How might a financial manager go about gathering information to ensure that budgeting takes into consideration the above factors? Are there other factors that should be considered in assessing whether there are growth needs in staff or salaries?

Week 4 Class Discussion

Reply to the following using at least 175 words per response. Reply to post 1 and 2 separately. Be sure to use FULL APA references and in-text citations. Be professional and constructive in your response.

1. A good approach to budgeting is using an historical approach. Using the past to predict the future can add an element of reliability to the budget. However, one can’t simply depend on the past in isolation to develop the next year’s budget. Budget Tracking with Rolling Statistical Forecasts (https://fpa-trends.com/article/budget-tracking-rolling-statistical-forecasts) also provides a good approach for budget tracking as well.

Especially in the area of salaries you must make sure what you’re budgeting is consistent with projected need for the upcoming year. Some things to consider are:

Is there any projected growth in patient volume that might necessitate increased staff

Are there any wing expansions planned that will necessitate increased staff,

Are there any increased services being planned that will necessitate increase staff, etc.

How might a financial manager go about gathering information to ensure that budgeting takes into consideration the above factors? Are there other factors that should be considered in assessing whether there are growth needs in staff or salaries?

2. Sometimes it is difficult to keep the budget on the “planned course” and it is even harder to get the budget “back on course” should the financial compass take a detour. If budgets are like roadmaps then strategic plans could be viewed as our GPS. Investments like expanding services, adding equipment or adding space should all have been incorporated into strategic plans. Strategic plans help build the budget. And, the budget guides our operations (tactical) plans. Linking Budget to Strategy in Healthcare Organizations (https://www.clearpointstrategy.com/linking-budget-to-strategy-in-healthcare-organizations/) explores this concept.

know all of us are no doubt familiar with the GPS phrase “recalculating route”. The strategic plan is like a GPS system inasmuch as it can help us recalculate our routes should we get off course financially.

 

Discuss what must be included to request finances through a capital request. What are some examples for capital request items needs?Why and how are capital requests treated differently?

1. Describe the difference between an operational and a capital financial budget.

2. Discuss what must be included to request finances through a capital request. What are some examples for capital request items needs?

3.Why and how are capital requests treated differently? Provide an example for a capital request.

4. Complete the capital budget request as assigned. (it’s in the files)

A $40,000 face value bond carrying a 7.6% coupon is purchased with four years until maturity. Posted rates are then 4.9%. Construct an appropriate complete table for the capital gain or loss. What is the total gain accrued or loss amortized in the third year?

2 Finance questions

For all questions, assume that all interest rates or yields and payment frequencies are compounded semi-armually and that the redemption price equals the face value.
Mechanics

1. A Province of Alberta $100,000 face value bond carrying a 5.03% coupon was issued on December 17, 1998, with 20 years until maturity. What was its purchase price on June 17, 2005, when market yields were 4.29%2

2. A Government of Canada $50,000 face value bond carrying a 5.75% coupon was issued on Jtme 1, 2008, with 25 years until maturity. What was its market price on November 21, 2009, when market rates were 3.85%?

3. A $35,000 face value bond carrying a 7% coupon will mature on October 3, 2019. If it is purchased on April 3, 2006, for $46,522.28, what is its yield to maturity?

4. A $55,000 face value bond carrying a 4% coupon is purchased for $33,227.95 on March 29, 1997. The bond is later sold on September 29, 2007, for $60,231.63. Calculate the semi-annual investor’s yield.
5. A Province of Manitoba 1250,0000!! value bond carrying a 2% coupon was issued on December 1, 2006, with 30 years until maturity. On January 10, 2010, when market yields were 4.19%, what were its market price, accrued interest, cash price, and premium or discount?

6. Carlyle needs to save up $20,000 to meet the down payment requirement on his new home. He wants to make semiannual deposits at the beginning of each six months for the next four years, putting them into a fund earning 6.12% compounded semi-armually. Construct a complete sinlcing fund due schedule.

7. A $15 million face bond carrying an 8.5% coupon has nine years until maturity. The bond issue has a sinlcing fund provision requiring semi-annual payments, and the full bond value must be saved by its maturity date. If the fund can eam 7.35% compounded semi-armually, calculate the annual cost of the bond debt.

8. When market yields are 16%, a $65,000 face value bond carrying a 6.75% coupon is purchased three years before maturity. Construct a complete bond discount accrual table for the bondholder.
Applications

1. When posted market rates are 9.65%, a $75,000 face value bond carrying a 7% coupon is purchased with 23V2 years to maturity. With eight years remaining until maturity the bond is then sold, when posted market rates are 3.5%. Calculate the investor’s yield.

2. A 3275,000 face value Province of British Columbia bond carrying a 10.6% coupon is issued on September 5, 1990, with 30 years tmtil maturity. The bond is purchased on March 5, 2002, when posted rates are 5.98%. Calculate the purchase price of the bond. What is the amount of its premium or discount?

3. A $40,000 face value bond carrying a 7.6% coupon is purchased with four years until maturity. Posted rates are then 4.9%. Construct an appropriate complete table for the capital gain or loss. What is the total gain accrued or loss amortized in the third year?

4. A $50 million face value bond carrying a 4.83% coupon with 25 years until maturity is issued. The bond has a sinking fund requirement with semi-annual payments designed to retire the full face value upon maturity. If the sinlcing fund is expected to eam 3.89% compounded semi-annually, calculate the annual cost of the bond debt. What is the book value of the debt after 10 years?

5. A $62,000 face value bond carrying an 8.88% coupon is purchased on July 15, 2011. The bond matures on November 13, 2027. At the time of purchase, the market rate on the bond was 4.44%. Calculate the market price, accrued interest, and cash price of the bond. Determine the amount of the bond premium or discount.
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Briefly describe the municipality’s demographics.Evaluate the previous three-year trend of the municipality’s major revenue sources and expenditures.

Develop your case study findings and recommendations consisting of no less than two pages in which you discuss the prompts listed below.

Briefly describe the municipality’s demographics.

Evaluate the previous three-year trend of the municipality’s major revenue sources and expenditures.

Analyze the impact of the issues contributing to the municipality’s budget deficiencies.

Propose three alternative financing options.

Evaluate the effectiveness claims of the manager using the budgetary variance mode described in Chapter 17. What is your analysis of the department manager’s performance? Explain your reasoning.

Budgetary Variance Model

Prior to completing this assignment, review Assignment 9 in Chapter 17 of your course text. Prepare an evaluation of the performance of the Radiology Department Manager for a hospital.

The service unit, or output, for this department is the number of procedures performed. A static budget was prepared at the beginning of the year.

Examine that budget in relation to actual experience. The relevant data are included in Table 17-18 in your course text. The department manager is pleased because the department has a favorable $120,000 cost variance.

Evaluate the effectiveness claims of the manager using the budgetary variance mode described in Chapter 17. What is your analysis of the department manager’s performance? Explain your reasoning.

 

How much better is the chosen alternative over the worst alternative?If a new lower cost of capital equal to 11% is used, what decision do you reach?

Business math assignment

Recalculate question 11 with the following modifications: Project A: Add a residual value of $100,000 in year 10. Project B: Add a residual value of $60,000 in year 10. Project C: Move the residual value from the ninth year to the tenth year. a. At a 16% cost of capital and using an appropriate decision-making technique, recommend which project should be selected. How much better is the chosen alternative over the worst alternative?

b. If a new lower cost of capital equal to 11% is used, what decision do you reach?

First accurately identify the risks. For example, how might your firm be negatively impacted by fluctuations in the money supply?

7-2 Final Project Milestone Three: Analysis of the Scenario

Interpret the macroeconomic events described in the scenario to determine their likely impacts to capital market conditions. Cite specific evidence and principles discussed in the course that support your claims.

B. Draw connections between your analysis of the events and the more specific likely impacts to your own firm and their strategic objectives. Cite specific evidence and principles discussed in the course that support your claims.

C. Assess the potential for the macroeconomic events to pose financial risks to your firm.

i. First accurately identify the risks. For example, how might your firm be negatively impacted by fluctuations in the money supply?

Provide a specific example to illustrate each identified risk.

ii. Then measure (i.e., quantify) the risks using appropriate financial tools. For example, consider calculating your firm’s debt-to-capital ratio, debt/equity ratio, interest coverage ratio and their degree of combined leverage.

What form of integration? What are the key value adding activities?Which market(s) is the organisation operating in?

Internal report on PB

Which of these categories are most significant in delivering the strategy and achieving advantage over competitors. Also you must discuss what business model they use?

What form of integration? What are the key value adding activities? Remember this must be company specific so the evidence you use will be about the company you are analysing.

Which market(s) is the organisation operating in? Identification of major SBUs

How does the organisation make its money?

Discuss the impact of the Global Financial Crisis (GFC) in 2008/09 on the chosen country’s economy (for example, students can explore the bond market and plot yield curves in their discussions); – 10%

Firm and Country Level Analysis- Bloomberg

Use Bloomberg Functions to find out the capital structure of the chosen company and discuss the cost of capital and its implications on the value of the firm; – 10%

Trace the change of share price and illustrate the risk and return of the company in the market; – 10%

Identify a piece of related news and (e.g., using economic and financial theory) explain its impact on the share price; – 10%

Analyse the relationship between the performance of the chosen company and a relevant market benchmark index (e.g., FTSE100 Index) over the sample period (The use of quantitative techniques will merit more marks). – 10%

Discuss the impact of the Global Financial Crisis (GFC) in 2008/09 on the chosen country’s economy (for example, students can explore the bond market and plot yield curves in their discussions); – 10%

Comment on the impact of Covid-19 on the chosen country’s economy; – 10%

Provide an overview of the chosen country’s currency on the foreign exchange market; – 10%

Provide country-level insights on the chosen company and its future. – 10%

What is the contract size (aka. contract unit) of 1 Euro FX futures contract? Is the British Pound futures contract size the same as Euro FX futures? How many Euro FX futures contracts do you need to long/short today?When you convert 3.75 mil Euros into USD next month, are you “buying” or “selling” Euros? To lock the future exchange rate in this case, should you “long” or “short” Euro FX futures today? Explain.

Finance H.W

10 Questions (each is worth 1 point, consider each as a):

1. When you convert 3.75 mil Euros into USD next month, are you “buying” or “selling” Euros? To lock the future exchange rate in this case, should you “long” or “short” Euro FX futures today? Explain.

2. What is the contract size (aka. contract unit) of 1 Euro FX futures contract? Is the British Pound futures contract size the same as Euro FX futures? How many Euro FX futures contracts do you need to long/short today?
(Hint: Go to https://www.cmegroup.com (official futures exchange) and locate the Euro FX futures. Check “Contract Specs” tab.)

The rest of this project will confirm whether your actions taken on 10/25/2021 (=answers to Q1/Q2) are indeed the correct hedging strategy at the end. If you don’t find sufficient evidence of lowering risk in Q3-Q10, it’s likely that your answers to Q1/Q2 are incorrect so revise your answers and solve them again, as necessary.

3. For every trading day (skip holiday/weekends) during the sample period, collect the EUR/USD exchange rate (from either Bloomberg, Google, Yahoo, Fed, etc) and the Euro FX futures price (from CME or other sites).

The above screenshot is what the Euro FX futures quotes looks like at cmegroup.com. The price you need to collect is “Last” price (not Open, High, Low).
(Hint: There are free sources on the internet to get the futures price history. If you find one, then you don’t have to visit the cmegroup.com every day to collect data. You can ask whether your source is correct in Teams. For these websites, “Last” price may be called as “Close” price. )

Prepare a spreadsheet and create 3 columns for
Date (exclude non-trading days)
EUR/USD exchange rate
Euro FX futures price

(Hint: The above screenshot is just a suggested template for the spreadsheet. You can add more columns, if needed.)
(Hint: FOREX and futures price will not be identical to each other. But they should be very similar. If your FOREX is 0.80 and futures price is 1.20, then it’s most likely you are using an incorrect quote.)

4. In columns E and F, calculate “Daily Gains” and “Cumulative Gains” for your Euro FX futures position from Q1 and Q2. Calculate these values in Excel. Do not manually enter the values. If don’t see Excel calculation behind your answers, I’ll assume you copied someone else’s answers, which is not acceptable for an individual project.
(Hint: How to calculate daily and cumulative gains is explained in Module 1.4. Daily Settlements.)

5. Assume the initial margin requirement is $2,420 per contract and the maintenance margin requirement is $2,200 per contract. In column G, calculate the “Margin Account Balance” for each trading day. Is there a margin call at any time? If yes, add the required cash to the margin account to avoid liquidation.

6. In column H, convert 3.75 mil Euros into USD using the exchange rates in column B for each day. In column I, calculate the values of your “Hedged Value”. (Hint: hedged value = unhedged value in H + futures cumulative gains in F).
At this point, your spreadsheet should have the columns (A – I) in the screenshot above.

7. Plot the unhedged values and hedged values in Q6 over time. Discuss whether your strategy was successful. Specifically, did your futures position lower the currency risk?

8. Calculate the standard deviations of the unhedged values in H. In addition, calculate the standard deviation of hedged values in I. Discuss whether your strategy was successful.

9. If EUR/USD exchange rate increases in the future, the USD value of your Euros will become higher, which will benefit you. Suppose you want to benefit from this positive opportunity but still want to limit the loss against FOREX drop. For this objective, Euro FX futures is a wrong instrument. Instead, which investment strategy should you use? In addition, which specific financial derivative will this strategy involve?

(Hint: try to find a security that will pay off big, when EUR/USD increases but not penalize when EUR/USD decreases.)

10. Euro FX futures is an example of FX (or currency) derivatives. In Module 3, we learned Eurodollar futures. Eurodollar futures may sound similar to Euro FX futures but they are fundamentally different. What is Eurodollar futures? Why and when will a company use Eurodollar futures? Using a specific example from Module 3 and discuss how a company would use Eurodollar futures.