Assignment
Part A: Essay Questions. Answer the question below.
1) What is Weighted Average Cost of Capital? Explain and derive each component part.
2) Utilizing the company that you have analyzed, estimate its WACC.
3) What is capital budgeting?
4) What is a target capital structure?
5) Derive the Net Present Value methodology of capital budgeting, and explain the use of WACC.
Part B: Essay Questions. Answer any two questions.
I. Regarding equities (stock):
1) What is stand-alone risk?
2) How is it measured? Create an example and compute the risk measurement.
3) What is market risk?
a. What is the connection of a stock to market risk?
b. Define and provide the formula to determine a stock's market risk.
II.
1) What is an Investment portfolio?
2) Using historical data: create a portfolio, and solve for the portfolio's average, annual return. [Suggestion: Pick 4 to 10 different companies to comprise the portfolio].
3) How would we measure the risk of the PORTFOLIO?
4) What is the conclusion of the Capital Asset Pricing Model with regard to a portfolio?
5) What are the important conclusions that this model offers regarding investment portfolios?
III.
1) Why must working capital be "managed"?
2) What is (are) the goal(s) of working capital management?
3) Create an example and explain the Cash Budget.
4) How is a Cash Budget distinct from an Income Statement?
5) What are some techniques that a company may undertake to improve its working capital position?
Format your assignment according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.