1) From the e-Activity Part 1, based on your review of the government and municipality bond price / yield rate, determine the type of investor that is most likely to be attracted to government bonds with a short-term versus a long-term date to maturity. Provide support for rationale.
Evaluate the risk and reward proposition for an investor considering purchasing a government versus corporate bond, indicating the key factors to be considered to determine the investor level of risk tolerance and the impact to his decision.
Go to Bloomberg's bond site at http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ and review the bond price/yield rate for government and municipalities. Be prepared to discuss.
Go to Bloomberg's Website related to key-market rates at http://www.bloomberg.com/markets/rates-bonds/key-rates/ and review the mortgage rates (national average) trends over the past year. Be prepared to discuss.
2) New regulatory requirement imposed on banks and financial institutions may have impacted a bank's ability to generate mortgages for home buyers by increased requirements for disclosures, notices, statements, and documents related to lending. Evaluate the pros and cons of increased regulatory requirement, indicating the impact to the lender and the buyer. Provide support for your answer.
Based on your review of the mortgage rate trends, predict the future (within a year) rate of the 30-year fixed and the 15-year fixed rate mortgage, indicating the basis and rationale of your prediction, and the resulting impact to the mortgage industry.
3) From the e-Activities, based on your review of the Dow Jones Industrial Average performance trends from 1900 to the present, what conclusions can you draw and how may this impact your future decision to invest in the Dow Jones Index or companies. Provide support for your decision.
Based on your review of the current company composition of the Dow Jones Industrial Average, evaluate the company you believe creates the most and least value to the index. Provide a rationale for your decision.
Review the Dow Jones Industrial Average historic trends from 1900 to the present at http://stockcharts.com/freecharts/historical/djia1900.html. Be prepared to discuss.
Review the current company composition of the Dow Jones Industrial Average at http://www.bloomberg.com/markets/stocks/movers/dow/. Be prepared to discuss.
4) Evaluate the environmental factors that contribute to corporate management's need to manage corporate earnings to align with market expectations, indicating the potential long- term risks to financial performance and sustainability.
Assess the ethical complexities related to managing corporate earnings, determining whether or not investors and stakeholders are accepting of this behavior. Assuming that you are in a position to make corporate financial decisions, how likely are you to engage in earnings management and why?
5) From the e-Activity, based on your review of the performance trend for the FTSE Eurotop 100 Index, assess how the performance compares to the Dow Jones Industrial Average. Indicate the type of investor that is most likely to invest in a foreign market, such as the FTSE, given the level of performance. Provide a rationale for your response.
Assess the environmental factors (economic, social, political, etc.) that should be evaluated by an investor who is considering making a foreign investment. Indicate the factor that you believe to be the most influential in the decision-making process.
Go to the Bloomberg FTSE Eurotop 100 Index and review the performance trends. Be prepared to discuss.
6) The use of derivatives within financial institutions is considered to have contributed the financial crisis in 2008. Assess how the use of derivatives contributed to significant losses in the financial industry, indicating how such losses may be mitigated in the future. Provide a rationale for your response.
Some economists and bankers believe that derivatives make the market safer. Agree or disagree with this statement, providing support for your position.