Principle of Finance: School vs. Work and Compliance

This finance report delves into critical financial decisions, providing a detailed analysis of investment strategies and compliance regulations. The report begins by comparing the financial implications of choosing between school and work, evaluating the advantages and disadvantages of selling a combination of stocks and bonds, and determining the optimal portfolio allocation. It then examines the choice between receiving a bonus or stock, considering the time value of money and potential risks associated with each option. The report also explores the importance of compliance, outlining relevant federal and shareholder requirements, particularly within the context of the Securities Act of 1933 and other key legislation. Through data-driven calculations and financial reasoning, the report offers valuable insights into making informed financial choices and adhering to regulatory standards. The report concludes with a discussion on the importance of compliance within a financial environment, emphasizing the role of the Securities and Exchange Commission (SEC) in preventing fraud and ensuring transparency.

Running head: PRINCIPLE OF FINANCE
Principle of Finance
Name of the Student:
Name of the University:
Authors Note:

PRINCIPLE OF FINANCE
1
Table of Contents
I. School versus Work:...............................................................................................................2
A. Providing appropriate data and calculations that would be used for making the decision:. .2
B. Identifying the advantages and disadvantages of selling a combination of stocks and
bonds:.........................................................................................................................................3
C. Depicting the choice and the financial reasoning behind this choice:...................................3
D. Identifying the financial reasoning behind this choosing to work:.......................................4
II. Bonus versus Stock:..............................................................................................................4
A. Identifying the best choice for the investors:........................................................................4
B. Identifying the advantages and disadvantages of each option:.............................................5
C. Identifying the ultimate choice and financial reasoning behind this choice:........................5
III. Compliance:.........................................................................................................................5
A. Identifying how the information influences you as a potential employee and as a potential
shareholder:................................................................................................................................5
B. Identifying the federal and shareholder requirements that would be familiar with in order
to ensure completely compliance:..............................................................................................6
References:.................................................................................................................................7

PRINCIPLE OF FINANCE
2
I. School versus Work:
A. Providing appropriate data and calculations that would be used for making the
decision:
Number of
shares 1000
Date Share Price Amount
16-08-2019 $206.50 $206,500.00
18-08-2014 $99.16 $99,160.00
Return in 5 years 108.25% $107,340.00
Particulars Value
Number of Bonds 100
Coupon 3.25%
Face value $100,000.00
Time 5
Total payments in 5 years’ time $116,250.00
Particulars Value
Current Value of shares $206,500.00
Current Value of bonds $116,250.00
Total Portfolio Value $322,750.00
School fees $100,000.00
Remaining value of the
portfolio
$222,750.00
The information provided in the above table directly helps in identifying the overall
portfolio value after paying for the school fees of $100,000. This information is relatively
based on the overall calculation of the portfolio that was built by combining both stocks and
bonds of Apple the analysis has directly indicated that the overall share value of Apple stock
is relatively at the levels of $206,250 as of 16 August 2019 (Finance.yahoo.com, 2019). The
purchasing value of the overall stock was at the levels of $99.16 and the current value is at

PRINCIPLE OF FINANCE
3
$206.50. Therefore, it could be understood that the overall value for the returns that was
generated from the investment in share was at the levels of 108.25%, which makes the overall
profit generated from the shares to at $107,340. This mainly make the total portfolio value of
both bond and share to be at the levels of $322,750, while only $100,000 is needed for the
school fees, which could help in improving the degree and enhancing the knowledge base of
the investor. Thus, it could be understood that after selling the combination of both share and
bonds would reduce the portfolio value to be at the levels of $222,750.
B. Identifying the advantages and disadvantages of selling a combination of stocks and
bonds:
There are both advantages and disadvantages of selling a combination of stocks and
bonds by investors in an adequate investment environment. The current scenario has directly
indicated that the overall share price of Apple stock has increased immensely and generated a
return of 108%. This mainly increases the possibility of reducing the level of exposure in the
stock and maintains the bond investment. Bond investments have low risk in comparison to
stock investments, which would eventually benefit the portfolio and reduce the considerable
amount of risk involved in investment. Therefore, investment exposure in both bond and
shocks is beneficial for the portfolio, as it helps reduce the limitations of both the investment
scope.
C. Depicting the choice and the financial reasoning behind this choice:
Number of shares 515
Date Share Price Amount
16-08-2019 $206.50 $106,347.50
Particulars Value
Number of Bonds 100
Coupon 3.25%

PRINCIPLE OF FINANCE
4
Face value $100,000.00
Time 5
Total payments in 5 years’ time $116,250.00
Particulars Value
Current Value of shares $106,347.50
Current Value of bonds $116,250.00
Total Portfolio Value $222,597.50
The calculation in the above table represents the sale of 485 shares in the portfolio for
allowing the investor to maintain exposure in both share and bond in its portfolio. Apple Inc.
shares could provide useful in the long run, as it could generate high level of income over the
period of time.
D. Identifying the financial reasoning behind this choosing to work:
Therefore, if you choose to accept the job the overall financial reasoning behind the
choice would be the enormous portfolio that has been created with both stocks and bonds.
This would eventually increase in future due to the rapid increase in development of Apple,
which increase the exposure in both shares and bonds of Apple Inc. would benefit the
investor in the long run.
II. Bonus versus Stock:
A. Identifying the best choice for the investors:
On the basis of mathematical calculation, it could be identified that both bonus and
shares would be beneficial for the investor as they have the same value. However, the best
choice would be the bonus as time value of money erodes benefits that could be obtained in
future and she is a relatively unpredictable and could decrease in value over time due to

PRINCIPLE OF FINANCE
5
limitations of the organization. Thus, the best option mathematically for the investor is the
bonus of $5,000.
B. Identifying the advantages and disadvantages of each option:
The analysis has directly indicated get the bonus of $5,000 has both advantage and
disadvantage where the major advantage is the time value of money. The limitation is from
the overall reduction in value of the bonus due to the tax of from IRS, which would
substantially reduce the overall bonus amount by 25 to 35%.
There are both advantages and disadvantages of shares as it could allow the investor
to improve the level of returns from investment over the period of time with positive
company output. However, the disadvantage is the loss of the share value in which the stock
has been provided as bonuses. The decline in value of the share price would directly reduce
the overall benefit that would be generated from the bonus stock (Keown, Martin & Titman,
2014).
C. Identifying the ultimate choice and financial reasoning behind this choice:
The analysis has very clearly indicated that using stocks would be much beneficial for
investors as Apple Company is increasing rapidly which would eventually benefit the
investor in the long run. Thus, selecting the 100 shares would be beneficial for the investor.
III. Compliance:
A. Identifying how the information influences you as a potential employee and as a
potential shareholder:
In accordance with the securities act 1933, companies that offering shares needs to be
registered, as the overall information concerning the securities needs to be public, where it

PRINCIPLE OF FINANCE
6
helps in preventing misrepresentations, deceit and frauds during the sale of securities. The
analysis has directly indicated, that when the purchase of security is conducted for the
company, which is not registered will directly not disclose adequate financial statements and
information to the investors. The four companies are not allowed to sell the securities when
they are not registered under sec where the rules 504 to 506 directly provide exemptions for
the certain amount of securities that can be obtained by the organization. The potential
shareholders should ignore companies offering stocks that are not able to show the financial
statements and register in with the adequate SEC (Sec.gov, 2019).
B. Identifying the federal and shareholder requirements that would be familiar with in
order to ensure completely compliance:
Therefore, after being the financial manager relevant federal requirements needs to be
fulfilled, where the Securities Act of 1933, Securities Exchange Act of 1934, Trade Indenture
Act of 1939, Investment Company Act of 1940, Investment Advisors Act of 1940, Sarbanes-
Oxley Act of 2002, Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
needs to be complied by the organisation. The US Regulatory System directly provide all the
relevant measures and method that needs to be followed by companies registering for the
issue of shares, as it might help in reducing the scandals and increase transparency in their
financial reporting (Sec.gov, 2019).

PRINCIPLE OF FINANCE
7
References:
Finance.yahoo.com. (2019). Finance.yahoo.com. Retrieved 18 August 2019, from
https://finance.yahoo.com/quote/AAPL?p=AAPL
Keown, A., Martin, J., & Titman, S. (2014). Financial Management. Principles and
Applications. Twelfth Edition.
Sec.gov. (2019). Sec.gov. Retrieved 18 August 2019, from
https://www.sec.gov/answers/about-lawsshtml.html