Question 1: Company Objectives
Select a company other than in the S&P 500 index and go to its Web site (usually "www.companyname.com") to find its mission statement or statement of values. This information is often included in the "Investor Relations" section of the Web site.
Please include the key elements of the company's mission statement in your posting, and also answer the following questions:
1. Is shareholder wealth maximization stated as a specific corporate objective?
2. In your opinion, is the company an adherent of shareholder primacy, or of stakeholder capitalism?
3. Why do you think the company has adopted this viewpoint? Do you agree with it?
Question 2: Stock Markets
Visit the Web sites of NYSE/Euronext (the New York Stock Exchange) and the NASDAQ Stock Market to learn more about how those institutions are organized and how companies qualify to become listed and actually go public. At the New York Stock Exchange, click on the "About Us" link on the left side of the home page to begin. At the NASDAQ Web site, scroll down and click on the links under the "NASDAQ Corporate" heading.
Generally speaking, how do these markets operate?
Question 3: Company's Beta
Guess the beta of the company chosen in Question 1, and then look up the beta. How close was your guess? Are you surprised by the actual beta? Why or why not?
Question 4: Bond Yields (show calculations)
1. Choose a bond and confirm the yield to maturity that is presented.
2. Then find a callable bond and calculate its yield to call, assuming the bond will be called at the earliest possible date.
Question 5: Applying the Constant Growth Model (show calculations)
Select a company with a long (ten-plus years) history of paying dividends. Use the constant growth model to estimate the company's expected rate of return.
Question 7: Capital Expenditures
How do companies invest their capital? Select a publicly traded company and review the Management's Discussion and Analysis section of its annual report to see what capital expenditures it made, and it what amounts, in its most recent fiscal year.
Question 8: Capital Structures
Select a company in the S&P 500 and assess the extent to which it uses debt in its capital structure.
1. Compare your company's capital structure to that of other companies in the same industry.
2. If your company's financial leverage is significantly higher or lower than that of its peers, why do you think this is the case?
3. Do you think your company's actual capital structure is close to its ideal capital structure? Why or why not?
Question 9: Dividend Policies
Select a company that has recently announced a new (first-time) dividend or a dividend increase. Analyze the factors that led to this decision. Do you think the company's current dividend payout policy is appropriate? Why or why not?
The solution creates a mission statement. Market, beta, CGM and dividends are explained.