Discuss insider trading. Do you think insider trading should be legal?

Assignment #1

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Your work for this assignment must be saved as a single WORD document and you must submit it as a Turnitin assignment in Blackboard and follow the Assignment Instructions posted in the Assignments folder in Blackboard.

NOTE: Your answers to the questions below should be in your own words. You should not copy from another students’ work or from any other source including the textbook.

 

  1. What are the advantages and disadvantages of a sole proprietorship, partnership, & corporation?
  2. What is the difference between a ‘B Corporation’ and a ‘Benefit Corporation’? (HINT: You will have to research this online – and you should provide a citation to support your answer)
  3. What is the difference between a ‘Co-op’ and a ‘non-profit’? (HINT: You will have to research this online – and you should provide a citation to support your answer)
  4. Discuss Sarbanes-Oxley. Include the reason the law was passed, some of the provisions, and the consequences of its passage. (You may wish to find other sources to support your answers. Be sure to cite your sources)
  5. Discuss insider trading. Do you think insider trading should be legal?
  6. Define in your own words:

            Money Market

            Capital Market

            Primary Market

            Secondary Market

  1. What is the difference between a public corporation and a private corporation?
  2. Identify the following as ‘public’ or ‘private’:
  3. Simmons First National Corporation (AKA Simmons Bank)
  4. First State Bank of Russellville
  5. America’s Car Mart
  6. Arvest Bank
  7. Bear State Financial
  8. Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal of maximizing shareholder wealth?
  9. Discuss the historical basis for, provisions of, and implementation of Dodd-Frank.
  10. What is the difference between book value of common stock and market value of common stock? Why is there a difference between these?
  11. Describe the basic characteristics of a balance sheet.
  12. Describe the basic characteristics of an income statement.
  13. Describe how depreciation impacts cash flow?
  14. How does a corporation’s marginal tax rate impact financial decisions?
  15. Bob’s Stores had earnings after taxes of $664,750 in the year 2014 with 474,820 shares outstanding. On January 1, 2015, the firm issued 34,000 new shares. Because the proceeds from these new shares financed investments that led to operating improvements, earnings after taxes increased by 30 percent.
  16. Compute earnings per share for the year 2014.
  17. Compute earnings per share for the year 2015.

 

  1. Benjamin’s Clothiers had sales of $1,534,000 and cost of goods sold of $357,300.
  2. What is the gross profit margin?
  3. If the average firm in the clothing industry had a gross profit margin of 70 percent, how is the firm doing?
  4. Barrimore’s Accessories Company had earnings after taxes of $3,600,000 in 2012 with 3,000,000 shares of stock outstanding. The stock price was $33.50. In 2013, earnings after taxes increased to $4,260,000 with the same 3,000,000 shares outstanding. The stock price was $44.00. In 2014, earnings after taxes declined to $2,260,000 with the same 3,000,000 shares outstanding. The stock price declined to $29.80.

 

  1. Compute earnings per share and the P/E ratio for 2012.
  2. Compute earnings per share and the P/E ratio for 2013.
  3. Compute earnings per share and the P/E ratio for 2014.
  4. Give a general explanation of why the P/E changed. You might want to consult the textbook to explain this surprising result.

 

  1. The Bollywood Corporation has assets of $4,500,000, current liabilities of $600,000, and long-term liabilities of $1,012,000. There is $600,000 in preferred stock outstanding; 202,500 shares of common stock have been issued (round dollar values to the nearest penny).
  2. Compute book value (net worth) per share.
  3. If there is $360,000 in earnings available to common stockholders, and The Bollywood Corporation’s stock has a P/E of 18 times earnings per share, what is the current price of the stock?
  4. What is the ratio of market value per share to book value per share?
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