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In this homework activity, you will examine what it is like living paycheck to paycheck.
Instructions: Go to playspent.org. Click on Continue to Spent on the right side of the screen to start the game and play it all the way through.
TIP: Keep an eye on the left-hand bar which keeps track of your progress and includes 3 options to get more money during the month.
Question: Think about your emotional state as you played the game and select the top 5 adjectives below that best to describe what you felt.
Calm, Disappointed, Embarrassed, Excited, FOMO, Frustrated/Angry, Hopeful, Hopeless, Motivated, Proud, Relieved, Sad, Scared, Self-sufficient, Shocked/Surprised, Stressed, Other (include other emotion that you felt)
In this homework activity you will examine what it is like living paycheck to paycheck.
Instructions: Go to playspent.org. Click on Continue to Spent on the right side of the screen to start the game and play it all the way through.
TIP: Keep an eye on the left-hand bar which keeps track of your progress and includes 3 options to get more money during the month.
Question: Did you make it through the entire month? If so, how much money did you have left? If not, on what day did you run out of money?
Over 14 million Americans are unemployed. Now imagine you’re one of them. Your savings are gone. You’ve lost your house. And you’re down to your last $1,000. Can you make it through the month?
Use any of the following vocabulary terms in your explanation to demonstrate your understanding of them: assets, lifestages, early adulthood, middle adulthood, later adulthood, labor market, capital market, credit market, business cycles, gross domestic product, depression, recession, unemployment rate, purchasing power, inflation, deflation, consumer price index, financial planning process, financial advisor, income, liquidity, expenses, budget deficit, budget surplus, stocks, bonds, opportunity cost, sunk cost, capital gain, capital loss, equity, cost of equity, risk, debt, cost of debt, interest, principal, and/or diversification.
Question: How do you feel about your situation? Do you think you can live 30 days with $1,000? Explain.
Money Makes Money
The quote by Adam Smith identifies you can make money if you have money. If you were given $100,000 dollars today how would you use this money to make additional money in the future?
Please create a list of 3 options you could take to make money from the $100,000; identify the pros and cons of each option and identify your first choice.
Instructions
- Create your list of three options.
- Identify the pros and cons of each option.
- Weigh each option and identify your first choice.
The firm’s cost of equity capital is 18%, the market value of firm’s equity is $8 million, the firm’s cost of debt is 9%, and the market value of debt is $4 million. The firm is considering a new investment with an expected rate of return of 17%. This project is 30% riskier than the firm’s average operations. The risk-free rate of return is 5%, the variance of the market return is 0.08. Is the project profitable?
Calculating Portfolio Betas You own a stock portfolio invested 25 percent in stock Q, 20 percent in stock R, 15 percent in stock S, and 40 percent in stock T. The betas for these four stocks are .75, 1.90, 1.38, and 1.16, respectively. What is the portfolio beta?
Jack holds a portfolio which is currently worth $100,000. With Beta =2.
Jack received 20,000, so he decided to sell one of the securities with Beta=1 for $5,000 and use 25,000 to buy a new security B=2.5.
Calculate Beta of the new portfolio.
Sam invested $3m in a portfolio made of 10 different securities with portfolio’s Beta of 3.5.
One month later, Sam sold security A which Beta =1.8 for $490,000 (purchased at a cost of 400,000) and used the profit to add security C with beta =2.4.
Compute the new portfolio Beta.
Calculating Portfolio Betas You own a stock portfolio invested 25 percent in stock Q, 20 percent in stock R, 15 percent in stock S, and 40 percent in stock T. The betas for these four stocks are .75, 1.90, 1.38, and 1.16, respectively. What is the portfolio beta?
Plak Co. of Chicago has several European subsidiaries that remit earnings to it each year. Explain how appreciation of the euro (the currency used in many European countries) would affect Plak’s valuation?
