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INTRODUCTION TO FINANCIAL MANAGEMENT AND FINANCIAL MARKETS

1. Question 1: In your small business you have a finance department with a CFO, controller, and treasurer. For the following scenarios, explain which of these three financial executives would be the most likely to work on the issue. Refer to Chapter 8 from the Peterson and Fabozzi (2010) text.

You suspect that a lower-level employee has embezzled about $50,000 over the last three years. You want to try to find out who based on past financial records. Who would be most likely person to look into this issuethe CFO, the treasurer, or the controller? Why?
Your chief marketing officer wants to take out a large loan to finance a major advertising campaign that he claims will bring in large sums of new profits over the next few years. However, your chief operating officer wants to take out a large loan to purchase some new equipment and machinery that she claims will save your company a lot of money over the next few years. You would like to see some estimates about which of the two projects will be most likely to increase profits enough to be able to pay back the loan. Who would be most likely person to look into this issuethe CFO, the treasurer, or the controller? Why?
Question 2: Explain whether each of the following assets is a financial asset. Refer to Chapter 2 from the Peterson and Fabozzi (2010) text.

A certificate of deposit at your local bank
A two-bedroom house
$50,000 worth of bonds from an airline company
Ownership of a copyright to a hit song

Question 3: Complete financial research on Facebook and General Motors using a webpage such as investing.com, finance.yahoo.com, or Bloomberg.com. Based on their stocks P/E ratios, dividend yields, and other information, compare and contrast these two stocks. How would you classify these stocks: growth stock, value stock, or income stock? Explain your reasoning using concepts from the background readings as well as any information you find on these two companies. Your answer should be about 100150 words and can include graphs or diagrams.

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