Discuss how diversity, equity and inclusion are correlated with business performance. Discuss the reason that efforts in this area do not seem to result in better representation that contributes to equity in society.

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Action Areas for International Finance

Developed over half a century ago, event study is a research method that continues to gain popularity and acceptance as an important tool in the field of finance. In recent years, event studies have evaluated the impact of corporate, regulatory changes, and macroeconomic shocks on stock prices for a single country (usually the U.S.). In the context of action areas for international finance:

First, discuss how diversity, equity and inclusion are correlated with business performance.

Then, discuss the reason that efforts in this area do not seem to result in better representation that contributes to equity in society.

Next, discuss how the increasing number of global events (e.g., COVID-19 pandemic, Brexit, and the Paris and Trans-Pacific Partnership agreements) have impacted corporate initiatives (e.g., mergers and acquisitions, equity and debt issuance, dividends and repurchases, corporate restructuring), regulatory changes (e.g., board reform, compensation, changes in taxation, workplace safety), and how advocacy networks socialize international financial institutions.

Lastly, address in your discussion the IMF adopted discourse linking macroeconomic stability and gender inequality, and how this has resulted in international economic regulation consisting of written rules and the practices and ideas of economic actors.

Discuss why international finance and its financial institutions are essential infrastructure in the facilitation of global commerce. Discuss the impacts of modernized digital platforms and networks that are accelerating digitization of transactions across the globe?

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Institutions of International Finance

A tentative recovery in 2021 has been followed by increasingly gloomy developments in 2022 as risks began to materialize. Global output contracted in the second quarter of this year, owing to downturns in China and Russia, while US consumer spending undershot expectations. Several shocks have hit a world economy already weakened by the pandemic: higher-than-expected inflation worldwide – especially in the United States and major European economies – triggering tighter financial conditions; a worse-than-anticipated slowdown in China, reflecting COVID-19 outbreaks and lockdowns; and further negative spillovers from the war in Ukraine. In the context of discussing the impact of institutions on international finance:

First, discuss why international finance and its financial institutions are essential infrastructure in the facilitation of global commerce.

Then, discuss the impacts of modernized digital platforms and networks that are accelerating digitization of transactions across the globe?

Next, discuss the hurdles small and medium sized enterprises (SMEs) face in accessing financing on affordable terms and the reason(s) this is of particular concern.

Lastly, give one example from a recent news article.

Your answer should rely heavily on the sources provided (the document I attached and the following online source):

  • https://www.tradecommissioner.gc.ca/development-developpement/mdb-overview-bmd-apercu.aspx?lang=eng

Discuss different types of risks faced by banks and financial institutions.Critically examine why regulating banks and financial institutions activities are so important.

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Assignment 1 Questions: Week 2, Week 3 & Week 4 (15 Marks)

Q.1. Discuss different types of risks faced by banks and financial institutions.Critically examine why regulating banks and financial institutions activities are so important. (4 Marks)

Q.2. Outline the basis of the evolution of international banking regulation under Basel I (4 Marks)

Q.3. Describe the key deficiencies in bank regulation and risk management in financial institutions that led to Basil III. (4 Marks)

Q.4. Explain the Capital Asset Pricing Model (CAPM). (3 Marks)

 

Find two articles that discuss financial ratio analysis. Identify two advantages and two disadvantages to using ratios in financial analysis.

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Financial ratio analysis

Find two articles that discuss financial ratio analysis. Identify two advantages and two disadvantages to using ratios in financial analysis. Be sure to cite your sources using APA format as outlined in the Ashford Writing Center. 200 words or more

 

Describe the nurse’s role and responsibility as health educator. What strategies, besides the use of learning styles, can a nurse educator consider when developing tailored individual care plans, or for educational programs in health promotion? When should behavioral objectives be utilized in a care plan or health promotion?

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Nurse’s role and responsibility as health educator

Describe the nurse’s role and responsibility as health educator. What strategies, besides the use of learning styles, can a nurse educator consider when developing tailored individual care plans, or for educational programs in health promotion? When should behavioral objectives be utilized in a care plan or health promotion?

 

Underpricing is the difference between the underwriters’ cost of buying shares and the offering price of those securities to the public: True or False.

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Financial Management

Show all the work clearly and legibly. Otherwise, I cannot give you full credit.

Answer the questions based on the table below.

Cash Dividend Stock Repurchases Stock Dividend
Value of Operations $900,000,000 $900,000,000 $900,000,000
Value of Cash balance 80,000,000 80,000,000 80,000,000
Total value of firm $980,000,000 $980,000,000 $980,000,000
− Debt   100,000,000   100,000,000   100,000,000
− Preferred stock     80,000,000     80,000,000 80,000,000
Value of equity $800,000,000 $800,000,000 $800,000,000
# of shares Before the event        40,000,000        40,000,000        40,000,000
Stock price Before the event               $20               $20               $20
# of shares After the event (               ) (               ) (                )
Stock price After the event (               ) (               ) (                )

The firm considers cash dividend using the cash balance of $80,000,000.

  1. Figure out the dividend per share. (15points)
  2. Once the cash dividend is completed, figure out the stock price. (15points)

The firm considers stock repurchase using the cash balance of $80,000,000.

  1. Figure out how many shares this firm can repurchase. (15points)
  2. Once the stock repurchase is completed, figure out the stock price. (20points)

The firm considers a 25% stock dividend.

  1. Figure out how many new shares this firm can issue. (15points)
  2. Once the stock dividend is completed, figure out the stock price. (20points)

 

Answer the questions based on the table below.

Before rights offering After rights offering
Value of equity $200,000,000 (                 )
# of shares       10,000,000        (                 )
Stock price               $20 (                 )
New equity capital raised $40,000,000
Subscription price $10
# of new shares (               )
# of rights (               )
Conversion ratio for a right to a new share (               )
Value of a right (               )

 

  • Figure out the number of new shares issued given the subscription price. (25points)
  • Figure out the conversion ratio for rights to a new share. (25points)
  • Figure out the stock price after the rights offering. (30points)
  • Figure out the value of a right. (20points)

Firm A tries to acquire Firm B. Assume that both firms have no debt outstanding. Firm A estimates that the value of synergistic benefits from Firm B is $10,000,000.

Firm A Firm B Firm AB
Cash acquisition Stock acquisition
Earnings $5,000,000 $1,000,000 $6,000,000 $6,000,000
Stock price $40 $20 $ (      ) $ (      )
# of shares 1,000,000 500,000 1,000,000 (              )

Supposed Firm A tries to acquire Firm B for $30 per share in cash.

  • Figure out the NPV of the merger. (20points)
  • Figure out the stock price of the merged firm. (20points)

Suppose Firm B prefers stock acquisition instead of cash acquisition of $30 per share. If Firm A offers one share for every two of Firm B’s shares.

  • Figure out the number of stocks and the stock price of the merged firm. (20points)
  • Figure out the NPV of the merged firm.(20points)
  • Figure out the share exchange ratio of Firm A to Firm B where the shareholders of Firm B are indifferent between cash acquisition and stock acquisition. (20points)

 

Answer the questions.

With Dutch auction underwriting, all successful bidders pay the same price per share. (15points)

  1. True
  2. False

Underpricing is the difference between the underwriters’ cost of buying shares and the offering price of those securities to the public. (15points)

  1. True
  2. False

According to Green Shoe provision, underwriters can purchase additional shares at a lower price than the offering price to cover excess demand. (15points)

  1. True
  2. False

Stock repurchase may send a negative signal that a firm does not have any profitable investment opportunities. (15points)

  1. True
  2. False

According to Dividend preference theory, higher payout leads to lower agency costs, thereby resulting in higher stock price. (15points)

  • True
  • False

Employee stock options (ESO)s are “out-of-the money” when they are issued. (15points)

  1. True
  2. False

Employee stock options (ESO) backdating is a practice of selecting a grant date on which the stock price is low. Therefore, this practice is illegal or unethical. (15points)

  1. True
  2. False

In convertible bonds, conversion premium is the difference between conversion price and bond price, divided by bond price. (15points)

  1. True
  2. False

Stock warrants are long-maturity call options like ESO, while they are listed and traded on the exchange unlike ESO. (15points)

  1. True
  2. False

If managers ignore real options such as option to wait, they could underestimate the NPV of a project. (15points)

  1. True
  2. False

International companies face multiple types of risk related to international finance. Discuss the impact of the following types of risk on a multinational company.

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Discussion post

International companies face multiple types of risk related to international finance. Discuss the impact of the following types of risk on a multinational company:

  • Currency exchange risk
  • Financial market stability risk
  • Foreign taxes and regulation risk

Explain the nature and purpose of bonds. Explain call provisions and compute yield to call.

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Purpose of bonds

You should spend between $100,000 and $200,000 on a group of debt investments. From your experience exploring the corporate, federal, and municipal bond markets, select at least:

  • One corporate bond purchase. One Treasury bill or bond.
  • One municipal bond.

Finally, in a Word document, supplemented with Excel, please submit a recap of your activity if you think appropriate. Be sure to include an analysis of your decisions in your notes explaining your choice of bonds.Checklist:

Explain the nature and purpose of bonds.

Explain call provisions and compute yield to call.

Interpret bond ratings.

Contrast current yield and yield to maturity

 

On the basis of the dividend history you uncovered in question 5 and your assessment of XOM’s future dividend payout policies, do you think it is reasonable to assume that the constant growth model is a good proxy for intrinsic value? If not, how would you use the available data in Thomson One to estimate intrinsic value using the nonconstant growth model?

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Estimating ExxonMobil’s Intrinsic Stock Value

In this chapter we described the various factors that influence stock prices and the approaches that analysts use to estimate a stock’s intrinsic value. By comparing these intrinsic value estimates to the current price, an investor can assess whether it makes sense to buy or sell a particular stock. Stocks trading at a price far below their estimated intrinsic values may be good candidates for purchase, whereas stocks trading at prices far in excess of their intrinsic value may be good stocks to avoid or sell. While estimating a stock’s intrinsic value is a complex exercise that requires reliable data and good judgment, we can use the data available in Thomson One to arrive at a quick “back of the envelope” calculation of intrinsic value.

Discussion Questions
1. For purposes of this exercise, let’s take a closer look at the stock of ExxonMobil Corporation (XOM). Looking at the COMPANY OVERVIEW we can immediately see the company’s current stock price and its performance relative to the overall market in recent months. What is ExxonMobil’s current stock price? How has the stock per- formed relative to the market over the past few months?

2. Click on the “NEWS” tab to see the recent news stories for the company. Have there been any recent events impacting the company’s stock price, or have things been relatively quiet?

3. To provide a starting point for gauging a company’s relative valuation, analysts often look at a company’s price-to-earnings (P/E) ratio. Returning to the COMPANY OVERVIEW page, you can see XOM’s current P/E ratio. To put this number in perspective, it is useful to compare this ratio with other companies in the same industry and to take a look at how this ratio has changed over time. If you want to see how XOM’s P/E ratio stacks up to its peers, click on the tab labeled PEERS. Click on FINANCIALS on the next row of tabs and then select KEY FINANCIAL RATIOS.
Toward the bottom of the table you should see information on the P/E ratio in the section titled Market Value Ratios. Toward the top, you should see an item where it says CLICK HERE TO SELECT NEW PEER SET—do this if you want to compare XOM to a different set of firms. For the most part, is XOM’s P/E ratio above or below that of its peers? In Chapter 4, we discussed the various factors that may influence P/E ratios. Off the top of your head, can these factors explain why XOM’s P/E ratio differs from its peers?

4. Now to see how XOM’s P/E ratio has varied over time—return back to the COMPANY OVERVIEW page. Next click FINANCIALS—GROWTH RATIOS and then select WORLDSCOPE—INCOME STATEMENT RATIOS. Is XOM’s current P/E ratio well above or well below its historical average? If so, do you have any explanation for why the current P/E deviates from its historical trend? On the basis of this information, does XOM’s current P/E suggest that the stock is undervalued or overvalued? Explain.

5. In the text, we discussed using the dividend growth model to estimate a stock’s intrinsic value. To keep things as simple as possible, let’s assume at first that XOM’s dividend is expected to grow at some constant rate over time. If so, the intrinsic value equals D1/(r s g), where D 1 is the expected annual dividend 1 year from now, rs is the stock’s required rate of return, and g is the dividend’s constant growth rate. To estimate the dividend growth rate, it’s first helpful to look at XOM’s dividend history. Staying on the current Web page (WORLDSCOPE—INCOME STATEMENT RATIOS)
you should immediately find the company’s annual dividend over the past several years. On the basis of this information, what has been the average annual dividend
growth rate? Another way to get estimates of dividend growth rates is to look at analysts’ forecasts for future dividends, which can be found on the ESTIMATES tab.
Scrolling down the page you should see an area marked “Consensus Estimates” and a tab under “Available Measures.” Here you click on the down arrow key and select Dividends Per Share (DPS). What is the median year-end dividend forecast? You can use this as an estimate of D 1 in your measure of intrinsic value. You can also use this forecast along with the historical data to arrive at a measure of the forecasted dividend growth rate, g.

6. The required return on equity, rs, is the final input needed to estimate intrinsic value. For our purposes you can either assume a number (say, 8 or 9 percent), or you can use the CAPM to calculate an estimate of the cost of equity using the data available in Thomson One. (For more details take a look at the Thomson One exercise for Chapter 8). Having decided on your best estimates for D 1, r s, and g, you can calculate XOM’s intrinsic value. How does this estimate compare with the current stock price? Does your preliminary analysis suggest that XOM is undervalued or overvalued? Explain.

7. It is often useful to perform a sensitivity analysis, where you show how your estimate of intrinsic value varies according to different estimates of D1, r s, and g. To do so, recalculate your intrinsic value estimate for a range of different estimates for each of these key inputs. One convenient way to do this is to set up a simple data table in Excel. Refer to the Excel tutorial accessed through the ThomsonNOW Web site for instructions on data tables. On the basis of this analysis, what inputs justify the current stock price?

8. On the basis of the dividend history you uncovered in question 5 and your assessment of XOM’s future dividend payout policies, do you think it is reasonable to assume that the constant growth model is a good proxy for intrinsic value? If not, how would you use the available data in Thomson One to estimate intrinsic value using the nonconstant growth model?

9. Finally, you can also use the information in Thomson One to value the entire corporation. This approach requires that you estimate XOM’s annual free cash flows. Once you estimate the value of the entire corporation, you subtract the value of debt and preferred stock to arrive at an estimate of the company’s equity value. Divide this number by the number of shares of common stock outstanding, and you calculate an alternative estimate of the stock’s intrinsic value. While this approach may take some more time and involves more judgment concerning forecasts of future free cash flows, you can use the financial statements and growth forecasts in Thomson One as useful starting points. Go to Worldscope’s Cash Flow Ratios Report (which you find by clicking on FINANCIALS, FUNDAMENTAL RATIOS, and WORLDSCOPE RATIOS) and you will find an estimate of “free cash flow per share.” While this number is useful, World- scope’s definition of free cash flow subtracts out dividends per share; therefore, to make it comparable to the measure in this text, you must add back dividends. To see Worldscope’s definition of free cash flow (or any term), click on SEARCH FOR COMPANIES from the left toolbar, and select the ADVANCED SEARCH tab. In the middle of your screen, on the right-hand side, you will see a dialog box with terms. Use the down arrow to scroll through the terms, highlighting the term for which you would like to see a definition. Then, click on the DEFINITION button immediately below the dialog box.

How important do you suppose control is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange? Is the control issue likely to be of more importance to stockholders of publicly owned or closely held (private) firms? Explain.

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DISCUSSION QUESTIONS

1 It is frequently stated that the one purpose of the preemptive right is to allow individuals to maintain their proportionate share of the ownership and control of a corporation.
a. How important do you suppose control is for the average stockholder of a firm whose shares are traded on the New York Stock Exchange?
b. Is the control issue likely to be of more importance to stockholders of publicly owned or closely held (private) firms? Explain.

2 Is the following the correct equation for finding the value of a constant growth stock? Explain.

3 If you bought a share of common stock, you would probably expect to receive dividends plus an eventual capital gain. Would the distribution between the dividend yield and the capital gain yield be influenced by the firm’s decision to pay more dividends rather than to retain and reinvest more of its earnings? Explain.

4 Two investors are evaluating GE’s stock for possible purchase. They agree on the expected value of D1 and also on the expected future dividend growth rate. Further, they agree on the riskiness of the stock. However, one investor normally holds stocks for 2 years, while the other holds stocks for 10 years. On the basis of the type of analysis done in this chapter, should they both be willing to pay the same price for GE’s stock? Explain.

5 A bond that pays interest forever and has no maturity is a perpetual bond. In what respect is a perpetual bond similar to a no-growth common stock? Are there preferred stocks that are evaluated similarly to perpetual bonds and other preferred stocks that are more like bonds with finite lives? Explain.