BUS FPX 3062 Assessment 1 Financial Management and Markets
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Assessment Overview:
BUS FPX 3062 Assessment 1: examines fiscal operation and requests, focusing on ethical considerations (e.g., Martha Stewart bigwig trading), the significance of wealth maximization over profit maximization, the bracket of request deals and fiscal instruments, understanding the yield wind, and calculating the equilibrium rate of return.
How to Pass BUS FPX 3062 Assessment 1 Financial Management and Markets
- Read the rubric carefully and understand all required components.
- Analyze ethical considerations (Martha Stewart case) and clearly explain what was unethical.
- Explain why wealth maximization is preferred over profit maximization.
- Classify financial markets as primary or secondary.
- Distinguish between money market (short-term) and capital market (long-term) instruments.
- Explain the yield curve using Unbiased Expectations Theory (UET) and Liquidity Premium Theory (LPT).
- Calculate the equilibrium rate of return using the sum of risk premiums and the risk-free rate.
- Provide a clear conclusion linking ethical behavior, wealth maximization, and financial decisions.
- Use 5–7 credible references, including textbooks and financial sources.
- Follow APA 7th formatting: double-spaced, 12-pt font, and proper references.
Sample Assessment:
Financial Management and Markets
1. Ethical Considerations in Martha Stewart’s Case
The ethicality of Martha Stewart’s conduct, particularly insider trading, from a fiscal operation perspective is subject to debate. Stewart’s decision to sell ImClone stocks was based on information provided by her broker about the CEO’s stock trade, which is not inherently unethical, as similar transactions are often disclosed. Thus, Stewart may not have perceived her conduct as unethical given the information available to her. Still, her subsequent attempts to cover up her conduct were easily unethical. These conducts, however, aren’t directly related to fiscal operation opinions or liabilities.
2. Importance of Wealth Maximization over Profit Maximization
Wealth maximization is preferred over profit maximization, as it takes a long-term perspective, focusing on sustained growth and returns. While profit maximization may boost shareholder equity in the short term, it can lead to actions that may undermine long-term performance or produce other issues over time.
3. Explanation of Yield Curve
The shape of the yield curve is explained by both the unbiased expectations theory (UET) and the liquidity premium theory (LPT). Under UET, the wind pitches overhead if unborn one-time rates are anticipated to increase, remains flat if rates are anticipated to stay the same, and pitches over if unborn rates are anticipated to fall. LPT suggests that long-term rates are determined by the geometric pars of current and anticipated short-term rates, acclimated by liquidity threat decorations that increase with maturity. Thus, an overhead-leaning yield wind may indicate prospects of rising, flat, or falling unborn interest rates, as long as liquidity decorations rise sufficiently with maturity.
5. Calculation of Equilibrium Rate of Return
The equilibrium rate of return for the security is calculated as follows:
dereliction threat decoration Affectation, threat, decoration Real threat-free rate Liquidity threat decoration Maturity threat decoration
= 2% + 1.75% + 3.50% + 0.25% + 0.85% = 8.35%
References (APA 7 Format)
- By The Associated Press. (2014, August 15). Timeline of Events in Stewart Stock Scandal. Chicagotribune.com; Chicago Tribune. http://www.accounting-basics-forstudents.com/
- Cornett, M. M. (2021). M: Finance (5th Edition). McGraw-Hill Higher Education (US).
Rubric Breakdown
| Criteria | Marks / Weight | Description |
| Ethical Considerations | 15% | Explains ethics in finance using examples like Martha Stewart’s case; distinguishes legal vs. unethical actions. |
| Wealth vs. Profit Maximization | 15% | Demonstrates understanding of long-term wealth maximization over short-term profit. |
| Financial Markets & Instruments | 20% | Classifies markets (primary vs. secondary) and instruments (money vs. capital markets) correctly. |
| Yield Curve Explanation | 15% | Explains the shape of the yield curve using Unbiased Expectations Theory (UET) and Liquidity Premium Theory (LPT). |
| Equilibrium Rate of Return | 20% | Correctly calculates anticipated return using risk premiums and risk-free rate. |
| Conclusion & Insights | 10% | Summarizes lessons learned and relevance for financial decision-making. |
| APA & Formatting | 5% | Proper in-text citations, reference list, double spacing, 12-pt font. |
Step-by-Step Guide
- dissect ethics—assess the ethical counteraccusations of bigwig trading and related conduct.
- Wealth vs. profit maximization—prioritize long-term shareholder wealth over short-term profit earnings.
- Classify request deals—determine whether deals are in primary or secondary requests.
- Classify fiscal instruments—distinguish between plutocrat request and capital request instruments.
- Explain the yield wind—interpret wind shapes using the unprejudiced prospects proposition (UET) and liquidity premium theory (LPT).
- Calculate equilibrium return—sum threat decorations and real threat-free rate to determine anticipated security return.
Frequently Asked Questions
Q What was unethical in Martha Stewart’s case?
Martha Stewart attempted to cover up her conduct related to stock trading, rather than the original sale itself.
Q: Why is wealth maximization preferred over profit maximization?
It focuses on long-term growth and sustainable returns rather than short-term earnings.
Q: What’s the difference between primary and secondary requests?
Primary requests issue new securities; secondary requests trade existing securities.
Q: What are plutocrat request vs. capital request instruments?
Plutocrats request short-term (e.g., T-bills, CDs); capital requests long-term (e.g., stocks, bonds).
Q: What does an overhead-leaning yield wind indicate?
The prospects of rising, flat, or falling interest rates are indicated by liquidity conditions.
Q How is the equilibrium rate of return calculated?
Add dereliction threat, affectation threat, real threat-free rate, liquidity threat, and maturity threat decorations.
Q: Why consider ethical conduct in finance?
An ethical gesture ensures trust, compliance, and sustainable fiscal decisions.
Integrity Note
Note: Only use this assessment example for learning and structure purpose. Do not submit as your own work.
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