Corporate financial decisions.

Added on - 18 Sep 2019

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Corporate financial decisions
School versus workb.The advantage of selling a combination of bonds and stocks includes that the portfoliowill be diversified and the risk can be hedged which helps to generate higher revenuewithin the particular time period. The disadvantage of selling both the bonds and stocksincludes that the transaction cost is very high because both the securities have differentselling 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 theshares 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. Sothe dividend will be received yearly, and the coupon stock will also provide the incomeafter selling the stock, but the job income is a regular monthly income which helps togenerate sustainable amount of income. The selling of 50% stock is $50,000, selling ofcoupon stock is $121,250, but the income is $25,000*12 which is 300,000 yearly. Thesalary is assumed.Bonus vs. Stocka.The bonus has the value of $5,000, and the share option is worth $50 per share whichis $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, andaccrued 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 ofbonus 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 andaccumulated 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 priceis selected due to increase in the share price.Compliancea.The sale of unregistered shares is the area in which the concentration is on thesecondary market. The gaining of interest in this type of securities increases thelevel of cost to the shareholders through collective investment which alsoincreases the risk to the fund manager according to theFinancial RegulatoryAuthority.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
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