Explain the relationship between risk and return and how this relationship impacts stock investment decisions.

Journal

Overview Risk and return go hand in hand. Understanding this relationship is critical to making well-reasoned financial decisions, whether you are making personal investment decisions or working for a business where you’re responsible for investing excess cash.This journal assignment allows you to explore the risk-return relationship in the context of investing in stocks in both of these roles.
Prompt Write a journal discussing risk and return as it relates to investing in stocks.
Specifically, you must address the following rubric criteria:

Investment Risk: Explain key risks associated with investing in stocks.

Investment Return: Discuss events that can cause the price of a stock to increase or decrease.

Risk-Return Relationship: Explain the relationship between risk and return and how this relationship impacts stock investment decisions, using examples to support your claims.

Reflection: Describe whether you make stock-investment decisions in your personal life and how you do or would make those decisions.

Consider the following in your response: Would your decision-making process change if you needed to make stock-investment decisions for a business? Why or why not?

Guidelines for Submission Your submission must be a 4- to 5-paragraph Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Sources should be cited according to APA style.

Discuss some of the factors, including environmental, sustainable, and governance (ESG) factors, that you believe have impacted the stock performance and why.

Understanding Pricing of a Stock
You may have seen how financial news outlets provide real-time financial market reporting. They often produce stock-market news feeds for traders; these news feeds include a stock chart. The stock chart may include different filters that allow you to see how the stock is performing today or has performed over one or more years.
There are many factors that will influence pricing that can’t be controlled or predicted accurately. The approaches used to value stocks (determine what the stock is truly worth) are usually theoretical. You should consider what drives stock prices and why.
For this discussion, first go to Mergent Online. Find the pricing chart under the “Company Details” tab, then click on Pricing Summary for your selected company. This is the company you have selected for your Project Two assignment. Filter the time period to one year.
In your initial post, address the following:
Discuss how the stock for your company is trending. Explain why the stock is in either an uptrend or downtrend.

Discuss some of the factors, including environmental, sustainable, and governance (ESG) factors, that you believe have impacted the stock performance and why.

Convince your peers to either invest in your chosen company or to not invest in the company. Explain your reasoning.
In your response posts to at least two peers, discuss the following:

Do you agree with your peer’s argument to either invest or not invest in their company? Explain why or why not, making sure to also include information not previously shared by your peer.

What are the advantages and the disadvantages of a merger?

As part of the financial planning process, a common practice in the corporate finance world is restructuring through the process of mergers and acquisitions (M&A). It seems that on a regular basis, investment bankers arrange M&A transactions, forming one company from separate companies. What are the advantages and the disadvantages of a merger? In your response, provide an example of either – a merger that was successful, or one that was unsuccessful. (title page, abstract and reference page not included in word count)

Evaluate the potential impact (social, environmental) of your business on different types of stakeholders.

Financial sustainability

Develop a business plan for a social enterprise.
Required:

Produce a PowerPoint presentation of maximum 8 slides outlining the following:

1. Clear and concise presentation of the social problem (justifying the need for a social enterprise).

2. Clear presentation of your business idea, social purpose, business model and description of product(s)/service(s).

3. Present potential sources of start-up finance and subsequent revenue streams.

4. Evaluate the potential impact (social, environmental) of your business on different types of stakeholders.

Each slide will be accompanied by 50-100 (max) word notes to explain the context.

The key aspects of the business idea and the business plan (listed above) will be tied together and further expanded on in a 1000 words paper.

Submission will be on Turnitin in ONE PDF file (Word document converted to PDF) which will include: the slides (as images/printscreens) with relevant notes, followed by the 1000 word paper explaining the business idea in more depth.

The work will be marked based on the following marking criteria:

Description Weighting

Clear and concise presentation of the social problem (justifying the need for a social enterprise).

Clear presentation of your business idea, social purpose, business model and description of product(s)/service(s).

Present potential sources of start-up finance and subsequent revenue streams.

Evaluate the potential impact (social, environmental) of your business on different types of stakeholders.

Presentation (quality of slides, written work, referencing – HRS)

Identify two or three good performance companies and justify the investment motivation for the industry and the companies.

Financial investment analysis

Assignment task:

As a trainee analyst in a London investment company, you are tasked to conduct stock market performance analyses and produce a report to the investment manager to identify some key factors that affect share performance. The investment manager is keen to make significant investment in companies and industries that thrive in the current COVID-19 market environment and ask you to do some research in this area.

You are to identify two companies in one industry that perform well under COVID-19 investment environment. In your report,include the following:

Identify two or three good performance companies and justify the investment motivation for the industry and the companies (suggested words: 200 words)

Through research and review,identify key factors that could affect share performance for the companies in that industry (suggested words: 800 words)

Construct regression model(s) to examine the effect of different factors on share performance, i.e. CAPM, Fama and French three factors model and five factors model, or other models you develop.See some journals listed in the Assignment Support folder under Module (suggested words: 600 words)

Data introduction and sample statistics covering the most five recent years using daily data (suggested words: 200 words)

Discuss findings, including the following regression analysis areas: (suggested words: 1000 words)
Regression results and the economic meaning of key coefficients

Compare and contrast the two companies, i.e. performance and key factors
Examine multicollinearity
Examine heteroscedasticity
Examine autocorrelation
Examine model specification errors
Examine stationary/nonstationary
Examine cointegration
Discuss volatility

Conclusion and make recommendation to the investment manager (suggested words: 200 words)
Additional information:

Financial information can be obtained from the OSIRIS(Links to an external site.) (Links to an external site.) database accessible through the Anglia Ruskin University Library to an external site or via Stock Exchange, annual reports, official company website or other professional resources.
Data can be collected from finance.yahoo.com, i.e. book-to-market ratio, price-earnings ratio, market capitalization, P/E ratio, and any other criterion that interests you.

What contribution would be made to head office post-tax profit.

1. Calculate the following cross rates
The 8/F rate given 1.3874 $/€ and 110 F/$

The CHF/€ rate given 1.3874 $/8 and 0.9148 CHF/$

The €/f rate given 1.3874 $/€ and 1.1807 $/€

The AUD/CHF rate given 0.9151 CHF/$ and 1.3620 AUD/$

2. Given Forward Rate is CHF1.50/USD, iusn = 4.2%, icHF=0.4%, estimate the spot price today.

3. Suppose that the one-year interest rate is 3% in the United States, the spot exchange rate is $1.18/€, and the one-year forward exchange rate is $1.14/€. What should the one-year interest rate be in the euro zone?

4. Following quotations are available to you: (You may buy or sell at the stated rates.) Assume that you have an initial DEM 1 000 000 available. Is triangular arbitrage possible? If so, explain the steps and compute the profit. Lehman Brothers: 4.8600FRF/GRD Bear Stearns: 1.4200 DEM/GRD Bank of Scotland: 3.4400 FRF/DEM

5. The corporate tax rate for a company head office is 27%. The corporate tax rate for a subsidiary in Narnia is 20%. Narnia has a thin-cap. regulation that requires at least a third of funding for the subsidiary comes from equity. How would you fund the subsidiary from head-office?

6. Narnia has introduced a withholding tax of 15% on dividends (though not on interest payments). How would this change the optimum funding?

7. What contribution would be made to head office post-tax profit in question 6?

How will issuing more shares affect the capital structure of the company?

Mini-Case Analysis 1: Amazing Brentwood

1.Determine the value of the terminal loss or recapture at the end of the year.

2. What are the earnings before interest and taxes in the year 2018?

3. What is the after-. net profit for the year 2018?
The company planning to expand in the future. It is planning to open one more branch in the Greater Vancouver region. The shareholders, Board of Directors (800) and the managers may have a disagreement on its decision though.
4. What is the Asset turnover for the company?

5. Calculate the TIE ratio and also r.pond whether it is satisfactory or not?

6. How will issuing more shares affect the capital structure of the company?

7. What does the firo need to do to raise its ROE?
8. Calculate the profit margin ratio of the company and comment on the profitability performance of the numPacY.
What type of financial decision is the company making with the expansion?
10. The disagreement among the shareholders, BOO and the managers is popularly points. what in finance?

Explain the various financial statement(s) needed to calculate a business’s working capital and how each financial statement is used.

Working Capital Management
Overview Working capital management is critical to an organization’s ability to meet its short-term obligations. When proposing new projects or investment ideas for corporations, it is critical to consider working capital red flags such as excess credit use by the business or a low cash balance. Managing such issues early on can help corporations acquire a competitive advantage in the marketplace.
Prompt Using the business you selected for Project Two, complete the calculations for determining working capital, and describe their relevance in assessing financial health.
Specifically, you must address the following rubric criteria:
Financial Statement(s): Explain the various financial statement(s) needed to calculate a business’s working capital and how each financial statement is used. Provide examples to support your claims.
Working Capital’s Role: Discuss how effective working capital management supports a healthy business.
Working Capital Interpretation: Use the appropriate formula to calculate working capital, then discuss the business’s current financial liquidity position. o For example, does the business have sufficient working capital on hand to address bills to suppliers? Will there be potential cash inflow at the end of the year?
Working Capital Management Direction: Discuss the current direction of the business regarding working capital management.
Guidelines for Submission Your submission should be a 2 to 3-page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. Any sources should be cited according to APA style.

Explain how potential short-term financing sources could help the business raise needed funds to improve its financial health.

Financial Formulas
In preparation for your report in Project Two, you will need to calculate the financial ratios needed to determine your chosen business’s current financial health. Once you’ve calculated these ratios, the results will be used to analyze the business’s current financial position and help them make decisions about how to improve or maintain their financial health. Pay particular attention to working capital management. If liquidity is an issue, consider how the company will meet its short-term obligations.
Prompt Using the Project Two Financial Formulas spreadsheet and the balance sheet, income statement, and cash flow statement from Mergent Online for your chosen company, calculate the financial ratios for the most recent fiscal quarter. Then, compare those ratios with the same ratios for the same fiscal quarter from one year prior in Mergent Online, and analyze your results.
Specifically, you must address the following rubric criteria:
Financial Calculations: Calculate accurate financial ratios to assess the business’s current financial health. Specifically, calculate the following ratios: o Working capital o Current ratio o Debt ratio o Earnings per share o Price/earnings ratio o Total asset turnover ratio o Financial leverage o Net profit margin o Return on assets o Return on equity
Fiscal Quarter Comparison: Using Mergent Online, summarize the differences between the results from your financial calculations of the most recent fiscal quarter and the results of the same financial calculations of the same fiscal quarter from a year before for your chosen business. o For example, if the most recent fiscal quarter available is the 3rd quarter in 2020, then you will compare those results to the same financial calculations from the 3rd quarter in 2019.
Comparison Analysis: Explain what the results of your calculations and your comparison indicate about the business’s current financial health, providing examples to support your explanation.

You might consider the following questions:

Do the results indicate the business is financially healthy or financially unhealthy? Which results indicate this? o What might be the cause(s) of the business’s financial success or failure? o Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed?
Short-Term Financing: Explain how potential short-term financing sources could help the business raise needed funds to improve its financial health. Base your response on the business’s current financial information.