Order ID:89JHGSJE83839 | Style:APA/MLA/Harvard/Chicago | Pages:5-10 |
Instructions:
Business Finance Assignment (BCO212)
Individual assignment
All of the questions and issues below will be answered by the student.
Formalities:
A document in Excel format should be submitted.
Arial 11 pts font.
Justified text alignment.
Week 5 submission via Moodle (Turnitin). Sunday, June 27th, 23:59 CEST
This task accounts for 40% of your overall grade in this subject.
The following learning outcomes are assessed in this task:
Understand the fundamental theories of finance and how to apply them to real-world situations.
Describe the relationship between risk and return and use risk and return measurement methods and strategies.
Analyze a series of future cash flows and make investment recommendations.
QUESTIONS FOR THE ASSIGNMENT:
IMPORTANT: FOR EACH QUESTION, SHOW YOUR DETAILED SOLUTIONS.
Obstacles (60 points)
1.-You need a 100,000 loan from your local bank to purchase a new Porsche. You can afford 1,800 in monthly payments, but no more. What is the greatest APR you can pay on a 60-month loan, assuming monthly compounding?
2.- A large investment bank has offered David Alonso a position as a local manager. He will be paid a basic salary of 255,000. One year after starting work, he will receive his first yearly salary payout. He will also receive an immediate bonus of 25,500 for joining the company. His annual pay will increase by 4% per year. Every year, David believes he will receive a bonus equal to 25% of his annual pay.
If David is 40 years old today and expects to work for the company for the next ten years, what is the present value of this employment offer if the discount rate is 11%?
3.- You want to build a portfolio that is as risky as the market, and you have the resources to do it.
500,000 is available for investment. Fill in the blanks in the following table with this information: The total investment is $500.000.
4.- A stock has a 15 percent projected return, a beta of 1.2, and a market expected return of 12 percent. What is the risk-free rate required to be?
What is the portfolio’s projected return?
What is the portfolio’s variance?
What is the standard deviation of a data set?
Inquiries (40 points)
a) How does increasing the rate r affect the future value of an annuity? So, what happens to the current price?
b) Who is the owner of a corporation? Describe the procedure by which the firm’s management is controlled by the owners. What is the primary rationale for the existence of an agency relationship in a corporate structure? What kinds of issues might occur in this situation?
c) Is the statement below truthful or false? Because no risk-averse investor would be prepared to retain this asset in equilibrium, a risky security cannot have an expected return that is less than the risk-free rate. Explain.
d) Is it conceivable for a risky asset’s beta to be zero? Explain. What is the projected return on such an asset based on the CAPM? Is it conceivable to have a negative beta on a risky asset? What is the CAPM’s prediction for the asset’s projected return? Is it possible for you to explain your response?
e) Why is some risk diversifiable, in general? Why can’t some risks be diversified? Does this mean that an investor can only control the amount of unsystematic risk in a portfolio but not the amount of systematic risk?
Rubrics
Descriptor
9-10
The student exhibits a thorough grasp of the ideas.
8-8.9
The student shows that he or she understands the principles.
7-7.9
The student shows that he or she has a good grasp of the ideas.
6-6.9
The pupil shows some comprehension of the topics, but it is insufficient.
3-5.9
The learner exhibits a lack of comprehension of the principles. They may name some pertinent ideas or concepts, but it is evident that the student does not understand the relationship between them.
1-2.9
The student shows a lack of grasp of the concepts by failing to provide any pertinent thoughts or concepts.
0
The student either does not answer the question or cheats.
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Business Finance Assignment