Company Financial Security Analysis
Instructions:
- Choose a large publicly held company to investigate. Download, or otherwise immediately
obtain, the complete annual report for this company. The best place to locate the annual report is
the company’s home website. The annual report will include financial statements with footnotes
and any written materials such as a letter from the chairperson to the stockholders.
Choose either a large company that commonly has articles written about it or some company that
has recently been generating publicity. You should of course choose a company you are
interested in, as it will make the work much more enjoyable. You may think of selecting a
company you have investments in or might be interested in seeking employment. DO NOT
MAKE THE MISTAKE IN THINKING YOU HAE EVERYTHING JUST BECAUSE YOU
HAVE THE ANNUAL REPORT. BE SURE YOU HAVE THE FINANCIAL STATEMENTS,
THE NOTES TO THE FINANCIAL STATEMENTS AND THE LETTER FROM THE
CHAIRPERSON.
- You will write a report on this company and its use of financial securities. The three major parts
of this report will cover bonds, stocks, and derivatives. You must locate a company that uses at
least two of these three pieces. Most companies will use all three. Again, if you are in doubt,
please contact me and I will assist you in determining if this is the case for your company
selection. AT A MINIMUM, THE COMPANY YOU SELECT MUST HAVE 2 OF THE 3
FINANCIAL SECURITIES (STOCK, BONDS, DERIVATIVES) WE WILL BE DISCUSSING
IN THIS COURSE to write about in your paper.
- Things to research and report on should include, but are not limited to:
- Using the annual report to discuss the company’s outstanding bonds; how many and what kind of bonds are outstanding; identify when they were issued, discuss the rating of these bonds and what that means, do a current valuation of the bonds or if there are many bonds, select a sample of these bonds and valuate them using the current rate of return in the market; what does the value tell you?
Discuss the data in your research that deals with stock (prices, volume, symbol, etc.); discuss the
historical prices of these stocks; valuate the stock and compare it to the market price of the stock;
explain the possible reasons for being undervalued or overvalued; complete an investor return on
these stocks; how is the investor’s return compared to some index (i.e. S&P 500); 3. Identify any
futures, options and swaps that your company has utilized to hedge risk for the organization;
discuss the opportunities the derivative securities markets might provide for this particular
organization. How might managers use them to reduce risk to their organization? Provide an
example of what the company is doing with the use of derivatives. Give enough explanation so
that anyone reading your report can understand the organization and their use of derivatives.
In addition, you will want to report anything that you feel is pertinent to the content in this
course, Financial Markets. This also means incorporating information from your reading
assignments as well as any other outside sources that might give you some insight into the
organization’s use of financial markets. The due date for this assignment will be posted on the
class website. This assignment will be graded with the grading form attached to this assignment.
Paper Structure:
- Paper introduction (what will the paper be about)
- Introduction to Financial Markets & Securities; General Information of securities: Stocks,
Bonds, Derivatives (discuss what each of these securities are and why they are used by
firms).
- Company Overview, Products/Services, Benefits of Company Using Securities
Valuation of security/risk assessment/comparison to market values. (discuss each security
(stocks, bonds, derivatives) and give the information about each of these securities as it
relates to the firm you’ve chosen. For the stock, be sure to valuate it, compare it to the
market price and discuss the beta/risk. For the bonds, take an example and valuate the
bond and discuss the results. For the derivatives, take an example and discuss the valuation
of the security and explain what it means to the firm).
- Paper conclusion (what was the paper about and what did you learn)
Company Financial Security Analysis
APA
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