1.Question Part A

1.1.what are the institutional arrangements that ensure that managers work toward increasing the value of a firm.

1.2.Explain, using an example, the term agency costs as related to a corporation.

2.Question Part B

2.1.Explain the time value of money concept, focus on the key reasons for difference in value of money at different points of time.

2.2.Which one would you prefer and why? Work out the value of these investments after 1, 5 and 20 years.

a.An investment paying an interest of 12% compounded annually.

b.An investment paying an interest of 11.7% compounded semi-annually.

3.Question Part C

(Mr. Morris had $100,000 in his account. Using this fund, he made a portfolio of two NYSE listed stocks -General Electric and Pfizer on 01 Jan 2019 in the ratio of 60:40, i.e. 60% funds in General Electric & 40% funds in Pfizer.The daily stock data of both stocks can be found on market websites such asfinance.yahoo.com. Download daily data for 1 year from 1 Jan 2019 -1stJan 2020.

Using the stock data of the two stocks, you are required to explain the below concepts and then compute for the given stocks:

a.Annual return of both General Electric and Pfizer

b.Annualized standard deviation of returns of both General Electric and Pfizer

c.Correlation coefficient of returns of General Electric and Pfizer. What does this correlation coefficient signify about the correlation of the two stocks and corresponding decision from an investor? (5marks)

d.Portfolio return of the portfolio of two stocks. (5marks)

e.Portfolio risk (standard deviation) of the portfolio of two stocks. (5marks)

f.Critically analyze your investment decision in these two companies (5Marks). Given an option, would you like to invest in any other company? Or would you like to have a different ratio of investment in the two? (10 marks)

Contextual Information:

The students can base their replies on wider research, even from the internet sources,however, all information should be appropriately referred using Business School's referencing style. Though students quantitative analysis will be same, however, justification, use of theory, paper structure and background for recommendation is to be explained in detail for which you will get higher awards.