Use our essay title generator to get ideas and recommendations instantly
.....company would expense the 1000 share options at $15 (1000 x $15 = $15,000), as this was fair market value at the time of expense, based on Black-Scholes (Harper, 2017). In 2014, the expense would be $3 per share option (1000 x $3 = $3,000), because that is the amount of increase in the value of the options that derives from the change in the exercise price.
The accounting for the awards would change after the options became fully vested, because the value of the options would no longer be based on Black-Scholes. Instead, the options would be based on the difference between the new exercise price and the old exercise price. After the options have vested, there is no longer any time value to the options, so an options model for pricing is no longer necessary -- they are just shares at that point because the employees no longer…
Executive Stock Option Plans
"If the company does not do better than its competitors, but the stock market goes up, executives do very well from their stock options. This makes no sense." Discuss viewpoint. Can you think of alternatives to the usual executive option plan that take the viewpoint into account?
Executive stock options are performance-based incentive plans that became popular in the 1950s and 1960s. They declined due to the stock market crash of the 1970s, but returned aggressively returned in the 1990s (Kole, 1997). Today, most companies grant stock options to their top officers as part of executive compensation, along with salary and bonuses. Options that are awarded as part of a compensation package can be very valuable to executives when stocks are performing well. The challenge comes in when stock value is realized for executives even when a company is not faring well at all. This is…
Cicero, D.C. (2009). The manipulation of executive stock option exercise strategies: Information timing and backdating. Journal of Finance, 64(6), 2627 -- 2663.
Collins, D.W., Gong, G., & Li, H. (2009). Corporate Governance and Backdating of Executive Stock Options. Contemporary Accounting Research, 26(2), 403-445.
Hamilton, S. And Wise, D. (2008). Adding performance criteria to your stock options. Hay Group. Retrieved from http://126.96.36.199/haygroupusmkting/e_article001162460.cfm.
Hess, D. (2012). More Stock Rewards Tied To Performance. Crain's New York Business, 28(31), 0015.
employee stock option pricing is effected by the bonus plan hypotheses as discussed in the Watts and Zimmerman article.
Employee stock option pricing is an option on the common stock of a company that is issued as a form of non-cash compensation. estrictions on the option (as for instance vesting and limited transferability) are ways in which the business attempts to align its own interests with those of the holder's interests. In the event of the company's stock rising, holders of options generally experience a direct financial benefit, which gives employees the incentive to behave in ways that will boost the company's stock price (Summa; web).
The management compensation hypothesis, otherwise known as the Bonus plan hypothesis accordingly states that managers whose incentives are tied up with the firm's accounting performance are more likely to use accounting choices that reduce reported profits and manipulate their accounting methods and records in…
Summa, J. employee stock options. Investopedia.
Watts, R. L & Zimmerman, J.L,"Towards a positive theory of the determination of accounting standards" The Accounting Review, January 1978, pp 112-34.
Value two call options, using two different option-pricing calculators, and/or pricing programs. The two calls you are to value are: Ticket Symbol (WFM)
The August 2014 $50.00 Whole Foods Call Option (50 is the Strike Price)
The January 2015 $50.00 Whole Foods Call Option (50 is the Strike Price)
The two models that were utilized are the Binomial and Black Scholes. The Binomial model is focused on looking at the option from a neutral perspective. This means that a series of valuations will be provided which are showing the potential prices movements. In this case of Whole Foods, the price of the stock must move up or down $1.10 to be able to realize a profit. ("Binomial Options Calculator," 2014) The Black Scholes model is designed to provide everyone with a better understanding of the possible valuations of the option. This takes place by looking at…
Binomial Options Calculator. (2014). Waikato. Retrieved from: http://www.management.waikato.ac.nz/kurt/frontpage/studentwork/danielchainov2003/bitree2.htm
Black Scholes Calculator. (2014). My Stock Options. Retrieved from: http://www.mystockoptions.com/bs2.cfm?ticker=&s=51.10&x=50&t=0.6&r=.05%25&v=25%25&calculat e=Calculate
Monte Carlo Options Calculator. (2014). Volatility Trading. Retrieved from: http://www.volatilitytrading.net/monte_carlo_option_calculator.htm
Option Pricer. (2014). Kluge. Retrieved from: http://kluge.in-chemnitz.de/tools/pricer/heston_price.php?filled=1&T=0.7&strike=50.00&barrier_down=&barrier_up=&rd=1.0005&rf=1.0375&spot=123.4&sigma_0=0.1197&sigma_a=0.108977&kappa=1.98937&xi=0.33147&rho=0.0258519&n_s=50&n_v=15&n_t=20
The purpose of this project was to gain experience in the area of options and futures trading. For the purposes of this project, the values were obtained from various sources. The dates covered were 2/11/2002 to 05/10/2002. The company chosen for this project was the TJX Corporation, Inc. which is in the Retail sector of the S & P. 500. It was chosen primarily because it has been showing a bullish trend for 5 years and would be a good example of bull market trading. The stock was compared to the S & P. 500 Index (Symbol SPX). The final portion of the project required the use of a futures commodity. I chose Corn (Symbol CO (e)). It has been bearish since February.
All tests were ran in a bull market environment. Various trading strategies were tested on this option. The methods tested were a ull market Strategy,…
Agribiz. Accessed through the Chicago Board of trade Website. Updated May, 2002. http://www.agribiz.com/cfor/accessed http://www.agribiz.com/cfor / Accessed May, 2002
Big Charts. Updated May 2002. http://www.bigcharts.com/javacharts/ . Accessed May, 2002.
Market Vector.com. Updated May, 2002. http://www.marketvector.com/stock-market/. Accessed May, 2002.
Nasdaq.com. Updated May, 2002. http://quotes.nasdaq.com/asp/option_chain.asp?symbol=SPX&selected=SPX. Accessed May, 2002.
The trader must pay the cost of the option ($5.00 x 100 shares = $500). The stick price starts to rise as expected and then stabilizes at $110: before the expiry date on the options contract, the trader can engage in a call option and purchase all the shares of the company's stock at $70, the strike price on the options agreement. The trader pays $7,000 for the stock and can sell the new stock on the market for $11,000, making a profit of $4,000.
Call vs. Put / Seller vs. Buyer
As this paper has already stated, options one the ability, without an obligation, to engage in a security at a set price within a particular time period. With a call option, the buyer has the right, though is not required to buy at a set quantity of a commodity or a financial instrument from a seller by a…
Diffen.com. (2013). Call Option vs. Put Option. Retrieved from Diffen.com: http://www.diffen.com/difference/Call_Option_vs_Put_Option
Dummies.com. (2013). Basic Strategies for Buying and Selling Puts in Stock Trading. Retrieved from Dummies.com: http://www.dummies.com/how-to/content/basic-strategies-for-buying-and-selling-puts-in-st.html
Fischer, J. (2010, May 21). Use Options to Protect, Hedge, and Gain. Retrieved from Fool.com: http://www.fool.com/investing/general/2010/05/21/use-options-to-protect-hedge-and-gain.aspx
Greg, G. (2011, December 20). When Is The Best Time To Sell Call Options? Retrieved from seekingalpha.com: http://seekingalpha.com/article/314918-when-is-the-best-time-to-sell-call-options
Raising Corporate Capital Issues
It appears fairly clear that the most advantageous means of raising capital for a corporation is to sell common stock. However, it is critical to realize that there are other things that a corporation must do in addition to selling common stock to make this method provide the degree of efficacy that the corporation desires. The reason that selling common stock can help to raise capital for the corporation is that it is possible to get many different people to invest in the company through this means. However, these individuals will tend to do so in greater numbers and in ways that continue to benefit the corporation if the company itself excels. Specifically, the company must simultaneously focus on its core business and keep abreast of its competition so that it can continue to generate revenue and, hopefully, provide the sort of profit margins that are…
It is expected that the bond will mirror the performance of the S & P. 500. ("Transaction History," 2010)
November 24, 2010
On November 24th several more new purchases would take place to include: General Motors, erkshire Hathaway, the Fidelity Immediate Government Fund and the Strategic Advisors Income Fund.
General Motors was selected, because it could help to provide the portfolio with above average growth. The results were that that stock would see an increase of 1.4%. ("Transaction History," 2010)
erkshire Hathaway was purchased to provide the portfolio with stability and diversification. This investment is expected to outperform the major market averages. The results were up .96%.( "Transaction History," 2010)
The Fidelity Intermediate Government Fund was selected because of their focus on medium term Treasury investments. This is expected to underperform the market averages. The results were that the position declined by 2.55%. ("Transaction History," 2010)
Account Details. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/summary.aspx
Ford Posts 68% Rise in Third Quarter Income. (2010). MSNBC. Retrieved from: http://www.msnbc.msn.com/id/39845528/ns/business-autos/
Transaction History. (2010). Stock Trak. Retrieved from: http://www.stocktrak.com/private/account/transactionhistory.aspx
Kavilanliz, P. (2010). Black Friday. CNN Money. Retrieved from: http://money.cnn.com/2010/11/27/news/economy/Black_friday_2010_sales/
In regard to the organizational structure, al-Mart Stores can be said to be organized by divisions. In this regard, we have al-Mart supercentres, Sam's Clubs etc. Currently, the company's president is Mr. Mike Duke. Other key management positions in the firm include the position of chief financial officer, vice chairman, chief executive officer-international operations, and chief executive officer- al-Mart U.S.. These key positions are currently held by Mr. Charles M. Holley Jr., Mr. Eduardo Castro-right, Mr. Doug McMillon and Mr. illiam S. Simon respectively.
"Stagnant ages, High Unemployment Slam al-Mart U.S. Sales: Domestic Sales at orld's Largest Retailer Post Two-Year Slump." (5/17/2011). (MSN n.p.)
Impact and Reason
In my own opinion, the news item above will bring about a decrease in the price of al-Mart's Store Stock. My reasoning in this case is that based on a decline in sales, investors will not be…
LaRocco. L. "Wal-Mart's Quiet Tax Haven." CNBC. N.p. Sept 23rd 2011. Web. 18th Oct 2011. http://www.cnbc.com/id/44627207
MSN. "Stagnant Wages, High Unemployment Slam Wal-Mart U.S. Sales: Domestic Sales at World's Largest Retailer Post Two-Year Slump (5/17/2011)." MSN. N.p. May 17th 2011. Web. 18th Oct 2011.
Rappeport, A. "Wal-Mart has First U.S. sales Rise in Two Years." Financial Times. N.p. Oct 12th 2011 Web. 18th Oct 2011.
Regardless of one's appetite for risk, it is essential that some diversification of assets is used to prevent 'losing' money by saving money in a bank account alone, although noninsured investments should not be concentrated on one area of the economy, to protect against potential losses.
Even in today's economic climate, investors should allocate some of their funds in safe, but higher-interest bearing sources. These might include certificates of deposits or CDs, which can be allocated into different accounts so the CDs mature at different times, to free up more of the saver's money. These safer investments may also include government bonds of stable governments and corporations, as well as preferred stock for companies that offer this option. Unlike CDs less than $250,000 in value, however, bonds and preferred stocks are not insured by the government.
The concept of the future value of money underlines the importance of saving in…
Real options valuation: KLM ailines flight options
The object of this pape is to delive a eal option valuation of an option on an ai ticket fom KLM Ailines. The pape consists of seveal pats: (i) a file explaining the poblem, the modeling choices and the solutions (ii) a table with calculations and; (iii) the conclusion.
The value of an options contact elies on a vaiety of diffeent vaiables. In addition to the value of the undelying asset itself, options ae extemely complex to value. Thee ae many picing models in cuent use, though all basically incopoate the concepts of moneyness, ational picing, put-call paity, option-time value.
Moneyness is a measue of the degee to which a deivative is likely to have positive monetay value at its expiation.
Rational picing is the assumption in economics that asset pices will eflect the abitage-fee pice of the asset as any…
references supporting the theory that option traders use much more robust hedging and pricing principles than the Black, Scholes and Merton model.
9. Triana, Pablo (2009). Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets?. Wiley. ISBN 9780470406755. The book takes a critical look at the Black, Scholes and Merton model.
10. KLM News Release, Nov. 12, 2010, Take an option on a flight, at, http://www.klm.com/travel/nl_en/about/news_press/travel_news/Take_an_option_on_a_flight.htm
11. KLM News Release, Feb. 9, 2011, Financial Year 2010-2011, http://www5.klm.com/corporate/en/newsroom/press-releases/archive-2011/financial-year-2010-11.html
12. Understanding Option Pricing, http://www.investopedia.com/ articles/optioninvestor/07/options_beat_market.asp
Employee Stock Ownership on Employees in the Airlines Industry since September 11th.
Review current materials on the issue.
Airline industry ESOPs tend to be very volatile.
This paper will examine the effects of the September 11th tragedy on employees' employee stock ownership plans in the airlines industry. The following generic information is provided for background before examining the main issue for this paper.
In the United States, the main vehicle for employee ownership in a company is the Employee Stock Ownership Plan (ESOP) which first became a recognized plan in 1974. There are between 17 and 20 million U.S. employees participating in large ESOPs or other contribution plans holding stock. Employees may own stock directly in their companies through stock purchase programs or be members of work cooperatives.
Studies find the employee ownership has a positive impact on performance even in adverse times. September 11th adversely affected the majority of…
Douglas Kruse, Ph.D. "Research Evidence on Prevalence and Effects of Employee Ownership. http://wwww.chrs.rutgers.edu.February 2002.
United Airlines. Form 10K. Securities and Exchange Commission.
Southwest Airlines. Form 10K. Securities and Exchange Commission.
Continental Airlines. Form 10K. Securities and Exchange Commission.
UnitedHealth Group Stock
This report will provide insight into the UnitedHealth Group Stock from an investor's perspective. The report will show a financial analysis included with an overview of the company's current health standing. The paper will also provide a summary of the company and their products and services. The key to any intelligent investing strategy lies in the investor knowing what a stock is really worth and also if it is safe to buy, sell or hold. Therefore, since this report is from an investor's perspective, the company's stock and industry will be reviewed so as to present a big picture of where United Health is today and where they want to go in the future.
Over the five past years the UnitedHealth Group stock has been making great progress as analysts consistently consider the group a strong buy option. As can be seen from the two…
UHC Home Page. Ed. UnitedHealthcare. UNH. http://www.uhc.com/ .
United Health Group Home Page. Ed. United Health Group. UnitedHealth Group. http://www.unitedhealthgroup.com/ .
UnitedHealth Group. Ed. Yahoo Finance. Yahoo Finance. http://finance.yahoo.com/q?s=UNH&d=t .
If you need to type anything after the Reference List then start it on this page
The reason that the subject lends itself to natural resources or real estate is that there will be some information available in those areas, making the valuation less difficult than in innovative areas.
The pessimistic approach is characterized by the divest/shrink option. When a firm is divesting or shrinking it can first scale down, which means that it can "shrink or shut down a project part way through if new information changes the expected payoffs;" this option lends itself to capital intensive industries or industries dealing with financial services (Mauboussin, 1999). ather than shutting down a project, a company can also choose to switch down, which involves switching "to more cost-effective and flexible assets as new information is obtained," and might be used in smaller companies, where the wholesale shut-down of a project could end a business (Mauboussin, 1999). The scope-down option is the mirror image of the above-mentioned scope-up…
Discounted cash flow- DCF. (2009). Retrieved February 2, 2009, from Investopedia.com.
Web site: http://www.investopedia.com/ terms/d/dcf.asp
Espinoza, R.D. And Luccioni, L.X. (2007). Simplified investment valuation model for projects with technical uncertainty and time to build. Retrieved February 1, 2009, from Real-Options.org. Web site: http://www.realoptions.org/Academic/espinoza_new.pdf
Giat, Y., Hackman, S., and Subramanian, a. (2007). Risk, uncertainty and optimism in venture capital relationships. (2007). Retrieved February 3, 2009, from Real-Options.org. Web site: http://www.realoptions.org/Academic/Subramanian_
By opening stock options to middle management and employees, it was assumed that better employee performance would be incentivized. As company stock prices go up, it creates a greater spread between the option price when it was granted to the employee and the hypothetical sale price at the end of the vesting period. Consistently better performance over a longer period of time would yield greater reward when the option is exercised. However, as Hall and Murphy again point out, "even if employees can increase the value of the firm, their share of that gain through their option holdings is very small. Combining this enormous free-rider problem with the risk imposed on employees through stock-based pay, it seems obvious that cash-based incentive plans based on objective or subjective performance measures can provide stronger and more efficient pay-performance incentives."
Despite many early statements in the life of the practice that employee stock…
Calomiris, C. a. (2004, 01-08). Options Pricing and Accounting Practice. Retrieved 12-13, 2010, from Should We Expense Stock Options: http://docs.google.com/viewer?a=v&q=cache:tDxxxPDG3cwJ:www0.gsb.columbia.edu/faculty/ccalomiris/papers/Options%2520Pricing%2520and%2520Accounting%2520Practice.pdf+Stock+options+are+an+expense&hl=en&gl=us&pid=bl&srcid=ADGEEShtdjeKitOxVfuENYIeyxgGdUiOjraoDHCLwH-WWxt9w30pnL310kAkP21iDHhBpErxlJ6mC_GQS6NEu7L3UGdc6T1ky33N1e7CFGL_NSZAn5ntALxB4KVgA2vjEiww911f6x4d&sig=AHIEtbRx6dSwLFzFHZnpHTpV0lsNIVpCYw
Core, J. a. (2001). Stock option plans for non-executive eployees. Journal of Financial Economics (61), 253-287.
Engel, E. a. (2001, Jan.). The Roles of Performance Measures and Monitoring in Annual Governance Decisions in Entrepreneurial Firms. Retrieved 12-13, 2010, from an Analysis of Executive Compensation, Ownership, and Control in Closely Held Firms: http://docs.google.com/viewer?a=v&q=cache:5vp-iWjpPb4J:faculty.chicagobooth.edu/ellen.engel/research/egh-rev-11_2.pdf+%E2%80%98%E2%80%98Stock-based+pay+in+new+economy+firms%E2%80%99%E2%80%99.+Journal+of+Accounting+and+Economics,&hl=en&gl=us&pid=bl&srcid=ADGEESifIyqUeDNwUoNkeDagDN_o40V-Jd9R56ECpswKKWzRQRdz_dZzpDHfcmTAKvZCDwZPpz9ZtR51HmXhCZ408jF-cv485C4m1xIxTy2zfTfQ4rp_g-4KFhIUdwKFVtmNCOWy82W5&sig=AHIEtbQapxbbbr0z-APPf2sdFQgWOYglLA
Glater, J. (2009, March 26). Stock Options Are Adjusted After Many Share Prices Fall. New York Times, p. B1.
While stock may be used instead of monetary motivation, management may inflate the value of these and gain more from employees with less investment. Furthermore, a buyback strategy may result in a negative external business image for the company when stock is later revealed to be of lower value than merited by the buyback price.
3. I believe that stock buybacks are indeed a strategy. A strategy can be defined as a plan of action to further the business advantage and image of a company. As seen above, while the strategy may be to the advantage or disadvantage of the investor, it is always used to the advantage of the company buying back stock. Some companies include this strategy as part of their yearly business plan and projections for the future. The disclosure of buying back strategies can also be used as a tool to encourage future investments. As such,…
According to the Miller-Modigliani Hypothesis, dividends do not affect value. This theory reasons that if a firm's investment policy doesn't change, the value of the firm cannot change with dividend policy. Therefore, investors should be indifferent to receiving either dividends or capital gains. but, the Miller-Modigliani Hypothesis has underlying assumptions that don't hold in the real work. It assumes there are no tax differences between dividends and capital gains and that companies do not use the excess cash they have as result of not paying the dividends for bad projects or acquisitions (Dividend policy). As these situations occur, there are distinct advantages and disadvantages of dividends
3.1 Advantages of Dividends
Stockholders may value regular cash payments that dividends offer and many may not face the tax disadvantages of dividends (discussed in the next session of this paper). and, unlike volatile stock prices firms generally do not change their…
Buybacks vs. dividends (2006, February 2). Nightly Business Report. http://www.pbs.org/nbr/site/onair/transcripts/060202c/
Dividend policy. http://pages.stern.nyu.edu/~adamodar/New_Home_Page/lectures/dividend.html
Hughes, C. And O'Doherty, J. (2007, February 22). Companies put faith in buy-backs and special dividends. Financial Times, p. 22.
If I own Apple stock and I feel that there is significant risk that the stock might decline in the next few months, there are a few different option strategies that might help to address this situation. Some strategies actively seek to protect value, while other strategies are more in line with trying to capitalize on the expected downturn in the value of the stock. The current price of Apple stock is $604.71. For the examples, it will be assumed that there are transaction costs.
The first strategy to try to protect some value for the stock is to purchase a put option. The put option gives the holder of the put the option of selling the stock at a certain price. Let's say that we want to protect this portfolio at $575.00. To buy a put on Apple at $575 will cost $12.75 for an August 16th expiry.…
Investopedia. (2014). Protective put. Investopedia. Retrieved May 20, 2014 from http://www.investopedia.com/ terms/p/protective-put.asp
Yates, L. (2014). Covered writing -- A way to reduce risk? Discover Options. Retrieved May 20, 2014 from https://discoveroptions.com/mixed/content/education/articles/coveredwriting.html
s explained by Professor Watkins at San Jose State University, the binomial option pricing model is when a stock price over some period is presumed to go up by a certain percent or down by a certain percent. This leads to a formula whereby the current stock price is multiplied times one plus the percentage it could go down and then the same formula is done for the percentage it could go up. If a call option is in play or if the stock has interest that is risk-free, then the formula gets a little more complex (Watkins, 2014). Risk-neutral option pricing relies on something known as arbitrage. In this instance, all future outcomes are adjusted for risk and the expected asset values that results are calculated thusly. Once that is done, every asset can be priced accordingly. This is not the same thing as true real-world risk…
As with other parts of doing business and the wants of all the stakeholders and investors involved, the agency problem is when the differing objectives and desired outcomes of the stakeholders and investors lead to business decisions that fail to properly and sufficiently maximize value. Not unlike situations where money is tugged between dividend payments and more investing in the business, an agency problem creates issues with mergers as the price a business is sold or bought for has a major effect on the motives and perspectives of the people involved. One academic theory that relates to this subject points out that perceived or stated value up front before a merger is approved and executed can differ greatly from the verifiable or perceived value found after the fact. Further, it is shown that managerial behavior by bidding companies is promoting of mergers that are excessive and managerial behavior in target firms tends to manifest in the opposite way. In short, the collusion and behavior of buying and selling firms leads to an improper price being paid for a firm and this can be either a boon or a bust for the buying firm (Caves, 1989).
Caves, R. (1989). Mergers, takeovers, and economic efficiency: Foresight vs. hindsight.
International Journal of Industrial Organization, 7(1), 151-174.
When the market crashes, turns bearish, or severely corrects, investors not only lose objective things such as money, they also lose the sustaining functions of which the investing process (and/or money, which may psychologically represent self-esteem, independence, power, etc.) has been the source. That means, in addition to objectively not having the money to buy that new house or car, self-esteem drops, and the investors capacity to calm themselves down is diminished, motivation wanes, confidence is shaken, and vitality ebbs. A down market represents an injury to our total sense of self and all the functions that sustain it. In a general way it represents a hope or fantasy lost.
For the young investor, with a large amount of earning power remaining in his life, the ups and downs of the market are small obstacles to the long-term objective of amassing a financial nest egg on which to…
Block Sandra. Stable value funds low-cost, reliable investments., USA Today, 11-30-1998, pp 20A.
McEwen David, Best to find out your risk tolerance., The Daily News (Taranaki, New Zealand), 10-08-2001, pp 6.
Luke, Robert. Staff, Step 1: Investors should evaluate tolerance for risk Finance professor's quiz helps determine the asset allocation each individual is most comfortable with.., The Atlanta Journal and Constitution, 04-03-2000, pp S26.
eal Options Valuation
Market investors often carry out their research in a sell side or buy side method. Sell side carry out their investment research to enable them satisfy buy side customers. They carry out this research to generate business or reach the goal of generating transactions. The buy side follows the prospective of banking customers as away of attracting new customers and a service to past customers. Sell side firms sell IPO's and services to the buy side companies.
Buy side and sell side
Buy side reports produced in house consumption are used by colleagues to the analyst. These colleagues can be corporate development executives and development and portfolio managers. Sell-side reports done by firm analysts are vastly distributed than the buy side reports. Sell side reports should be clear because of their wide distribution, while by side reports should be simple and brief because company's management uses them.…
Albrran, B.S. (2009). Handbook Of Media Management Aand Economics. Atlanta: Routledge.
Amram, M. (2002). Value Sweep. Atlanta: Havard Business Press.
Hook, C. (2010). Security Analysis And Business Valuation On Wall Street. New York: John Willey and Sons.
Marion, A. (2003). Real Options In Practice. New York: John Willey and Sons.
Since inception, the Amex Composite Index has shown an increase of 57.3%, as compared to the NASDAQ Composite's gain of 26.6%, the S&P 500's gain of 7.1%, and the NYSE composite's gain of 14.3% (American Stock Exchange).
Values and volumes of stocks and options at the AMEX are significant. Closing values as of 10/11/2004 at 5:07 PM ET show significant activity. As of this date, the total volume was 44,288,030, with 1,359 block trades. Total options volume was 576,653, and bond volume was 102,000 (American Stock Exchange).
Like other stock exchanges, the AMEX is run by a number of officials. Officers of the AMEX include Chairman and Chief Executive Officer SALVATOE F. SODANO, the President Peter Quick, Executive Vice President alph . afaniello, and Chief Financial Officer and Controller MICHAEL T. D'EMIC. The AMEX also has a Board of Governors, trustees, a nominating committee, exchange officials, floor officials and a…
American Stock Exchange.
Welcome to the American Stock Exchange, 2004. 11 October 2004. http://www.amex.com/
CCH Incorporated. American Stock Exchange (AMEX), 2004. 11 October 2004. http://wallstreet.cch.com/AmericanStockExchangeAMEX/
Investorwords.com. American Stock Exchange. WebFinance, Inc., 2004. 11 October 2004. http://www.investorwords.com/197/American_Stock_Exchange.html
Brazilian tock Market's operation and its strategy for expansion.
Use eight sources of information.
The BOVEPA plays an integral role in the economics of Brazil and the Latin American stock market system.
Brazilian tock Market
The Brazilian tock Market, better known as BOVEPA, the an Paulo tock Exchange was originally founded in 1890 and since then has provided services to the financial market and the Brazilian economy. Initially, BOVEPA and the other Brazilian exchanges came under the state government.
However, all that changed in 1965, when the Brazilian financial system and the capital markets became non-profit self-regulating institutions. The 1960 led to changes in the BOVEPA that has improved the quality of service and upgraded the technology platform making it more user friendly for investors.
The BOVEPA also implemented automated trading software using real-time trades via a computer network. This was an instrumental factor in introducing the options market…
http://www.bovespa.com.Background -- the Organization. http://www.bovespa.com.Background-Operating Structure. http://www.bovespa.com.Background-Markets and Indexes. http://www.bovespa.com.Background-Securities Traded. http://www.bovespa.com.The Organization-Self-Regulation. http://www.forbes.com ."Brazil Currency Steady, Stocks Rebound." Todd Benson. May 2003 http://www.citycomment.com."Brazilian Mega Deals." Anne McIvor. August 2002. http://www.bovespa.com.Background Page.
(Dow Jones and Company, 2009). The DJIA can be used in three principal ways: as a yardstick, as a barometer, or as an investment.
When the DJIA is used as a yardstick, the goal is to measure performance from one period of time to another:
The most common use of an index by investors is to evaluate the performance of their own portfolios on a monthly or quarterly basis. This is the "benchmark" function of an index, and it constitutes the bogey that many investors try to beat with individual stock picks or with mutual funds. There is no official benchmark for the stock market. Each investor chooses his or her own. The only logical requirement is that the benchmark chosen should represent the part of the stock market that is targeted by the investor's portfolio. For example, if the investor dabbles in large stocks from a variety of industries,…
H.J. Heinz Co. 2009. Shareholder Information. H.J. Heinz Company. Available from:
http://heinz.com/our-company/investor-relations/shareholder-information.aspx [August 28, 2009].
Dow Jones and Company. 2009. About the Averages: Overview. New York: Dow Jones and Company. Available from: http://www.djaverages.com/?view=about&page=overview [August 28, 2009].
E*Trade Financial Corp. 2009. Pricing. E*Trade Financial Corp. Available from:
As with any of the big questions worth asking, there is no easy answer to whether the stock market is rigged. The real answer is both yes and no. On the one hand, the market has rules and regulations, oversight boards like the Securities and Exchange Commission, and is open for all investors to participate in on a potentially equal basis. On the other hand, the way the market works is clearly “unfair,” as Tepper puts it (1). Unfairness is built into the system because the actual point of sale is not something the ordinary investor is privy to—meaning the price of stocks is not a true reflection of investor supply and demand. This inherent unfairness built into the process of the stock market is why maverick developers like Brad Katsuyama has developed the IEX (Tepper 1). Abraham points out other reasons why the stock market methodologies remain unfair, “rigged,”…
One of the most significant factors in the decision to invest in ICICI Bank is to determine the affects of recent capital expenditure and the anticipated return for these investments. Entry into microfinancing represents a considerable amount to risk, due to the financial instability of the target market. The following chart highlights the most significant changes affecting the financial health of ICICI bank that result from expenditures associated with entry into the rural finance venture. It compares key indicators and explains the effects of ICICI's most recent changes to their banking strategy.
Income Statement for years 2003-2006 (in millions USD)
Cost of evenue
Balance Sheet for years 2003-2006 (in millions USD)
Cash Flow for years 2003-2006 (in millions USD)
Net Cash Flows Investing
Net Cash Flows Financing
Net Cash Flow
Data Source: Nasdaq.com (2007).
Das, K. (2006). India's ICICI Bank Targets 25 Million New Rural Customers. Innovations in Emerging Markets. Retrieved May 3, 2007 at http://ifcblog.ifc.org/emergingmarketsifc/2006/11/indias_icici_ba.html .
Domash, H. (2007). The Basics: 10 growth stocks that can't be stopped. Moneycentral. Retrieved May 3, 2007 at http://moneycentral.msn.com/content/Investing/Simplestrategies/P109819.asp
Jubak, J. (2006). 10 top stock picks for 2007. Jubak's Journal. Retrieved May 3, 2007 from: http://articles.moneycentral.msn.com/Investing/JubaksJournal/10TopStockPicksFor2007.aspx .
Nasdaq.com (2007). ICIC Bank. Infoquotes. Retrieved May 3, 2007 at http://www.nasdaq.com/reference/glossary.stm#EPS
Telephone, wireless, and internet communications is becoming increasingly critical to simply live and function in modern society and commerce. However, the volatility of the industry might make certain aspects of investing in any telecommunications company dicey -- competition is likely to be fierce in upcoming years, and also a new form of technology developed by a rival company might weaken at&T's competitive edge. Not even the most perfect formula can predict changes in technology or a new regulatory environment that may affect the price of a stock.
In the short-term, at&T looks strong, making it a good bankable retirement stock, although its price is quite high. A wealthy investor like Beebee with money to burn might want to select a slightly more risky company, meaning that it might not be the best choice for him. Also, Beebee seems to have a guaranteed income not based in investments at all, but…
Derivatives Explained." Financial Pipeline. Retrieved 18 Nov 2007 at http://www.finpipe.com/derivatives2.htm
Preferred vs. Common Stock." Created by Ameritrade in 1999. Updated in 2003. Retrieved 18 Nov 2007 at http://www.ameritradefinancial.com/educationv2/fhtml/stocksfunds/prevscom.fhtml#overview_preferred
Company treasurer option strategies developed due future foreign currency transactions occur contract Italian high-tech firm finalized. The treasurer construct a memo hedging strategies including a bull spread, a butterfly spread, and a ratio spread.
Memo: Options spreads
egarding the recently-negotiated contract with Company X, one of the most important issues to consider is how to mitigate our risk as a company. Given that Company X is based in Italy, the economic instability of the European Community (particularly its Southern European countries) and the Euro is of paramount concern. A bull spread would likely be unsuitable given that it is "used by option traders who believe that the price of the underlying security will remain stable in the near-term but will eventually rise in the long-term" (Bull spread, 2013, The Options Guide). Neither of these are likely scenarios to be characteristic of the firm given that it is located…
Bull spread. (2013). The Options Guide. Retrieved:
Butterfly spread. (2013). The Options Guide. Retrieved:
Even if Bristol-Squib Meyers is not directly implicated in all of the cases surrounding this issue, fears about the over all health of the industry will affect stock prices. And finally, there is increased consumer outrage about drug costs and pressure to change current regulations about providing effective health care to Americans. Whatever the long-term impact upon the industry, the government is likely to have to devote considerable resources to health care reform in the near future. Changes in regulation, whatever they are, will make pharmaceutical stocks very volatile for the next 5-7 years.
Finally, the particularly negative publicity surrounding ImClone, justified or not, will negatively impact stock prices for all of the companies connected to the scandal, and Bristol must struggle and devote valuable corporate resources to generate positive media coverage to regain its faltering ethical reputation in the eyes of investors…
Real Options Analysis
Companies resort to capital budgeting in the process of taking decisions with regard to making long-term investments. The projects involving capital budgeting are chosen by the companies in terms of expected generation of cash flows. Since profitability is the main criterion for long-term investments of the companies the strategic decisions with regard to the long-term investments involves a cost-benefit analysis in terms of cost of investments and expected generation of cash flows over the period of time. Emphasis is being laid on the concepts of Net Present Value and Internal Rate of Return etc. To assess the benefits of long-term investments against the cost of capital invested. The cost of capital of a firm signifies towards the cost of obtaining of capital by the firm that is used for long-term investments. Generally the firms define economic profit as the operating profit excluding the tax and cost of…
Dynamic strategic planning Evaluation of Real options" Retrieved at http://msl1.mit.edu/mib/dsp/curricula.mit.edu/~dsplan/Docs/Sessions/S70/s70.pdf. Accessed on 19 May, 2004
Eckersley, Peter. Regional Economist, Bunbury. "Budgeting and decision-making techniques" Retrieved at http://agspsrv34.agric.wa.gov.au/agency/pubns/farmnote/1993/F06393.htm. Accessed on 19 May, 2004
Net Present Value and Other Investment Criteria" Retrieved at http://www.webster.edu/~charngil/chapter%208.pdf . Accessed on 19 May, 2004
Phelan, Steven E. "The Role of Strategic Thinking in the Analysis of Hard Investment Evaluation Problems" Retrieved at http://www.aom.pace.edu/bps/Papers/ifsam.html. Accessed on 19 May, 2004
Leasing and Purchasing are two major options available to most of the organizations when it comes to acquisition of fixed assets especially capital resources. At the same time these decisions are tricky to be made and therefore require that not only quantitative but also qualitative factors are taken into account.
Arrowvale Electronics is one of the leading Electronics manufacturer and Electronic solution provider in the United Kingdom. The company is located in Worcestershire and was established in 1985. Since then it has seen a phenomenal growth in the electronics industry. Arrowvale offers a broad spectrum of services. It holds an outstanding track record with respect to providing rail safety equipment. The company manufactures a wide range of electronic products including Printed Circuit Board Assembly, Loom and Wiring Harnesses, Pneumatic Assembly, Global Positioning Systems and Driver's Safety Devices.
Arrowvale's electronic products are manufactured under strict assurance of quality management and efficiency.…
Arrowvale Electronics (n.d.). Manufacturing overview. Retrieved from http://www.arrowvale.co.uk/electronic-services/manufacturing-overview
Arrowvale Electronics. (n.d.). Electronic Services. Retrieved from http://www.arrowvale.co.uk/electronic-services
Arrowvale Electronics. (n.d.). Our company. Retrieved from http://www.arrowvale.co.uk/about-us
Arrowvale Electronics. (n.d.). Rail. Retrieved from http://www.arrowvale.co.uk/rail
Accounting is a common function in virtually every organization, irrespective of size and industry/sector of operation. The function is generally concerned with documenting business transactions and preparing financial statements. The accounting field offers numerous career paths. These include financial accounting, managerial accounting, internal auditing, tax accounting, financial analysis, payroll clerking, and forensic accounting (Bureau of Labor Statistics [BLS], 2015; American Institute of Certified Public Accountants [AICPA], 2017). Though related, each of these careers is unique in its own way. A financial accountant is involved in making and receiving payments, recording transactions, and preparing financial statements. Closely related to financial accounting is managerial accounting. While a financial accountant prepares financial statements for use by outsiders such as shareholders and lenders, a managerial accountant prepares financial records for internal use. The work of a payroll clerk is to ensure employees are paid accurately and on time. The clerk prepares, processes,…
Stocks and Bonds Basics
There are a number of different types of bonds that are existent. These bonds are typically redeemable in different ways and for different types of value. For instance, a convertible bond is the type that one can redeem for stock options at various prices (Yamam, 2014, p. 63). The number of stock options for which it can be redeemed varies, which affects the valuation of the bond. Another type of bond is a pure discount bond, which must mature before it can be redeemed for cash. Once such a bond does mature, however, it is always redeemable for its face value -- which certainly contributes to the factors for the valuation of this variety of bond. Other types of bonds include a callable bond. This bond enables the entity that has disseminated the bond to buy it back. However, the bond issuer can only repurchase this…
Newton, H. (2015). Common stock. Research Starters. Retrieved from http://eds.a.ebscohost.com.library.gcu.edu:2048/eds/detail/detail?sid=4e161b6e-158e-49b5-ab52-f46b3758794f%40sessionmgr4001&vid=4&hid=4108&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d#AN=89163588&db=ers
Yamam, D. (2014). Does the sequence of convertible bonds matter? Journal of Finance, Accounting & Management. 5(1), 63-87.
Derivatives are defined as the investment products derived from or dependent on the underlying assets. The derivatives are the contracts between two or more parties with reference to the underlying assets, and its value depends on the fluctuations of the assets. Most common type of underlying assets are bonds, stocks, currencies, commodities, market indexes, and interest rates.
The objective of this paper is to explore the concept derivatives and evaluate the future markets and options markets.
Advantages and disadvantages of the Futures Markets and Options Markets
Future markets and options markets are the derivatives instruments that derive their values from instruments or assets. Both options and futures have their advantages and disadvantages. An advantage of an option contract is its ability to provide buyers or sellers the right to buy or sell a financial instrument or asset at a fixed price. The method assists buyers to limit their…
John C. H. (2011). Options, Futures and Other Derivatives (8th ed.). Harlow: Pearson Education.
Sohnke, M. Bartram; Brown, Gregory W.; Conrad, Jennifer C. (2011). The Effects of Derivatives on Firm Risk and Value. Journal of Financial and Quantitative Analysis. 46 (4): 967 -- 999.
JOHN DEEE & COMPANY
This analysis of John Deere presents the external and internal analysis of the company including a SWOT analysis of the company. This analysis is then used to discuss informed strategic options and recommendations for John Deere.
The external analysis of John Deere includes the history of the agricultural industry, sources of competitive rivalry in the industry, and a PESTEL analysis of the agricultural and construction equipment industry. This section also presents the external factors (opportunities and threats) for John Deere.
The internal analysis of John Deere is based on the company's internal factors (strengths and weaknesses). It presents a brief overview of recent issues that are facing the company and how the company has reacted to them. It is a functional analysis of the internal activities of John Deere - operation, administration, finance, and marketing.
Strategic options and recommendations
This section is informed by…
Agarwal, V., & Taffler, R. (2008). Does Financial Distress Risk Drive the Momentum Anomaly? Financial Management, 37(3), 461-484. doi: 10.2307/20486664
Bloomsberg Businessweek. (2014). Deere & co (DE:New York Consolidated). Retrieved October 2nd, 2014, from http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=DE
Caballero, R.J., & Krishnamurthy, A. (2009). Global Imbalances and Financial Fragility. The American Economic Review, 99(2), 584-588. doi: 10.2307/25592462
Financial Innovation: Too Much or Too Little? (2012). The MIT Press.
ith the health food trend in full gear, Amplify Snack Brands, Inc. (BETR) is a perfect stock for one's portfolio. Q1 2016 Earnings showed a "net income increased 71.3% to $8.4 million, or $0.11 per share, compared to $4.9 million, or $0.07 per share a year ago" ("Earnings Reported After the Bell May 2"). Sales were up over 20% compared to the same quarter the year previous and the company slightly beat analysts' expectations. Growth for the company looks positive with analysts expecting yearly revenues to report a "net income of $.062 per share" ("Earnings Reported After the Bell May 2").
Thus, from January to May 2016, BETR has been on a tear, breaking out of its range bound trading from January to March after the 2015 earnings report. The stock soared from $11 to $16 from mid-March to May with considerable volume buoying the stock over the 2…
"Earnings Reported After the Bell May 2." Nasdaq, 2016. Web. 4 May 2016.
Durden, Tyler. " 'Nothing Has Been Fixed' -- Citi's Five Reasons Why This Sucker Is
Going Down." ZeroHedge, 2016. Web. 4 May 2016.
"Insider Transactions." Yahoo! Finance, 2016. Web. 4 May 2016.
For AAPL, on June 20th, 2016, I sold 50 Jun17 90.00 -- to open for a total of $59,750. On, July 6, 2016, I bought them back to close at 11.55 for a total of $57,750 -- for a total gain of $2,000 minus $65 for commissions/fees.
For MSFT, on the same dates, I bought 200 Jun17 50 calls at 4.70 to open for a total of $94,000 and sold to close 200 Jun17 50 calls at 5.15 for a total of $103,000.00. Total gains on this trade were $9,000 minus $228 in commissions/fees.
For CHK, on the same dates, I sold 300 Jan17 4.50 calls at 1.15 for a total of $34,500 and bought to close 300 Jan17 calls at 1.03 for a total of $30,900. Total gains on this trade were $3,400 minus $335 in commissions/fees.
For XOM, on the same dates, I bought 200 Jun17 92.50…
Popper, Nathaniel. "The first big company to say it's serving the legal marijuana trade?
Microsoft. Wall Street Journal, 16 June 2016. Web. 21 June 2016.
Yan, Sophia; Petroff, Alanna. "European stocks sink and pound tumbles over Brexit fallout." CNN Money. 6 July 2016. Web. 6 July 2016.
Figure 1. AAPL trade.
Equities and Energy Options
The trades executed are for long MSFT, short AAPL in tech; long XOM and short CHK in energy. These trades are based on both sector sentiment and fundamentals. MSFT appears to be in an outperform trend while AAPL is poised to underperformed following poor sales data in China, slowing down of growth.
In energy, the price of oil is a big factor in any stock's performance and with crude hitting a ceiling at $50, it will not be good for companies like CHK which are overwhelmed by debt and need oil prices to be higher in order to maintain any kind of leverage. XOM on the other hand is in an outperform trend which looks to continue as it nears a deal with Russia to deliver gas to China and as the company continues to invest along these lines, giving it an outlet should oil prices…
Ausick, Paul. "Exxon Adds $45 Billion to Market Cap." 24/7 Wall St., 20 June 2016.
Web. 21 June 2016.
Cherney, Mike. "Apple to issue $10 billion to $12 billion of bonds to finance share buybacks, dividends." Wall Street Journal, 16 Feb 2016. Web. 21 June 2016.
Gomez, Amanda. "Here's Why Chesapeake Energy (CHK) Stock is Falling Today."
The first component is as follows: Net Margin = Net Income/Sales. How much profit Abbott laboratories makes for very $1.00 it generates in revenue, and the higher a company's profit margin the better. The second component is as follows: Asset Turnover = Sales/Total Assets. The amount of sales generated for every dollar's worth of assets. This measures Abbott's efficiency at using assets, and again, the higher the number the better. The final factor of the Du Pont analysis is as follows: Leverage Factor = Total Assets/Shareholder's Equity. The higher the number, the more debt the company has. Abbott's Du Pont analysis is computed using the following equation:
In this case, for the end of 2006, Abbott Laboratories reported a net income of $717 million dollars, sales of $22,476 million, total assets for 2006 of $36, 178 million, and equity of $14,054 for 2006. Placing these figures into the equation above…
Abbott. (2007). About the Company. Retrieved November 9, 2007 at http://www.abbott.com .
Epsicom. (2007). Abbott Medical Device Company Intelligence Report. Retrieved November 9, 2007 at http://www.piribo.com/publications/medical_devices/companies/abbott_medical_device_company_intelligence_report.html .
McKinnell, H. (2003). Performance Report. Bayer AG 2003 Annual Review: 1-30.
Rogers, M. (2003). Risk Management in Real Options-Based Pharmaceutical
Stock Market Investing
Stock market investing is not new to me. In fact, I plan to invest in the stock market in future because I have adopted the overly cautious investment approach for too long. It is now time for me to move into risky investments that will help me cash after a large fall. However, I will be risking making a temporary loss to be permanent. The global direction taken by many stock market investors is one showing relentless efforts: their continual rise is valuable over a long time. It is also punctuated by regular or even very significant falls. The rule displayed by the stock market is that it rises, falls and recovers one-third of the time.
For me, investing will mean looking at the different asset classes available to enable me to spread the loss because long-term investment in the stock market means that they are like…
Black-Scholes and Binomial Models
The variables that impact the pricing of options consist of the following basic factors: the underlying stock price, the strike price of the option, the time until expiration of the option, volatility, interest rates, and dividends (Folger, 2015). However, how these factors are perceived differs according to the model used to gauge the value of the option. The Black-Scholes model and the binomial model differ in their approach to valuing options.
The Black-Scholes model was developed for European put and call options and makes certain assumptions -- namely, that the option cannot be exercised early, that dividends are not a factor (though an ex-dividend addendum to the model has been produced in more recent years), that there are no commission fees involved, that volatility is constant and that the underlying's returns are normally distributed.
The Binomial Model also makes some assumptions -- namely that the market…
Damodaran, A. (2012). Investment Valuation. NY: John Wiley and Sons.
Folger, J. (2015). Options Pricing: Factors that influence option price. Investopedia.
Retrieved from http://www.investopedia.com/ university/options-pricing/option-price-influence.asp
In situations where outcome or decision control is ceded to a legitimate decision-maker, the available legal procedure may be judged according to whether it provides adequate 'voice' for the aggrieved, adequate process control, and/or the satisfaction of being respected and afforded an appropriate level of procedural justice as a litigant, defendant or citizen.
In any event, continued dialogue between lawyers and psychologists from both types of system is encouraging. To this end, van Koppen and Penrod (2003) have collected legal psychological analyses of American and European criminal justice procedure together in a recent volume allowing comparisons between adversarial and inquisitorial mentalities.(n10) If this type of work continues, we may better understand when each type of process works best and when people, be they socialised in Australia, America, England or continental Europe, react best to adversarial or inquisitorial systems of legal decision-making in particular contexts.
In many jurisdictions, the approaches of…
Balmford, R. 'The Life of the Administrative Appeals Tribunal: Logic or Experience' in R. Creyke (ed) Administrative Tribunals: Taking Stock (Canberra: Centre for International and Public Law, 1992) 50, 68-71
Bronitt, Simon; Mares, Henry. 2004. The history and theory of the Adversarial and Inquisitorial systems of law. (cover story). Legaldate (3): 1-3.
Lind EA et al. 1978. Reactions To Procedural Models For Adjudicative Conflict Resolution: A Cross-National Study. Journal of Conflict Resolution 22: 318.
Nolan, Mark. 2004. The Adversarial mentality vs. The Inquisitorial mentality. Legaldate 16 (3): 7.
stock options and benefits and flexible benefits. It determines that stock options and benefits, tied directly to organizational performance, are good for the organization, however, they may have been a contributing factor to recent corporate scandals. And, the paper will discuss how my organization utilizes flexible benefits, and the rewards the organization has reaped, as such.
Incentive Conflicts and Contracts
Stock options and bonuses tied to company performance are effective in motivating executives to work for the good of the organization. It allows these employees to "participate from an equity point-of-view" (oberts, 1999). This tie with the employee financial incentive to organizational success is now not only a perk top-level management receives, but is also increasingly being offered to employees at all levels within the organization.
This inclusion of all employees is a strong strategic move for many organizations. As Tony Plath, a professor of banking and corporate finance at…
Flexible benefits -- case study: Figuring out how successful flex is. (2005, Mar. 2). Employee Benefits. Retrieved March 10, 2005, from InfoTrac OneFile database.
Roberts, T. (1999, Mar. 19). Stock options motivate, reward more employees. The Business Journal Serving Charlotte and the Metropolitan Area, 13(51). Retrieved March 10, 2005, from InfoTrac OneFile database.
This is significant because it shows how some critics of contrarian investing will often point to the various instances of speculation and assume that it is contrarian investing. In some cases the psychology of consumers can become so extreme, that the definition of what is speculative expands greatly. As a result, using contrarian investing in conjunction with other indicators / tools can help prudent investors and traders, be able to identify when the market condition are becoming more extreme.
Contrarian Indicators and Tools
When using the different contrarian indicators / tools in conjunction with one another, you can begin to see how this strategy can be used, to effectively determine if the market conditions are overbought or oversold. There are number of different tools that can be utilized to indentify major changes that are occurring in the trend of a stock or the market averages. These would include: headlines…
"3M Historical Prices," Yahoo Finance, http://finance.yahoo.com/q/hp?s=MMM&a=00&b=2&c=1970&d=04&e=25&f=2010&g=v&z=66&y=0
"3M Reports First Quarter Results," 3M, http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjA2NjEwOHxDaGlsZElEPTMzNDE0MXxUeXBlPTI=&t=1
"3M Reports Fourth Quarter and Full Year 2008 Results," 3M, http://library.corporate-ir.net/library/80/805/80574/items/322063/054431D4-6347-45F1-AF4D-85CCA5F89C52_mmmQ4release.pdf
"American Depository Receipt." Investopedia, http://www.investopedia.com/ terms/a/adr.asp
alternative investment vehicles have been using by the investors to reduce the risk and maximize the profit. In this paper, we will discuss alternative investments opportunities and reducing the risk of portfolio by using the stock index future. Buying or selling the stocks is highly risky because of weak economic conditions. Investors should include various types of assets in the portfolio so that portfolio will not suffer the impact of a decline of any one security. For example; if an investor uses stocks and bonds in his/her portfolio, if stock price decline due to market fall then, the bonds would get higher return and it will eliminate the risk of decline. In the portfolio management it says that "not putting all eggs in one basket," it means investor should not invest in only one asset; they should construct the portfolio containing various types of assets. Thus, the portfolio must be…
Sushant, Portfolio management, "Tips for diversifying your portfolio," retrieved through; http://www.portfoliomanagement.in/tips-for-diversifying-your-portfolio.html
Hedged your portfolio using stock index future (2002), published by Chicago Mercantile Exchange (pp-1, pp23).
"The Case for Hedge funds," Tremont Advisors Inc. & Tass Research, 3rd edition, Feb 2003 (pp 9)
Absolute Returns: The Risks and Opportunities of Hedge Fund Investing," byAlexander M. Ineichen, published by John Wiley & Sons, 2002,-Page 36.
M2Global Technology Ltd. has a specific metric that determines CEO and managerial pay based upon a combination of financial returns, efficiency, and customer satisfaction.
Stock options with restrictions that cannot be 'cashed out' for a number of years, or forms of equity that are dependant upon long-term goals also reduces the incentive for CEOs to quickly and artificially boost stock prices. They ensure that the CEO has a real, financial stake in the long-term health of the company. There is also growing agreement that hefty, unrestricted severance packages send the wrong message to CEOs -- and golden parachutes are also highly unpopular amongst ordinary shareholders.
But as important as these incentives may be, perhaps the best prescription for success is a good choice of a CEO with a managerial style is a good 'fit' for the company culture. A CEO who wishes to succeed and foster his or her reputation…
Expensing of Stock Options
Expensing of stock options is a far more complicated issue. The Federal Accounting Standards oard (FAS) strongly recommends expensing of options and is trying to make it a legal requirement (Rash, 2004).
The pros of expensing options include providing a level playing field so that companies that use cash bonuses and companies that use stock options each have an expense on the income statement (McPeak). and, some believe it will improve corporate governance by reducing the incentives to inflate income and earnings per share.
However, there are many significant challenges for a company that expenses options (McPeak). Many companies have issued options to multiple levels of employees to attract high quality employees and to motivate them. If companies expense options at the time they are granted, it will be difficult to continue to grant options to as many employees. Some feel that there is already a…
Adjusting the accounts. Retrieved February 9, 2005 from Web site: http://188.8.131.52/search?q=cache:IFCF5xnQ7gwJ:www2.ac.edu/faculty/JDavis/course_files/acc201/ch03.ppt+%22expense+recognition%22+%22matching+principle%22&hl=en
Rash, M.C. (2004, August 6). Considering options. The Business Journal. Retrieved February 9, 2005 from Web site: http://www.bizjournals.com/triad/stories/2004/08/09/focus1.html
Service and construction contract revenue. (2002). PricewaterhouseCoopers. Retrieved February 9, 2005 from Web site: http://www.pwcglobal.com/Extweb/service.nsf/0/829224D1965E9B6A80256C7C0042A50C?opendocument
Turner, L.E. (2001, May 31). Speech by SEC staff: Revenue recognition. USC SEC and Financial Reporting Institute. Retrieved February 9, 2005 from Web site: http://www.sec.gov/news/speech/spch495.htm
jobs are paid more or less? Is this what you would expect? Why or why not? What factors could explain the difference in salaries?
As would be suspected, the Director of Human Resources job paid the most with a median salary level of $140,750. All comparisons in this analysis are based on the U.S. national averages. The lowest-paid position was Financial Analyst I, which has a salary of $49, 350. This is to be expected as any director-level role will have the highest salary, as these are senior management positions with a correspondingly higher level of authority and responsibility as well. Director- and Vice President-level roles often require 10 years of experience at a minimum, followed by advanced degrees including MBAs or MA degrees in Human Resources as well. The higher the pay the exponentially greater the experience, training and expertise required, in addition to more insight and intellect un…
Assessing an Incentive Scheme for Bobs Burgers
Bobby's Burgers has an incentive problem. In order to overcome the current issues, which include poor performance of managers allowing the quality to deteriorate, tt has been suggested that a stock plan is implemented that will give the unit managers 500 shares each. This is a plan that has some potential, but it is not the only option. The first section of the paper will assess the proposal and the second section will consider other ways that the firm may motivate the managers.
Proposal of the stock plan
A major benefit of the stock plan is the way it will provide an incentive for the managers to increase their effort by overcome the principle agent problem by giving the managers a stake in the performance of the company. The problem within firms is that the owners, who are the shareholders, and benefit…
Source provided by the student was used, but could not be cited due to the absence of citation details
Baye Michael, (2007), Managerial Economics and Business Strategy, McGraw-Hill/Irwin
Eisenhardt, M, K. (1989), Agency theory: An assessment and review, Academy of Management Review, 14(1), 57
These tasks allowed me to use the financial analysis skills I gained during the course of my education. I was able to uncover errors that were being made and alert my superiors so that the problem could be rectified.
The experience was valuable for a couple of reasons. For one, it provided me with a framework for the functional application of financial analysis. I learned much by poring through both the financial and managerial accounting figures. I focused on determining efficiencies, and was successful in making improvements in small ways.
I gained considerable experience in front line business as well. This acts as a complement to my academic background, because it puts that background into perspective. At Ming Feng, I gained a real appreciation for the way business works in the real world. It was a step into the old Hong Kong for me, away from the glass towers, but…
Strategic Audit a Corporation1 I. Current Situation A. Current Performance How corporation perform past year terms return investment, market share profitability? B.
Nestle's performance Audit Report
Performance of Nestle in the year 2011
In the developed world the corporation faced economic frailty and uncertainty more so in the developed world. The economic down turns in the developed world economies had a significant impact on the performance of the product in the market which set in new challenges. Key to remaining afloat with all this challenges at Nestle is to focus on delivery of both short-term performance result and considering investing along the long-term profitability and sustainable lines Nestle The World's Leading Nutrition, Health and Wellness Company 32()
On top of the normal growth Nestle corporation experienced organic growths of up to 7.5%. Real internal growth was recorded at 3.9% while growth in pricing stood at 3.6% Nestle The…
Myers H. Trends in the Food Retail Sector across Europe,. Oxford London,: Oxford Institute of Retail Management, 2004. Print.
Nestle. Nestle Corporate Governance Report http://www.nestle.com/Common/NestleDocuments/Documents/Library/Documents/Corporate_Governance/Corp_Governance_Report_2011_EN.pdf2011 . Print.
-. The World's Leading Nutrition, Health and Wellness Company. http://www.nestle.com/Common/NestleDocuments/Documents/Library/Documents/Annual_Reports/2011-Annual-Report-EN.pdf : Nestle S.A., Cham and Vevey (Switzerland), 2011. Print.
Deficiencies in Organizational Management That esulted in the Economic Meltdown
Since the onset of the global financial crisis, everyone wanted to know what happened and what caused the entire situation. Analysts, economists and experts have all come up with many different reasons and explanations for what triggered the meltdown. To some extent many of these are intertwined and connected to another. Organizations such as Bear Sterns, Lehman Brothers, Freddie Mac and Fannie Mae were flawed at similar regions. In other words, there was a common denominator that ultimately led to the crisis for all these corporations. A fundamental error which is present in nearly all of the organizations which were directly to blame for and were directly affected is the problem of governance and management within organizations. As the companies and firms were not managed in a sustainable and healthy manner, their minor everyday errors built up and lead to…
Berrone, P. (2008). Current Global Financial Crisis: An Incentive Problem. Occasional Paper,. [e-book] Madrid, Spain: Unversity of Navarra. http://www.kantakji.com/fiqh/Files/Markets/p109.pdf [Accessed: 30th July, 2013].
Buiter, W. (2009). Lessons from the Global Financial Crisis For Regulators And Supervisors.. [e-book] Available through: London School of Economics and Political Science http://eprints.lse.ac.uk/29048/1/Lessons_from_the_global_financial_crisis.pdf [Accessed: 30th July, 2013].
Clarke, T. (2010). Recurring Crises In Anglo-American Corporate Governance. Contributions to Political Economy, 29 pp. 9-32.
Kirkpatrick, G. (2009). The Corporate Governance Lessons from the Financial Crisis. Financial Market Trends, 1.
It is also a "what" problem, however, because the major issue Mr. McNerney, (and others at the company) need to address is "what needs to be changed." It is a "why" problem, moreover, because 3M executives need to endeavor to discover how 3M "lost its groove" (so-to-speak) in the first place, and how it might now go about getting it back. So the problem of #M's organizational leadership problem is a three-part problem (or, perhaps, three separate yet related problems).
3. One strategy Mr. McNerney is using is to attempt to get everyone onboard, and in favor of the changes he envisions, rather than simply ordering change. Mr. McNerney is using persuasion with subordinates, rather than coercion. As one 3M employee, having watched McNerney in action, observes: "Jim doesn't say, 'You've got to do this.' Instead he says, '3M has this tremendous reputation and global presence and great technology, and…
Employee Compensation Deduction
Tax Research Memorandum
Mr. Jones, President
From: Tax Accountant, CPA
Tax Treatment of Employee Compensation in Business Deductions
Mr. Jones is the President of a corporation owned by him and members of his family. Mr. Jones was paid $48,000 in salary and the corporation paid $12,000 in a pension plan contribution on Mr. Jones's behalf for the tax year. The IRS Agent claims that both the salary paid to Mr. Jones and the pension plan contribution must be taken into account to determine whether the total compensation is reasonable in amount. The corporation wants to know if the pension plan contribution must be taken into account in determining the total compensation reasonableness to Mr. Jones.
The issue is whether the pension plan contribution paid by the corporation must be included with Mr. Jones salary for the tax year to determine whether the total compensation was…
finance and financial entrepreneurship. The basis of the article is on a discussion that was held on this subject among four leading lights of financial entrepreneurship in the United States - Michael Milken, Lewis Ranieri, Richard Sandor and Myron Scholes. These people are famous in their own right and have had a sizeable role in financial entrepreneurship in the U.S. over the last 20 years. We have first discussed their achievements to get a clear idea about their personal achievements. This would certainly give a clear idea of what is possible in the U.S. today. They are of course interesting characters and one has to remember that the ideal entrepreneur of the 21st century cannot be thought of as an updated version of Henry Ford. After the discussion of the people, the meeting and the discussions held there are summarized. ased on the total information collected, we have come to…
Altman, E.I., ed. The High-Yield Debt Market: Investment Performance and Economic Impact, 41-57. 1990.
Atkinson, T.R. Trends in Corporate Bond Quality. Hardingson, 1967.
Goodfriend, Marvin; Parthemos; James, Summers, Bruce J. Recent financial innovations: courses, consequences for the payments system, and implications for monetary control, Economic Review, March 14-27, 1980
Schneider, S.H. Laboratory Earth: The Planetary Gamble We Can't Afford to Lose. Basic Books New York, NY. 1997.
It is difficult to understand or explain why throughout history some negative investor philosophies continually repeat themselves. Far too often investors miss blatant signs that lead to major collapses in the free markets. The purpose of this report is to discuss derivative securities in detail and how they affect those investor philosophies. Even unsophisticated investors understand that the stock and commodities markets are supposed to fluctuate on a daily basis. A key in the minds of investors is to avoid overly large swings in either direction and to also take advantage of those market swings that are heading in the right direction. To solve this ageless dilemma, investment bankers and individual investors themselves have historically created new and unique systems, methods and processes that help avoid those big swings. But what happens when the new and unique systems, methods and processes…
Black Tuesday.(n.d.) lowrisk.com. Retrieved on October 23, 2009, from .
Forbes Digital. (2009.). Investapedia. Retrieved on October 23, 2009, from http://www.investopedia.com/ terms/
Goatzmann, William. (n.d.). An Introduction to Investment Theory. Retrieved on October 23, 2009, from http://viking.som.yale.edu/will/finman540/classnotes/notes.html
Hoadly Training and Investment Tools. (2009). Option Pricing Models and the "Greeks." Retrieved on October 23, 2009, from http://www.hoadley.net/options/bs.htm
The developments of credit derivatives began in 1980s as a new financial innovation after the swap market started. Swap market provided derivative organizations with profit due to their intermediary position while the credit margins for borrowers were reduced. As the swap market developed there was the development of new interest derivatives so that there were additions to the list of products. Credit derivatives are relatively recent introductions and these are mechanisms for the credit institutions to separate the credit risk from their loans and treat market risk as a separate category so that their pricing efficiency could be more competitive and the concerned organizations could be more competitive in the market. (Credit Derivatives Move Beyond Plain Vanilla)
Thus one can say that credit derivatives are a recent form that can be used by bankers to reduce risk, or increase risks and thus meet their corporate objectives. The general…
Aggrawal, Sunil K. Credit Derivatives Move Beyond Plain Vanilla. Retrieved at http://pages.stern.nyu.edu/~sjournal/articles_00/credit_derivatives.htm. accessed 27 July, 2005
Black Scholes Model. Retrieved at http://www.cs.sunysb.edu/~mverma/blackscholes.htm . accessed 27 July, 2005
Cox, Daniel. FAS 123(R): Lattice vs. Black-Scholes. Retrieved at http://www.fmnonline.com/publishing/article.cfm?article_id=836accessed 27 July, 2005
Credit Derivatives. Retrieved at http://www.finpipe.com/crederiv.htm . accessed 27 July, 2005
financial derivatives? What are they used for? Types of derivatives. Types of derivatives markets (where are they negotiated).
What are financial derivatives?
Financial derivatives are essentially a financial contract between two people or two entities that depends on the fulfillment of an economic asset in the future, such as a stock, a bond, commodity, or a currency. The two parties make agreements between each other to ensure that all aspects of it will be covered and work in a specific way by a certain date. Financial derivatives, by the way, are called so since the term 'derivative' denotes that their value 'derives' from underlying assets like stocks, bonds and commodities. These financial derivatives can range from something as simple as a private agreement to something that is controlled by rules and restrictions.
Different types of derivatives
There are various derivatives that meet different needs.
Some of these derivatives are the…
Citeman. Need and types of financial derivatives http://www.citeman.com/5293-need-and-types-of-financial-derivatives.html
NY TImes,( 2012) Derivatives http://topics.nytimes.com/top/reference/timestopics/subjects/d/derivatives/index.html
O'Harrow, R. (Wednesday, April 21, 2010). A primer on financial derivatives. Washington Post
Sarbanes-Oxley Act on a Medium Sized Company
The following paper begins with a discussion of the benefits of going public. The paper then gives a comparison between a public and private company. It focuses on the fund raising procedures of the private companies as well. The paper also discusses the ratios that are evaluated at the time of and IPO and determines the impact of these ratios on the decisions of the company. The paper then discusses the positive and negative impacts of the Sarbanes-Oxley act and finishes with a recommendation about whether to continue as a private company or go public.
Benefits of Going Public
Going public refers to an initial public offering of a private company. An initial public offering is the first time a company offers its shares to public. Different companies have different reasons for going public. One of the reasons is to obtain capital. Privately,…
Jong, A., Huijgen, C., Marra, T., & Roosenboom, P. (2012). Why Do Firms Go Public? The Role of the Product Market. Journal Of Business Finance & Accounting, 39(1-2), 165 -- 192.
PricewaterhouseCoopers,. (2010). Roadmap for an IPO A guide to going public (pp. 4-13). London: PricewaterhouseCoopers.
Primack, S. (2012). The Financial Impact of the Sarbanes-Oxley Act on Small vs. Large U.S. Public Companies (1st ed., pp. 1-5). Berkeley: University of California. Retrieved from http://live.econ.berkeley.edu/sites/default/files/Primack.pdf
Troy, L. (2008). Almanac of business and industrial financial ratios (1st ed., pp. 9-22). Chicago, IL: CCH.
CEO's salary, bonus, and long-term compensation with respect to various organizational, financial and CEO factors such as corporate reputation, growth in employees, company size, and return on equity, CEO tenure and CEO stock ownership. In relation to the general performance of the organization
This paper utilizes the various measurement of chief executive compensation as exploited by the various detailed pieces of literature and employed as the dependent variable in a model based on multiple regression theory. It explores the extent to which the CEO's compensation package affects the overall performance of the whole firm or corporation for which he or she works for.
The purpose of this research is to determine the extent to which the CEO's remuneration a large corporation such as Coca Cola has on the general performance of the organization.
The CEO's compensation has for a long time been source of attention from various groups in…
Anderson, R.C & Bizjak, J.M. 2003) An Empirical Examination of the Role of the CEO and the Compensation Committee in Structuring Executive Pay.Journal of Banking and Finance, 27.
Baiman, S. And Verrecchia R. (1995).Earnings and price-based compensation contracts in the presence of discretionary trading and incomplete contracting. Journal of Accounting and Economics, Vol. 20:1, pp. 94-120.
Barro, J.R.; Barro, R.J. (1990) Pay, Performance and Turnover of Bank CEOs, Journal of Labor Economics, 8.
Bebchuk, L.A & Fried, J.M.( 2003) Executive Compensation as an Agency Problem. National Bureau of Economic Research Working Paper Series, No. 9813.