BASED ON THE LAST ASSIGNMENT BELOW; ( read below )
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1)
In today’s rapidly changing and competitive business world, it is in important to stay current with financial news and events. Visit a financial-related website like Forbes.com, CNNMoney.com, TheStreet.com, Bloomberg.com, or SmartMoney.com. These are suggested websites and you can select another one if you wish. Browse your chosen website and read at least two financial-related articles. Evaluate and summarize two articles and state what you learned. If you were discussing the article with a colleague, what three important points would you want to explain? How can knowledge of what you learned help you in your career?
2)
Go to the FINRA Bonds Quick Search (Links to an external site.) http://finra-markets.morningstar.com/BondCenter/Screener.jsp
Links to an external site.
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- Click the Corporate check box under Bond Type then click Show Results.
- Choose any bond.
Assume interest rates for bonds today is 5% for an AAA rated bond. Calculate the price of the bond you have selected relative to the 5%. Is the bond selling at a premium or a discount? Why? Be sure to show how you arrived at your answer. What other factors may influence the value of a bond?
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REPLY TO 6 OTHER ANSWERS.
QUESTION 1 HAS 3 RESPONSES AND QUESTION 2 HAS 3 RESPONSES!
FIRST 3 ANSWER, ” whether you agree or disagree with how they arrived at their answers. Are there any alternative financing options that may be even better?”
1)
stacey
This week we were asked to browse two articles about finance and summarize what we learned about it. In the first article, I chose one by forbes.com called why finance must put more than profit and loss under the microscope. In this article, it states that in today’s world finance is tasked to measure beyond revenue and cost data. “Finance has a much broader and more demanding set of stakeholders and a constantly evolving business landscape. This means that not only is measuring and reporting revenue and P&L increasingly difficult, it is also not a comprehensive method for understanding how the business generates top and bottom line results.” (why finance must put more than profit and loss under the microscope) since today markets are more driven towards service the focus is now on revenue. most traditional finance systems were not designed to capture more in-depth information that today needs to be looked at. In synopsis, if the right data is not collected from the very beginning then the information will not give the right analysis. The second article, I choose an article from bloomburg.com. the second article I found interesting is unintended consequences of mifid: job losses, trade turmoil. In this article I learned that with Europe’s new regulatory rules it could do more damage than good to the finances. “Aimed at making markets fairer and more transparent, the European Union’s revised Markets in Financial Instruments Directive impacts everything from how firms trade to how research
is distributed. Yet practitioners are concerned that the hundreds of pages of rules conceal problems that regulators never fully considered. “The bubble of MiFID II feels painful,” said Gerard Walsh, who heads up equities business development for Northern Trust Capital Markets in London. “It’s a bit like Britain all of a sudden changing to driving on the right-hand side. It will create disruption but eventually people will adapt.”‘ ( unintended consequences of mifid: job losses, trade turmoil)in the artcle it shows the negative side that can lose profits and it also shows the positives that can gain profits. It states that more of the data will be more in-depth and have more details to them. Globally, if Europe does this it could be very complicated and could cause less business in England and “Fund managers in the U.S. are considering pricing and assigning research costs internally, and disclosing those costs to clients, according to Amrish Ganatra at research payment-processing platform Commcise.”
If I was talking with a colleague three points I would state about the articles is that today finance does not just effect locally but now globally and much needs to be assessed meaning more detailed data information. Another point would be that with the growth of plans to help with finance there is many things to consider that could cause more problems then helping. And lastly, watching the markets and what is more in demand and how to balance that more things are service driven today and not a tangible market.
The knowledge of this can help my career by knowing more data can help redesign to keep the market going or to steer it to another direction. As one of my businesses is a service it can help me to understand how to best run my business to keep my finances balanced.
2)
jaime
The website I visited was CNNMoney.com, the articles I read are titled Chipotle still struggling – and queso may not save itand JCPenney nosedives to all-time low on big loss.
Starting with the Chipotle article. A few years ago Chipotle had an E.coli outbreak making many customers sick. The CDC declared the outbreak over in early 2016. However, Chipotle stock is down 20% so far this year and recently hit its lowest level since February 2013. Chipotle recently had to close a location in Dallas due to a rodent issue and in Virginia there was norovirus outbreak due to a sick employee coming to work. This has scared investors. The big question is what can Chipotle do to get back on track and attract customers and investors? Chipotle is now thinking of getting rid of their chorizo and adding queso to the menu but will this really fix Chipotle’s financial problems? Shares of many fast food chains are up whereas Chipotles continues to drop. If it continues to drop a takeover could be possible. Chipotle states they take food safety seriously and have hired a food safety expert. Investors however are losing patience with Chipotle and four Wall Street analysts have a sell rating on Chipotle stock.
JCPenney just announced that its stock has dropped more than 15% and is below $4 a share. The store lost $62 million in its second quarter. JCPenney along with other department stores are not able to compete against Amazon and Walmart resulting in a decline in sales. JCPenney announced it would be closing 138 stores and is planning on expanding its online operations to compete with Amazon and Walmart, along with added new products such as toys and appliances. JCPenney’s CFO recently stepped down and was replaced by Olive Garden’s former finance chief. Investors remain skeptical, stock has fallen more than 50% in 2017 so far and has plummeted over 85% in the past five years.
Both of these articles discuss business that are failing for one reason or another and what can be done to bring stock back up. Chipotle took a right step in hiring a food safety expert and they are taking necessary steps towards making sure all food is handled correctly and safely but they still have not won me back as a customer. They have had too many food borne illness outbreaks for me. JCPenney’s issues it that they are not keeping up with their competition. The retail industry has changed drastically. Many people shop online because it’s convenient and many times even cheaper. I don’t think that Chipotle and JCPenney are evaluating what is really the source of their finance problems. They need to discover why sales are falling and address that issue head on. Look at their competitors and see what it is they are doing that keeps sales up.
If talking to colleagues I would say that it’s important when stocks are dropping to determine why and come up with solutions to directly fix those problems. Look at other companies in your industry that are thriving to see why they are thriving and your business is not. Listen to your customers and investors.
This can be used in my career to make sure that the company I work for stays successful by paying attention to competition and if the company does start to struggle to work on different strategies to get it back on top.
LaMonica, P. (2017). Ch
The website I visited was CNNMoney.com, the articles I read are titled Chipotle still struggling – and queso may not save itand JCPenney nosedives to all-time low on big loss.
Starting with the Chipotle article. A few years ago Chipotle had an E.coli outbreak making many customers sick. The CDC declared the outbreak over in early 2016. However, Chipotle stock is down 20% so far this year and recently hit its lowest level since February 2013. Chipotle recently had to close a location in Dallas due to a rodent issue and in Virginia there was norovirus outbreak due to a sick employee coming to work. This has scared investors. The big question is what can Chipotle do to get back on track and attract customers and investors? Chipotle is now thinking of getting rid of their chorizo and adding queso to the menu but will this really fix Chipotle’s financial problems? Shares of many fast food chains are up whereas Chipotles continues to drop. If it continues to drop a takeover could be possible. Chipotle states they take food safety seriously and have hired a food safety expert. Investors however are losing patience with Chipotle and four Wall Street analysts have a sell rating on Chipotle stock.
JCPenney just announced that its stock has dropped more than 15% and is below $4 a share. The store lost $62 million in its second quarter. JCPenney along with other department stores are not able to compete against Amazon and Walmart resulting in a decline in sales. JCPenney announced it would be closing 138 stores and is planning on expanding its online operations to compete with Amazon and Walmart, along with added new products such as toys and appliances. JCPenney’s CFO recently stepped down and was replaced by Olive Garden’s former finance chief. Investors remain skeptical, stock has fallen more than 50% in 2017 so far and has plummeted over 85% in the past five years.
Both of these articles discuss business that are failing for one reason or another and what can be done to bring stock back up. Chipotle took a right step in hiring a food safety expert and they are taking necessary steps towards making sure all food is handled correctly and safely but they still have not won me back as a customer. They have had too many food borne illness outbreaks for me. JCPenney’s issues it that they are not keeping up with their competition. The retail industry has changed drastically. Many people shop online because it’s convenient and many times even cheaper. I don’t think that Chipotle and JCPenney are evaluating what is really the source of their finance problems. They need to discover why sales are falling and address that issue head on. Look at their competitors and see what it is they are doing that keeps sales up.
If talking to colleagues I would say that it’s important when stocks are dropping to determine why and come up with solutions to directly fix those problems. Look at other companies in your industry that are thriving to see why they are thriving and your business is not. Listen to your customers and investors.
This can be used in my career to make sure that the company I work for stays successful by paying attention to competition and if the company does start to struggle to work on different strategies to get it back on top.
3)
juan
For this week discussion 1, I went to TheStree.com and read 2 articles, the first article was in regard to Salesforce.com Inc., a cloud computing company founded in 1999, most of Salesforce revenue is generated from customer relationship management product, Salesforce.com Inc. also capitalizes on commercial applications of social networking through acquisition. Salesforce.com Inc. is one of the most highly valued American cloud computing companies. The name of the article is “Salesforce’s Profit Guidance Disappointed, but Its Sales Momentum Remains Strong”. The article talk about how Salesforce.com Inc. shares moved lower after delivering a fairly strong earnings report this summer that fell a little short of the high bar set by investors following a sizable 2017 rally. The company hiked its fiscal 2018 sales guidance by $100 million to $10.35 billion to $10.4 billion, up 23% to 24% year-over-year. It also reported July quarter (fiscal second quarter) revenue of $2.56 billion up 26% annually, which was slightly better than the April Quarter’s 25%. Tuesday shares fell 1.3% to $91.73 in after-hours trading, after having risen 1.3% to new highs in regular trading. However, they reversed course on Wednesday morning, trading slightly higher. They are up 37% in 2017. While management is disappointed that earnings reported are a little short than expected, they remain very optimistic because the company have shown steady increase from last year to this.
If I were discussing the article with a colleague the points that I would explains would be the second quarter revenues, second quarter cash flow and deferred revenue which are all up more than 26% from last year. I would also discuss what is causing the lack of margin guidance hike.
The second article I read was in regard to Waltmart. Waltmart have been trying very hard to find ways to increase its revenue and compete with Amazon. They recently made deals to deliver orders via Uber drivers and ship merchandise by way of Google’s digital assistant. Their goal is not only to compete with Amazon but also to defeat it. The writer (Sozzi Brian) suggest for Waltmart to merge with Microsoft. With Walmart’s global sourcing capabilities and store network attached on the technological beast that is Microsoft, the possibilities are unlimited. Both Waltmart and Microsoft have the pieces needed to take down Amazon if they combined them. The important points I would discuss with my colleague would be what Waltmart is offering in the merge, what Microsoft is offering in the merge and what Amazon is doing that we can do better.
NEXT 3 COMMENTS, ” by sharing your view of their conclusion. Are there any other factors that you can offer that may explain why the bond is selling at a premium or discount?”
4)
Mary
After viewing the video, Important Financial Documents, and reviewing our text, I was able to gain some basic understanding of how financial statements can be utilized for different purposes. I also am starting to see how these different documents like Cash Flow, Income Statement, and the Balance sheet all relate to each other. Based upon the video it appears they can be used independently of each other for some decision making or they can be used as a whole group for other financial decision making as well as communicating. The reason that these papers are important is because, ” they are the primary access with which the firm communicates with the varied stockholders “(Hickman, Byrd, & McPhersons, 2013). “Income statements show revenues and profits over a period of time the balance sheet it will show the company’s position at a certain point and time.” The Cash Flow Statement can communicate to the stock holders of a publicly held company where is all the money being spent. And they can then decide if management is spending the money wisely.
The statement of the cash flows is a numbers flow chart demonstrating how the company fills its bank account from sales, bank loans, investments, capital influx. On the lower part of the statement it becomes a picture is worth a thousand words. What did the company obtain by spending the cash. It can demonstrate company philosophy on where it feels investments should be made. It might show large amount being spent to pay off debt or it might show a company spending cash on hiring new people or putting in new computers. Financial managers use this financial statement becomes a key road map to how long it might take for a company to reach their long-term growth plan. It allows them to review if their historic spending is paying off in profits. “The Cash Flow Statement will show more accurate version of how the money is receive and how it will be paid out within the business. (Hickman Byrd & Pearson, 2013). And reviewing the statements, if the manger were to use the statement of cash flow, it would give him a better outlook of the current position of the company, so in the Article the basis of the accounting and the Revenues of the reported may not have been collected. So the same goes for the expenses that has not been actually paid for, it also stated that looking at this cash flow statement most all of the information has been considered when it was prepared. So in my opinion, the cash flow statement would be the most important document for the manger to use in order to make decisions.
5)
stacey
The company I choose to do bond on is 21 first century fox Amer inc. this is only a bbb+ for standard and poor ratings and the payment is semi- annual. the Coupon rate is set at 6.400%. (Maturity Date 12/15/2035. Since from now until 2035 is 18 years away. Being that I am assuming that the bond is 5 % for an aaa rated bond, the coupon rate would be 6.4%= 3.2% which yields a $32.00 semiannual coupon payment. To get this divide 6.4 by 2 then move the decimal over. (3.20*1000). the interest rate is expressed as 2.5% to be on the same level as the semiannual payment. The number of periods doubled to account for the semiannual payments as the maturity time is 18 years and 5 months estimates from today it would be 18.5*2.5= 46.25 periods.
PV= (coupon*(1-(1/(1+R)^m))/r))+(par value/(1+R)^M
(32.00*(1-(1/(1+1.025)^46.25))/.25))+(1000/1.025)^46.25
Price of bond = 1480.00 im horrible with algebra so im most likely wrong formulas are not my strong point. I understand everything else though.
I think I am close but being that this is sold over a par value then it is a premium according to the text. interest rates can cause the price to rise or fall as well as the length of the bond because the longer the maturity of the bond can affect the change in interest rates.
6)
Allen
The corporation bond that I chose was for Parker-Hannifin because I am nothing if not predictable. So, here are the variables and associated values:
Maturity Date: 5/15/2038 (in 21 years or 42 semiannual periods)
Coupon Rate: 6.250
Price: 134.265
Yield: 3.839%
Based on the directions, we are assuming the current interest rates for bonds is 5% for a AAA rating. We are assuming semiannual coupon payments.
The equation that I will be using is:
PV0 = (6.250%)(1-[1/(1+2.5%)42])/2.5% + 1000/(1+2.5%)42
PV0 = $356.098
Since $356.098 is less than the $1,000 par value, then that means that the bond is selling at a discount.
Other factors that can affect the value of a bond are prevailing interest rates which have the effect of lowering prices as the interest rates increase, as well as length of time to maturity has the tendency to decrease the time value if it is too long.
