Posted: August 1st, 2022

Financial management and markets

FPX3062FinancialManagement1 xWeek1-BUS3062Template xFinancialManagementandMarketsScoringGuide

 Financial management and markets  

Focus on general finance questions based upon readings from Chapters 1 and 6 of your textbook.

In this assessment, you will explore various aspects of the business environment, including the role of financial managers. Financial managers are known as the agents of company owners (stockholders) who are tasked with achieving the goal of maximizing shareholder wealth using tools of financial markets. You also receive an introduction to the various types of financial markets and the relationships between interest rates and other economic variables.

Introduction

This assessment focuses on general finance questions based upon readings from Chapters 1 and 6 of your textbook.

Instructions

Complete and submit the 

Assessment 1 Template [DOCX]

.

Use references to support your answers as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:

· Competency 1: Analyze financial environments and concepts. 

1. Evaluate ethical nature of an insider trading case.

1. Explain why wealth maximization is more desirable than profit maximization as a goal for any company.

1. Classify four market transaction types correctly.

1. Classify 5–7 market securities correctly.

1. Explain the shape of the yield curve with respect to the unbiased expectations and liquidity premium theories.

1. Competency 2: Apply financial computations and processes. 

2. Calculate the correct equilibrium rate of return for a security.

1. Competency 3: Communicate effectively and professionally. 

3. Convey clear meaning through appropriate word choice and usage

Focus on general finance questions based upon readings from Chapters 1 and 6 of your textbook.
In this assessment, you will explore various aspects of the business environment, including the role of financial managers. Financial managers are known as the agents of company owners (stockholders) who are tasked with achieving the goal of maximizing shareholder wealth using tools of financial markets. You also receive an introduction to the various types of financial markets and the relationships between interest rates and other economic variables.
Introduction
This assessment focuses on general finance questions based upon readings from Chapters 1 and 6 of your textbook.
Instructions
Complete and submit the 
Assessment 1 Template [DOCX]
.
Use references to support your answers as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
Competencies Measured
By successfully completing this assessment, you will demonstrate your proficiency in the course competencies through the following assessment scoring guide criteria:
· Competency 1: Analyze financial environments and concepts. 
1. Evaluate ethical nature of an insider trading case.
1. Explain why wealth maximization is more desirable than profit maximization as a goal for any company.
1. Classify four market transaction types correctly.
1. Classify 5–7 market securities correctly.
1. Explain the shape of the yield curve with respect to the unbiased expectations and liquidity premium theories.
1. Competency 2: Apply financial computations and processes. 
2. Calculate the correct equilibrium rate of return for a security.
1. Competency 3: Communicate effectively and professionally. 
3. Convey clear meaning through appropriate word choice and usage

· Textbook: Cornett, M., Adair, T., & Nofsinger, J. (2019). M: Finance (4th ed.). McGraw-Hill. Available in the courseroom via the VitalSource Bookshelf link. 

. Chapter 1, “Introduction to Financial Management.”  

. This chapter introduces finance and the functional function, including business organizations, firm goals, and agency theory.

· Chapter 6, “Understanding Financial Markets and Institutions.” 

. This chapter covers various types of financial markets and the relationships between interest rates and other macro-economic variables.

·

The Role of the Chief Financial Officer.

· Details the duties and responsibilities of the CFO.

·

Financial Markets.

· Provides and introduction to financial markets—what they are and how they operate

Remove or Replace: Header Is Not Doc Title

Week

1

Assignment Template

Respond to the following questions using grammatically correct language.

1. Martha Stewart was accused of insider trading for selling ImClone stocks a day before the stock went down in value. The charges of securities fraud were thrown out but she served 5 months in prison for obstruction of justice and lying to investigators. Do you think what Martha did (insider trading) was unethical from financial management point of view? Explain.

[Answer here.]

2. Explain why wealth maximization is more desirable than profit maximization as a goal for any company.

[Answer here.]

3. Classify the following transactions as taking place in the primary or secondary markets by placing an “X” in the appropriate cells for questions 3 and 4.

Markets

Transactions

Primary Market

Secondary Market

IBM issues 200 million dollars of new common stock.

The New Company issues 50 million dollars of common stock in an IPO.

IBM sells 5 million dollars of GM preferred stock from its marketable securities portfolio.

The Magellan Fund buys 100 million dollars of previously issued IBM bonds.

Prudential Insurance Co. sells 10 million dollars of GM common stock.

4. Classify the following financial instruments as money market securities or capital market securities:

Financial Instruments

Transactions

Money Market

Capital Market

Federal Funds.

Common Stock.

Corporate Bonds.

Mortgages.

Negotiable Certificates of Deposit.

U.S. Treasury Bills.

U.S. Treasury Notes.

U.S. Treasury Bonds.

State and Government Bonds.

5. Explain the shape of the yield curve with respect to the unbiased expectations and liquidity premium theories.

[Answer here.]

6. Imagine a particular security’s default risk premium is 2 percent. For all securities, the inflation risk premium is 1.75 percent and the real risk-free rate is 3.50 percent. The security’s liquidity risk premium is 0.25 percent and maturity risk premium is 0.85 percent. The security has no special covenants. Calculate the security’s equilibrium rate of return. Show your work.

[Answer here; show your work.]

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5/18/22, 3)19 PM

Financial Management and Markets Scoring Guide

Page 1 of 1https://courserooma.capella.edu/bbcswebdav/institution/BUS-FPX/BUS-FPX3062/210400/Scoring_Guides/a01_scoring_guide.html

Financial Management and Markets Scoring Guide

CRITERIA NON-PERFORMANCE BASIC PROFICIENT DISTINGUISHED

Evaluate ethical
nature of an insider
trading case.

Does not evaluate
ethical nature of
an insider trading
case.

Evaluates ethical
nature of an insider
trading case.

Evaluates
ethical nature of
an insider
trading case.

Evaluates ethical nature of an
insider trading case in detail and
provides a strong argument and
references to an appropriate
ethical code.

Explain why wealth
maximization is more
desirable than profit
maximization as a
goal for any
company.

Does not explain
why wealth
maximization is
more desirable
than profit
maximization as a
goal for any
company.

Explains why wealth
maximization is more
desirable than profit
maximization as a
goal for any company
in a confusing or
ineffective manner.

Explains why
wealth
maximization is
more desirable
than profit
maximization as
a goal for any
company.

Explains why wealth maximization
is more desirable than profit
maximization as a goal for any
company in a detailed way that
draws a strong distinction
between the two concepts.

Classify four market
transaction types
correctly.

Classifies less
than three market
transaction types
correctly.

Classifies three
market transaction
types correctly.

Classifies four
market
transaction
types correctly.

Classifies all market transaction
types correctly.

Classify 5–7 market
securities correctly.

Classifies less
than two market
securities
correctly.

Classifies 2–4 market
securities correctly.

Classifies 5–7
market
securities
correctly.

Classifies all market securities
correctly.

Explain the shape of
the yield curve with
respect to the
unbiased
expectations and
liquidity premium
theories.

Does not explain
the shape of the
yield curve with
respect to the
unbiased
expectations and
liquidity premium
theories.

Explains the shape of
the yield curve with
respect to the
unbiased expectations
and liquidity premium
theories with
significant errors or
omissions.

Explains the
shape of the
yield curve with
respect to the
unbiased
expectations
and liquidity
premium
theories.

Explains the shape of the yield
curve with respect to the
unbiased expectations and
liquidity premium theories in a
clear concise manner with
insightful detail that demonstrates
a deep understanding of the
concept.

Calculate the correct
equilibrium rate of
return for a security.

Does not attempt
to calculate the
equilibrium rate of
return for a
security.

Calculates the
incorrect equilibrium
rate of return for a
security.

Calculates the
correct
equilibrium rate
of return for a
security.

Calculates the correct equilibrium
rate of return for a security and
shows the work calculations.

Convey clear
meaning through
appropriate word
choice and usage.

Does not convey
clear meaning
through
appropriate word
choice and
usage.

Clear meaning is
inhibited by a limited
vocabulary, vague or
ambiguous word
choice, or incorrect
usage.

Conveys clear
meaning
through
appropriate
word choice and
usage.

Conveys precise and unequivocal
meaning through precise word
choice and effective usage.

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