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Strategic Analysis: Stocks, Options, and Bonds Evaluation
In this assignment, you will dive deep into the realm of stocks, bonds, and options, leveraging the knowledge and tools acquired in Units I-III. Through a fictitious company scenario, you will evaluate various investment avenues, assess potential risks, analyze the time value of money, and draw strategic financial conclusions. This practical application aims to equip you with the analytical skillset crucial for the real-world corporate finance setting.
1. CompanyProfile:
Choose a fictitious company. Create a brief profile, including its industry, market position, and financial standing. You may refer to real-world companies for inspiration but ensure that your company’s details remain fictional. Describe all of this in the introduction to your case study, providing a clear background for the topic and the main points of your paper.
2. StockAnalysis:
Identify three potential stock investments for the company.
For each stock, analyze its historical returns over the past five years.
Estimate the future return of each stock using the methods described in Chapter 6.
Assess the associated risks, employing tools like probability ranges in normal distribution, mean, and standard deviation.
Discuss the influence of market efficiency on these stocks, referring to the Fama-French three-factor model and the capital asset pricing model (CAPM).
Reflect on any known behavioral finance phenomena, like retail trading or meme stocks, which could affect these investments.
Select one of the stocks for an in-depth analysis. Identify the key components of financial statements, including the balance sheet, income statement, statement of stockholders’ equity, and statement of cash flows. Apply financial ratio analysis to interpret financial statements and assess the company’s financial performance. In your analysis, discuss whether you think the stock would be a good investment.
3. Option Analysis:
Pinpoint two financial options that could be beneficial for the company.
Utilize the single-period and multiperiod binomial option pricing models and the Black-Scholes option pricing model (OPM) to evaluate these options.
Determine the potential risks and benefits of each option, considering the company’s specific context.
Evaluate the price of a put option for each and provide a rationale for your valuations.
4. Bond Analysis: ·
Your company is also considering an expansion. Board members have talked about issuing bonds to cover the cost of expansion.
Distinguish between different financial strategies and tools used in leading an organization, including the issuance and valuation of bonds.
Explain the importance of bond market dynamics, such as the relationship between interest rates and bond prices in shaping organizational financial strategies.
Discuss whether you think this is a viable option in today’s market.
5. Recommendations:
After your thorough analysis, offer a strategic financial recommendation:
Which stock and option investments should the company consider?
Justify your recommendations based on potential returns, associated risks, and the time value of money. Identify the key factors, such as inflation and interest rates, which influence the dynamic nature of money’s value over time.
Be sure to include a conclusion that is clear, concise, and thorough, summarizing the key points of your paper.
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SAMPLE FORMAL ESSAY
Page numbers are placed in the
upper right corner of every
page. This is done by going to
“Insert,” “Page Number,” “Top of
Page,” and then selecting “Plain
Number 3.”
The title page includes the title of
the assignment in bold font, the
student’s name, the name of the
university, the course name, the
instructor’s name, and the date
the assignment is due. There is
an extra double space after the
title of the paper.
Three Keys to Success
Joshua A. Learner
Columbia Southern University
LSS 1300: Learning Strategies for Success
Dr. John Doe
July 10, 2020
Paper Format
✓ 1 inch margins
✓ Double spacing
✓ Paragraphs indented .5 inch (usually default Tab)
Suggested fonts:
✓ Sans serif fonts such as 11 pt. Calibri and Arial, or 10 pt. Lucida Sans Unicode
✓ Serif fonts such as 12 pt. Times New Roman, 11 pt. Georgia, or 10 pt. Computer
Modern. This example paper is written in Times New Roman, size 12. The same font
and font size should be used throughout the entire paper.
✓ This Formatting Formal Assignments tutorial will help you format your paper
✓ The CSU Citation Guide will also help with paper format and APA
Three Keys to Success
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The title at the top of this page
needs to be the same as the title
on the title page. It is bold.
Being successful in the classroom and the working world requires more than just pure
luck. Those who achieve success tend to understand that they must work hard, and they often
excel at incorporating various skills into their daily routines. Three skills that are essential for
ensuring success include organization, time management, and communication, and these are
abilities that most people can learn and master.
Organization is a skill that enhances efficiency. Being organized helps individuals
maintain order in their lives and allows them to focus on tasks instead of being distracted by
chaos. Being organized can also improve productivity. Having an area that is clear of clutter and
where necessary items are conveniently placed improves study time because everything is easily
accessible, and this allows the individual to focus on the task at hand. A messy or cluttered work
space not only makes it difficult to focus, but it can also be stressful. To help eliminate stress,
Scott (2019) recommends that individuals organize their physical space. She also suggests that
being proactive about anticipating stressors can help one be prepared to preemptively manage
them before they occur. That may mean spending a few hours tidying up a work area, making a
to-do list, or ensuring that children are fed and entertained before studying to ensure that the
study time will be productive. In addition to being organized, success also depends on one’s
ability to effectively manage his or her time.
This is a transition sentence. It tells
the reader what the next topic is.
Time management is the practice of intentionally assigning time to various tasks (Mind
Tools, n.d.). Using time wisely allows individuals to accomplish their goals promptly, which can
When paraphrasing information,
be vital if changes
or corrections are necessary after the task has been completed. Procrastinating
in-text citations will include the
author’s name and the year the
until the last minute
leaves
little to no time to make necessary revisions, which can lead to subpar
source
was published.
work and lower grades, and it can also create unnecessary stress and anxiety. Procrastination is
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not the only time stealer, however. Staying busy with non-essential tasks can make an individual
less productive as well. Tourangbam (2011) notes that “Nothing is easier than being busy, and
few things are more difficult than being efficient and effective” (p. 2). It is important to use time
wisely and effectively. Prioritizing tasks and scheduling events allow individuals to maximize
Direct quotations include the author’s
productivity (Hamilton, 2013). When timename,
is scheduled
and work isand
ordered,
year of publication,
page orthe most important
paragraph number.
tasks get completed first, which leaves room for unexpected occurrences like technological
issues and unscheduled meetings. Effective time management is a constantly evolving skill that
requires discipline and, at times, self-denial, because one must decide to forgo his or her desires
to do what needs to be done to ensure success. Time management is undoubtedly a very
important aspect of success, but success also depends on one’s ability to communicate well.
Communication involves conveying information in a clear and concise manner, and it is
important for people to communicate clearly whether they are presenting information verbally or
writing a research paper. Some of the various methods used to communicate in the modern age
include telephone conversations, email, and chat messaging (Hamilton, 2013). Phone
conversations must be professional, and it is important to be mindful of the tone of voice used
when communicating on the telephone. Ellis (2009) notes that since body language is nonexistent in phone conversations, first impressions are based on the pace of speech and the
warmth and tone of the voice. Written communication is also void of visual cues, so proper
etiquette must be used when communicating online or through email (Hamilton, 2013).
Additionally, written communication must be clear and grammatically correct so that others can
understand what is being communicated. The ability to clearly transmit key thoughts and ideas
to others is imperative.
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Although there are many skills that contribute to success, three that have proven to be
essential for success in educational endeavors, the professional world, and everyday life are
organization, time management, and communication. Individuals who can master these skills
will have a set of competencies and abilities they can use throughout their lives to help them
achieve their goals and become successful.
References
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The word “References” is bold
and is centered at the top of the
reference page.
Ellis, R. (2009). Communication skills: Stepladders to success for the professional (2 nd ed.).
Intellect Limited.
Mind Tools. (n.d.). What is time management?
https://www.mindtools.com/pages/article/newHTE_00.htm
Scott, E. (2019). How to get organized to manage stress. Very Well Minded.
https://www.verywellmind.com/tips-on-getting-organized-3145158
Tourangbam, D. K. (2011). Time management. Vij Books Private Limited.
This is an example of a reference list.
This list is arranged alphabetically by
author name. All in-text citations
must have a corresponding entry on
the reference page.
Note: An essay that will be copied and pasted
into Blackboard will include the references below
the essay; however, essays that will be uploaded
as a Word document will have a separate
reference page like the one shown here.
