Sample Final Exam free essay sample

The company currently has earnings per share of $8. 25. The company has no growth and pays out all earnings as dividends. It has a new project which will require an investment of $1. 60 per share today (at time zero). The project will increase the earnings by $0. 40 per share indefinitely starting one year after the investment. Investors require a 10 percent return on XYZ stock. Assume the firm just paid the dividend of $8. 25 yesterday. a) What is the value per share of the company’s stock assuming the firm does not undertake the investment opportunity? 5 pts) b) If the company does undertake the investment what is the value per share now? (10 pts) c) What will the value per share be 3 years from now? (5 pts) Solution: a) P = Dividend / R = 8. 25 / 0. 1 = $ 82. 5 b) NPVGO = (-1. 60 + 0. 40 / 0. 1) = $ 2. 40 So the stock price will be: 82. 5 + 2. 40 = 84. 90 c) (8. 25 + 0. 40) / 0. 1 = 86. 5 Question 3 – Portfolio Variance Suppose the expected returns and standard devia tion of stocks A and B are E(Ra) = 0. We will write a custom essay sample on Sample Final Exam or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 13, E(Rb) = 0. 19, ? a = 0. 38, ? b = 0. 62 respectively. ) Calculate the expected return and standard deviation for a portfolio that is composed of 45 percent A and 55 percent B when the correlation coefficient between the returns on A and B is 0. 5 (10 pts) b) How does the correlation coefficient between the returns on A and B affect the standard deviation of the portfolio? (3 pts) c) Provide a range for the correlation coefficient where we obtain diversification benefits. (i. e, The portfolio standard deviation is less than the weighted average of the individual standard deviations of the stocks? ) Provide a range where we don’t have diversification benefits. 3 + 2 pts) d) For some values of correlation coefficient, we can achieve a portfolio standard deviation of almost zero. TRUE or FALSE? ( 2 pts) Solution: a) The expected return of the portfolio is the sum of the weight of each asset times the expected return of each asset, so: E(RP) = wAE(RA) + wBE(RB) E(RP) = . 45(. 13) + . 55(. 19) E(RP) = . 1630 or 16. 30% The variance of a portfolio of two assets can be expressed as: ([pic] = w[pic]([pic] + w[pic]([pic] + 2wAwB(A(B(A,B ([pic] = . 452(. 382) + . 552(. 622) + 2(. 45)(. 55)(. 38)(. 62)(. 50) ([pic] = . 20383 So, the standard deviation is: (P = (. 20383)1/2 = . 4515 or 45. 15% b) As Stock A and Stock B become less correlated, or more negatively correlated, the standard deviation of the portfolio decreases. c) corr lt; 1 (strictly less), corr = 1 d) TRUE Question 4 – CAPM and SML Suppose that you observe the following information. Assume these securities are correctly priced. Beta Expected Return XYZ Corp: 1. 4 0. 150 ABC Corp: 0. 9 0. 115 a) What is the risk free rate and the expected return on the market? 3 + 3 pts) b) What is the expected return on an asset with a beta 1. 6? (4 pts) c) What is the beta on a portfolio consisting of 30% XYZ, 30% ABC, 20% risk free asset and 20% market portfolio? (5 pts) d) If a security has beta 1. 8 and expected return 18%, is this security above or below SML? Over or under priced? ( 2 + 3 pts) Solution: a) Here we have the expected return and beta for two assets. We can express the returns of the two assets using CAPM. If the CAPM is true, then t he security market line holds as well, which means all assets have the same risk premium. Setting the reward-to-risk ratios of the assets equal to each other and solving for the risk-free rate, we find: (. 15 – Rf)/1. 4 = (. 115 – Rf)/. 90 .90(. 15 – Rf) = 1. 4(. 115 – Rf) .135 – . 9Rf = . 161 – 1. 4Rf .5Rf = . 026 Rf = . 052 or 5. 20% Now using CAPM to find the expected return on the market with both stocks, we find: .15 = . 0520 + 1. 4(RM – . 0520). 115 = . 0520 + . 9(RM – . 0520) RM = . 1220 or 12. 20%RM = . 1220 or 12. 20% b) 5. 20% + 1. 6 (12. 20% – 5. 20%) = 5. 20% + 11. 20% = %16. 40 c) 0. 30 * 1. 4 + 0. 30*0. 9 + 0. 2*1 +0. *0 = 0. 89 d) According to SML 5. 20% + 1. 8 (12. 20% 5. 20%) = 5. 20% + 12. 60% = 17. 80%. The security is above SML. It is underpriced. Question 5 1). For a multi-product firm, if a projects beta is different from that of the overall firm, then the:Â  (4 pts) A. CAPM can no longer be used. B. project should be discounted using the overall firms beta. C. project should be discounted at a rate commensurate with its own beta. D. project should be discounted at the market rate. E. project should be discounted at the T-bill rate. 2). Jacks Construction Co. as 80,000 bonds outstanding that are selling at par value. Bonds with similar characteristics are yielding 8. 5%. The company also has 4 million shares of common stock outstanding. The stock has a beta of 1. 1 and sells for $40 a share. The U. S. Treasury bill is yielding 4% and the market risk premium is 8%. Jacks tax rate is 35%. What is Jacks weighted average cost of capital? (8 pts) A. 7. 10% B. 7. 39% C. 10. 38% D. 10. 65% E. 11. 37% Re = . 04 + (1. 1 ( . 08) = . 128 Debt: 80,000 ( $1,000 = $80m Common: 4m ( $40 = $160m Total = $80m + $160m = $240m [pic]

Stolen Generation -Aboriginals- essays

Stolen Generation -Aboriginals- essays The role a family plays in bring up a child is: caring for them, protecting them, educating in behavior and customs of their social culture. Aboriginal families are very similar with a couple of additional roles. They are: feelings of kinship (bonding with their extended family) kinship is also the respect for elders who pass on the important traditions, values and stories within their culture, the understanding of values of sharing, understanding of dreamtime and of the spiritual life. In 1997, the Human Rights and Equal Opportunity Commission (HREOC) produced a report that told us that the Europeans thought aboriginals had no right to keep their child, so they were removed and placed in another family, thinking this will benefit the child more. After being removed from there families they were told they would be placed in another white family who would take care of them, and if old enough would be paid a wage for working for them. But in most cases this did not happen. Instead they were physically and sexually abused, worked very hard and received little to nothing than what they were told they would receive. Even those that were placed in a loving family felt feelings of loneliness and reject. The main recommendations of the report was to assist Aboriginals in reuniting with their family, an apology from the institution that had been involved with taking the children, a public recognition of the past injustices through a National Sorry Day. The state parliaments did apologize but the federal government refused to apologize (But two years later did the did mention regret over the situation). Children taken (stolen) from there families. The stolen generation didnt just last a couple of week or a couple of years. It lasted a few generations from when the Europeans arrived until it ceased a few decades ago. The government hasnt been able to apologize to the aboriginals for the crime they have committed, and the...

Henry David Thoreaus Walden Quotes

Henry David Thoreau's 'Walden' Quotes Henry David Thoreaus Walden was published in 1854. The essay details the experiment in personal independence and self-reliance that Thoreau underwent, starting on July 4, 1845. During this period he lived on Walden Pond. Famous Quotations Let us first be as simple and well as Nature ourselves, dispel the clouds which hang over our brows, and take up a little life into our pores. Do not stay to be an overseer of the poor, but endeavor to become one of the worthies of the world. - Henry David Thoreau, 1. Economy, WaldenI had three pieces of limestone on my desk, but I was terrified to find that they required to be dusted daily, when the furniture of my mind was all undusted still, and threw them out the window in disgust. - Henry David Thoreau, 1. Economy, WaldenIn any weather, at any hour of the day or night, I have been anxious to improve the nick of time, and notch it on my stick too; to stand on the meeting of two eternities, the past and future, which is precisely the present moment; to toe that line. - Henry David Thoreau, 1. Economy, WaldenI would rather sit on a pumpkin and have it all to myself, than be crowded on a velvet cushion. - Henry David Thoreau, 1. Economy, WaldenTo be awake is to be alive. - Henry Dav id Thoreau, 2. Where I Lived and What I Lived For, Walden A man is rich in proportion to the number of things which he can afford to let alone. - Henry David Thoreau, 2. Where I Lived and What I Lived For, WaldenI have always been regretting that I was not as wise as the day I was born. - Henry David Thoreau, 2. Where I Lived and What I Lived For, WaldenI have a great deal of company in my house; especially in the morning, when nobody calls. - Henry David Thoreau, 5. Solitude, WaldenA lake is the landscapes most beautiful and expressive feature. It is Earths eye; looking into which the beholder measures the depth of his own nature. - Henry David Thoreau, 9. The Ponds, WaldenYou only need sit still long enough in some attractive spot in the woods that all its inhabitants may exhibit themselves to you by turns. - Henry David Thoreau, 12. Brute Neighbors, WaldenI learned this, at least, by my experiment; that if one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a su ccess unexpected in common hours. - Henry David Thoreau, 18. Conclusion, Walden If you have built castles in the air, your work need not be lost; that is where they should be. Now put the foundations under them. - Henry David Thoreau, 18. Conclusion, WaldenHowever mean your life is, meet it and live it; do not shun it and call it hard names. - Henry David Thoreau, 18. Conclusion, Walden

Research proposal Essay Example | Topics and Well Written Essays - 3000 words - 5

Research proposal - Essay Example The research will assess how designers of employee workplaces use the global concepts of marketing and high tech products and services in the design of commercial workplaces (Viswanath 28 and Gacenga et al. 93). This will be done by conducting a research that is based on primary data collection method (Venable 120). Such will entail the use of a focus group, face-to-face interviews, observation and surveys (Shouhong and Wang 548). Interview questions will be formulated so that they will elicit response from the respondents (Venable and Richard 142). The questions will also include Likert Scale for trend and relationship identifications (Orfield 138). The population of interest will be Silicon Valley. However, representatives from Brighton University will also be included in the study. This population will assist in identification of key metrics that include color and design of workplaces (McMahon 570). The research will assist in gathering essential data, which will be used in the process of testing the hypothesis that workplace could assist in improving productivity and enhancing attainment of creativity in the workplace (Mangalaraj et al. 250). This is because in marketing, value addition is vital in the presentation of products and services. Such facilitates in increasing the quality level, which is a key focus for most of the customers who like quality products and services. Increment of quality level also ensures that an organization is able to compete with others favourably in the market (Gregor and Alan 338). The research will also yield insightful information on how creativity and productivity can be enhanced in organizations (Landwehr et al. 93). The social network companies have reinvented Silicon Valley from its origins as a place of manufacturers measuring instruments, such as oscilloscopes. The first company to adopt the beginning of the open plan workspace was Hewlett-Packard in the 1970’s. This working

Love. Response papers week 7 Assignment Example | Topics and Well Written Essays - 500 words

Love. Response papers week 7 - Assignment Example The same applies to nursing. Apart from the experience of the original responder, there are other evidences indicating that practicing nurses utilize intuition, and it has been powerful in changing patient outcomes (McCutcheon and Pincombe, 2001). The power of intuition also cuts across disciplines including the sciences. According to Holton and Elkana (1997), some scientists have agreed that intuition has had a part to play in innovation and scientific discovery. The power of intuition therefore transcends human intellect and innovation in scientific discovery. Improved patient outcomes, witnessed by nurses using intuition over logic in their nursing practice, are testimony to the importance of intuition. Because of its influence on the wellbeing of patients, there is a need to recognize intuition as an important tool in the nursing practice. The world desperately needs a unique role model, a person different from the common leaders so as to stop the endless reports of abandoned values, exploitation, manipulation, betrayed trust and discrimination. It is important for leaders to adopt the Lead Like Jesus style to achieve success and to attain to constructive influence. Just like the traits portrayed by Jesus, the characters outlined by Blanchard (2005) are somehow universal. By acting that way, Jesus was able to accommodate sinners transform them. The same should apply to modern leaders. Never will all members of a sports team or employees of a company possess the same characters, but the leader must focus on how to bring out the potential in them. This means that the first thing is to make them feel appreciated, mold them to fit the organizational culture, and then dig into their potentialities and talents. Tim Tebow can be said to have achieved this very well as demonstrated by the â€Å"Tebowing† practice. â€Å"Tebowing† is evidence that Tim’s unconditional love has generated an integrative and accepting

Impact of exchange rate on the economy

Impact of exchange rate on the economy A countrys exchange rate is explicitly the currency value at which it transacts business with other countries around the world. It determines how much would be an equivalent of its currency which would be used to purchase goods and services from other countries around the global world. The world is a global market that needs a form of agreement in terms of currency at which it trades. The essence of a fixed exchange rate system is to maintain a countrys currency value  within a very narrow band.  This is also regarded as pegged exchange rate. The exchange rate in question depends on the form or type which the government of the country chooses to adopt or to use. OBJECTIVE To discuss issues as they will affect certainty in international trade when all countries adopt a fixed exchange rate. The issues to consider include: Types of exchange rate How exchange rate changes Impact of exchange rate on the economy both nationally and internationally Understanding of fixed exchange rate from demand and supply perspective. IMPACT OF THE ADOPTION OF A FIXED EXCHANGE RATE ON INTERNATIONAL MARKET. In the history of financial world there exists various international monetary systems and foreign exchange rate which not only manage domestic economy of country but also international trade issue. These include: Fixed rate Floating rate Forward rate Spot rate Future rate Amongst these, we shall critically examine the fixed rate and how it can affect international trade as a whole. FIXED RATES According to the writer of ehow found on http://www.ehow.com/list_6804540_types-foreign-exchange-rates.html viewed on 30/12/10 it writes The smaller economies of developing countries adopt the use of fixed foreign exchange rates for trading and to attract foreign investments. By fixing its currency against the currencies of other countries, a country keeps export prices affordable and easy to international buyers and allows for trade surplus over time. Fixed currency rates also allow a country to assure foreign investors of the stable value of their investments in the country. However, under fixed rates, the monetary policies of a country can become ineffective when trying to stimulate domestic economic activities by consumers at the host country. Injecting more money into the economy would normally reduce a countrys currency value against foreign currencies under floating rates. As imports become more expensive, consumers would gradually focus their demand on domestic products, potentially lifting up the economy. With fixed rates, however, the exchange value of domestic currency does not move and more money means more buying power for imports. Such an outcome does not achieve policy makers intention to increase domestic demand. This is expedient in order to ensure that there is a close gap which would assist balance of payment; the international economy would be appreciative of a fixed rate of exchange as it would allow for free f low goods and services at a predicted price. (Reference: http://www.rba.gov.au/publications/confs/1993/intro-93.pdf assessed on 30/12/10) From the above citation from Adrian, it is obvious that fixed exchange rate has its benefits too which would help the international market. Below are some of the merits and demerits of the fixed exchange rate. MERITS OF FIXED EXCHANGE RATE 1. It reduces fluctuation in the value of currencies which can cause problems for firms engaged in Trade. When exchange rate is fixed, it allows for comfort in the desire of the foreign customers who wants to trade with the host country as they would know that the price agreed on for the commodities at the stated time would still be at a given exchange rate. Though the price of the commodity might change, but the exchange rate is known. 2. It allows for foreign firms to invest in countries where fixed exchange rate occurs. Some Japanese firms have said that the UKs reluctance to join the Euro and provide a stable exchange rates make the UK a less desirable place to invest. 3. When the cost of import and export increases, it will therefore increase the income of the host country and the other countries involved. 4. A well monitored exchange rate would assist the domestic companies to sell out there products to the international world without fear of pressure from exchange rate differences, thereby increasing the domestic market and encouraging the local manufacturers to produce more of their products which would be used for international trade. 5. Fixed exchange rate reduces drastically the expectations of inflation in an economy.  Inflation is reduced to a minimal if not zero. This is due to the fact that the one of the major factors that would have allowed for inflation which is differing exchange rate is absent. DEMERITS OF FIXED EXCHANGE RATES 1. To maintain a fixed level of the exchange rate may conflict with other macroeconomic objectives. 2. It is difficult to respond to temporary shocks. For example an oil importer may face a balance of payments deficit if oil price increases, but in a fixed exchange rate there is little chance to devalue. 3. It requires government intervention when there exists too much money in circulation and the fixed rate is affecting the countrys currency adversely. 4. In order to check the problems that may accrue to the countrys currency, the central bank with the government may have to increase interest rate which may not be conducive to the citizenry, leads to unemployment and might lead to recession. (Reference: http://www.economicshelp.org/macroeconomics/exchangerate/advantages-disadvantages-fixed.html assessed on 30/12/10) CONCLUSION From the above mentioned issues on foreign exchange basically on fixed and floating foreign exchange, it is obvious that the floating system of exchange would be better off as the dangers of fixed would be avoided. This is also the system widely used by most countries i.e. the floating exchange rate as it helps to readjust during inflation and deflation. Under a system of fixed exchange rates balance of payments equilibrium is disturbed by a fall in export sales. When the supply curve of foreign exchange moves sharply and the authorities do nothing, an excess demand for foreign exchange will come on the market and thereby causing the exchange rate to rise which means the home currency would depreciate. In order to guard against such happening the home authorities must enter the market, and close the gap by supplying foreign exchange from reserves. Thus the home currency may be supported at cost to the countrys reserves. This would drastically affect the financial reserve of the count ry. However, the implication of the adverse effect on the domestic market is also very crucial. But this is where the government intervention now matters. The government of the concerned countries would buy the currency which is in excess from the market so as to avoid deflation of its currency which could lead to a devastating market economy. A good example is the government of Australia as written by Adrian Blundell-Wignall. He wrote Australias economic relations with the rest of the world have undergone profound change over the past decade. The floating of the exchange rate opened goods markets to greater international competition and Australias pattern of international trade changed considerably. Concomitantly, increasing integration into world financial markets saw Australia drawing more heavily on foreign capital. In the past 15 years, two broad developments in the world economy have been particularly significant for Australia: financial market liberalisation and the emergence of t he newly industrialising countries in Asia. From the late 1970s, financial liberalisation (and, in particular, the removal of capital controls) made financial markets increasingly globalised. At times, these developments were associated with speculative capital flows that undermined attempts to reconcile managed exchange rates with domestic macroeconomic objectives. At the end of 1983, against the background of more general moves to deregulate the financial system, the Australian dollar was floated. Australia is a small commodity exporting country, subject to significant terms of trade shocks driven by the world commodity price cycle. Once the currency was floated, the nominal exchange rate was able to respond more rapidly to these external shocks, helping to cushion the domestic economy from the inflationary and deflationary pressures to which they gave rise. For example, falls in the terms of trade have been associated with real depreciation which has reduced the negative income effects of the terms of trade decline on exporters and has added stabilising stimulatory influence to the domestic economy. While movements in the currency have been largely driven by commodity prices, it is widely felt that the depreciation in the mid-1980s went beyond that justified by fundamentals. While the real exchange rate recovered in the second half of the 1980s and fell again in the early 1990s, in line with the behaviour of the terms of trade, the overall trend in the past two decades has been one of real depreciation. This downward trend in the real exchange rate occurred at a time when Australia also began to cumulate significantly larger external deficits, so that foreign debt was rising as a share of income. This too can be linked to the globalisation of world capital markets. The greater degree of integration of Australia into world financial markets meant that it became easier to attract capital from the rest of the world to finance investment independently of the level of national saving. There were two major investment booms in the 1980s associated with high real exchange rates and current account deteriorations. The first occurred around the time of the second oil price rise in the late 1970s/early 1980s, and resulted largely from improved prospects for the ene rgy and minerals sectors. The second was associated with the asset price boom later in the decade. Both episodes were accompanied by a build-up in Australias foreign liabilities and were followed by a world recession and falling commodity prices.

Positive Case for Compatibilism and the Free Will Problem

The concept of free will has been a point of contention for philosophers for several decades. One of the reasons for these diverging viewpoints is the debate on how exactly to define the word free. It would be misleading to attribute any one exclusive idea to the concept.However it is agreed neutrally that it is an exercise of an individual’s behavior in order for him to take moral responsibility for his actions. A person who takes on his moral responsibility is one who can chose to make decisions that are morally right or wrong. Thus, the blame or reward for the outcome of the decision falls squarely on his shoulders. It is understood that free will is an essential component of these decisions.Conceptually it can be understood how the pre-determined nature of the universe can casually affect our decisions to such a point where free will is no longer applicable. However the theory of compatibilism states that free will and determinism are not mutually exclusive. That they can exist together without conflict, that an individual can exercise free will when faced with pre-determined factors. This topic will analyze, synthesize and evaluate arguments related to the problems associated with the concept of free will and how compatibilism offers a solution to these problems (McKenna, 2004).In order to understand how compatibilism acts as a solution to the free will problem it is first important to understand that there are several concepts used attributed to free will. When these concepts are conjoined to others they invariably create several contradictions. In order to avoid these problems it is important to consider the classic formulation of free will which informs us of then several key factors associated with it. The first is that the individual has a choice to act in more than one way in a situation.However any action taken by an individual qualifies as an event with various causes that effect the individual’s decision. Thus, the cause is casually determined and the individual cannot act in any way other than what is pre-determined by these factors. It should be noted that the existence of free will is tantamount upon the fact that the individual has no extraneous source compelling him to act. Rather all his decisions making is contingent upon his own compulsion to follow his decisions in the face of alternate possibilities. It is only in such a case that freedom to assume moral responsibility exists (McKenna, 2004).John Martin Fincher is a philosopher who is responsible for refining the viewpoint that suggested that decisions which constitute the free will of an individual can be affected by a number of reasons. This proves why certain people can have different reactions to the same situation and rules out those individuals who have compulsive or neurotic behavior.The refined viewpoint by Martin Fincher is known as the reasons-responsiveness theory which states that even though there are considerations which may affect the d ecisions of an individual. The decision made it can still be considered to be an individual free will since the choice made is rationally based according to the factors affecting the individual (McKenna, 2004).Another concept attributed to Compatibilism is P.F Strawson’s concept of moral responsibility. This is similar to Hume’s concept and says that the practice of holding an individual morally responsible for his or her own actions is formed on the basis of both emotional and societal structures. He said that the existence of these critical responses is part of human nature defined by our basic emotional natures and cannot be abandoned, thus the fact that determinism affects our moral responsibility does not hold ground.However in certain cases an individual can choose to give up their moral judgments in favor of rationalizing the individuals actions can exist as well but only in the cases where the actions gains favors or losses to human life (Kane, 2002 p. 516-521) .There are of course objections to the theories of compatibilism. One of the principle arguments for incompatibilism comes from Carl Ginet. The argument given by him states that the power of an individual to affect change does not extend to factors such as those of nature that are by their very nature unchangeable.And if a certain fact affects a person directly and the consequences of that fact exist than the person will be affected by the consequences of that fact as well. Thus in the face of these facts determinism becomes true and since no one can change the facts that cause the situation, no one can affect the future (McKenna, 2004).