Corporate Finance Homework Help

1. (2 marks) Provide a discussion on the similarities and differences of two companies: China Petroleum & Chemical and Alibaba. Minimum four key points for full marks. Hints: students may consider the following when attempting this question. • What services/products each company offers? • Which industry the company operates in? • Where their stocks are listed? • Where the company is found? Do not forget to cite the source of information. Referencing (Chicago 17B referencing) is mandatory. 2. (8 marks) Calculate the return and risk (standard deviation) of each stock. 3. (2 marks) Explain the relation (positive or negative) between risk and return based on your answers in the previous question. 4. (4 marks) Calculate the correlation coefficient between (1) Amazon and Alibaba, and (2) Amazon and China Petroleum & Chemical. 5. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 50% in Amazon and 50% in Alibaba. 6. (3 marks) Calculate the expected (annual) return and standard deviation if you owned a portfolio consisting of 80% in Amazon and 20% in China Petroleum. 7. (3 marks) Compare the portfolios in parts 5 or 6. Which portfolio (parts 5 or 6) provides better diversification? Define diversification and explain your answer(s).

Question 2 According to Smith (2019), net assets equals.... O Assets minus liabilities O Liabilities plus assets O Revenue minus expenditures

Question 3 One of the goals of Revenue Theory of Costs is O Is to adequately support the institution within the level of possible enrolments. O Is to meet the need of each student. O Each institution is to spend the money that it has. O There is virtually no limit to the amount of money that can be spent to increase an institutions prestige, excellence and influence

Question 6 Budgetary accounting according to Smith is when, O Looks at income and expenses O Recognises revenues when cash is received and expenditures when bills are paid O Looks forward to how much a company plans to spend so you can see how much budget is left.

You need a quick $400 to pay this month's cell phone bill. A"payday" loan company will end you that amount for one month, charging you a fee of "only" $45 (meaning you payback $445 in one month). The fee will be due on the day you pay off the loan .Recognizing that the fee is in reality the interest payment, a) what is the true Effective Annual Rate (EAR) on this loan? b) what is the Annual Percentage Rate (APR) on this loan?

AmTrust Financial Services, Inc., (NASDAQ: AFSI) is a multinational property and casualty insurance company headquartered in New York. In 2017, the company had to restate three years of financial statements due to several accounting errors, the key one being how it accounted for extendedwarranties. Am Trust provides extended-service plans (ESP) for automobiles and other consumer goods. Acustomer purchasing an ESP will pay for the plan at the point of automobile or consumer goodpurchase and then the customer will be protected from unexpected repairs for the life of thecontract. These ESP plans can, and frequently do, span multiple years. An ESP plan is a warranty(insurance coverage) sold by AmTrust, even though the company itself does not sell the automobileor other product that the ESP covers. 1.During 2012 - 2015, how did AmTrust erroneously account for the sale of a four-year ESP for cash? 2. If Am Trust sold a four-year ESP and received cash for it at the time of sale, how should Am Trust have accounted for the sale of that ESP? 3. Assume that Am Trust sold a four-year $1,000 ESP at the beginning of 2012 for cash and recognized the revenue immediately. What would the impact on the balance sheet and income statements for each of the four years from 2012 - 2015? Be specific. 3. Assume that Am Trust sold a four-year $1,000 ESP at the beginning of 2012 for cash and recognized the revenue immediately. What would the impact on the balance sheet and income statements for each of the four years from 2012-2015? Be specific.

Question 10 Encumbrance accounting is, O money that is reserved to cover the cost of a purchase or payroll commitment O where cash has already been expended within a budge O an actual cost of purchase orders and contracts

5. Burt is saving up for his retirement. Today is his 36th birthday. Burt first started saving when he was 25 years old. On his 25th birthday, Burt made the first contribution to his retirement account when he deposited $1,500. Each year on his birthday, Burt has ontributed another $1,500 to the account. The 12th (and last) of these contributions was made earlier today on his 36th birthday. The account has paid an effective annual rate of return of 6.4%. a) How much will Burt have in the account on his 36th birthday (after the contribution mentioned above)? Burt wants to close the account tomorrow and move the money to a stock fund which is expected to earn an effective annual return of 8.3% a year. Burt's plan is to continue making contributions of an undetermined amount to this account each year on his birthday. His next contribution will be one year from today (age 37) and his final planned contribution will be on his 66th birthday (30 additional contributions in all). Burt hopes to withdraw $8,000 a month for 20 years after he retires (240 withdrawals starting one month after his 66th birthday). b) How much does Burt need in his account on his 66th birthday to fund the future withdrawals? c) How much does each of the 30 annual contributions (from age 37 to 66) need to be to reach this goal?

6. You have decided to buy a house for $450,000. You have saved enough money to make a 15% down payment, but you will need to borrow the remainder. You arrange for a30-year mortgage(monthly payments) with a local bank at a stated rate of 4.8% APR. a) What will be your monthly payment? b) Construct the a mortization table for the first 12 months of payments (showing how much of your payment goes to principal, how much goes to interest, and the remaining balance on the loan). c) What will be the outstanding balance or remaining principal after 24 monthly payments? In other words, if you decided to pay off the loan after 24 months, how much would you owe?

Question 7 The group LEAST likely to graduate from college is O young people from high SES families O young people from low SES families O minority students O non-traditional students