Week 4 Assignment-Fair Value DUE DATE: Sunday midnight of Week 4, submitted in a MS Word (or Excel if computations required) document with filename format: Last First_Week X hwk.doc or .xls Make sure your name appears on each page of the homework using the header function. Homework questions: 1. The Fair Value requirement has been blamed by some for the credit market crunch that started in 2007, worsened in 2008 and continues into 2009. Discuss what effect you think Fair Value had on financial institutions and why some believe that it precipitated the current economic recession. Do you agree or disagree that Fair Value caused the collapse of the mortgage and lending markets? There are a number of good articles and links to help you with this such as the article in the Web Links page from the January 20, 2009 Boston Globe about the impact on State Street Corporation’s capital from potentially having to permanently write down the value of assets (it will help you understand how marking down the value of assets impacts the banks’ capital, and how in turn, this impacts their ability to lend). Also, the JOA May 2008 3 Articles with view pro and con about Fair Value vs. Historic Cost. There are a number of other readings to help with this topic or you may gather your own-please share them if you would on the student section of the Web Links page. 2. You are the CFO of a publicly traded company and are getting ready to prepare you year- end financial statements. In your investment portfolio you have: a. Long-term bank CD’s b. Stock holdings in 5 publicly traded companies c. Stock holdings in 2 privately held companies d. Investment in a real estate trust (REIT) which owns strip malls and other commercial buildings for retail establishments. This trust trades on a market with other similar trusts, although the trades are infrequent. Take into account the current real estate market when evaluating this investment. e. Private equity investment in a joint venture for the development of a new green energy method to produce electricity. f. Complex foreign currency hedges that were custom-designed by an investment bank for the company, to hedge their exchange rate exposure on overseas transactions. What level for evaluation would each fall into and what method(s) would you use to determine the fair value of each? How easy or difficult would each be and why? The Nov 16, 2008 Financial Week Article on the Web Links page about Illiquid Bank Assets may help with this question. 3. Find the financial statements of a publicly traded company that has measured assets and/or liabilities at fair value. You will find this information in the footnotes (just open up the document and search the page with either Fair Value or FAS 157 as a key word). What financial ratios (name at least 2) could be affected by the difference between measuring these assets at historic cost vs. fair val.

1. Week 4 Assignment-Fair Value
DUE DATE: Sunday midnight of Week 4, submitted in a MS
Word (or Excel if
computations required) document with filename format:
Last First_Week X hwk.doc or .xls Make sure your name
appears on each page of the
homework using the header function.
Homework questions:
1. The Fair Value requirement has been blamed by some for the
credit market crunch that
started in 2007, worsened in 2008 and continues into 2009.
Discuss what effect you
think Fair Value had on financial institutions and why some
believe that it precipitated
the current economic recession. Do you agree or disagree that
Fair Value caused the
collapse of the mortgage and lending markets? There are a
number of good articles and
links to help you with this such as the article in the Web Links
page from the January 20,

2. 2009 Boston Globe about the impact on State Street
Corporation’s capital from
potentially having to permanently write down the value of
assets (it will help you
understand how marking down the value of assets impacts the
banks’ capital, and how in
turn, this impacts their ability to lend). Also, the JOA May 2008
3 Articles with view pro
and con about Fair Value vs. Historic Cost. There are a number
of other readings to help
with this topic or you may gather your own-please share them if
you would on the student
section of the Web Links page.
2. You are the CFO of a publicly traded company and are
getting ready to prepare you year-
end financial statements. In your investment portfolio you have:
a. Long-term bank CD’s
b. Stock holdings in 5 publicly traded companies
c. Stock holdings in 2 privately held companies
d. Investment in a real estate trust (REIT) which owns strip
malls and other
commercial buildings for retail establishments. This trust trades

3. on a market
with other similar trusts, although the trades are infrequent.
Take into account
the current real estate market when evaluating this investment.
e. Private equity investment in a joint venture for the
development of a new
green energy method to produce electricity.
f. Complex foreign currency hedges that were custom-designed
by an
investment bank for the company, to hedge their exchange rate
exposure on
overseas transactions.
What level for evaluation would each fall into and what
method(s) would you use to
determine the fair value of each? How easy or difficult would
each be and why? The Nov
16, 2008 Financial Week Article on the Web Links page about
Illiquid Bank Assets may
help with this question.
3. Find the financial statements of a publicly traded company
that has measured assets

4. and/or liabilities at fair value. You will find this information in
the footnotes (just open
up the document and search the page with either Fair Value or
FAS 157 as a key word).
What financial ratios (name at least 2) could be affected by the
difference between
measuring these assets at historic cost vs. fair value? How
would this company’s ratios
differ from the current presentation under fair value than under
historic cost? Do the
footnotes tell you if there was an active market for valuing the
assets-if so, what was the
basis for the valuation? If there was no active market, what did
they base the valuation
on? Does this sound like an appropriate measure of the asset(s)
value? What problems
could there be with the measure(s) that was used? If you were a
banker preparing to loan
money to the company, how much difference would this make in
your decision? Take
risk into account in this decision and not just the difference in
value caused by the
methods. Include the annual report with your answer and
reference the pages in the report

5. where you obtained your information. Prepare any computations
on Excel and submit as
a separate document (make sure to use the above naming
convention for all files).
4. A company’s management and its auditors have the same goal
in mind-to prepare
financial statements that fairly present the financial position of
the company under US
GAAP (well, at least until we convert to IFRS!) The auditors
“opine” on the fair
presentation. For example, here is a statement from the
independent auditor’s report of
Mozilla Foundation:
In our opinion, the financial statements referred to above
present fairly, in all material
respects, the consolidated financial position of Mozilla
Foundation and Subsidiary as of
December 31, 2007 and 2006, and the changes in their net assets
and their cash flows for the
years then ended in conformity with accounting principles
generally accepted in the United
States of America.

6. When Fair Value cannot be determined by an actively traded
market and management
judgment must be applied, such as with Level 3 assets, discuss
where disagreements
might occur between management and the auditors, and why. In
other words, what
valuation might management may have computed and the impact
it would have on the
reporting year, vs. the role that the audit firm plays and the
liability they assume in
providing an unqualified or “clean” opinion-why might they
disagree on the inputs and
judgment used by management?
5. So now that you have had 2 full weeks to think about Fair
Value, where do you stand on
the topic? Don’t be wishy-washy! Form an opinion and support
it with evidence from the
work we have done.
9Discussion-Diversity in Hiring
View the "Manager's Hot Seat: Diversity in Hiring - Candidate
Conundrum" video case and then post a new thread to this
discussion board that addresses the following:
· Read the Practical Action box feature "The Right Way to
Conduct an Interview." Which of the suggestions did you see
implemented at Beck n' Call? Explain.
·

7. · If you were the Human Resources manager at Beck n' Call,
would you recommend the use of any pre-employment tests to
clarify the decision that Robert and Paul must make between the
two candidates? What tests would you use, and why?
· Would you recommend another approach to the selection
process that may have worked better? Explain.
· Pass or fail? Grade Robert on his management skills,
techniques, and overall performance. Explain what he should
have done differently or better.
This posting, consisting of a minimum of 4 full paragraphs(At
least 500 words), must include chapter ideas and concepts to
support your answers. Please make certain to cite any outside
sources used.
Change Resistance assignment
Look at the list "Ten Reasons Employees Resist Change" on p.
350-351.
Then write an essay addressing three or more of the reasons in
the list. Give examples of times when you have seen these
reasons in action, and tell about the resulting outcome. Is there
a suggestion you might have to make things work out for the
better? For example, maybe a relative had a hard time switching
to a new computer software program and lost his job.
Your assignment should be 2-3 pages long (excluding cover
page, attachments, etc.) (At least 600 words), double-spaced,
using 12-point font and 1-inch margins. Keep this in mind:
You will need to write almost a page on each one if you choose
to write only on three reasons. If you write on all of them you
can write less on each one. Keep the expected length in mind.
Keep in mind that, while there are no "absolutely correct"
answers for these questions, this is not an opportunity for
opinion alone. Grading will reflect your reasoning and critical
thinking skills, your ability to integrate what you have
assimilated from material presented in the textbook and other
learning materials, the clarity of your response and its

8. appearance.
Please remember that, if your paper integrates information from
published sources and/or you build on the work of others, you
must be careful not to plagiarize. You can find information
about plagiarism at the Plagiarism.org website; a link to this
website has been provided under the "Resources" tab in the
main menu of the course. Please also see the rubric posted
under the "Resources" tab in the main menu of the course for
additional guidelines on grading. Discussion - Legal/Ethical
Challenge
Read the Chapter 11 Legal/Ethical Challenge ("Should Airlines
Accomodate Overweight People?") on. p.372-373 and then post
a new thread to this discussion board that addresses the options
posed at the end of the exercise.
This posting, consisting of a minimum of 4 full paragraphs(At
least 500 words), must include chapter ideas and concepts to
support your answers. Please make certain to cite any outside
sources used.
paper
The topic for your Final Project can be anything covered in this
course. Choose something that really interested you, something
you would like to explore more fully, or something you might
like to debate in class
You can choose any one from the key points in the below screen
shot, BUT THIS PAPER HAVE TO REALTIVE THAT
CONCEPT IN BOOK.
Part1: (introduction and the beginning of the paper)
Part 1 will show your instructor that you have started your
project, and it will have the motivating effect of getting you
started. Note: This is more than a statement saying what you
plan to do; this is the beginning of your work. You'll need to
decide what your topic will be, and what option you'll choose
for presenting it. Then submit the beginning part of your
project. A paper might require a rough draft (an unedited

9. version, or the first few paragraphs), (ONE PAPE)
Part2:( finished paper)
Your assignment should be 4-5 pages long (excluding cover
page, attachments, etc.), double-spaced, using 12-point font and
1-inch margins. (at least 1200 words)
The parts are need separate two file.
If your paper integrates information from published sources
and/or you build on the work of others, you must be careful not
to plagiarize. You can find information about plagiarism at the
Plagiarism.org website; a link to this website has been provided
under the "Resources" tab in the main menu of the course.
Please also see the rubric posted under the "Resources" tab in
the main menu of the course for additional guidelines on
grading.