Month Bt9.60 (Prev Bt7.50) • • • 3Q09F will beat record high 2Q09 earnings Promising outlook with firm product prices, low raw material costs, and improving margins Raised earnings, and TP to Bt9.60. Undemanding valuation, 21% upside, maintain BUY. Singapore Research Team – 6533 9688 research@dbsvickers.com www.dbsvickers.com “In Singapore, this research report or research analyses may only be distributed to Institutional Investors, Expert Investors or Accredited Investors as defined in the Securities and Futures Act, Chapter 289 of Singapore.” “Recipients of this report, received from DBS Vickers Research (Singapore) Pte Ltd (“DBSVR”), are to contact DBSVR at +65 6398 7954 in respect of any matters arising from or in connection with this report.” Regional Morning Pack Roadshows & Event Calendar* Analyst Roadshows Events Date Location DBSV Analyst Key Indices Indices Asia JCI Index KOSPI SET BSE Sensex Taiex PCOMP STI Hang Seng KLCI HSCEI Index HSCCI Index Nikkei 225 Close as at 30.09.09 2,468 1,673 717 17,137...
Words: 21991 - Pages: 88
...tments in equity securities to answer questions 1 4 below. The company’s accounting year ends December 31. Investment Ajax Company stock Bril Corporation stock Coy Company stock 1. Date of acquisition 6/20/13 5/1/13 8/2/13 Cost $40,000 20,000 16,000 Fair value 12/31/13 $35,000 N/A 16,500 Date sold 2/10/14 11/15/13 1/17/14 Selling price $32,000 26,000 23,000 Topic: Accounting for trading securities LO 1 If the above investments are categorized as trading securities, what amount is reported for gain or loss on securities, on the 2013 income statement? a. b. c. d. $1,500 gain $6,000 gain no gain or loss $4,500 loss ANS: a 2. Topic: Accounting for trading securities LO 1 If the above investments are categorized as trading securities, what amount is reported for gain or loss on securities, on the 2014 income statement? a. b. c. d. $1,000 loss $4,000 loss $3,500 gain $6,000 loss ANS: c You can buy the this complete file at http://testbanksfor.com 3. Topic: Accounting for AFS securities LO 1 If the above investments are categorized as availableforsale securities, what amount is reported for gain or loss on securities, on the 2013 income statement? a. b. c. d. $1,500 gain $6,000 gain no gain or loss $4,500 loss ANS: b 4. Topic: Accounting for AFS securities LO 1 If the above investments are categorized as availableforsale securities, what amount is ...
Words: 9574 - Pages: 39
