Home Work One
Due February 14, 2017
Please show your work!
1. End of Chapter One (Bodie, Kane, Marcus 10th edition):
Questions: from 9 to 10 (inclusive)
Questions: 1, 2, 5, 7, 13, 19, 21,
2. End of Chapter TWO (Bodie, Kane, Marcus 10th edition):
22 Part ONE Elements of investments
. - . s' Is to force em 1 _
The act addresses incentive issues. Among. 3:- :'-[ 1:23:21; public camping? :3:
pensation [0 He longer-term performancl-v L . . in if it was based 0ni I
uclawback provisions" to take back ex
1. Equity is a lower-priority claim and represents an ownership share in a corporation,
whereas fixed-income (debt) security is a higher-priority claim but does not have an
ownership interest. Fixed-income (debt) security pays a specified cash
Microcomp a U.S based manufacturer of personal computer is planning to build a new manufacturing and
distribution facility in either South Korea, China, Taiwan, the Philippines, or Mexico. It will take 5 years to
build the infrastructure and put into oper
I. Quality Management (Chapter 6)
All except quality loss function and target-oriented quality,
II. Quality Management Principles
1. Organization as an open system
2. Focus on the Customer
3. Continuously Improve the
Practice Problems: Module A, Decision Making
Bascombs Candy is considering the introduction of a new line of products. In order to produce the
new line, the bakery is considering either a major or minor renovation of the current plant. The
There are 3 kinds of sign : the ICON, the INDEX and the SYMBOL.
from philosopher Charles S. Peirce in the late 19th century.
a sign is a stimulus pattern that has a meaning.
The difference is in how the meaning happens to be attached to (or associated wit
Examples for the Individual Assignments
1. Pros and Cons of 5 Doritos Crash the Super Bowl Finalists
As Super bowl is approaching, Doritos holds its annual video contest as usual. In the article
Pros and Cons of 5 Doritos Crash the Super bowl Finalists, i
MANG 4480 495, 496 Fall 2016
UNIVERSITY OF NEW ORLEANS: DEPARTMENT OF MANAGEMENT
Course Name: MANG 4480
BUSINESS POLICIES AND PROBLEMS
Joseph V. Wilson III, CPA
Kirschman Hall 349
Contact info: [email protected] (primary)
Market Efficiency Chapt. 14 in RWJ
The Random Walk Theory - Stock prices follow a random walk. That is, they change
randomly with no predictable patterns or trends (the same can be said of bond prices).
Each movement is entirely independent of past moveme
Class Notes Index
Chapter 4 - The Time Value of Money
Chapter 8 - Bonds
Chapter 9 - Stock
Chapter 5 - Capital Budgeting
Chapter 6 - Cash Flows
Chapter 10 - Risk and Return
Chapter 11 - Asset Pricing Part 1
Chapter 11 - Asset Pricing Part 2
Chapter 13 - Be
Beta and WACC Chapt. 13 in RWJ
(1 r ) t
Ct is not known for certain. It is a random variable. It has a probability distribution with a
mean and standard deviation.
Ct = E(Ct) = expected cash flow
r is the appropriate cost of capital. It shou
Asset Pricing Part 2 Chapt. 11 in RWJ
Mean/Variance Analysis Risk-averse investors like a high expected (mean) return and a
low standard deviation (variance). They like return and dislike risk.
So if we plot expected return on the vertical axis and standa
Asset Pricing Part 1 Chapt. 11 in RWJ
Here, we are dealing with probabilities of future returns not historical data, so we
will calculate Expected Return and Standard Deviation differently.
Expected Return - Probability weighted average of possible outcom
The Time Value of Money Chapter 4 in RWJ
The time value of money - The most basic concept in Finance.
Interest - Money paid for the use of your money. Expressed as a % or a decimal.
Future Value - Amount to which an investment will grow after
Stock Chapt. 9 in RWJ
Common Stock = Stock = Equity: Ownership shares in a corporation.
Preferred Stock: A hybrid between stock and a perpetual bond. Receives a fixed
dividend, but generally has no voting rights. Priced as you would price a perpetuity.
Risk and Return Chapt. 10 in RWJ
Converting Total Return to Annualized Return
Returns are measured over a period of time usually over the course of a year, but if
some other period, they can be annualized.
This is very similar to calculating the EAR, whic
Capital Budgeting Chapter 5 in RWJ
Capital Budgeting the process of choosing the best investment projects.
Because other capital budgeting techniques are either rarely used in practice or are
inefficient, we will only concern ourselves with Net Present Va
Bonds Chapt. 8 in RWJ
Bond - An IOU. - A security that obligates the issuer to make specified payments to the
Maturity - Date when the bond principal is repaid.
Face Value - Payment at maturity
Coupon Rate - Annual interest paymen
Explanations of Quiz Solutions for Chapters 8-9
1. A price of 97 means that the bonds are selling for 97% of their face value. A coupon rate
of 8.6% means that each year, the issuer pays the bondholder 8.6% of the face value of
the bond. Since the Yield t
Explanations of Quiz Solutions for Chapters 10-11
1. Since these five years are only as sample of the entire population of returns, we can
never know the true means, variances, standard deviations, or covariances. We must
calculate estimates using the sam
Explanations of Quiz Solutions for Chapters 5-6
1. Since the price of the widgets will be increasing at 3% per year and 3% per year is also
the inflation rate, the price of widgets will be constant in real dollars (purchasing power).
This is also true for
Explanations of Quiz Solutions for Chapter 4
1. The amount of money you are borrowing is the present value of the mortgage. Since the
payments are being amortized over 30 years with monthly payments, this is an annuity
with a monthly interest rate and 360