Free Essay

Fin 534 Discussion Wk 1

In: Business and Management

Submitted By thickness1975
Words 465
Pages 2
* * From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. *
Freddy Mac Scandal
In the Freddy Mac Scandal, over 5 billion dollars in earnings were misstated. The SEC alleges that the corporation engaged in an accounting fraud from 2000 to 2002. The manipulation of earnings occurred by incorrectly accounting for various derivative instruments of the firm as well as manipulating the accounting for loan origination costs and reserves for losses. There was a SEC investigation, which lead to the firing of the President, Sr. Vice President and CFO. There was $125 million in fines.
Fannie and Freddie were created by Congress to make mortgages affordable and pump cash into the market by buying blocks of home loans from lenders and bundling them into securities for sale to investors worldwide. Due to this lots of people lost their homes or the interest rates were one thing, but turned out to be another later on down the line. The interest rates got so high in certain states that people could not afford the mortgage payment due to the fact the interest and tripled in some cases.
American Insurance Group Scandal (2005)
American Insurance group is a multinational insurance company. Massive accounting fraud was uncovered in the amount of 39 billion dollars, there was reports of bid rigging and stock price manipulation. CEO Hank Greenberg was the one that was accused of this scandal. Greenberg allegedly booked loans as revenue, steered clients to insure with whom AIG had payoff agreements, and told traders to inflate stock prices. There was a regular SEC investigation and a possible whistleblowing that was taken place.
There was $1.64 million paid out by AIG. The CEO was fired, but no criminal were filed.
In my opinion the penalty for both companies were not harsh enough. Criminal charges should have been filed against both parties.

* * From the scenario, recommend two (2) actions that Trevose Fitness Center (TFC) could take in order to raise capital that will, in turn, enable it to reach its expansion goals. Defend your response. Support your recommendation with two (2) real-world examples of successful implementations of these actions.

To raise more capital, I would look for outside investors. Offer employees a chance at buying stock within the company. I would also do research on the west coast to see what types of services that the other gyms offer. Having a daycare at the fitness centers would be a way to expand and increase capital.

References

http://accounting.smartpros.com/x59491.xml

http://www.nbcnews.com/id/21027918/ns/business-us_business/t/freddie-mac-settles-accounting-fraud-charges/#.VpLCaGfSnIU…...

Similar Documents

Premium Essay

Fin 534

...(5–1) Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds? 0 1 2 3 4 5 6 7 8 9 10 11 n=12 PV 80 80 80 80 80 80 80 80 80 80 80 80 Par Vaule= $1,000.00 Coupon interest rate = 8% Par value = $1,000.00 Payment = Par value x coupon rate Payment = $1,000.00 x 0.08 Payment = $80.00 Yield to maturity = 9% The current market price of the Jackson Corporation's bonds are calculated as follows. =PV(Rate, Nper, Payment, FV, Type) =PV(9%,12,80,1000,0) [pic] The current market price of Jackson Corporation's bonds is $928.39. (5–3) Heath Foods’s bonds have 7 years remaining to maturity. The bonds have a face value of $1,000 and a yield to maturity of 8%. They pay interest annually and have a 9% coupon rate. What is their current yield? 0 1 2 3 4 5 6 n= 7 PV 90 90 90 90 90 90 90 Par Vaule= $1,000.00 Coupon interest rate = 9% Par value = $1,000.00 Payment = Par value x coupon rate Payment = $1,000.00 x 0.09 Payment = $90.00 Yield to maturity 8% The current yield for Heath Food's bond is calculated as follows. Current Yield=current payment/current price Current Yield = $90.00/Present Value =PV(Rate, Nper, Payment, FV, Type) =PV(8%,7,90,1000,0) [pic] Current Yield=......

Words: 792 - Pages: 4

Free Essay

Fin 534

...1. Which of the following statements about dividend policies is CORRECT? 14.4 pages 567 - 568 e. The clientele effect suggests that companies should follow a stable dividend policy. 2. Which of the following statements is CORRECT? 14.2 pages 563 c. Stock repurchases can be used by a firm that wants to increase its debt ratio. 3. Which of the following statements is CORRECT? 14.13 pages 587 e. If a firm’s stock price is quite high relative to most stocks—say $500 per share—then it can declare a stock split of say 10-for-1 so as to bring the price down to something close to $50. Moreover, if the price is relatively low—say $2 per share—then it can declare a ―reverse split‖ of say 1-for-25 so as to bring the price up to somewhere around $50 per share. 4. Which of the following statements is CORRECT? 14.8 pages 572 - 573 a. If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm’s dividend payout. 5. DeAngelo Corp.'s projected net income is $150.0 million, its target capital structure is 25% debt and 75% equity, and its target payout ratio is 65%. DeAngelo has more positive NPV projects than it can finance without issuing new stock, but its board of directors had decreed that it cannot issue any new shares in the foreseeable future. The CFO now wants to determine how the maximum capital budget would be affected by changes in capital structure policy and/or......

Words: 424 - Pages: 2

Premium Essay

Acct504 Wk 1 Discussion

...Week 1: Overview of Financial Statements - Discussion Accounting is a way of tracking transactions and organizing them into concise reports to be used by investors, principals of companies, or government agencies to be able to control the financial health of a company, family, or an individual. The book uses the example of a checkbook, which is apropos, as I don't know of anyone who has never "bounced" a check due to careless recording of a transaction.  Accounting involves a level of trust, that the reporting is accurate and true.  Unfortunately, trust is not enough, and it must be standardized and regulated. Accounting is a way to maximize a finite resource (capital) and allocate it in the most efficient way.   Accounting is the bookkeeping methods involved in making a financial record of business transactions. It is also the preparation of statements concerning the assets, liabilities, and operating results of a business.  Accounting is part of every day life for those who pay bills as well.  Honestly in the business community there has to be accounting in place to see where the business stands. What is GAAP?  What is the purpose of GAAP? | | | GAAP are the rules that stop accountants from manipulating numbers and formulas to represent whatever it is they want the numbers to say rather than it being an actual reflection of the company's performance. these principles are put in place to prevent the over valuation of company's and overstating of profits......

Words: 1463 - Pages: 6

Free Essay

Discussion Q Wk 1 Bis/220

...Some of the challenges the entertainment industry faces with internet sharing is loss of money. More people have the ability to download music, movies, and other products illegally because of “sharing” web-sites such as limewire, frostwire, and bear share. The entertainment industry does not have a way to track these illegal downloads and numerous people know that the chances of being prosecuted are extremely small. Some people believe that what they download has little effect of the entertainment industry and no one suffers in the process. If one takes into account that one person downloads a CD that costs $16, that one CD for that one person does make little difference on the larger picture. Take that one person and multiply it by 1 million, which is likely a fraction of the amount of illegal downloads; the entertainment industry will now have lost $16 million. Imagine the ramifications if each person downloaded two or three CDs each. How much less would CDs cost if every piece of music was purchased properly. Education has opened my eyes to see that piracy can harm entertainment companies. I was not aware that not just illegal downloading but copying or uploading friend’s CDs, movies, and other items is also considered piracy and hurts the entertainment industry. Educating the general population, I believe will help reduce piracy and potentially decrease the purchasing cost of movies and music. Creating anti-piracy ads and presenting them at the movie theatres and on......

Words: 252 - Pages: 2

Premium Essay

Fin 534 Complete Course Week 1 to Week 11

...FIN 534 Complete Course Week 1 to Week 11 Download Answer Below http://workbank247.com/q/fin-534-complete-course-week-1-to-week-11-discussi/7837 FIN534 Week 1 Discussion * From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. * From the scenario, recommend two (2) actions that Trevose Fitness Center (TFC) could take in order to raise capital that will, in turn, enable it to reach its expansion goals. Defend your response. Support your recommendation with two (2) real-world examples of successful implementations of these actions. Download Answer Here http://workbank247.com/q/fin534-week-1-discussion/7817 FIN534 Week 2 Discussion "Financial Statement, Cash Flow, and Taxes" Please respond to the following: Analyze the importance and impact of financial managers being able to understand financial statements. Provide the rationale behind your analysis. Imagine that you are starting a business. Determine the tax considerations that might result in you setting the business up as a proprietorship or a partnership, rather than a corporation. Provide a rationale for your decision. Download Answer Here http://workbank247.com/q/fin534-week-2-discussion/7818 FIN534 Week 2 Homework Set 1 Directions: Answer the following questions on a separate document.......

Words: 4711 - Pages: 19

Premium Essay

Fin 534 Discussion Questions Week 1-11 Solution

...FIN 534 Discussion Questions Week 1-11 Solution Follow www.hwmojo.com link below to purchase solution http://www.hwmojo.com/products/fin-534-discussion-questions We have all assignments, homework problems set and exams for FIN 534. Email us support@hwmojo.com FIN 534 Week 1-11 Discussion Questions Solved Week 1 DQ 1 Discussion 1: An Overview of Financial Management. A. In your judgment, what were the principal causes of the recent financial crisis and Great Recession? Would you include Government policies that encouraged housing purchases for those who could not afford them, artificially low interest rates implemented by the Federal Reserve, banks and mortgage brokers who were greedy, the failure of Government regulators to provide proper oversight to the banks and other financial institutions, individuals who borrowed and spent more than they should have, or some other causes? . B. From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide at least two (2) recent (in the last 5 years) examples (other than Enron, WorldCom, and Bernie Madoff) of companies that have been guilty of ethics-based malfeasance related to financial management. What were the specific sanctions that were imposed and explain why the sanctions and penalties were appropriate? . C. From the scenario (Scenario Topic: The primary objective of the corporation is value maximization), what are at least two (2) actions that Trevose......

Words: 2510 - Pages: 11

Premium Essay

Fin 550 Discussion Questions Week 1-11

...FIN 550 Discussion Questions Week 1-11 Follow www.hwmojo.com link below to purchase solution http://www.hwmojo.com/products/fin550-discussions We have all assignments, quizzes, exams, homework problems and discussion for FIN 550. Email us support@hwmojo.com FIN 550 Week 1-11 Discussion Questions Solved Week 1 DQ 1 "Investment Performance" Please respond to the following: • From the e-Activity, predict the performance of the DOW for the next two years. Provide support for your prediction. • Given your predictions, recommend whether or not a risk-adverse person should invest in the DOW index fund. Explain your rationale. Week 1 DQ 2 "Investment Decisions" Please respond to the following: • Analyze the factors that influence investment decisions at different stages in an investor’s life cycle, and make a recommendation at which stage the average investor should consider financial investments. Provide support for your recommendation. • Assess how cultural differences in foreign countries impact investor asset allocations. Week 2 DQ 1 "Globalization" Please respond to the following: • From the e-Activity, analyze how national exchanges around the world are linked and suggest which exchange most significantly impacts the U.S. markets. Explain your rationale. • Assess the factor(s) contributing to the global consolidation of stock, bonds, and derivative exchange. Predict the impact to these exchanges in the......

Words: 1373 - Pages: 6

Free Essay

Fin. 534 Chapter 14 Homework

...Fin.534 Chapter 14 Homework 1. Myron Gordon and John Lintner believe that the required return on equity increases as the dividend payout ratio is decreased. Their argument is based on the assumption that c. investors view dividends as being less risky than potential future capital gains. Section 14-3c of our book points out that future gains can be “taxes more favorably than dividend income” 2. Which of the following should not influence a firm's dividend policy decision? c. The fact that much of the firm's equipment has been leased rather than bought and owned. Answer C here is the only answer that does not talk about shareholders or taxes that related to dividends. Answer c does not influence the dividend policy decision. 3.Which of the following statements about dividend policies is correct? d. The clientele effect suggests that companies should follow a stable dividend policy. Section 14.6 talks about the Clientele Effect and putting into place a stable payout type of schedule for the company to use. This would be in the company’s best interest towards dividend policies. 4. Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio? b. Its R&D efforts pay off, and it now has more high-return investment opportunities. The rest of the answers seem to increase a firms dividend payout. After reading Chapter 14, I feel that a decrease in the firm’s......

Words: 315 - Pages: 2

Premium Essay

Fin 534 Entire Course

...FIN 534 ENTIRE COURSE To purchase this visit here: http://www.activitymode.com/product/fin-534-entire-course/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 534 ENTIRE COURSE FIN 534 Week 1 Chapter 1 Solution.doc FIN 534 Week 1 Chapter 2 Solution.doc FIN 534 Week 1 DQ 1.docx FIN 534 Week 1 DQ 2.docx FIN 534 Week 1 Quiz 1.doc FIN 534 Week 10 Chapter 17 Solution.doc FIN 534 Week 10 DQ 1.docx FIN 534 Week 10 DQ 2.docx FIN 534 Week 10 Quiz 9.doc FIN 534 Week 11 DQ 1.docx FIN 534 Week 11 DQ 2.docx FIN 534 Week 11 Quiz 10.doc FIN 534 Week 2 Chapter 3 Solution.doc FIN 534 Week 2 DQ 1.docx FIN 534 Week 2 DQ 2.docx FIN 534 Week 3 Chapter 4 Solution.doc FIN 534 Week 3 Chapter 5 Solution.doc FIN 534 Week 3 DQ 1.docx FIN 534 Week 3 DQ 2.docx FIN 534 Week 3 Quiz 2.doc FIN 534 Week 4 Chapter 6 Solution.doc FIN 534 Week 4 Chapter 7 Solution.doc FIN 534 Week 4 DQ 1.docx FIN 534 Week 4 DQ 2.docx FIN 534 Week 4 Quiz 3.doc FIN 534 Week 5 Chapter 8 Solution.doc FIN 534 Week 5 Chapter 9 Solution.doc FIN 534 Week 5 DQ 1.docx FIN 534 Week 5 Quiz 4.doc FIN 534 Week 6 Chapter 10 Solution.doc FIN 534 Week 6 Chapter 11 Solution.doc FIN 534 Week 6 DQ 1.docx FIN 534 Week 6 Quiz 5.doc FIN 534 Week 7 Chapter 12 Solution.doc FIN 534 Week 7 Chapter 13 Solution.doc FIN 534 Week 7 DQ 1.docx FIN 534 Week 7 DQ 2.docx FIN 534 Week 7 Quiz 6.doc FIN 534 Week 8 Chapter 14 Solution.doc FIN 534 Week 8 Chapter 15 Solution.doc FIN 534 Week 8 DQ 1.docx FIN 534 Week 8 DQ......

Words: 797 - Pages: 4

Free Essay

Fin 410 Wk 2 Assignment 1

...FIN 410 WK 2 ASSIGNMENT 1 To purchase this visit here: http://www.activitymode.com/product/fin-410-wk-2-assignment-1/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 410 WK 2 ASSIGNMENT 1 FIN 410 WK 2 Assignment 1 - Financial Organization Analysis Use the Internet to research one (1) of the following financial institutions: J.P. Morgan, Bank of America, or Citigroup. Gather information about the overall nature of their business, products or services it sells, key financial data, and its mission and vision statements. Write a two to three (2-3) page paper in which you: 1. Describe the business of the organization that you have chosen, indicating the financial services provided by the institution. 2. Develop and apply a Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis of this organization. 3. Suggest ways that the institution could capitalize on its strengths and minimize its weakness. Provide support for your rationale. More Details hidden... Activity mode aims to provide quality study notes and tutorials to the students of FIN 410 WK 2 Assignment 1 in order to ace their studies. FIN 410 WK 2 ASSIGNMENT 1 To purchase this visit here: http://www.activitymode.com/product/fin-410-wk-2-assignment-1/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 410 WK 2 ASSIGNMENT 1 FIN 410 WK 2 Assignment 1 - Financial Organization Analysis Use the Internet to research one (1) of the following financial institutions: J.P. Morgan, Bank of America, or......

Words: 541 - Pages: 3

Premium Essay

Fin 534 Set 1

...Homework Set 1 Fin 534 Pro. Jeffery Woo Fannie Spears January 17, 2016 Strayer University 1. What is the free cash flow for 2014? NOPAT = 502,640 (1-0.40) “ =301,584 NOWC = operating current assets-operating current liabilities “ = 2,608,480 – 739,800 NOWC = 1,868,680 Total net operating capital = NOWC + operating long term assets Total net operating capital = 2,705,520 Net income in operating capital = total net operating capital 2014 – total net operating 2013 Net investment in operating capital = 2,705,520 – 2,257,632 Net investment in operating capital = 447,888 Free cash flow = NOPAT – NIOC Free cash flow = 301,584 – 447,888 Free cash flow = (146,304) 2. Suppose Congress changed the tax laws so that Berndt’s depreciation expenses doubled. No changes in operations occurred. What would happen to reported profit and to net cash flow? Net income would drop down, while net cash flow would go up. 3. Calculate the 2014 current and quick ratios based on the projected balance sheet and income statement data. What can you say about the company’s liquidity position in 2013? Quick ratio = Current assets – Inventories Quick ratio = 2,680,112 – 1,716,480 Current liabilities 1,039,800 Quick ratio = 0.9 Current ratio = Current Assets Current ratio = 2,680,112 Current liabilities ...

Words: 363 - Pages: 2

Premium Essay

Fin 534 Midterm Exam

...FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534 Midterm Exam FIN 534 Midterm Exam Purchase here http://homeworkonestop.com/FIN%20534/fin-534-midterm-exam Product Description FIN 534......

Words: 336 - Pages: 2

Free Essay

Fin 534. Week 1 Discussion

...From the e-Activity, examine ethical behavior within firms in relation to financial management. Provide two (2) examples of companies that have been guilty of ethics-based malfeasance related to financial management and determine why their comeuppance was deserved. The two companies that I focus on in this section are Goldman Sachs company and WorldCom in the telecom world. Goldman Sachs was charged by the securities exchange commission, with fraud because the company developed and marketed an artificial collateralized debt system. Paulson & Co had the same invested and at stake with in the equity of ABACUS as believed by ACA. In circumstance, they did not have a concern in the success. By October. 24, 2007, the investors were defrauded by omitted facts or misstatements which led to downgrading of 83% of the RMBS in the ABACUS portfolio and 17 percent were on negative watch. (SEC Charges Goldman Sachs with Fraud concerning structuring and marketing of CDO Tied to Subprime Mortgages in 2010. Goldman established to pay $550 million in a settlement (Duggan, T. 2013). The vice president of Goldman was found liable for fraud too. The WorldCom scandal is another well-known unethical scandal. WorldCom submitted the largest bankruptcy filing in United States’ history after admitting improperly accounting for more than $3.8 billion dollars in expenses. The company used acquisitions to spurt large growth. Two of WorldCom’s acquisitions included MCI Communications and MFS......

Words: 658 - Pages: 3

Premium Essay

Fin 534

...Monique Davis Strayer University – Online Campus FIN 534 Professor Ronal Lentz Monique Davis December 11, 2011 Company profile ITT Corporation (NYSE: ITT) is a global manufacturer and top 10 U.S. defense contractor specializing in electronics and fluids with annual revenues of about $11 billion. As the largest supplier of pumps and systems in the transport and treatment of water, ITT offers its services to local governments in the U.S. and to the governments of developing nations. ITT also manufactures electronics such as night vision goggles and communication systems for the U.S. military. The future of ITT's fluids business depends on the global demand for clean water, especially in developing countries such as China and India. The growth in agriculture, increasingly wealthy populations, and widespread pollution in these developing countries have contributed to the rising demand for clean water. ITT is just one of many competitors working to bring clean water to developing nations. (WIKI Invest, 2011) provides that during the financial period about 58% of ITT's revenue is generated by its defense and information solutions business segment. As a result, a significant proportion of ITT's revenues come directly from U.S. government contracts. Since the September 11, 2001 terrorist attacks, U.S. defense spending has risen over 35%, reaching $896.2 billion in 2010. ITT consists of three business segments: Defense......

Words: 2589 - Pages: 11

Premium Essay

Fin 534 Assignment4

...Assignment 4: “Capital Structure Analysis” Submitted by Laurence Denebeyel Number and Name of Course (Financial Management) (FIN 534) Class Meeting time/Day (Friday 17:45 p.m. – 9:30 p.m.) Professor (Michael Keith Simms) Quarter (Summer 2011) Today’s Date (Friday August 26, 2011) Assignment 4: Capital Structure analysis Read Problem 28, chapter 16. Answer questions a) to d) and prepare a report (3_4 pages) on your conclusions; Show calculations. Info Systems Technology (IST) manufactures microprocessor chips for use in appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both possibilities as equally likely, so the shares currently trade for $13.50. IST must raise $500 million to build a new production facility. Because the firm would suffer a large loss of both customers and engineering talent in the event of financial distress, managers believe that if IST borrows the $500 million, the present value of financial distress costs will exceed any tax benefits by $20 million. At the same time, because investors believe that managers know the correct share price, IST faces a lemons problem if it attempts to raise the $500 million by issuing equity. a) Suppose that if IST issues equity, the share price will remain $13.50. To maximize the long term share price of the firm once its true value is known, would managers choose......

Words: 1019 - Pages: 5