Make 3 Stock Purchases, Provide Information about the Purchases, and Calculate and Interpret the Standard Deviation

/in /by

RISK, RETURN, AND STOCK VALUATION SLP 3

Virtual Stock Exchange Project
Make 3 Stock Purchases, Provide Information about the Purchases, and Calculate and Interpret the Standard Deviation

Download the Module 3 SLP template. You will type your answer into this Excel workbook. When finished with the SLP assignment, please save the document with your last name and submit to the drop box.

1. Purchase 7 and 8: Buy stock in two companies that have returns that are inversely related. In other words, you might choose to buy stock in a company that does well when oil prices rise and one that does poorly when oil prices rise. You must explain this in the spreadsheet in the field “Reason for Buying.”

2. Purchase 9: Buy a stock that has countercyclical returns. In other words, its returns are inversely related to the business cycle.

You are free to make additional purchases, but you only need to explain the reasoning behind your required purchases 7 through 9.

3. You will need to include the following information for each stock in this workbook:

  • Company Name
  • Ticker Symbol
  • Reason for Buying

4. In addition to making these purchases and recording the above information, you will need to calculate the mean and standard deviation of the daily stock price for TWO of your required stock purchases for the last year. The historical stock price can be downloaded from finance.yahoo.com. Once you have searched on the company, using the ticker symbol, you can select the “Historical Data” tab. Click on “Download Data.” You will copy and paste this information into the SLP template and calculate the mean and standard deviation for the “Adj Close” price.

Once you have downloaded the data and calculated the mean and standard deviation for both stocks, you will answer the following additional questions in the template:

5. Based on the standard deviation alone, can you make any conclusions about the relative risk of the two stocks?

6. Given the risk, what can you say about the relative expected return of the two stocks?

The company is investigating the use of activity-based costing and has created the activity cost pools shown above. Calculate the unit cost of the twin and double box springs using ABC.

/in /by

GUAVA

Your company is Guava Company

Your company manufactures two sizes of box springs: twin and double. Presented below is the budget estimates for material cost & labor cost per unit and the budgeted overhead within the activity cost pools.

Production Data

    Twin     Double  
Material Cost per unit     27   38  
Labor Cost per unit     51   61  
Budgeted Production Esti mate   5000   9200  
Activity Cost Pools   Driver   Estimated Ove rhead   Use per Twin   Use per Double
                   
Framing   Square feet of pine           194,400                 4,628                       1,852
Padding   Square feet of quilting           194,500             108,055                    86,445
Filling   Square feet of filling           320,900             501,406                  300,844
Labeling   Number of box es           249,800             832,666                  416,334
Inspection   Number of ins pections           264,700               17,646                       8,824

A)  If the company currently uses a traditional plantwide overhead allocation rate based of 150% of labor cost, calculate the unit cost of the twin and double box springs.

B)   The company is investigating the use of activity-based costing and has created the activity cost pools shown above. Calculate the unit cost of the twin and double box springs using ABC.

Note: The use of ABC or traditional costing does not change the total overhead amount but instead simply changes the way it is allocated.

C)  Analyze the results.  If you believe the ABC numbers are more accurate, discuss the potential impact to pricing of the twin and double if the sales price is determined by the cost.

List both the positives for your choice and the negatives of the ‘other’ options. Would you rather ‘invest’ the $1000 and hope to grow the money to use later in life? What do you think most people your age would do with a quick $1000 from grandma?

/in /by

Section 1: Savings Options. Explore the following Savings Options:

Explain the advantages and disadvantages of each choice. Using the following criteria:

  • Safety
  • Risk v Reward
  • Liquidity (how quickly you can convert to cash)
  • Ease of opening the account (or keeping at home or buying a collectible)

You can create a chart (spreadsheet), slides, or paragraphs to present the information.

  • Personal Savings (Piggy Bank or under your mattress)
  • Savings Account
  • Money Market Account,
  • Certificate of Deposit,
  • Savings Bonds
  • Corporate or Municipal Bonds
  • Collectibles

Explain the advantages and disadvantages of each choice, considering safety, reward, ease of getting cash, and ease of opening the account.

Section 2: Personal Reflection: What is your choice?

Grandma requests that you keep the money for six months. How will you save the money?

Create a multi-paragraph reflection on how you will save the money, the risk/reward, and benefits of your decision.

Options to consider:

  • At this point in your life, do you need the $1000?
  • What would you ‘like’ to use the $1000 for?
  • List any needs you will have for the money in the next 2 years.
  • List both the positives for your choice and the negatives of the ‘other’ options.
  • Would you rather ‘invest’ the $1000 and hope to grow the money to use later in life? (Next week’s assignment)
  • What do you think most people your age would do with a quick $1000 from grandma?

 

How the budget is being prepared in The Kingdom of Saudi Arabia? Explain any budget with reference to the revenue, expenditure and sectorial spending.

/in /by

Government fund

  • The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).
  • Submissions without this cover page will NOT be accepted.

 

(Total number of the questions. 5 Questions each question will carry 3 marks)

Q-1-Which of the government fund is being operated by the Saudi Government? Highlight the main objectives of the fund.

Answer:-

 

Question no 2-

How the budget is being prepared in The Kingdom of Saudi Arabia? Explain any budget with reference to the revenue, expenditure and sectorial spending.

Answer :

 

Question no 3

The Western Province of K.S.A. has approved the 2020 budget as follows:

  • Budgeted 2020 revenues from:
  • Property taxes $8,000,000
  • Sales taxes $2,000,000
  • Appropriations for 2020:
  • Salaries $7,200,000
  • Materials $2,000,000
  • Equipment $200,000

During 2020, the authority has presented the budget revision to increase the amount of appropriation for salaries by $100,000. The council approved this budget revision.

Required:

  1. Prepare the general journal entry necessary to initially record the budget.
  2. Prepare the general journal entry necessary to record the budget revision.

 

Question no 4-

Prepare entries to record the following transactions and events related to Northern township’s tax revenues for the year beginning January 1, 2015:

  1. To raise property tax revenue of $1,500,000 the County bills its property owners a total of $1,504,000, providing $4,000 for uncollectible and refundable taxes.
  2. During the year, taxpayers pay a total of $1,300,000 in property taxes.
  3. Edam declares bankruptcy, owing the County $4,000 in property taxes. The County writes off the unpaid amount as uncollectible.
  4. The state collects sales taxes on behalf of Northern townships. It sends the province’s $300,000 for sales taxes collected during the year.
  5. At year-end, the Northern township declares all unpaid property taxes to be Delinquent

Answer

 

Question no 5-

From the information below prepare Financial Statements

 

Cash   20,000

 

Taxes receivable, net   147,000

 

Investments  65,000

 

Due from other funds   68,000

 

Vouchers payable   39,000

 

Due to other funds  152,750

 

Unassigned fund balance  117,000

 

Estimated revenues  610,000

 

Appropriations  590,000

 

Budgetary fund balance  20,000

 

Revenues-taxes  590,175

 

Revenues-charges for services   14,080

 

Expenditures-personal services  287,125

 

Expenditures-supplies  29,680

 

Expenditures-capital outlay  244,000

Transfer in from debt service fund   32,500

 

Transfers out to capital projects fund   84,700

$1,555,505

$1,555,505

Answer:

 

On your own words, outline the accounting principles and assumptions and explain each one. What is the accounting cycle? Explain every step starting from analyzing transactions to preparing post-closing trial balance.

/in /by

Accounting cycle

Q1. On your own words, outline the accounting principles and assumptions and explain each one.(Marks5)

Q2. What is the accounting cycle? Explain every step starting from analyzing transactions to preparing post-closing trial balance.(Marks5)

Q3. Based on the following trial balance for ABC Co, prepare an income statement, statement of retained earnings and a balance sheet. The company made no additional investments in the company during the year.(Marks5)

ABC Co.

Trial Balance

December 31
Cash SR 6,500  
Accounts receivable 475  
Supplies 2,500  
Equipment 17,000  
Accounts payable   SR745
Common stock   10,000
Retained earnings   11,155
Dividends 36,000  
Revenue earned   72,000
Supplies expense 3,425  
Rent expense 6,000  
Wages expense 22,000  
Totals SR93,900 SR93,900

 

How does Golf Challenge’s use of FIFO improve its net profit margin and current ratio? Is the action by Golf Challenge’s owner ethical? Explain.

/in /by

Inventories and Cost of Sales

Golf Challenge Corp. is a retail sports store carrying golf apparel and equipment. The store is at the end of its second year of operation and is struggling. A major problem is that its cost of inventory has continually increased in the past two years. In the first year of operations, the store assigned inventory costs using LIFO. A loan agreement the store has with its bank, its prime source of financing, requires the store to maintain a certain profits margin and current ratio. The store’s owner is currently looking over Golf Challenge’s preliminary financial statements for its second year. The numbers are not favorable. The only way the store can meet the required financial ratios agreed on with the bank is to change from LIFO to FIFO. The store originally decided on LIFO because of its tax advantages. The owner recalculates ending inventory using FIFO and submits those numbers and statements to the loan officer at the bank for the required bank review. The owner thankfully reflects on the available latitude in choosing the inventory costing method.

Answer the following questions:

1. How does Golf Challenge’s use of FIFO improve its net profit margin and current ratio?

2. Is the action by Golf Challenge’s owner ethical? Explain.

A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital.

/in /by

A company had cash and marketable securities worth $200,000 accounts payables worth $51,000, inventory of $1,501,500, accounts receivables of $5,288,128, short-term notes payable worth $220,000, other current liabilities of 100,000, and other current assets of $121,800. Calculate the company net working capital and describe how managers manage the firm working capital. (2 Marks)

Your parents have given you $1,500 a year before your graduation so that you can take a trip when you graduate. You wisely decide to invest the money in a bank CD that pays 7% interest. You know that the trip costs $1600 right now and that inflation for the year is predicted to be 3%. Will you have enough money in a year to purchase the trip? Show your calculations. (2 Marks)

If the following financial information related to XYZ Company. Total Revenues last year $970, depreciation expenses $50, costs of goods sold $450, and interest expenses $55. At the end of the year, current assets were $121 and current liabilities were $107. The company has an average tax rate of 35%. Calculate the net income for XYZ Company by setting up an income statement. (2 Marks)

Calculate the common-size balance sheet from the following information for the company: (2 Marks)

Ten years ago, Amanda Cortez invested $20,000 in an account paying an annual interest rate of 5%. What is the value of the investment today? What is the interest on interest earned on this investment? (2 Marks)

You have just won a lottery that promises an annual payment of $120000 beginning immediately. You will receive a total of 15 payments. If you can invest the cash flow in an investment that is paying 8% annually, what is the present value of this annuity? (2 Marks)

XXX company has forecast a rate of return of 20% if the economy booms (30% probability); a rate of return of 19% if the economy in in a growth phase (40% probability); a rate of return of 2.50% if the economy in in decline (20% probability); and a rate of return of -10% if the economy in a depression (10% probability). What is the company standard deviation of returns? (3 Marks)

Cash 50,000 Accts/Pay 25,800
Acct/Rec 60,000 Accrued expenses 30,000
Inventories 200,500 Short-term N/P 9,700
Total Current assets 310,500 Current liabilities 65,500
Net fixed assets 132,000 Long-term debt 150,000
Total assets 442,500 Total liabilities 215,500
    Owner’s equity 227,00

 

Explain the Investment Risk Pyramid and the factors that influence investors’ risk preferences? What are the types of investments that fit into each of the risk categories ?

/in /by

Community: Innocence replaced by Experience

4.2 Action Required:

  • To access the link just click on the link (If not working, copy it and paste in the URL)

https://www.investopedia.com/articles/basics/03/050203.asp

 4.3 Test your Knowledge (Question):

  • Explain the Investment Risk Pyramid and the factors that influence investors’ risk preferences?
  • What are the types of investments that fit into each of the risk categories ?

 

What is the difference between the product cost and period cost? Give some examples for each type. What do you mean by Variable and Absorption Costing? Explain both with suitable example.

/in /by

Cost accounting

Q1. What is the difference between the product cost and period cost? Give some examples for each type [2 marks]
Answer:

Q 2. What do you mean by Variable and Absorption Costing? Explain both with suitable example. [2 marks]
Answer:

Q3. In cost accounting, direct costs are easily and economically traced to cost object. On the other hand, overheads cannot be economically traced to cost object. Therefore, allocating overheads is considered as the main problem in cost accounting, whereas traditional methods such as Single plantwide factory overhead rate method and Multiple production department factory overhead rate method have been used. In addition, developed methods such as Activity based costing method (ABC) has been used to enhance the allocation of overheads to cost object.
Students are required to criticize traditional methods and explain how is ABC being applied to a manufacturing company? What are the disadvantages of the ABC method? [2 marks]

Q4. The AMS Manufacturing Company uses a job costing system with machine hours as the allocation base for overhead. The company uses normal costing to develop the overhead allocation rate. The following data are available for the latest accounting period:
Estimated fixed factory overhead cost SAR 160,000
Estimated machine-hours 100,000
Actual fixed factory overhead cost incurred SAR 170,000
Actual machine-hours used 110,000
Jobs worked on:
Job No. Machine Hours Used
1020 12,000
1030 18,000
1040 15,000
1050 10,000
Compute the overhead allocation rate. [1 mark]
Determine the overhead allocated to job 1040. [1 mark]
Answer:

Q5. Karim Surf Boards makes custom boards for professional surfers. The boards vary according to the types of materials requested by customers and the amount of direct labor required for the finishing process.
The following costs are estimated for 2021:
Number of surf boards 3,000
Direct labor hours 45,000
Direct material cost SAR 175,000
Direct labor cost SAR 900,000
Overhead cost SAR 675,000

During 2021 actual costs were:
Number of surfboards 3,300
Direct labor hours 46,300
Direct materials SAR 185,000
Direct labor SAR 850,000
Overhead SAR 664,000

Explain why job costing, and not process costing, should be used for this organization. [1 mark]
Karim uses a normal costing system. Overheard is allocated on the basis of direct labor hours. Calculate the manufacturing cost of a surfboard that takes SAR 150 of direct materials and 36 hours of direct labor. [1 mark]
Answer:

Q6. Abdulkrim Company manufactures a product A. The company estimates the cost function for the total costs. The cost driver is number of units. The following information were collected:
Month Units Total Costs
January 3,560 SAR 242,400
February 3,800 SAR 252,000
March 4,000 SAR 260,000
April 3,600 SAR 244,000
May 3,200 SAR 228,000
June 3,040 SAR 221,600
Compute a cost function using the high-low method. [2 marks]
Answer:

Q7. Ayob Company’s projected profit for the coming year is as follows:
Sales SAR 200,000 with Price per unit SAR 20, Total Variable cost SAR 120,000 with Variable cost per unit SAR 12 and fixed expenses are SAR 64,000
Compute the break-even point in units. [1.5 marks]
How many units must be sold to earn a profit of SAR 30,000? [1.5 marks]
Answer:

 

Write a description of the research problem you propose to investigate and explain why you chose this topic. What should be considered in developing a good research idea?

/in /by

Assignment Question(s):   (Marks 15)

Question 1: The correct and complete sequence of steps in conducting research is as follows:

  • Identify broad area,
  • Select topic,
  • Decide approach,
  • Formulate plan,
  • Collect information,
  • Analyze data,
  • Present findings.

Using our Saudi Digital library (SDL) you should find two papers in accounting field and determine for each paper the steps described above.      [4marks]

  Paper  1 Paper 2
1.The broad area of the paper    
2.The topic    
3.Approach used    
4.Data source    
5. Data analysis    
6.Findings    

Question 2: Write a description of the research problem you propose to investigate and explain why you chose this topic.     [2 marks]

Question 3: What should be considered in developing a good research idea? [2 marks]

Question 4: What are the five categories of research methods?  [2mark]

Question 5: Differentiate between Quantitative vs. Qualitative research. [2.5 mark]

Question 6: Define ANOVA and Regression Analysis [2.5 mark]