Question 1· Which of the following is the final step in the eth.docx

Question 1
· Which of the following is the final step in the ethical decision-
making process?
·
·
· Identifying the ethical issues involved
·
·
· Monitoring and learning from outcomes
·
·
· Considering how a decision affects stakeholders
·
·
· Identifying key stakeholders
·
Question 2
· Which of the following is an example of a social role?
·
·
· Student-body president
·
·
· Manager
·
·
· Neighbor
·
·
· Accountant
·
Question 3
· Which of the following terms refers to shortsightedness about
values?

·
·
· Inattentional blindness
·
·
· Normative myopia
·
·
· Change blindness
·
·
· Descriptive ignorance
·
Question 4
· Which of the following is a criticism of the Sarbanes-Oxley
Act?
·
·
· It excludes requirements for certification of documents by
officers.
·
·
· It imposes extraordinary financial costs on the firms.
·
·
· It does not require lawyers to report concerns of wrongdoing if
not addressed.
·
·
· It does not require codes of ethics for senior financial officers.
·
Question 5
· __________ exists where a person holds a position of trust
that requires that he or she exercise judgment on behalf of
others but where his or her personal interests conflict with those
of others.

·
·
· duty of care
·
·
· community of interest
·
·
· conflict of interest
·
·
· duty of loyalty
·
Question 6
Discuss the duties of care and good faith.
Your response should be at least 200 words in length.
Name________________________________________________
____________________
Astronomy Packet 3
1) The major observational problem in the geocentric model was
this type of motion
____________________________________. This could be
described as a
______________________ Which appears to _____________
and then__________________
before ______________________. In order to resolve this
complication Geocentric created

_________________ inside the previously designed orbits of
the planets. The first scientist who
challenged this viewpoint was ____________________.This
scientist championed the
______________________ model which placed the _______ at
the center of the universe. He
defended his views in various ways in regards to the lack of a
strong wind by stating
that_________________________________________________
_________________________
______________________. He also stated that the daily motion
of the Sun, moon and stars
was caused by the ____________________________. He also
stated that all the planets
_____________________ in the
______________________________but at
__________________________ with the closest planets
traveling _____________________.
His greatest mistake was believing the ___________________.
A scientist who shared many of
these ideas almost 2 centuries earlier was
___________________________________.Copernicus’s theory
were mostly ignored due to

what reasons1) __________________________________ 2)
______________________ and
3)_________________________________________.
2) The invention of the ________ would
revolutionize____________. The man credited with its
invention in Europe was _________________ a Dutch merchant.
This invention was used by
what Italian astronomer to reexamine the heavens?
______________________.Using this tool
Galileo was able to see that the moon was not_______________
but was able to
see______________ and ____________________ as well what
he thought were
_____________________but was actually
________________________________________.
When he viewed the planet __________________ he saw __
small objects _______________
around it. What he actually saw was the 4
__________________________________ now
known as ______, __________, __________, and
_______________. He also looked at the

planet__________________ and was surprised to see it
had_______________ which were in
actuality its ________. When he viewed the Sun he saw that it
was not
____________________ but was covered in_________________
which we call
________________. He also observed that________ had
____________ just like our moon.
Deep in his journals Galileo mentions the movements of a faint
star which we believe to be the
first recorded observation of the planet which we now call
______________________. All of
these observations put Galileo at odds with the __________
which charged him with
______________and eventually_______________________
him. This penalty was lifted until
________ by ___________________________.
3) At the same time as the above mentioned astronomer the
great Dutch
observer______________ was making detailed observation of
the movement’s of_______ as
well as the appearance of ___________ and________. He was a
great observer but
unfortunately needed__________________ help from his

assistant
_________________________ who differed from him in almost
every way. Using
_______________ data for the planet _____________,
____________created his __ Laws of
Planetary Motion the 1
st
Law states that
________________________________________
_____________________________________________________
_________________________
________________________________________. The Second
law states that _____________
_____________________________________________________
_________________________
_____________________________________________________
________________________-
While the 3
rd
states
_____________________________________________________
_________________________

_____________________________________________________
_________________________
_____________________________________________________
_________________________
_____________________________________________________
________________________.
4) The Great English astronomer and mathematician whose
ideas unified the earth and heavens
was _____________________________________________ He
created ___ laws of Motion and
___ Law of______________________________________. His
1
st
Law of Motion states that
_____________________________________________________
_________________________
_____________________________________________________
________________________.
While the 2
nd
Law is the familiar _____________________. Finally the third
law
states________________________________________________
_________________________

_____________________________________________________
________________________
His law of_______________ states that ____________ is a
force that exists between any 2
objects with ____________separated by a ________. In his
opinion gravity was
_____________; this was a critical flaw of his theory.
5) The Austrian Physicist who challenged Newton was named
________________________________________________. He
began his work by studying the
behavior of __________ and was able to calculate
it’s__________________ at approximately
_______________. This challenged _________________ as
shown by the solar catastrophe
example. Explain this example
____________________________________________________
_____________________________________________________
_________________________
_____________________________________________________
_________________________
_____________________________ . According to
_____________ gravity is

just_____________ in the
________________________________ caused by any object
with
________. The more ____________ the bigger the
__________________. This theory is known
as the concept of
________________________________________________ An
outgrowth of
this theory is concept of ________________________, which
are created by
_____________________________________________________
_________________________
_____________________________________________________
_________________________
_____________________________________________________
_________________________
.
5) ________________________________ is one of the most
recognizable modern Physicists.
His research is centered on the study of
_____________________ which unify the fields of
________________ and _________________________. He was
able to figure that

______________ are really______________ and actually
_________________ energy in the
form of_________. This lead to an expansion of the concept of
the
_________________________________ the other scientist
whose observations helped develop
the __________________________ was
__________________________. He observed
“__________________” when he
discovered_________________________ which changed in
Luminosity. He used these to calculate the__________ to these
and figured out they were
not”_____________” but actually______________________.
As he studied these he realized
that distant ___________________ light was more
__________________ in color/wavelength
thus the galaxies were moving____________ from us. This
meant the universe was
____________________________________________
BBA 4751, Business Ethics 1

UNIT V STUDY GUIDE
Personal and Professional Ethical
Decision Making
Course Learning Outcomes for Unit V
Upon completion of this unit, students should be able to:
1. Describe a process for ethically responsible decision making
and
explain the reasons why “good” people might engage in
unethical
behavior.
2. Explore the impact of managerial roles on the nature of our
decision
making.
3. Explain the role of accountants and other professionals as
“gatekeepers.”
4. Outline the requirements of the Sarbanes-Oxley Act.
5. Define the “control environment” and the means by which
ethics and
culture can impact that environment.
6. Discuss the legal and ethical obligations of a member of a
board of
directors.
7. Describe conflicts of interest in financial markets and those
in

governance created by excessive executive compensation.
8. Define insider trading and evaluate its potential for unethical
behavior.
Unit Lesson
This unit encompasses two chapters in our textbook both of
which pertain to
ethical decision making in the workplace. The first of the two,
Chapter 2,
explores areas of consideration for ethical decision making as
an individual
person and in a professional context.
In making ethical decisions, there are a number of factors to
consider including
the facts of the situation, the ethical issues (if any), the affected
stakeholders
(and the situation from their point of view), as well as the
consideration of
available alternatives (a.k.a. “moral imagination”) and assessing
the potential
effects of any decision on stakeholders.
After making a decision, the effects of the decision should be
monitored and
assessed for possible “course correction” and as a basis for
future decision
making.
Perhaps the most difficult of these steps is recognizing that
there is an ethical
issue. This is made more complicated by the fact that people
disagree on what is

ethical versus unethical. The guiding principle in such
situations is the degree to
which a decision affects the well-being of the people involved.
It is important to recognize that businesses, economic decisions,
and/or ethical
decisions are not mutually exclusive. There are many cognitive
aspects that may
inhibit this realization. The concept of normative myopia is the
inability to
recognize ethical issues. Inattentional blindness is the result of
focusing on one
aspect of a situation without consideration for all other factors.
Change blindness
refers to a dynamic where ethical issues change over time and
therefore go
undetected.
Reading
Assignment
Chapter 2:
Ethical Decision Making:
Personal and Professional
Contexts, pp. 45-64
Chapter 10:
Ethical Decision Making:
Corporate Governance,
Accounting, and Finance,
pp. 523-553
Suggested Reading

See information below.
Assuming an ethical situation is identified, it is best to consider
how all parties
would view the situation. This will ensure an equitable
assessment and a
balanced decision. In order to engage in this kind of assessment,
one must
possess moral imagination, which entails the ability to consider
options beyond
those that are obvious and to develop alternatives that mitigate,
minimize, or
compensate for any possible harmful consequences and/or to
increase and
promote beneficial consequences.
The inability to engage in moral imagination is sometimes
referred to as a
cognitive barrier or stumbling block. When a decision is made
that merely
satisfies the moral minimum, it is known as “satisficing.”
It is clear from research that the social environment in business
plays a
significant role in determining the ability and the willingness to
identify and act
upon ethical issues. Managers have a particularly important role

in creating a
culture that promotes ethical decision making.
The second chapter for this unit’s study is Chapter 10. The
chapter introduces
a range of issues including corporate governance, accounting,
and finance.
In that context, one of the most infamous examples of recent
lapses in
professional duties and conflicts of interest is that of the Enron
Corporation,
which led to the demise of both Enron and their auditing firm,
Arthur Andersen.
Whether one is a free-market advocate or one that favors
increased
government regulation, these acts of fraud and deception have
severely
harmed stakeholders and have shaken confidence in the markets.
One reaction to these events has been to highlight the functions
of important
“gatekeeping” roles such as attorneys, auditors, accountants,
and financial
analysts. Their role is to ensure that those who enter into the
marketplace are
playing by the rules, which will assist the market in running
smoothly.
For the sake of clarity, it should be noted that a conflict of
interest exists where
a person holds a position of trust but allows his or her own
interests to interfere
with the decisions making process. A leadership role requires
one to fulfil the

respective fiduciary responsibilities (a professional and ethical
obligation to
duties that overrides any personal interests).
Another reaction has been tightened regulation in the form of
the Public
Accounting Reform and Investor Protection Act of 2002, which
is commonly
known as the Sarbanes-Oxley Act or SOX.
SOX applies to over 15,000 publicly held companies in the U.S.
and is intended
to provide oversight in terms of direct lines of accountability
and responsibility.
However, since one cannot predict each and every lapse of
judgment, no
regulatory or legal fix is able to guarantee compliance certainty;
this is where
ethics comes into play.
Reference
Hartman, L. P., DesJardins, J., & MacDonald, C. (2014).
Business ethics:
Decision making for personal integrity & social responsibility
(3rd ed.).
New York, NY: McGraw-Hill.

Suggested Reading
Click here to access the PDF of the Chapter 2 Presentation.
Click here to access the PDF of the Chapter 10 Presentation.
Berkowitz, A. D., Johnson, II, T. K., Downes, J. I., Eisenstadt,
L. F., &
Rubin, J. W. (2010, Winter). The Supreme Court and its recent
employment-related rulings. Employee Relations Law Journal,
36(3),
90- 94.
Galloway, A. (2011, December). A "narrow exception" run
amok: How courts
have misconstrued employee-rights laws' exclusion of
"policymaking"
appointees, and a proposed framework for getting back on track.
Washington Law Review, 86(4), 875-903.
Ward, S. F. (2012, February). The badgering state: As
Wisconsin battled over
state workers' rights, its supreme court justices also skirmised -
with a
choke hold and a sheriff's probe. ABA Journal, 98(2), 42+.

https://online.columbiasouthern.edu/CSU_Content/courses/Busi
ness/BBA/BBA4751/14N/UnitV_Chapter2_Presentation.pdf
https://online.columbiasouthern.edu/CSU_Content/courses/Busi
ness/BBA/BBA4751/14N/UnitV_Chapter10_Presentation.pdf
Financial Management
Question 1
· Based on the information below, calculate the weighted
average cost of capital.
·
· Great Corporation has the following capital situation.
· Debt: One thousand bonds were issued five years ago at a
coupon rate of 11%. They had 20-year terms and $1,000 face
values. They are now selling to yield 9%. The tax rate is 37%
· Preferred stock: Two thousand shares of preferred are
outstanding, each of which pays an annual dividend of $7.50.
They originally sold to yield 15% of their $50 face value.
They're now selling to yield 11%.
Equity: Great Corp has 108,000 shares of common stock
outstanding, currently selling at $18.48 per share. Use the risk
premium approach and assume a 3% risk premium
BBA 3301, Financial Management 1
UNIT VIII STUDY GUIDE
Cost of Capital
Learning Objectives

Upon completion of this unit, students should be able to:
1. Calculate the cost of debt capital.
2. Apply the CAPM to assessing the cost of equity capital.
3. Calculate the cost of equity capital using the Gordon Growth
Model.
4. Develop the cost of capital for preferred equity.
5. Create a weighting schedule based on market value of
securities.
6. Develop a model to measure the weighted average cost of
capital.
Written Lecture
The last unit in this course is dedicated to developing a measure
of the cost of
capital. The cost of capital is the average rate paid for the use
of the firm’s
capital funds. Capital refers to money acquired for use over a
long period. The
cost of capital provides a benchmark against which to evaluate
investment
returns. Projects should not be undertaken unless they return
more than the
cost of the funds invested in them. The cost of capital is used
as the discount
rate in net present value (NPV) analysis and also as a
comparison point for the
internal rate of return (IRR).
From Unit VII recall the following rules supporting a capital
investment decision:

A firm’s capital components include debt, common equity
(stock) and preferred
stock. Equity is the riskiest investment, earns the highest
return, and has the
highest cost. Debt is the safest investment, earns the lowest
return, costs the
firm less and is tax advantaged. Preferred stock offers investors
intermediate
risk and return levels and has a cost between that of equity and
debt.
Capital structure is the mix of the three capital components -
generally
expressed in percentages as seen below:
The above figure can be found in your textbook on page 559.
Target capital structure is a mix of components that
management considers
optimal and strives to maintain. Additionally, management
seeks to raise money
Reading
Assignment
Chapter 13:
Cost of Capital
Key Terms

1. Cost of capital
2. Cost of debt
3. Cost of equity
4. Cost of preferred
stock
5. Flotation cost
6. Gordon model
(dividend discount
model)
7. Investment
opportunity schedule
(IOS)
8. IRR
9. Marginal cost of
capital
10. NPV
11. Retained earnings
12. Risk premium
13. Weighted average
cost of capital
(WACC)

in the proportion of the capital structure. Thus, in cost of
capital calculations, we
assume money is raised in a constant proportion of debt,
preferred and common
equity.
Investors provide capital by purchasing securities. Returns paid
to investors
adjusted for taxes and administrative expenses are the firm’s
costs.
A firm’s cost of capital is a weighted average of the costs of the
three capital
components where the weights reflect the $ amounts of each
component in use.
This is usually referred to in two ways:
Example: Calculate the Weighted Average Cost of Capital
(WACC) for the
Following
Capital Component Value Cost
Debt $60,000 9%
Preferred Stock $50,000 11%
Common Stock $90,000 14%
$200,000

Below: First, calculate the component weights by dividing their
individual dollar
values by the total. For instance the weighting of Debt is
$60,000/$200,000.
Then, multiply the weight by cost to arrive at the last column.
For example, .25 x
11% = 2.75% for preferred stock.
Capital
Component
Value Weight Cost
Debt $60,000 30% 9% 2.70%
Preferred Stock $50,000 25% 11% 2.75%
Common Stock $90,000 45% 14% 6.30%
$200,000 WACC 11.75%
WACC is expressed in terms of either book or market values of
capital
components. WACC is used to evaluate next year’s capital
projects as the
discount rate in NPV and PI. Also, it can be used as a hurdle
mark for IRR.
Market values are the appropriate basis for WACC. The formal
steps in
calculating WACC are as follows:
Step 1: Develop a market-value-based capital structure
Step 2: Adjust market returns on the underlying securities to
reflect the

costs of the underlying capital components
Step 3: Combine in calculating the WACC
Example: Developing Market Value Capital Structure
The ABC Corporation has the following capital situation.
Debt: Two thousand bonds were issued five years ago at a
coupon rate of 12%.
They had 30-year terms and $1,000 face values. They are now
selling to yield
10%.
Preferred stock: Four thousand shares of preferred are
outstanding, each of
which pays an annual dividend of $7.50. They originally sold
to yield 15% of
their $50 face value. They're now selling to yield 13%.
Equity: ABC has 200,000 shares of common stock outstanding,
currently selling
at $15 per share.

Solution
The price of ABC’s bonds in the market must be determined.
We know the
bonds have 25 years remaining until maturity, pay interest of
$120 annually ($60
semi-annually) and are yielding 10% annually (5% semi-
annually). Thus, each
bond is selling for $1,182.55 in the market (per Bond
Calculations earlier in
Course).
Since there are 2,000 bonds outstanding, the market value of
debt is:
$1,182.55 x 2,000 = $2,365,100.
The firm's preferred stock represents a perpetuity that pays
$7.50 annually and
is yielding 13%. Thus, the value of each share of preferred
stock is $7.50 / .13 =
$57.69.

The total market value of ABC’s preferred stock is: $57.69 x
4,000 = $230,760
Each share of ABC's common stock is trading at $15, thus the
total market value
of the firm's equity is: $15 x 200,000 shares = $3,000,000
Next summarize and calculate the component weights:
Debt $2,365,100 42.3%
Preferred Stock $230,760 4.1%
Equity (Common
Stock)
$3,000,000 53.6%
$5,595,860 100.0%
Calculating the Component Costs of Capital
Begin with the market return received by new investors in each
capital

component kd, kp, and ke .
Cost of Debt
Tax adjustment applies only to debt (Tax rate is T), Cost of debt
= kd (1 – T).
Debt, the cheapest source, is made even cheaper by tax
adjustment.
Flotation costs are a percentage of a security’s price (f). This is
applied to
preferred and new sales of common equity which increases
effective cost. With
flotation the costs are found with the following equation:
kp / (1 – f)
ke / (1 – f)
Example: Cost of Debt
Blackstone Inc. has 12% coupon rate bonds outstanding that
yield 8% to
investors buying them now. Blackstone’s marginal tax rate
including federal and

state taxes is 37%. What is Blackstone’s cost of debt?
First notice that kd is the current market yield of 8%, not the
coupon rate. To
calculate the cost of debt we simply write equation 13.1 and
substitute from the
information given cost of debt = kd(1 - T)
= .08(1 - .37)
= 5.04%
Cost of Equity
The cost of common stock is not precise due to the uncertainty
of future equity
cash flows. The market return on common equity is estimated
through three

models:
del
The CAPM Approach
The sources of new common equity include retained earnings
and newly sold
stock. Retained earnings (RE) are not free because they belong
to
stockholders. No adjustments to the return on RE are necessary
to calculate
component cost of equity from RE. Payments to stockholders
are not tax
deductible to the firm. Thus, investor return on RE =
Component cost of RE.
The market return on a stock can be approximated by estimating
the required or
expected return using the CAPM’s SML (security market line):

kx = kRF + (kM - kRF) bX
where:
kX is the required return on stock X
kRF is the risk-free rate (return on three-month T bills)
kM is the return on the market or on an “average” stock (usually
estimated
through a market index like the S&P 500)
bX is stock X’s beta, the measure of its market risk
Example: Cost of RE using the CAPM
The return on the Strand Corporation’s stock is relatively
volatile as reflected by
the company’s beta of 1.8. The return on the S&P 500 is
currently 12% and is
expected to remain at that level. Treasury bills are yielding
6.5%. Estimate
Strand’s cost of retained earnings.
Write equation 13.5 and substitute directly, using the return on
the S&P 500 as
kM and the treasury bill yield as kRF.
cost of RE = kX kRF (kM kRF)bX

= 6.5% (12% 6.5%)1.8
= 16.4%
The Dividend Growth Approach (the Gordon Model)
The Gordon model is used to calculate the intrinsic value of a
stock. However,
we can use the Gordon model to solve for the expected return by
plugging in the
current price of the stock.
The Risk Premium Approach
The relationship between the risks of debt and equity is fairly
constant among
firms. The incremental risk premium between debt and equity
returns is similar
for high-risk and low-risk firms. The return on a firm's equity
can be estimated by

adding 3 to 5 percentage points to the market return on its debt,
if rpe is the
additional risk premium on equity: ke = kd + rpe
The Cost of New Common Stock
Firms often need to raise more equity than that generated by
retained earnings.
Equity from new stock is just like equity from RE, except it
involves flotation
costs. Market return estimates for RE must be adjusted for
flotation costs to
determine the cost of issuing new common stock.
Use the Gordon model and insert (1- f) to recognize flotation
cost (see below).

Marginal Cost of Capital
A firm's WACC is not independent of the amount of capital
raised. The WACC
typically rises as the firm raises more capital. The Marginal
Cost of Capital
(MCC) is a graph of the WACC, showing abrupt increases as
larger amounts of
capital are raised in a planning period. Breaks (jumps) in the
MCC occur when
cheap sources of financing are used up. The first increase in
MCC usually
occurs when the firm runs out of RE and starts raising external
equity by selling
stock. As debt increases the firm becomes riskier so lenders
require higher
interest rates. This causes further upward breaks in the MCC.
See the following
example for better explanation:
Example: Marginal Cost of Capital
These figures can be found in your textbook on pages 573-574.

Assume the business plan projects RE of $3,000,000 and note
that capital
structure is 60% equity.
Since capital is raised in the proportions of the capital structure
we ask $3M is
60% of what number?
$3M / .6 = $5M
The investment opportunity schedule (IOS) is a plot of the IRRs
of available

projects arranged in descending order. The MCC and IOS
plotted together show
which projects should be undertaken. The firm's WACC for the
planning period
is at the intersection of the MCC and the IOS (see below).

Question 1· Which of the following is the final step in the eth.docx

Recommended

Recommended

More Related Content

Similar to Question 1· Which of the following is the final step in the eth.docx

Similar to Question 1· Which of the following is the final step in the eth.docx (20)

More from makdul

More from makdul (20)

Recently uploaded

Recently uploaded (20)

Question 1· Which of the following is the final step in the eth.docx