Student 1:

• The labor movement and labor unions came about in America out of necessity. When more people turned to factory work during the industrial revolution rather than being self employed such as farming, that changed the way things worked. With many capitalists more focused on their own profits someone had to look out for the employees. “Labor union leadership enters into good faith negotiations with management representatives over terms of employment such as work hours, pay, and job security.” (Martoccio, pg 307). Labor unions help ensure that employees are protected from unfair treatment or being taken advantage of. Employees join labor unions for many different reasons including personal, political, social, and job considerations. Many employees see joining a labor union as a solution to a real or perceived problem. Unions can help employees receive better wages, which is also a big reason for joining. Employees covered under collective bargaining often enjoy higher wages and re more likely to participate in a variety of employee benefit programs.

Student 2:

• “The labor movement has developed a multilevel organizational structure. This complex of organizations ranges from local unions to the two principal federations—the AFL-CIO and the Change to Win Coalition. Structured unions then pursue strategies to build membership and representation of workers in as many workplaces as possible.” (J. J. Martocchio, J. Martocchio, 310). Local unions are the most important type of unions to employees, because they work directly with employers to broker deals on behalf of their members on a day-to-day basis. National unions serve as the over-arching organizing body for affiliate local unions. “The national union is active in organizing workers within its jurisdiction, engaging in collective bargaining at the national level, and assisting its locals in their negotiations. In addition, the national union may provide numerous educational and research services for its locals, dispense strike funds, publish the union newspaper, provide legal counsel, and actively lobby at national and state levels.” (J. J. Martocchio, J. Martocchio, 311)People join labor unions in order to remedy unfavorable labor conditions as a collective. It would be extremely difficult for an individual worker to address their grievances alone, but workers can negotiate for their rights more effectively using the collective power of labor unions. Employees join labor unions to create negotiating power as a collective unit to bargain for fair and equitable compensation and benefits, to establish job security, and weaken the autonomy of executives.

Student 3:

• I have chosen the telecommunication industry for my driving force analysis. Below are the following factors that affect this industry:Communication-Highly Important-Wireless internet is becoming the future quickly. There is an increasing demand for speedier data connectivity, higher resolution, quicker video streaming, and ample multimedia applications.Popularity-High importance-The popularity of wireless internet and all it offers is steaduly increasing revenue and lots of organizations are flocking towards it. Mergers- High Importance-Attractive to investors which makes the value higher. Telecommunications companies are a rarity in the stock market; their shares have, at times, exhibited characteristics of both income and growth stocks (Beers, B. 2019).Government Deregulation- Low- In 1996, Congress approved and President Clinton signed into law The Telecommunications act of 1996. One of the primary goals of this act was to restructure the telecommunications industry in order to foster competition by attempting “to reduce regulatory barriers for entry and competition(N/A, N.D). When this was done they wanted to make it so the telecommunication industry would have as much competition as possible. The communication driving force has had the most impact because of how much wireless internet and the digital age has come into play. It has sped up over the last five years and I do not see it slowing down.

Student 4:

• For the Driving Force analysis I would like to choose Technology Industry. In the current generation the technology is growing very fast and changing according to the consumer taste frequently. Technology has been a great success in the recent past. There are many factors which are driving the technology industry. They are,
  1. Customer needs – More Important – The customer needs in the current generation are really increasing. To meet the customer expectation and demand the research & development team has been spending a lot of money and time as well. If one customer needs are met another new demand increases. So, matching the customer needs are really challenging at the same time it is driving the industry as well.
  2. Data – More important – Data storage is another important aspect which has changed the technology industry to the heights. There are many companies who spends a lot of time in data saving and most importantly they look for database where the can be stored safe, confidential and accessible easily when they want. Every big company wants the data storage facility and increases the demand of technology in the market.
  3. User friendly tools – Less Important – Most of the people look for any tools they use has to be user friendly. Taking an example of mobile, how it has been transformed from just a phone to a device now. When it started it was just used to talk to another person and today nobody can live without mobile. People also have got used to mobiles and frequent changes in the mobile options makes them user friendly.
  4. Security – More important – Data security is the primary reason for a technology to grow. In the current generation it is easy to hack any kind of data which are stored with any kind of security. To stop the hackers, the companies will need to spend a lot of money on data safety and pay the companies who do the data safety for others which leads to technology growth
  5. New Skills and New Players – Less Important – There have been multiple companies who are coming with new skillset and with new type of technology and they are getting introduced in the market. This is also driving the technology industry. The more and more new players appears the industry starts widening and the number of people involved in the same industry also will increase.
  6. Competition – More Important – Competition is common in any industry. When there is a tight competition in the market, the competitors to stay constant in the market and to gain competitive advantage, they will start focussing on the products they offer. They also strive to provide better quality to retain the customers in the company. Where there is a competition there is a chance of growth in any sector. It is applicable for technology as well.
  7. Innovation – More Important – Change is the only thing constant in any business. To meet the customer demands, many companies have been involved in a lot of Research and development to modify the products they offer. Innovation attracts people to buy and try them. This brings up more revenue to the industry and becomes a cause of growth. Innovation in technical field is vital because the current generation always expects new innovations and it gets appreciated as well.

Student 5:

• In terms of job evaluation, working in teams should always be considered as a criterion for working appraisals. In order for an associate to be promoted to a position such as management, the associate’s ability to work in a team is vital in an organization’s efforts to achieve new goals. As associates work in teams, certain skills such as effective communication and leadership are applied and further developed. In order for managers to convey goals effectively, the ability to communicate amongst various associates is essential to accomplishing new tasks. Regardless of how “independent” a job may seem, generally teamwork is needed amongst all jobs. For example, jobs such as electricians or semi-truck drivers are generally completed by one person. On the other hand, the electrician is usually setting up cables to accommodate appliances that are later installed by a maintenance person. Additionally, truck drivers may take long drives with equipment, but are often met at a meeting point with another truck driver awaiting to transfer the goods. Consequently, If the initial duties by the electrician and semi-truck driver are not finished, then the rest of the assignment cannot be completed. Although the teamwork is not always direct, it is important that the specific aspect of job is completed to ensure the completion of the overall task. On the other hand, people who prefer to work alone can benefit by allotting their own specific time to complete a task. Not to mention, there are less chances of conflicts arising and a possibility that the task can be completed faster (Chitra, 2018). Unfortunately, although a task may be completed amongst a group correctly, it was due to one or few people among the group. According to Hitt, Miller, Colella, and Triana, sometimes it is “better to have individuals work separately, even if the final product was successful” (Hitt, Miller, Colella, and Triana, 2018, p. 364) Overall, working in teams has proven to benefit a company by six different factors: fostering creativity and learning, blending complementary strengths, building trust, teaching conflict resolution skills, promoting ownership, and encouraging healthy risk taking (Mattson, n.d.). Working in a team can take the pressure off individuals and allow individuals who are more knowledgeable in a subject to provide more insight amongst the group.

Student 6:

• I believe that working in teams brings about a certain dynamic that makes a task or job to be accomplished with more understanding and thoroughness. It has been proven that a level of synergy is created by the team which brings about a more efficient output to accomplish any task. There can be drawbacks from operating in teams as well, team members can have issues with communication, and cohesion. The fact is that not all task or jobs require people to work in teams, managers need to ask the hard question. Is the team needed? Managers must ascertain whether a project requires collective work. “Some situations do not call for teamwork and are better handled by individuals working alone” (Colella, Hitt, Miller, & Triana, 2018, p. 366).I believe that if you are working in a team task-based job environment that your employees should have to work in a team or group. The employees will have to understand that teamwork is the concept that is being established and if they have concerns they need to communicate them. Once they communicate them to management, it is managements task to help the employee overcome their concerns and grow into a real team member. They can learn and understand that past bad experiences can be overcome to learn the benefits of working in teams. Managers can also determine if the task that is being performed can be structured to enable for someone that has a problem working in a team environment might be able to excel performing unitary task. “Unitary task is a task that cannot be divided and must be performed by an individual” (Colella, Hitt, Miller, & Triana, 2018, p. 372). Workers who want to be evaluated on their own merits solely must determine if working in a team environment is where they want to be employed. This part of the question reminds me of being in the Navy, being in the Navy is considered a team environment but each individual is evaluated on their own merits. When they are evaluated, teamwork is only one grading category out of many. As a manager you must understand if they are apprehensive about teamwork as it could cause a conflict if the individual does not see or share the views of others. Ultimately we want a workforce that wants to work and is focused on the success of the team and everyone pitches in to accomplish the team goal. There has to be a strong structure, “Teams also need the right mix and number of members, optimally designed tasks and processes, and norms that discourage destructive behavior and promote positive dynamics” (Haas & Mortensen, 2016).

 

 

Assignment details:

• Read 5 Wall Streett Journal articles published between May 18 and June 26.
• For each article, write 2 paragraphs: (1) articles summary; (2) your thoughts and/or analysis of the issues discussed in the article.
• For each article, clearly indicate article title and publication date.
• Put your write-up for all 5 articles into a single Word or PDF document.
• At the end of your document, create a reference list with article title, author, and link to the original article.

How to choose articles:

The articles must be related to investments, so please avoid general news articles, political news, culture news, opinion pieces not related to finance, even news about particular companies or industries unless you can make an explicit connection to how the news affect investors. Suitable topics include financial markets, financial institutions, stocks, stock indexes, bonds, interest rates, inflation, mutual funds, ETFs, exchange rates, commodities, macroeconomic indicators, investor expectations, consumer confidence, IPOs, volatility. Use your best judgment in determining whether a particular article fits the scope of our class. I especially welcome articles about the effect that the spread of the coronavirus is having on financial markets in the US and the US economy.

What to write:

In the summary paragraph, concisely provide the necessary background information and then summarize the main points that the author is making. In the analysis paragraph, you can focus on a few of the following approaches: challenge the assumptions that the author is making, challenge the validity of the author’s conclusions, relate the author’s argument to the concepts learned in the class, generalize the conclusions of the author beyond the scope of the article, ask follow-up and what-if questions related to the article. As our course progresses, you are expected to increasingly link what you have read to the concepts we have covered in the class.

INVESTMENTS: WSJ REPORT EXAMPLE Article Reviews by Adam Bates, UT Finance Major Article 1: Stocks Gain as U.S. Weighs Restarting Economy (April 14, 2020) This article spoke about how stock prices rose on 4/12/2020 around 3% collectively. The Dow rose 2.4% S&P rose 3.1% and Nasdaq Composite gained 323.32 points, or 3.9%. This was around the news that many experts believed that the peak of the COVID-19 has passed and the economy is becoming more concentrated on rebuilding. At that time the Dow was still down 19% from its all-time-high despite this gain. Earning season is also coming up and many investors are worried about what will be uncovered during these announcements. However, many investors also believe that stock prices are already discounted, and the earnings estimates have already been taken into account with the current price of the stocks. Financial Institutions such as JP Morgan Chase have already reported 70% earnings drop due to the potential losses they face on their loans to their clients. Their stock however has only dropped 2.7%. An interesting quote I found in this article is from Shawn Snyder, a head of investment strategist at Citi Personal Wealth Management. “I think the market is almost willing to ignore 2020 and is focused on the returns of 2021, when the virus is more likely to be under control.” Could it be that the efficient market hypothesis is false in this situation due to human emotion? In chapter 8 we learned about the efficient market hypothesis that states prices of securities fully reflect the available information. When reading this article, I felt almost the opposite of what should happen is happening. During this time there is of course a lot of uncertainty, but as an investor I would expect a larger premium due to the risk of the uncertainty, but with the stock prices rising there is little to no upside within the market for the next three months. I believe that currently the human emotion of hope is getting in the way of these stocks getting priced effectively. Shawn Snyder’s quote pointed it out what I believe fairly well. Investors are willing to put up with these losses in 2020 in hopes of growth to come one year from now in 2021. I personally don’t believe that stock prices should be rising just yet as there are still a lot of situations to play out. There is a possibility of a second wave of infections when states re-open, as well as larger cuts in earnings that are to be reported soon. Article 2: When Your Fund Beats the Market, Ask: Which Market? (April 24, 2020) One of the topics touched on in chapter 4 was mutual funds. This article talks about one specific fund and the fund manager. Putnam launched a fund named Capital Spectrum and named David Glancy as the fund manager. Capital Spectrum was a “go-anywhere” fund meaning that it was able to buy anything that the manager found attractive. This type of fund is usually a good bet depending on who the manager is because the fund has no limitations. This fund has the capabilities to even dip into foreign markets if it seems profitable. As we learned in chapter 4 this fund had its own unique fee structure. Glancy would earn a small % (less than 1) of the money managed in the fund as a base. But he would also make a bonus if the fund beats a benchmark. The benchmark for Capital Spectrum was 50-50 blend of the S&P 500 and the JP Morgan High Yield index which consisted of low-rated corporate bonds. From May 2009 to October 2013 the Class A shares of the fund earned around 24% annually compared to the benchmark at 18% and the S&P 500 at 18.4%. These high gains attracted new investors to the fund and soon its assets were around $11 billion. It wasn’t before long that shares were losing 9% while the S&P was still gaining 14.4% annually. In 2015 shareholders withdrew a total of $1.5 billion and then a total of $7 billion from 2016 to the end of last year. Putnam has had to pay about $5 million back into the fund in rebates due to its lack of performance against the benchmark. I am both a fan of mutual funds as well as the fulcrum (performance based) fees that this article talked about. To begin I think a mutual fund is a great way for an investor to diversify his portfolio. By buying a single share you are effectively spreading your eggs out into multiple baskets. One thing this article brings to light is how an investor must know what the fund is doing. There is a large difference between a mutual funds that invests into stocks and one that invests into bonds. Its important to know what type of financial assets your fund is holding and from what sector of the economy. Putnam’s fund was hard to keep an eye on because it was not specifically designed for anything in particular. Fulcrum fees was another great topic that the article brought up. I believe that managers should be rewarded on high returns as well as being punished for losses. This way it keeps the manager wanting the same thing as the shareholders, large returns. The benchmark in this case was clearly bogus because it used half of the benchmark assets in bonds and no where near 50% of the fund’s assets were in bonds at all. We all know the stocks have a tendency to yield higher returns than bonds, so it was not that big of a deal to beat their benchmark. Having a real benchmark though will make the stockholder believe in the fund managers more because they are able to compare their performance to that of some close. I believe when shareholders get to see when the manager does good that they actually won’t mind paying out the fees. Article 3: Wall Street Explores Changes to Circuit Breakers After Coronavirus Crash (April 15, 2020) This article talks about a mechanism that is used to help protect investors from large losses. A circuit breaker happens if the S&P loses 7% then it will trigger a 15-minute halt where all trading is stopped on the market. Next if the market falls 13% it will have another 15-minute cool off time. If the S&P decreases by 20% then the market will be shut down for the rest of the day. The breaks are meant for investors to have time to take in all the information that is being sent their way. The break also allows investors to have a better reaction compared to a knee-jerk reaction they might have if they were not given the time to think about their actions. I believe that these rules and mechanisms are good and help make the market a safer place for all investors. Circuit breakers helped a lot during the 2010 flash crash, and they were still improved after that. A lot of what happens when the market is crashing is two types of sell offs. The first is computer based and the algorithm tells it to start selling. Then there is emotional selling where investors fell unsafe and try to exit the market by selling the assets. Again, with time to adjust the algorithm as well as understand the situation more to feel safe will help in these down turns. Article 4: Treasuries Rally as Oil Price Drop Leaves Investors Jittery (April 21, 2020) This article talked about how between what is going on with the corona virus as well as the oil market hitting all time lows U.S. Treasuries are Rallying. According to the article the yield on a 10-year dropped to 0.571% from 0.625% while the 30-year has fallen to 1.162% from 1.234%. The yield on the 5-year not actually hit a unprecedented low of 0.304%. Another point that the article brings up is that the sharp drop in oil prices is also dragging down inflation expectations. To gage these expectations the article used the five-year, five-year forward U.S. inflation swap. The oil prices have changed the perception of many economist about how the global economy is doing and where it is headed in the future. This article also touches on foreign bonds, specifically those of the eurozone. The reason is many investors believe that the ministers of those countries will fail in trying to agree on a common debt-issuance program. The perk of that program would be that it would share the burden of shielding economies across EU members from the rescission. However, there is practically no way that it will pass because countries like Italy, which has been hit the hardest, will want to issue more debt than others. And those countries who do not want to issue debt will either be burdened with Italy’s debt of stop Italy from issuing it. I think right now is a very interesting time to be looking at bonds, specifically government bonds. The reason is, with COVID-19 countries are being forced to put out very large stimulus packages to make sure everyone can eat and to make sure that when it is over people will still have jobs to go back to. But where is all that money coming from? In a separate article I read it spoke about how states are now running on larger deficits because they cannot make any money through the income tax. In order to make sure all is provided for the government will have to issue more debt. With a flood of new debt to the market, yields will have to be higher in order to attract investors, but at the same time investors are already interested because is a safer asset to own compared to others in this time. Also, oil is making it a much safer bet to buy in U.S. treasuries because they will be able to beat the inflation rate. I think the foreign bonds are also interesting to think about however it is mostly political when it comes to the EU. Article 5: The Reach for Yield Survives Coronavirus Market Shock (April 27, 2020) In this article the authors, Gunjan Banerji and Julia-Ambra Verline, speak about how amidst the crisis bond managers and investors are still searching for high yielding bonds. The specific sector of bonds that is really creating interest for those managers and investors are the asset-backed securities. Investors have been faced with the risky stock market and falling yields on government bonds, but they still want to have a good return. Despite economic conditions being rough and combined with a fall of consumer spending the demand for bonds backed by U.S. auto loans has outstripped supply in recent days. Dell Technologies has also sold roughly $1.1 billion in debt which backed by leases on equipment to big and small companies. Investors really seemed to like that debt offering during this time. March and February monthly issuance of structured retail products are both higher than they have been in the past five years. However, according to JPMorgan Chase & Co. only $55 billion in asset-backed securities has been issued, which is down from $77 billion over the same period last year. If I were a bond manager, I would be jumping on these asset-backed securities as well. In my opinion they are safer than normal corporate debt because they actually have something to lean on and as an investor you know what to track in order to sell the bond before it loose its value. One thing that I do not disagree with in this article is how investors are buying up subprime auto debt. This type of debt is typically to a riskier borrower with lower credit scores. Especially now, during the COVID-19 crisis, it is not a safe asset to have. The people paying these loans might be the same ones that are losing their jobs. About 7.5% of the loans have received a payment extension in March which is up 1% from February. I don’t believe that the number of people who need extensions will go down anytime soon and soon defaults will happen. If I were in the bond market, I would definitely be picking up some asset based with high yields such as the Dell issuance. I suppose the textbook would describe me as an active bond manager.\ References McCabe, C., 2020. Stocks Gain As U.S. Weighs Restarting Economy. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Zweig, J., 2020. When Your Fund Beats The Market, Ask: Which Market?. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Lim, A., 2020. Wall Street Explores Changes To Circuit Breakers After Coronavirus Crash. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Davies, A., 2020. Treasuries Rally As Oil Price Drop Leaves Investors Jittery. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Verlaine, G., 2020. The Reach For Yield Survives Coronavirus Market Shock. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. INVESTMENTS: WSJ REPORT EXAMPLE Article Reviews by Adam Bates, UT Finance Major Article 1: Stocks Gain as U.S. Weighs Restarting Economy (April 14, 2020) This article spoke about how stock prices rose on 4/12/2020 around 3% collectively. The Dow rose 2.4% S&P rose 3.1% and Nasdaq Composite gained 323.32 points, or 3.9%. This was around the news that many experts believed that the peak of the COVID-19 has passed and the economy is becoming more concentrated on rebuilding. At that time the Dow was still down 19% from its all-time-high despite this gain. Earning season is also coming up and many investors are worried about what will be uncovered during these announcements. However, many investors also believe that stock prices are already discounted, and the earnings estimates have already been taken into account with the current price of the stocks. Financial Institutions such as JP Morgan Chase have already reported 70% earnings drop due to the potential losses they face on their loans to their clients. Their stock however has only dropped 2.7%. An interesting quote I found in this article is from Shawn Snyder, a head of investment strategist at Citi Personal Wealth Management. “I think the market is almost willing to ignore 2020 and is focused on the returns of 2021, when the virus is more likely to be under control.” Could it be that the efficient market hypothesis is false in this situation due to human emotion? In chapter 8 we learned about the efficient market hypothesis that states prices of securities fully reflect the available information. When reading this article, I felt almost the opposite of what should happen is happening. During this time there is of course a lot of uncertainty, but as an investor I would expect a larger premium due to the risk of the uncertainty, but with the stock prices rising there is little to no upside within the market for the next three months. I believe that currently the human emotion of hope is getting in the way of these stocks getting priced effectively. Shawn Snyder’s quote pointed it out what I believe fairly well. Investors are willing to put up with these losses in 2020 in hopes of growth to come one year from now in 2021. I personally don’t believe that stock prices should be rising just yet as there are still a lot of situations to play out. There is a possibility of a second wave of infections when states re-open, as well as larger cuts in earnings that are to be reported soon. Article 2: When Your Fund Beats the Market, Ask: Which Market? (April 24, 2020) One of the topics touched on in chapter 4 was mutual funds. This article talks about one specific fund and the fund manager. Putnam launched a fund named Capital Spectrum and named David Glancy as the fund manager. Capital Spectrum was a “go-anywhere” fund meaning that it was able to buy anything that the manager found attractive. This type of fund is usually a good bet depending on who the manager is because the fund has no limitations. This fund has the capabilities to even dip into foreign markets if it seems profitable. As we learned in chapter 4 this fund had its own unique fee structure. Glancy would earn a small % (less than 1) of the money managed in the fund as a base. But he would also make a bonus if the fund beats a benchmark. The benchmark for Capital Spectrum was 50-50 blend of the S&P 500 and the JP Morgan High Yield index which consisted of low-rated corporate bonds. From May 2009 to October 2013 the Class A shares of the fund earned around 24% annually compared to the benchmark at 18% and the S&P 500 at 18.4%. These high gains attracted new investors to the fund and soon its assets were around $11 billion. It wasn’t before long that shares were losing 9% while the S&P was still gaining 14.4% annually. In 2015 shareholders withdrew a total of $1.5 billion and then a total of $7 billion from 2016 to the end of last year. Putnam has had to pay about $5 million back into the fund in rebates due to its lack of performance against the benchmark. I am both a fan of mutual funds as well as the fulcrum (performance based) fees that this article talked about. To begin I think a mutual fund is a great way for an investor to diversify his portfolio. By buying a single share you are effectively spreading your eggs out into multiple baskets. One thing this article brings to light is how an investor must know what the fund is doing. There is a large difference between a mutual funds that invests into stocks and one that invests into bonds. Its important to know what type of financial assets your fund is holding and from what sector of the economy. Putnam’s fund was hard to keep an eye on because it was not specifically designed for anything in particular. Fulcrum fees was another great topic that the article brought up. I believe that managers should be rewarded on high returns as well as being punished for losses. This way it keeps the manager wanting the same thing as the shareholders, large returns. The benchmark in this case was clearly bogus because it used half of the benchmark assets in bonds and no where near 50% of the fund’s assets were in bonds at all. We all know the stocks have a tendency to yield higher returns than bonds, so it was not that big of a deal to beat their benchmark. Having a real benchmark though will make the stockholder believe in the fund managers more because they are able to compare their performance to that of some close. I believe when shareholders get to see when the manager does good that they actually won’t mind paying out the fees. Article 3: Wall Street Explores Changes to Circuit Breakers After Coronavirus Crash (April 15, 2020) This article talks about a mechanism that is used to help protect investors from large losses. A circuit breaker happens if the S&P loses 7% then it will trigger a 15-minute halt where all trading is stopped on the market. Next if the market falls 13% it will have another 15-minute cool off time. If the S&P decreases by 20% then the market will be shut down for the rest of the day. The breaks are meant for investors to have time to take in all the information that is being sent their way. The break also allows investors to have a better reaction compared to a knee-jerk reaction they might have if they were not given the time to think about their actions. I believe that these rules and mechanisms are good and help make the market a safer place for all investors. Circuit breakers helped a lot during the 2010 flash crash, and they were still improved after that. A lot of what happens when the market is crashing is two types of sell offs. The first is computer based and the algorithm tells it to start selling. Then there is emotional selling where investors fell unsafe and try to exit the market by selling the assets. Again, with time to adjust the algorithm as well as understand the situation more to feel safe will help in these down turns. Article 4: Treasuries Rally as Oil Price Drop Leaves Investors Jittery (April 21, 2020) This article talked about how between what is going on with the corona virus as well as the oil market hitting all time lows U.S. Treasuries are Rallying. According to the article the yield on a 10-year dropped to 0.571% from 0.625% while the 30-year has fallen to 1.162% from 1.234%. The yield on the 5-year not actually hit a unprecedented low of 0.304%. Another point that the article brings up is that the sharp drop in oil prices is also dragging down inflation expectations. To gage these expectations the article used the five-year, five-year forward U.S. inflation swap. The oil prices have changed the perception of many economist about how the global economy is doing and where it is headed in the future. This article also touches on foreign bonds, specifically those of the eurozone. The reason is many investors believe that the ministers of those countries will fail in trying to agree on a common debt-issuance program. The perk of that program would be that it would share the burden of shielding economies across EU members from the rescission. However, there is practically no way that it will pass because countries like Italy, which has been hit the hardest, will want to issue more debt than others. And those countries who do not want to issue debt will either be burdened with Italy’s debt of stop Italy from issuing it. I think right now is a very interesting time to be looking at bonds, specifically government bonds. The reason is, with COVID-19 countries are being forced to put out very large stimulus packages to make sure everyone can eat and to make sure that when it is over people will still have jobs to go back to. But where is all that money coming from? In a separate article I read it spoke about how states are now running on larger deficits because they cannot make any money through the income tax. In order to make sure all is provided for the government will have to issue more debt. With a flood of new debt to the market, yields will have to be higher in order to attract investors, but at the same time investors are already interested because is a safer asset to own compared to others in this time. Also, oil is making it a much safer bet to buy in U.S. treasuries because they will be able to beat the inflation rate. I think the foreign bonds are also interesting to think about however it is mostly political when it comes to the EU. Article 5: The Reach for Yield Survives Coronavirus Market Shock (April 27, 2020) In this article the authors, Gunjan Banerji and Julia-Ambra Verline, speak about how amidst the crisis bond managers and investors are still searching for high yielding bonds. The specific sector of bonds that is really creating interest for those managers and investors are the asset-backed securities. Investors have been faced with the risky stock market and falling yields on government bonds, but they still want to have a good return. Despite economic conditions being rough and combined with a fall of consumer spending the demand for bonds backed by U.S. auto loans has outstripped supply in recent days. Dell Technologies has also sold roughly $1.1 billion in debt which backed by leases on equipment to big and small companies. Investors really seemed to like that debt offering during this time. March and February monthly issuance of structured retail products are both higher than they have been in the past five years. However, according to JPMorgan Chase & Co. only $55 billion in asset-backed securities has been issued, which is down from $77 billion over the same period last year. If I were a bond manager, I would be jumping on these asset-backed securities as well. In my opinion they are safer than normal corporate debt because they actually have something to lean on and as an investor you know what to track in order to sell the bond before it loose its value. One thing that I do not disagree with in this article is how investors are buying up subprime auto debt. This type of debt is typically to a riskier borrower with lower credit scores. Especially now, during the COVID-19 crisis, it is not a safe asset to have. The people paying these loans might be the same ones that are losing their jobs. About 7.5% of the loans have received a payment extension in March which is up 1% from February. I don’t believe that the number of people who need extensions will go down anytime soon and soon defaults will happen. If I were in the bond market, I would definitely be picking up some asset based with high yields such as the Dell issuance. I suppose the textbook would describe me as an active bond manager.\ References McCabe, C., 2020. Stocks Gain As U.S. Weighs Restarting Economy. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Zweig, J., 2020. When Your Fund Beats The Market, Ask: Which Market?. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Lim, A., 2020. Wall Street Explores Changes To Circuit Breakers After Coronavirus Crash. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Davies, A., 2020. Treasuries Rally As Oil Price Drop Leaves Investors Jittery. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020]. Verlaine, G., 2020. The Reach For Yield Survives Coronavirus Market Shock. [online] The Wall Street Journal. Available at: [Accessed 13 May 2020].
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For Discussion Forum 2, please address any of the questions below. As always: you are required to make a minimum of THREE (3) posts per module. At least one of your three posts should be your own original comment; at least one – should be a response to or comment on something another classmate has posted; the third post can be either your own original post or a comment on a classmate’s post. Keep in mind that your response should NOT simply be a summary of the assigned reading. A higher grade will be awarded to posts that demonstrate student’s ability to provide an original interpretation of the topic while also applying relevant concepts, issues, and theories covered in the module.

1. The Leningrad – Seattle spacebridge features a dialog between American and (still) Soviet citizens at the very beginning of Mikhail Gorbachev perestroika. Did any of the questions (or answers) that the spacebridge participants brought up surprise you? To your mind, what was the most memorable moment of that bridge? Keeping in mind that, obviously, Soviet television was not going to invite dissidents to such a program, did you get a sense that Soviet citizens were generally happy and content with their lives? Did you get a sense of antagonism towards Americans? (alternatively, did you get a sense of antagonism towards the Soviets from the Seattle crowd?). Give specific examples from the video. What questions do you think would have been discussed (and why) if a dialog of this type happened between Russians and Americans today?

2. In this module you have read quite a bit about the Gorbachev era that ultimately ended with the collapse of the Soviet Union. Did any of the readings or video materials you have seen so far illustrate (or contradict) anything that you read about the Soviet Union of that time? Give specific examples.

3. As you now know, after Gorbachev rose to power in the Soviet Union in 1985, the reforms that he put into place dramatically changed the lives of Soviet citizens. Watch this brief video clip (Links to an external site.)Links to an external site. (length 6:32, excerpts from Robin Hessman’s 2010 documentary My Perestroika) in which several Russians describe their personal experiences during that turbulent time. In your opinion, which of the new freedoms enjoyed by Russians was the most important? Why? Why do you think one woman in the video called this period a “really confusing and difficult time for our country”?

4. Tapping into your imagination here (please do base your answer on what you have learned in this module). If you were born in the Soviet Union in the late 1960s and were about 17 or 18 during the beginning of perestroika, what changes do you think you personally would have welcomed most? What would have been most difficult to adapt to? If you were the Soviet leader in 1980s and your goal was to improve the existing regime, what policies or reforms would you recommend? Which policies and reforms that Gorbachev implemented would you have stayed away from? (E.g. would you have introduced the anti-alcohol campaign? etc.). Although this is a “what if” type of question, make sure to provide detailed answers backed with facts and data from this module’s materials.

5. For Russian / Soviet people of my generation, Gorbachev’s perestroika (and then the collapse of the Soviet Union) was definitely a profoundly life-changing event on every possible level. What events would you identify as the key political events for your own generation? Why did you pick this particular event? If you choose to answer this question, make sure to explain how are these events similar to / different from what Soviet citizens experienced in the late 1980s.

 

 

FINCB/571: Corporate Finance Comp 3

Part #1

Write a response to the following in a minimum of 500 words:

You are the chief risk officer for a company, and you’ve been tasked with identifying the areas where your company is exposed to systematic and unsystematic risks. Based on the information you learned in this module, what approach would you take in explaining how systematic and unsystematic risks affect risk planning?

Describe your approach. Name 3 or more systematic or unsystematic risks your company might face. Think of some implications if your company decides not to be proactive and plan for these risks.

Part #2

Write a response to the following in a minimum of 500 words:

You are a business consultant who works with new business owners. A new client wants to start a bakery and seeks your advice. Based on what you’ve learned from the readings, discuss the advantages and disadvantages of using venture capital as startup funding for a business.

Describe what approach you would recommend for the client by using the information you researched.

How does your approach differ from the recommendations of your classmates? How might your recommendations change after reading your classmates recommendations?

Part #3

Prepare a financial plan for the company you selected for your business plan (in OPSCB/574 and MGTCB/574). This financial plan will be included in your final business plan in your capstone course, STRCB/581. (Brookfield Properties Retail)

Review the company you chose to work with for your business plan that you will complete for your Integrative Business Capstone.

Describe the business, including the type of business.

Create the business case:

• Determine why funding is needed for the company.
• Determine the sources of funding. Consider self-funding, borrowing, equity, venture capital, and so on.

o Evaluate the requirements of each funding source you determined appropriate.

o Analyze the associated risks of each funding source.

o Decide which sources are the best fit for your company based on the requirements of each. Justify your decision.

• Estimate the cost of capital for both short-term and long-term funding sources. Research current estimated APRs for your selected sources of funding. Consider creating a table or chart to display this information.

Create a profit-and-loss statement for a 3-year period. Project revenue. State any realistic assumptions, such as growth per year, in your projections.

Estimate direct costs, including capital, marketing, labor, and supply costs.

Cite references to support your assignment.

Part #4

Write a response to the following in a minimum of 500 words:

Reflect on the three competencies of this course.

Consider how they might directly apply to your life and work environment when answering the questions below.

Competency 1: Assess cash flow, valuation, and key performance indicators for financial growth and sustainability.

Competency 2: Evaluate the effects of economic and market conditions on financial performance.

Competency 3: Distinguish between sources, requirements, and risks associated with various types of long- and short-term financing capital structure.

Question #1:

Provide an example of an economic recession impacting the financial performance of an industry of your choosing. Is it possible for an industry to perform well during economic downturns? What components of a financial plan might differ depending on industry? How do you determine what to include when drafting a financial plan for your organization?

Question #2:

What specific assignments or learning activities from this course did you find particularly beneficial? What do you feel could’ve improved or added to your learning experience in this course?

 

 

Describe your own personal code of moral principles and values. How were these principles and values formed? Are these values and principles consistent with those of your current organization (the values and behaviors present within the organization) or community in which you interact? If a conflict between your personal values and these external larger group’s values is present, what actions could you take to respect these conflicting values given that people’s values include diverse perspectives? Consider gender, generation/age, and culture in your analysis. Remember, this is a confidential essay. Be honest. Personal values and principles may not coincide with those of others, religious organizations, or professional organizations.

Some values could include being honest (always tell the truth), never take an action that harms someone else, treat people like you would like to be treated, always contribute at the highest level possible, family comes first, people come first, at work the organization comes first, and always show up early for work. Consider your own value system. Ask yourself why you think or behave in certain ways, or why someone else’s behavior angers you and creates a strong reaction within you. How might your reactions and your behaviors conflict with what values that you believe are important? The following link provides ideas on how you can identify your values: https://www.inc.com/kevin-daum/define-your-personal-core-values-5-steps.html (Links to an external site.)Links to an external site.

Your submission should be 4-6 pages (excluding cover page and references) and formatted according to the CSU-Global Guide to Writing & APA (Links to an external site.)Links to an external site.. Be sure to integrate and reference concepts, terms, and theories from the course readings and module content. You must include a minimum of four credible, academic references to support your work beyond the text or other course materials, including at least one peer-reviewed article. Review the grading rubric to see how you will be graded for this assignment. Utilize headings to organize the content in your work.

The CSU-Global Library has excellent resources to support your success, including multiple selections of sources to build your research and writing skills. Visit the Library’s homepage (Links to an external site.)Links to an external site.; then click the Get Help tab at the top of the screen to explore these resources.