logo

Corporate Financial Decision Making

   

Added on  2019-09-18

4 Pages687 Words142 ViewsType: 142
Finance
 | 
 | 
 | 
Corporate financial decisions
Corporate Financial Decision Making_1

School versus workb. The advantage of selling a combination of bonds and stocks includes that the portfolio will be diversified and the risk can be hedged which helps to generate higher revenue within the particular time period. The disadvantage of selling both the bonds and stocks includes that the transaction cost is very high because both the securities have different selling cost of the transaction (Bodie et al., 2014).c. The best solution is to sell the coupon for $121,250 which will cater the school fees ($100,000), and the remaining amount ($21,250) will be reinvested through buying the shares on the basis of price trend which helps to generate higher returns.d. The sources of income are three, namely, job's income, dividends and coupon stock. So the dividend will be received yearly, and the coupon stock will also provide the income after selling the stock, but the job income is a regular monthly income which helps to generate sustainable amount of income. The selling of 50% stock is $50,000, selling of coupon stock is $121,250, but the income is $25,000*12 which is 300,000 yearly. The salary is assumed. Bonus vs. Stocka.The bonus has the value of $5,000, and the share option is worth $50 per share which is $5,000 for 100 shares. So the best choice is to accept the shares.b.The advantage of selecting the shares includes that the share price are increased, and accrued dividends are also increased. The disadvantages of selecting the shares optioninclude that the performance of the stock is low (Berk et al., 2013). The advantage of bonus is that the amount can be invested for the long term and the disadvantage is thatthe amount is fixed and there is no other income in the future.c.The obtaining of shares is more profitable than the bonus because the share price and accumulated dividend increases in the future but the bonus amount will remain fixed. For example, the bonus is $5,000 and share price is $50 per share than the share price is selected due to increase in the share price. Compliancea.The sale of unregistered shares is the area in which the concentration is on the secondary market. The gaining of interest in this type of securities increases the level of cost to the shareholders through collective investment which also increases the risk to the fund manager according to the Financial Regulatory Authority. b.As the financial manager, the following information needs to comply:1.Regulation fair disclosureThe disclosure allows t release the financial information of the company to theinvestors as well as the public (Campbell et al., 2016).2.Interim report
Corporate Financial Decision Making_2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Principle of Finance Analysis 2022
|8
|1532
|18

Estimating Intrinsic Value
|6
|677
|330

Article | Fund Sourcing Avenues
|5
|978
|21

Fixed Income Investments
|16
|2197
|23

Financial Performance of BHP: Analysis, Share Price, Bond Price, and Recommendations
|9
|2151
|50

Assignment (doc) | Time, Value and Money
|10
|1951
|25