This Is What It Means To Say Phoenix, Arizona by Sherman A

"This Is What It Means To Say Phoenix, Arizona"
by Sherman Alexie
First published in Esquire In 1994
Anthologized in Best American Short Stories of 1994
Adapted with other Alexie stories for the 1998 film Smoke
Signals
Just after Victor lost his job at the BIA, he also found J out that
his father had died of a
heart attack in Phoenix, Arizona. Victor hadn't seen his father in
a few years, only talked
to him on the telephone once or twice, but there still was a
genetic pain, which was soon
to be pain as real and immediate as a broken bone.
Victor didn't have any money. Who does have money on a
reservation, except the
cigarette and fireworks salespeople? His father had a savings
account waiting to be
claimed, but Victor needed to find a way to get to Phoenix.
Victor's mother was just as
poor as he was, and the rest of his family didn't have any use at
all for him. So Victor
called the Tribal Council.
"Listen," Victor said. "My father just died. I need some money

to get to Phoenix to make
arrangements."
"Now, Victor," the council said. "You know we're having a
difficult time financially."
"But I thought the council had special funds set aside for stuff
like this."
"Now, Victor, we do have some money available for the proper
return of tribal members'
bodies. But I don't think we have enough to bring your father all
the way back from
Phoenix."
"Well," Victor said. "It ain't going to cost all that much. He had
to be cremated. Things
were kind of ugly. He died of a heart attack in his trailer and
nobody found him for a
week. It was really hot, too. You get the picture."
"Now, Victor, we're sorry for your loss and the circumstances.
But we can really only
afford to give you one hundred dollars."
"That's not even enough for a plane ticket."
"Well, you might consider driving down to Phoenix."
"I don't have a car. Besides, I was going to drive my father's

pickup back up here."
"Now, Victor," the council said. "We're sure there is somebody
who could drive you to
Phoenix. Or is there somebody who could lend you the rest of
the money?"
"You know there ain't nobody around with that kind of money."
"Well, we're sorry, Victor, but that's the best we can do."
Victor accepted the Tribal Council's offer. What else could he
do? So he signed the
proper papers, picked up his check, and walked over to the
Trading Post to cash it.
While Victor stood in line, he watched Thomas Buildsthe-Fire
standing near the
magazine rack, talking to himself. Like he always did. Thomas
was a storyteller that
nobody wanted to listen to. That's like being a dentist in a town
where everybody has
false teeth.
Victor and Thomas Builds-the-Fire were the same age, had
grown up and played in the
dirt together. Ever since Victor could remember, it was Thomas
who always had

something to say.
Once, when they were seven years old, when Victor's father still
lived with the family,
Thomas closed his eyes and told Victor this story: "Your
father's heart is weak. He is
afraid of his own family. He is afraid of you. Late at night he
sits in the dark. Watches the
television until there's nothing but that white noise. Sometimes
he feels like he wants to
buy a motorcycle and ride away. He wants to run and hide. He
doesn't want to be found."
Thomas Builds-the-Fire had known that Victor's father was
going to leave, knew it before
anyone. Now Victor stood in the Trading Post with a one-
hundred-dollar check in his
hand, wondering if Thomas knew that Victor's father was dead,
if he knew what was
going to happen next.
Just then Thomas looked at Victor, smiled, and walked over to
him.
"Victor, I'm sorry about your father," Thomas said.
"How did you know about it?" Victor asked.

"I heard it on the wind. I heard it from the birds. I felt it in the
sunlight. Also, your
mother was just in here crying."
"Oh," Victor said and looked around the Trading Post. All the
other Indians stared,
surprised that Victor was even talking to Thomas. Nobody
talked to Thomas because he
told the same damn stories over and over again. Victor was
embarassed, but he thought
that Thomas might be able to help him. Victor felt a sudden
need for tradition.
"I can lend you the money you need," Thomas said suddenly.
"But you have to take me
with you."
"I can't take your money," Victor said. "I mean, I haven't hardly
talked to you in years.
We're not really friends anymore."
"I didn't say we were friends. I said you had to take me with
you."
"Let me think about it."
Victor went home with his one hundred dollars and sat at the
kitchen table. He held his

head in his hands and thought about Thomas Builds-the-Fire,
remembered little details,
tears and scars, the bicycle they shared for a summer, so many
stories.
Thomas Builds-the-Fire sat on the bicycle, waited in Victor's
yard. He was ten years old
and skinny. His hair was dirty because it was the Fourth of July.
"Victor," Thomas yelled. "Hurry up. We're going to miss the
fireworks."
After a few minutes, Victor ran out of his house, jumped the
porch railing, and landed
gracefully on the sidewalk.
"And the judges award him a 9.95, the highest score of the
summer," Thomas said,
clapped, laughed.
"That was perfect, cousin," Victor said. "And it's my. turn to
ride the bike."
Thomas gave up the bike and they headed for the fairgrounds. It
was nearly dark and the
fireworks were about to start.
"You know," Thomas said. "It's strange how us Indians
celebrate the Fourth of July. It

ain't like it was our independence everybody was fighting for."
"You think about things too much," Victor said. "It's just
supposed to be fun. Maybe
junior will be there."
"Which Junior? Everybody on this reservation is named junior."
And they both laughed.
The fireworks were small, hardly more than a few bottle rockets
and a fountain. But it
was enough for two Indian boys. Years later, they would need
much more.
Afterwards, sitting in the dark, fighting off mosquitoes, Victor
turned to Thomas Builds-
the-Fire.
"Hey," Victor said. "Tell me a story."
Thomas closed his eyes and told this story: "There were these
two Indian boys who
wanted to be warriors. But it was too late to be warriors in the
old way. All the horses
were gone. So the two Indian boys stole a car and drove to the
city. They parked the
stolen car in front of the police station and then hitchhiked back
home to the reservation.

When they got back, all their friends cheered and their parents'
eyes shone with pride.
You were very brave, everybody said to the two Indian boys.
Very brave."
"Ya-hey," Victor said. "That's a good one. I wish I could be a
warrior."
"Me, too," Thomas said.
They went home together in the dark, Thomas on the bike now,
Victor on foot. They
walked through shadows and light from streetlamps.
"We've come a long ways," Thomas said. "We have outdoor
lighting."
"All I need is the stars," Victor said. "And besides, you still
think about things too much."
They separated then, each headed for home, both laughing all
the way.
Victor sat at his kitchen table. He counted his one hundred
dollars again and again. He
knew he needed more to make it to Phoenix and back. He knew
he needed Thomas
Builds-theFire. So he put his money in his wallet and opened
the front door to find

Thomas on the porch.
"Ya-hey, Victor," Thomas said. "I knew you'd call me."
Thomas walked into the living room and sat down on Victor's
favorite chair.
"I've got some money saved up," Thomas said. "It's enough to
get us down there, but you
have to get us back."
"I've got this hundred dollars," Victor said. "And my dad had a
savings account I'm going
to claim."
"How much in your dad's account?"
"Enough. A few hundred."
"Sounds good. When we leaving?"
* * *
When they were fifteen and had long since stopped being
friends, Victor and Thomas
got into a fistfight. That is, Victor was really drunk and beat
Thomas up for no reason at
all. All the other Indian boys stood around and watched it
happen. Junior was there and
so were Lester, Seymour, and a lot of others. The beating might

have gone on until
Thomas was dead if Norma Many Horses hadn't come along and
stopped it.
"Hey, you boys," Norma yelled and jumped out of her car.
"Leave him alone."
If it had been someone else, even another man, the Indian boys
would've just ignored the
warnings. But Norma was a warrior. She was powerful. She
could have picked up any
two of the boys and smashed their skulls together. But worse
than that, she would have
dragged them all over to some tipi and made them listen to some
elder tell a dusty old
story.
The Indian boys scattered, and Norma walked over to Thomas
and picked him up.
"Hey, little man, are you okay?" she asked.
Thomas gave her a thumbs up.
"Why they always picking on you?"
Thomas shook his head, closed his eyes, but no stories came to
him, no words or music.
He just wanted to go home, to lie in his bed and let his dreams
tell his stories for him.

Thomas Builds-the-Fire and Victor sat next to each other in the
airplane, coach section.
A tiny white woman had the window seat. She was busy
twisting her body into pretzels.
She was flexible.
"I have to ask," Thomas said, and Victor closed his eyes in
embarrassment.
"Don't," Victor said.
"Excuse me, miss," Thomas asked. "Are you a gymnast or
something?"
"There's no something about it," she said. "I was first alternate
on the 1980 Olympic
team."
"Really?" Thomas asked.
"Really."
"I mean, you used to be a world-class athlete?" Thomas asked.
"My husband still thinks I am."
Thomas Builds-the-Fire smiled. She was a mental gymnast, too.
She pulled her leg
straight up against her body so that she could've kissed her

kneecap.
"I wish I could do that," Thomas said.
Victor was ready to jump out of the plane. Thomas, that crazy
Indian storyteller with
ratty old braids and broken teeth, was flirting with a beautiful
Olympic gymnast. Nobody
back home on the reservation would ever believe it.
"Well," the gymnast said. "It's easy. Try it."
Thomas grabbed at his leg and tried to pull it up into the same
position as the gymnast.
He couldn't even come close, which made Victor and the
gymnast laugh.
"Hey," she asked. "You two are Indian, right?"
"Full-blood," Victor said.
"Not me," Thomas said. "I'm half magician on my mother's side
and half clown on my
father's."
They all laughed.
"What are your names?" she asked.
"Victor and Thomas."
"Mine is Cathy. Pleased to meet you all."

The three of them talked for the duration of the flight. Cathy the
gymnast complained
about the government, how they screwed the 1980 Olympic
team by boycotting.
"Sounds like you all got a lot in common with Indians," Thomas
said.
Nobody laughed.
After the plane landed in Phoenix and they had all found their
way to the terminal, Cathy
the gymnast smiled and waved good-bye.
"She was really nice," Thomas said.
"Yeah, but everybody talks to everybody on airplanes," Victor
said. "It's too bad we can't
always be that way."
"You always used to tell me I think too much," Thomas said.
"Now it sounds like you
do."
"Maybe I caught it from you."
"Yeah."
Thomas and Victor rode in a taxi to the trailer where Victor's

father died.
"Listen," Victor said .as they stopped in front of the trailer. "I
never told you I was sorry
for beating you up that time."
"Oh, it was nothing. We were just kids and you were drunk."
"Yeah, but I'm still sorry."
"That's all right."
Victor paid for the taxi and the two of them stood in the hot
Phoenix summer. They could
smell the trailer.
"This ain't going to be nice," Victor said. "You don't have to go
in."
"You're going to need help."
Victor walked to the front door and opened it. The stink rolled
out and made them both
gag. Victor's father had lain in that trailer for a week in
hundred-degree temperatures
before anyone found him. And the only reason anyone found
him was because of the
smell. They needed dental records to identify him. That's
exactly what the coroner said.
They needed dental records.

"Oh, man," Victor said. "I don't know if I can do this."
"Well, then don't."
"But there might be something valuable in there."
"I thought his money was in the bank."
"It is. I was talking about pictures and letters and stuff like
that."
"Oh," Thomas said as he held his breath and followed Victor
into the trailer.
When Victor was twelve, he stepped into an underground w asp
nest. His foot was
caught in the hole, and no matter how hard he struggled, Victor
couldn't pull free. He
might have died there, stung a thousand times, if Thomas
Builds-the-Fire had not come
by.
"Run," Thomas yelled and pulled Victor's foot from the hole.
They ran then, hard as they
ever had, faster than Billy Mills, faster than Jim Thorpe, faster
than the wasps could fly.
Victor and Thomas ran until they couldn't breathe, ran until it
was cold and dark outside,

ran until they were lost and it took hours to find their way
home. All the way back, Victor
counted his stings.
"Seven," Victor said. "My lucky number."
* * *
Victor didn't find much to keep in the trailer. Only a photo
album and a stereo.
Everything else had that smell stuck in it or was useless
anyway.
"I guess this is all," Victor said. "It ain't much."
"Better than nothing," Thomas said.
"Yeah, and I do have the pickup."
"Yeah," Thomas said. "It's in good shape."
"Dad was good about that stuff."
"Yeah, I remember your dad."
"Really?" Victor asked. "What do you remember?"
Thomas Builds-the-Fire closed his eyes and told this story: "I
remember when I had this
dream that told me to go to Spokane, to stand by the Falls in the
middle of the city and
wait for a sign. I knew I had to go there but I didn't have a car.

Didn't have a license. I
was only thirteen. So I walked all the way, took me all day, and
I finally made it to the
Falls. I stood there for an hour waiting. Then your dad came
walking up. What the hell
are you doing here? he asked me. I said, Waiting for a vision.
Then your father said, All
you're going to get here is mugged. So he drove me over to
Denny's, bought me dinner,
and then drove me home to the reservation. For a long time I
was mad because I thought
my dreams had lied to me. But they didn't. Your dad was my
vision. Take care of each
other is what my dreams were saying. Take care of each other."
Victor was quiet for a long time. He searched his mind for
memories of his father, found
the good ones, found a few bad ones, added it all up, and
smiled.
"My father never told me about finding you in Spokane," Victor
said.
"He said he wouldn't tell anybody. Didn't want me to get in
trouble. But he said I had to
watch out for you as part of the deal."

"Really?"
"Really. Your father said you would need the help. He was
right."
"That's why you came down here with me, isn't it?" Victor
asked.
"I came because of your father."
Victor and Thomas climbed into the pickup, drove over to the
bank, and claimed the
three hundred dollars in the savings account.
Thomas Builds-the-Fire could fly.
Once, he jumped off the roof of the tribal school and flapped his
arms like a crazy eagle.
And he flew. For a second, he hovered, suspended above all the
other Indian boys who
were too smart or too scared to jump.
"He's flying," junior yelled, and Seymour was busy looking for
the trick wires or mirrors.
But it was real. As real as the dirt when Thomas lost altitude
and crashed to the ground.
He broke his arm in two places.
"He broke his wing," Victor chanted, and the other Indian boys
joined in, made it a tribal

song.
"He broke his wing, he broke his wing, he broke his wing," all
the Indian boys chanted as
they ran off, flapping their wings, wishing they could fly, too.
They hated Thomas for his
courage, his brief moment as a bird. Everybody has dreams
about flying. Thomas flew.
One of his dreams came true for just a second, just enough to
make it real.
Victor's father, his ashes, fit in one wooden box with enough
left over to fill a cardboard
box.
"He always was a big man," Thomas said.
Victor carried part of his father and Thomas carried the rest out
to the pickup. They set
him down carefully behind the seats, put a cowboy hat on the
wooden box and a Dodgers
cap on the cardboard box. That's the way it was supposed to be.
"Ready to head back home," Victor asked.
"It's going to be a long drive."

"Yeah, take a couple days, maybe."
"We can take turns," Thomas said.
"Okay," Victor said, but they didn't take turns. Victor drove for
sixteen hours straight
north, made it halfway up Nevada toward home before he
finally pulled over.
"Hey, Thomas," Victor said. "You got to drive for a while."
"Okay."
Thomas Builds-the-Fire slid behind the wheel and started off
down the road. All through
Nevada, Thomas and Victor had been amazed at the lack of
animal life, at the absence of
water, of movement.
"Where is everything?" Victor had asked more than once.
Now when Thomas was finally driving they saw the first
animal, maybe the only animal
in Nevada. It was a long-eared jackrabbit.
"Look," Victor yelled. "It's alive."
Thomas and Victor were busy congratulating themselves on
their discovery when the
jackrabbit darted out into the road and under the wheels of the
pickup.

"Stop the goddamn car," Victor yelled, and Thomas did stop,
backed the pickup to the
dead jackrabbit.
"Oh, man, he's dead," Victor said as he looked at the squashed
animal.
"Really dead."
"The only thing alive in this whole state and we just killed it."
"I don't know," Thomas said. "I think it was suicide."
Victor looked around the desert, sniffed the air, felt the
emptiness and loneliness, and
nodded his head.
"Yeah," Victor said. "It had to be suicide."
"I can't believe this," Thomas said. "You drive for a thousand
miles and there ain't even
any bugs smashed on the windshield. I drive for ten seconds and
kill the only living thing
in Nevada."
Yeah," Victor said. "Maybe I should drive."
"Maybe you should."

Thomas Builds-the-Fire walked through the corridors of the
tribal school by himself.
Nobody wanted to be anywhere near him because of all those
stories. Story after story.
Thomas closed his eyes and this story came to him: "We are all
given one thing by which
our lives are measured, one determination. Mine are the stories
which can change or not
change the world. It doesn't matter which as long as I continue
to tell the stories. My
father, he died on Okinawa in World War II, died fighting for
this country, which had
tried to kill him for years. My mother, she died giving birth to
me, died while I was still
inside her. She pushed me out into the world with her last
breath. I have no brothers or
sisters. I have only my stories which came to me before I even
had the words to speak. I
learned a thousand stories before I took my first thousand steps.
They are all I have. It's
all I can do."
Thomas Builds-the-Fire told his stories to all those who would
stop and listen. He kept
telling them long after people had stopped listening.

Victor and Thomas made it back to the reservation just as the
sun was rising. It was the
beginning of a new day on earth, but the same old shit on the
reservation.
"Good morning," Thomas said.
"Good morning."
The tribe was waking up, ready for work, eating breakfast,
reading the newspaper, just
like everybody else does. Willene LeBret was out in her garden
wearing a bathrobe. She
waved when Thomas and Victor drove by.
"Crazy Indians made it," she said to herself and went back to
her roses.
Victor stopped the pickup in front of Thomas BuildstheFire's
HUD house. They both
yawned, stretched a little, shook dust from their bodies.
"I'm tired," Victor said.
"Of everything," Thomas added.
They both searched for words to end the journey. Victor needed
to thank Thomas for his

help, for the money, and make the promise to pay it all back.
"Don't worry about the money," Thomas said. "It don't make
any difference anyhow."
"Probably not, enit?"
"Nope."
Victor knew that Thomas would remain the crazy storyteller
who talked to dogs and cars,
who listened to the wind and pine trees. Victor knew that he
couldn't really be friends
with Thomas, even after all that had happened. It was cruel but
it was real. As real as the
ashes, as Victor's father, sitting behind the seats.
"I know how it is," Thomas said. "I know you ain't going to
treat me any better than you
did before. I know your friends would give you too much shit
about it."
Victor was ashamed of himself. Whatever happened to the tribal
ties, the sense of
community? The only real thing he shared with anybody was a
bottle and broken dreams.
He owed Thomas something, anything.
"Listen," Victor said and handed Thomas the cardboard box
which contained half of his

father. "I want you to have this."
Thomas took the ashes and smiled, closed his eyes, and told this
story: "I'm going to
travel to Spokane Falls one last time and toss these ashes into
the water. And your father
will rise like a salmon, leap over the bridge, over me, and find
his way home. It will be
beautiful. His teeth will shine like silver, like a rainbow. He
will rise, Victor, he will
rise."
Victor smiled.
"I was planning on doing the same thing with my half," Victor
said. "But I didn't imagine
my father looking anything like a salmon. I thought it'd be like
cleaning the attic or
something. Like letting things go after they've stopped having
any use.
"Nothing stops, cousin," Thomas said. "Nothing stops."
Thomas Builds-the-Fire got out of the pickup and walked up his
driveway. Victor started
the pickup and began the drive home.
"Wait," Thomas yelled suddenly from his porch. "I just got to

ask one favor."
Victor stopped the pickup, leaned out the window, and shouted
back. "What do you
want?"
"Just one time when I'm telling a story somewhere, why don't
you stop and listen?"
Thomas asked.
"Just once?"
"Just once."
Victor waved his arms to let Thomas know that the deal was
good. It was a fair trade, and
that was all Victor had ever wanted from his whole life. So
Victor drove his father's
pickup toward home while Thomas went into his house, closed
the door behind him, and
heard a new story come to him in the silence afterwards.
FINC 330 Project Description
Research Project Part 2
Due at the end of week 7
This project is closely aligned with the Course Outcomes and

Finance Program Objectives. Completion of this project can be
used as part of a portfolio to show potential employers the
student is skilled at performing company valuations and
financial statement analysis and can be included on the student's
resume.
Bond and Stock Performance Analysis
OBJECTIVE
In this part of the project you are to assume to have been hired
to join a team serving as an internal financial analyst to THE
COMPANY. Your client plans to invest in bonds and (or) stocks
issued by THE COMPANY (SELECTED BY INSTRUCTOR). In
part 6 of the assignment you are asked to provide some
recommendations to THE COMPANY’S management.
THE COMPANY for part 2 of the project can be the company
that you were using for the Research Project Part 1 or
ANOTHER COMPANY determined by your professor. THE
COMPANY for this part of the project must have bonds listed
on the website http://finra-
markets.morningstar.com/BondCenter/Default.jsp. To find the
information on bonds, click on Search in the middle of the
screen (under Market Center Bond Guide), under Quick Search
type the Issuer Name and the Symbol, and click SHOW
RESULTS.
Alternatively, you can request approval of another publicly
traded company. This request must be submitted before the end
of the first week of the course. The request must include
· identification of the company by ticker symbol and name
· a reasonable and appropriate explanation of why you want to
examine the alternative company
· the source of the analyst's report that will be used in the
analysis (which must be submitted to me)
· acknowledgement by you that all the specific elements of the
assignment (see below) will be prepared by you and included in
the final research project report
SUGGESTED WEBSITES
www.morningstar.com - To find the information for your

company you need to type the stock symbol in the Quotes
window to get into the company’s page.
http://finra-markets.morningstar.com/BondCenter/Default.jsp -
To find the information on bonds, click on Search in the middle
of the screen (under Market Center Bond Guide), under Quick
Search type the Issuer Name and the Symbol, and click SHOW
RESULTS.
https://markets.businessinsider.com/bonds. To find the
information on bonds, scroll down the page, type the name of
the company in the window under Bond Finder, and click
SEARCH.
www.marketwatch.com -To find the information for your
company you need to type the stock symbol in the Search
www.money.cnn.com -To find the information for your
www.finance.yahoo.com - To find the information for your
www.nyse.com – Click on Data, then click on Stocks (under
Quotes), and type the name of the company or the stock symbol
in the window “Keyword or symbol” to get into the company’s
page.
www.nasdaq.com - To find the information for your company
you need to type the stock symbol in the Search window to get
into the company’s page.
Company’s websites
YOUR SPECIFIC ASSIGNMENT
Using the information from the websites the student will
develop evaluation of bond and stock performance for THE
COMPANY (SELECTED BY INSTRUCTOR). (The evaluation
portion will total 85% of the assignment grade)
-1—Background and Industry - The paper should begin with a
short introduction about background and industry, explains the

purpose of the paper, and provides an overview of the contents
that follow (one short paragraph).
-2- The financial leverage ratios (10% of the project grade)
a) Find the financial leverage ratios for THE COMPANY
assigned for you of the project for the last 3-5 years in the
Internet. Present these ratios as the table(s) in your project.
You can find these ratios in the Internet or calculate them. If
you use published ratios you must indicate that and cite their
source.
· Debt-to-assets ratio (Debt ratio)
· Debt-to Equity ratio
· Interest Coverage ratio (the Times Interest Earned)
b) Write (about) 1 page of the analysis of the ratio results. In
your analysis you should answer the following questions. Please
explain your answer to each question.
How is THE COMPANY financing its assets? Discuss how
much risk is associated with the bonds issued by the company?
How can this risk be measured? Please explain.
-3- Collect and evaluate the data about bond performance of the
assigned company. (15% of the project grade).
The information on bonds can be found on the website
http://finra-markets.morningstar.com/BondCenter/Default.jsp.
To find the information on bonds, click on Search in the middle
of the screen (under Market Center Bond Guide), under Quick
Search type the Issuer Name and the Symbol, and click SHOW
RESULTS.
Another useful website on bond information is
https://markets.businessinsider.com/bonds. To find the
information on bonds, scroll down the page, type the name of
the company in the window under Bond Finder, and click
SEARCH.
Copy the quotations of two bonds issued by THE COMPANY
(SELECTED BY INSTRUCTOR) that contain the Price. Present
these quotations in your project.
1. Assume that par value of the bond is $1,000. What were the
last prices of the bonds in $$$ (listed in the Price column)?

Show your work in your project.
2. Assume that par value of the bond is $1,000. Calculate the
annual coupon interest payments. Show your work in your
project.
3. Assume that par value of the bond is $1,000. Calculate the
current yield of the bonds. Show your work in your project.
4. Write a 1-2 page of the analysis of the bonds. In your
analysis you should answer the following questions. Please
explain your answer to each question.
a) How much is the YTM listed in quotations is for the bonds?
Explain the meaning of YTM.
b) If you are going to buy a bond issued by THE COMPANY,
which bond would you choose? Why?
c) Are these bonds callable? If the bonds that you chose are
callable (non-callable), will it change your decision to buy
them?
d) If you are an investor who is looking for a bond to invest in,
are you going to buy a bond that you chose? Take a look at the
balance sheet and income statement of the company. What data
or ratios support your decision to buy this bond or not? You
may want to incorporate the results of the Research Project Part
1, as well as the results of the financial leverage ratios to
answer this question. You should develop a specific
recommendation, with supporting rationale to explain your
answer.
-4- Collect and evaluate the data about stock performance of the
assigned company for the last one year. (totally 35% of the
project grade).
1) Find the market ratios for the company for the last 1-3 years
and its major competitor for the last year in the Internet. (10%
of the project grade)
· Price/Earnings ratio
· Market/Book ratio (also called (Price/Book ratio)
· Earnings per share
· Dividends per share

· Other market ratios on your choice
These ratios are available on www.morningstar.com>
Company’s page – under Valuation, Financials, and under
Dividends
You can find these ratios in the Internet or calculate them. If
you use published ratios you must indicate that and cite their
source.
a. Present the market ratios as the table(s) in your project.
b. Write about 1 page of analysis of the market ratio results that
you found. Compare the market ratio results against the industry
or main competitor. In your report please answer the question:
Are the common stockholders receiving an adequate return on
their investment?
c. Compare the P/E ratio of your company with the industry
average or 5-year average. Is the stock overvalued, undervalued,
or properly valued? Why? In accordance with your findings, is
it reasonable to buy the stock? Please explain your answers.
-2) Analysis of the historical stock prices trend for the last year.
(10% of the project grade)
a. Collect and evaluate the data about stock prices of the
assigned company for the last one year for the company and its
major competitor.
b. Create the chart(s) using the stock price chart tools on the
websites or Excel. Present the chart(s) in your project.
c. Write about 0.5 page of analysis the historic stock prices
trend for the last year.
3) Apply the Capital Asset Pricing Model (CAPM) Security
Market Line to estimate the required return on THE COMPANY
stock. Note that you will need the risk-free rate and the market
return. Show this information in your project. (15% of the
project grade)
1. Apply the Capital Asset Pricing Model (CAPM) Security
Market Line to estimate the required return on stock. Note that
you will need the risk-free rate, beta, and the market return.

a) To get the current yield on 10-year Treasury securities go to
www.finance.yahoo.com -click on Markets - U.S. Treasury
Bonds Rates. You will use the current yield on 10-year
Treasury securities as the risk-free rate to estimate the required
rate of return on stocks. Discuss how appropriate this rate is as
a measure of risk.
b) The market risk premium adjusted for COVID-19 is
estimated as 5.35%. What does it mean “market risk premium”?
c) Beta is listed in www.finance.yahoo.com and in
www.morningstar.com on the company's front page. What is the
beta listed for the company? What does it mean?
d) Calculate the required return on the stockusingthe Capital
Asset Pricing Model (CAPM) Security Market Line. Please
show your work.
2. There are several methods how to calculate the growth rate.
One of the possible ways is to calculate the sustainable growth
rate as g = ROE *(1- Dividend payout ratio). You can find ROE
and the Dividend Payout Ratio on www.morningstar.com>
Company’s page – under Financials and under Dividends
Calculate the company’s sustainable growth rate. Please show
your work.
3. Apply the Gordon model (constant growth rate model) to
calculate the intrinsic (economic) value of the stock. Please
show your work.
Please note that for some companies it is not possible to use the
Gordon model. If that is the case, please explain why it is not
possible to use this model for your company. What other models
is it possible to use?
4. Compare the result of your calculations with the
current stock price. Is the stock overvalued, undervalued, or
properly valued? Why? In accordance with your findings, is it
reasonable to buy the stock? Why? Please explain your answer.
-5- Develop a specific recommendation, with supporting
rationale for your client, as to whether the assigned company's
recent trend in financial and stock performance is of sufficient
financial strength to warrant entering in a long-term investment

in bonds and/or stocks of the company. Explain your answer
(about 1 page) (10% of the project grade).
-6- Develop a specific recommendation, with supporting
rationale for the COMPANY’S management - Think about the
financial strategy of the company, how to best balance THE
COMPANY’S financial leverage to optimize shareholder wealth
going forward taking into consideration the company's current
market position, credit rating, dividend policy, etc. (10% of the
project grade).
-7- Reflection - the students should write a paragraph in their
own words reflecting on what they learned from the assignment
and how they think they could apply what they learned in the
workplace. (5% of the project grade).
PRESENTATION OF PAPER AND WRITING (15%) of the
project grade):
-Organization, Format and Presentation of Paper including the
Title page, Introduction, Body, and Summary. Each section of
the paper must begin with a sub-heading. Please use the sub-
headings included in the assignment (4% of the project grade)
Use of Tables, Figures and Other Graphics to Summarize and
Support Analysis Presented in the Paper (3% of the project
grade)
Logical and Smooth Flowing Transitions and Relationships
among Sections of the Written Report (3% of the project grade)
Research Sources and Significance of Research Information and
Data, Use of APA Citation Methodology (5% of the project
grade)
Bonds and Stock Analysis of Apple
Background & Industry.
In 1976 Steve Jobs and Steve Wozniak founded Apple
Computer, Inc. Jobs and Wozniak vision was to develop a
computer that is portable and easy to use. The process started in
Steve Job’s household where the first product focused on its
capabilities, meaning bare bones. The cosmetics were added in

1977 and Apple changed the computer industry after going
public with their product in 1980 (www.loc.gov, 2015, p. 1-2).
Apple encountered challenges along the way which
included Wozniak leaving the organization in 1983 and Jobs in
1985. Steve Jobs launched his own business, NeXT Software
and attained Pixar from George Lucas. The acquisition of Pixar
later proved that it was one of the finest moves from Jobs.
Although Apple was able to hold its ground without Steve Jobs,
the organization realized that without a software the company
will soon close its door. Sculley, the current president at that
time decided to work with Jobs once more. Steve Jobs became
the interim CEO and he revolutionized Apple (www.loc.gov,
2015, p. 3-7)
Apple’s innovation of computers and how music was
perceived through a portable device became the game changer
for the organization. Apple’s success skyrocketed with the
release of their mp3 and various handheld devices including the
iPhone under Steve Jobs’ supervision.
Financial Leverage Ratios.
Financial Leverage Ratios
2020
2019
2018
Debt - to - asset ratio (Debt ratio)
0.35
0.32
0.31
Debt - to - equity ratio
1.72
1.19
1.07
Interest coverage ratio (the Times Interest Earned)
24.35
19.38
23.5

Apple is financing its assets by having less debt and more
assets in the company. Apple has more cash since they sell more
and make positive profit from their sales. The risk associated
with the bonds issued by Apple are low because most of their
bonds have high interest rates and the bond prices are not too
high.
Bond Performance.
Bond Symbol
Coupon Rate
Last Price of Bond (Assuming $1,000 par)
Annual Coupon Interest Payment (Assuming $1,000 par)
Current Yield (Assuming $1,000 par)
YTM
Is Bond Callable?
AAPL4001809
2.4%
$1,046.401
$242
2.29%3
Not listed
Yes
AAPL4122386
4.45%
$1,238.704
$44.505
3.59%
Not listed
Yes
Calculations:
1. Price of bond AAPL4001809 ($1000/100) * 104.64 = 10*
104.64 = $1,046.40
1. Annual Coupon Payment = $1000*2.4% = $24

1. Current Yield = ($1000*2.4%)/($104.64*10) = 2.29%
1. Price of Bond APPL4122386 = ($1000/100) * 123.87 = 10*
123.87 = $1,238.70
1. Annual Coupon Payment = $1000*4.45% = $44.50
1. Current Yield = ($1000*4.45%)/($123.87*10) = 3.59%
The current recommendation is to purchase Apple bond
APPL4122386 which currently holds a 4.45% coupon (Finra
2021). This is one of the higher coupon rates for Apple Inc.
bonds, signifying that holding out for a larger rate may prove
frivolous. While the bond in question is callable, presenting a
chance that the bond can be retired prior to maturity and not
realize its full earnings, the rate is nearly double that of the
bonds Apple Inc has recently issued. This will result in the
highest annual payments and yield. Additionally, the bond
ratings are high with a Moody's Rating at Aa1, and a Standard
& Poor's Rating of AA+ (Finra, 2021). These ratings indicate
the company has a high capacity to meet financial obligations
and presents less of a risk to the investor. The + sign in the
Standard & Poor's Rating indicates the company is in the higher
(stronger) end of this AA ranking making it an even safer
investment.
Investing in Apple Inc. would be a fruitful financial move based
on the profitability/liquidity ratios as well. While the ratios are
not always consistent (up and down from year to year since
2016) the company overall has maintained or increased the
financial leverage, ROE, ROA, and interest coverage. These
ratios indicate a high ability to repay debt and a safe or less
risky investment with a decent return. The Quick ratio for Apple
Inc. is 1.2 (Morningstar, 2021), another indicator of good
financial health as the asserts can cover the company’s
liabilities should they need to be liquidated. However, caution
is needed as always when investing as the debt-to-equity ratio is
1.5 (Morningstar, 2021) indicating that the company has used
large volumes of debt to finance current operations. When
considering the current pandemic and weakened economy, a

high ratio for most companies is to be expected over the next
year or so until the global economy restabilizes. After careful
analysis, it would be a good investment for a bondholder to
purchase Apple Inc. bond APPL4122386.
Stock Performance.
Market Ratios.
Microsoft over Apple
Year

2017
2018
2019
Average by data
PE Ratio
64.56%
215.71%
20.45%
100.24%
Price/Book
14.49%
30.46%
-20.45%
8.17%
EPS
41.30%
-28.52%
70.37%
27.72%
DPS
156.45%
142.25%
148.68%
149.13%
ROE
111.75%
32.98%
170.30%
105.01%
Overall Average:
78.05%

Microsoft had an overall average of 78.05% aggregate
difference from Apple based on the average data compiled by
using different ratio analysis. In terms of the common
stockholders receiving an adequate return on their investment,
both companies increase their dividend yield. Apple increased
by 5% and Microsoft by 11% (Sparks, 2020, p. 3-5). The
increase tells me that the common stockholders are getting
adequate return, however, depending on how you look at the
ratios or returns this could lead to a subjective perspective
based on the approach of the stockholder’s strategy in investing
to an organization.
Apple’s PEG ratio showed a significant advantage over
Microsoft from 2017 to 2019 as illustrated respectively, 9.86%,
5.04%, and 3.7%. This shows that Apple had a better EPS
growth than Microsoft, however, considering the “accepted”
PEG ratio both organizations are over 1 which indicates that the
stock prices are overvalued.
Cohan (2020), argues that the APPLE P/E ratio is overvalued. In
recent findings, APPLE’s revenue had declined due to factors
such as low sales from China, overall iPhone retention from
current and previous owners, and overall foreign exchange rate
(p. 7).
APPL’s EPS forecast for 2021 is estimated $4.47 (Nasdaq.com,
n.d., p-5). Which tells us that the P/E ratio will be
approximately 30. APPLE is trading their stocks 30x per share.
Overall, P/E is a quick tool analysis to understand the financial
situation of a company. However, a higher or lower P/E does
not necessarily good nor bad. It is important to understand the
organization from different factors such as, target market,
demographics, projected growth and so on.
Microsoft has been one of biggest challenger for APPLE. The
EPS forecast for this quarter is estimated to be around $7.4
which makes the P/E ratio by approximately 32. Koss (2020),

explains that significant increase of activity from big tech
companies in developing their own version of gaming systems
(p. 1-2). I think that the rise of AI gaming has been steadily
improving over the past five years. Microsoft has been one of
the leading pioneers of gaming for over a decade now and I
think that they will only grow from here on out.
Historical Stock Prices.
Microsoft’s (MS) stock prices are significantly higher than
Apple, with an average stock price of $201 (MS) and $124
(APPL). MS has a rate of 61.39% higher than APPL.
Conversely, the trend, shown in the red line, indicates that MS
and APPL almost had the same increase and decrease of stock
prices in FY 2020. We can observe that both organizations
peaked around August of 2020 and held the stock prices with
relatively minute differences until the end of the year. The
ratios above convey that MS could potentially be overvalued,
however, considering the complete financial health of MS and
APPL we can conclude that both organizations have a steady
EPS growth at this time. Which brings us the possibility of
investing in both organizations.
Required Return on Apple’s Stock.
CAPM
In order to estimate the required return on stock using the
Capital Asset Pricing Model (CAPM), the following data will be
used:
· Risk-free rate: 1.4460%
· Beta: 1.24
· Market risk premium (Adjusted for COVID-19): 5.35%
Required rate of return= .014460+(1.24*.0535)= 0.0808= 8.08%
Sustainable Growth Rate
The company’s sustainable growth rate is calculated as
g=ROE*(1-Dividend payout ratio). The following data was used
to calculate this rate:
· ROE= 82.09%
· Dividend payout ratio= 21.77%

Sustainability growth rate= .8209*(1-.2177)= 0.6422= 64.22%
Stock Value
The Gordon growth rate model will be used to calculate
the economic value of Apple’s stock. The equation for this
model is as follows:
· P=D1/(r-g)
Where:
· P= Stock price
· D1= Expected dividend value
· r= Required rate of return
· g= Dividend growth rate
The the stock price was calculated using the following values:
· D1= 0.82
· r= 8.08%
· g= 6.91%
Stock price= 0.82/(.0808-.0691)= $70.09
Based on the calculations above Apple’s stock, which is
currently priced at $125.12, is actually overvalued. This is
most likely due to growing investor confidence. The company’s
financial performance justifies the confidence that investors
have placed on its shares. Apple is a highly liquid company that
continues to grow at a high rate. With a sustainability growth
rate of 64.22% from its current resources, and the potential to
acquire more, investors can expect even greater returns on their
investment down the line.
Recommendation for Apple’s Management.

Eassa 2018 explains that Apple's stability for the past five years
could be an indicator that investors should consider looking at
Apple for long-term investment (p. 1-5). Apple has been
working diligently to ensure that the shareholders are getting
the most benefit by investing in the company. Although Apple
may not have the highest percentage rate of return for dividends
per share, it has proven itself as one of the best tech companies
to invest in now. Moreover, Apple's marketing strategy is
unique and stands out to its customers. Apple values its creation
and not its product. Apple identifies the exclusivity of their
product and allows the consumers to market for them. The
strategy that Apple has been using is creating an experience for
the consumers. Moreover, Apple has been rated as Aa1 due to
its robust and constant growth for the past five years
(Yahoo.com/Moody, 2021, p. 1-3)
Reflections
While completing this assignment, I gained an understanding of
the amount of research required to properly value a company.
Not all stock shares are properly valued, so as an investor it is
important to find out what a company is truly worth and
understand the reasoning behind its valuation. I also learned
how to estimate a company’s growth in order to determine if it
is performing at a sustainable rate. I can use what I have learned
to make wiser decisions when dabbling in the stock market.
-Dimitry Decolin
When researching the financial leverage ratios, I got more
information for understanding how bonds can be evaluated with
supporting financial leverage ratios when helping
someone/client understand if a company has good bonds to buy
or not. Additionally, I learned that it is easy to understand if a

company is doing good with it’s financial leverage ratios
because it shows the companies debts.
-Celine Denk
Surprisingly this was my first time working on a project like
this at UMGC and I had an overall good experience. There were
communication problems in the beginning as expected, but I
feel like we worked through them fast and set up a game plan
fairly quick for the remainder of the weeks. We eventually
found out that if we split up the work, so that we can all
contribute. I have learned that if you are not clear on something
it is always a good idea to ask, so that everyone can walk away
with a clear understanding. I could apply this to the workplace
in many different ways; collaboration, communication, using
Microsoft excel, and researching and interpreting data.
Especially how most companies are switching to telework or
working from home, I think that this was a great learning
experience for that.
-Jesse Cortez
This assignment taught me a lot about how to properly analyze a
company’s performance and gave insight on how to project the
longevity of a company’s finances. It was also an eye opener
into the difference in communication styles/strengths of a team.
I am more of a communicator through text rather than webcam
and in this team environment I had to find ways to adjust. Both
the academic and personal enlightenments can be beneficial in
the work environment. While my work is not financial in nature,
I will be forming partnerships with various organizations in the
future and will need to study their finances to determine
possible levels of financial backing. In addition, the differences
in communication styles and finding ways to adjust or work
around them are essential in today’s virtual world.
– Regina Cain
The group project on Apple was my first time completing at
UMGC. My group overall was great! We came together as a
team to figure out how we can tackle the project. Allowing each
team member to pick which part that they were most

comfortable completing, which helped a lot as a team. Learning
how to work as a team, is a great skill that can applied to real
life situations. I now would fill comfortable completing group
assignments, not only with fellow classmates, but my co-
workers too! Now that the world is dealing with this COVID-19
crisis and being able to virtually collaborate is also another skill
that can and will definitely be applied.
-Antonia Davis
I learned more information about Apple and its history. I find it
interesting how it went all way around and back to Steve Jobs.
The trend analysis allowed me to have a better understanding of
the organization’s growth capacity every year. This also
includes a possible forecast that can be achieved by analyzing
not just the trend the overall market that is the organization part
of. The income statements and balance sheet are making more
sense to me as well.
-Rocky Conejos
References
Cohan, P. (2020, January 2). Forbes.
https://www.forbes.com/sites/petercohan/2020/01/02/59
-overvalued-why-apple-is-neither-a-growth-nor-value-
stock/?sh=6fd0f2753990
Davuluri, A. C. (2021, March 1). Apple’s iPhone 12 Launch
Propels December Quarter Sales to
Record Heights; Raising FVE to $98. Retrieved from
https://www.morningstar.com/stock
s/xnas/aapl/quote
Dikov, D. F. (2020, December 14). Understanding the Gordon
Growth Model for Stock Valuation
. Retrieved from
https://medium.com/magnimetrics/understanding-the-gordon-

growth-
model-for-stock-valuation-
943f429ff1cf#:%7E:text=Gordon%20Growth%20Model%20fo
rmula&text=PO%20is%20the%20price%20(fair,the%20exp
ected%20dividend%20growth
%20rate.
Dybek, M. (2020, October 31). Apple Inc. (NASDAQ:AAPL):
Analysis of SOLVENCY RATIOS.
https://www.stock-analysis-
on.net/NASDAQ/Company/Apple-Inc/Ratios/Long-term-Deb
t-and-Solvency#Debt-to-Assets.
Analysis of Solvency Ratios. Stock
Analysis on Net. https://www.stock-analysis-
on.net/NASDAQ/Company/Apple-Inc/Ratio
s/Long-term-Debt-and-Solvency#Debt-to-Equity.
Analysis of Solvency Ratios. Stock
Analysis on Net. https://www.stock-analysis-
on.net/NASDAQ/Company/Apple-Inc/Ratio
s/Long-term-Debt-and-Solvency#Interest-Coverage.
Eassa, A. (2018, December 11). What you need to know about
Apple’s capital return program.
The Motley Fool.
https://www.fool.com/investing/2018/12/11/what-you-need-to-
know
-about-apples-capital-return.aspx
Finra. (2021). Bond detail. Retrieved March 04, 2021, from
http://finra-markets.morningstar.co
m/BondCenter/BondDetail.jsp?ticker=C592367&symbol=A
APL4001809
Finra. (2021). Bond detail. Retrieved March 04, 2021, from
http://finra-markets.morningstar.co
m/BondCenter/BondDetail.jsp?ticker=C610233&symbol=A
Apl4122386
Koss, H. (2020, February 3). What does the future of the

gaming industry look like? Built In.
https://builtin.com/media-gaming/future-of-gaming
Morningstar, Inc. (2021). Apple Inc. Retrieved March 04, 2021,
from https://financials.mornings
tar.com/ratios/r.html?t=0p000000GY&culture=en&platfor
m=sal
Nasdaq.com. (n.d.). Apple Inc. Common stock (AAPL) earnings
report date. https://www.nasdaq
.com/market-activity/stocks/aapl/earnings
Sparks, D. (2020, January 15). Battle of dividends: Apple vs.
Microsoft. The Motley Fool.
https://www.fool.com/investing/2020/01/15/battle-of-
dividends-apple-vs-microsoft.as
px
Www.loc.gov. (2015, August 12). Apple computers: This month
in business history (Business)
references services, Library of Congress). Library of
Congress. https://www.loc.gov/rr/b
usiness/businesshistory/April/apple.html
Yahoo.com. (2021, February 1). Apple Inc. – Moody’s assigns
Aa1 rating to Apple’s new senior
notes. Yahoo. https://www.yahoo.com/now/apple-inc-
moodys-assigns-aa1
Yahoo is now a part of Verizon Media. (n.d.). Retrieved from
https://finance.yahoo.com/quote/
%5ETNX?p=%5ETNX
Price/Book Ratio
Price/Book Ratio Apple 2017 2018 2019 6.42 6.96 14.23
Price/Book Ratio MS 7.35 9.08 11.32
Ratio

PE Ratio
PE Ratio Apple 2017 2018 2019 18.37 13.24 24.7
PE Ratio MS 30.23 41.8 29.75
Ratios
PEG Ratio
PEG Ratio Apple 2017 2018 2019 1.4 1.25
2.0299999999999998 PEG Ratio MS 2.78 1.88 2.78
Ratio
MS & APPL Historical Stock Prices
Stock Prices Apple 43885 43892 43899 43906
43913 43920 43927 43934 43941 43948
43955 43962 43969 43976 43983 43990
43997 44004 44011 44018 44025 44032
44039 44046 44053 44060 44067 44074
44081 44088 44095 44102 44109 44116
44123 44130 44137 44144 44151 44158
44165 44172 44179 44186 44193
71.632499999999993 70.569999999999993
65.9375 60.487499 57.02 62.685001
62.724997999999999 67.077499000000003
69.487503000000004 70.449996999999996
72.292502999999996 77.025002000000001
78.292502999999996 80.875 79.4375 82.5625
83.3125 87.834998999999996 88.3125 92.5
97.264999000000003 96.417502999999996
93.709998999999996 108.199997 112.599998
116.0625 128.697495 127.58000199999999
113.949997 114.720001 104.540001 115.010002
113.910004 120.05999799999999 119.959999

114.010002 109.110001 120.5
118.91999800000001 117.18 116.970001
122.30999799999999 122.599998 125.019997
133.990005 Stock Prices MS 43885 43892
43899 43906 43913 43920 43927 43934
43941 43948 43955 43962 43969 43976
43983 43990 43997 44004 44011 44018
44025 44032 44039 44046 44053 44060
44067 44074 44081 44088 44095 44102
44109 44116 44123 44130 44137 44144
44151 44158 44165 44172 44179 44186
44193 169.71000699999999 165.30999800000001
151 140 137.009995 152.44000199999999
160.320007 164.35000600000001
176.63000500000001 176.58999600000001
174.490005 183.14999399999999 185.75
186.33999600000001 182.53999300000001
185.94000199999999 184.58000200000001
195.78999300000001 195.779999
208.83000200000001 214.479996 205 201.470001
211.520004 211.66999799999999
209.60000600000001 214.78999300000001 227
206.5 204.240005 197.19000199999999
210.88000500000001 207.220001
218.78999300000001 220.41999799999999
213.85000600000001 204.28999300000001
224.44000199999999 214.86999499999999
210.949997 214.10000600000001
214.36999499999999 213.10000600000001
217.550003 224.449997
Apple's Financial Leverage

Interest coverage ratio (the Times Interest Earned) 2020 2019
2018 24.35 19.38 23.5
Apple's Dividends Per Share
Debt - to - asset ratio (Debt ratio) 2020 2019 2018 0.35 0.32
0.31

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