This document discusses two major US stock exchanges - the New York Stock Exchange (NYSE) and Nasdaq Stock Exchange. It provides similarities and differences between the two exchanges. The similarities include both using traffic controllers to deal with tariff issues and facilitate effective market functioning. Both exchanges trade stocks, bonds, and cash. The main differences are that NYSE uses an auction model while Nasdaq uses a dealer model. Nasdaq also has lower entry fees. The document then analyzes the free cash flows of General Electric (NYSE) and Microsoft (Nasdaq) from 2013-2014. Finally, it calculates various financial ratios for both companies using 2016-2017 data to analyze profitability, liquidity, and

1. Running Head: UNITED STATES STOCK EXCHANGE
MARKET 1
UNITED STATES STOCK EXCHANGE MARKET
2
United States Stock Exchange Market
Financial Management
April 16, 2019
There are quite a lot of stock exchanges in United States but I
am going to consider New York Stock Exchange and Nasdaq
Stock Exchange.
Similarities between the Two Stocks
Both New York stock exchange and Nasdaq stock exchange
makes use of traffic controllers. These traffic controllers in the
two exchange stocks deal with tariff issues which ensure that
the markets of each exchange works effectively. Both stock
exchanges emphasizes on trading stock choices, exchange
traded good as well as fixed incomes without forgetting cash
entities. Finally, both the stock exchanges make up for the
trade bulk which involves connecting with the entities in USA
as well as European stock market (Zeng, Xie, Yan, Hu, & Mao,
2016).

2. Differences between the Two Stocks
Firstly, the New York Stock Exchange enables people to carry
out transactions between one another on the basis of an auction
while the Nasdaq Stock Exchange operates on a dealer market
basis where people usually trade through dealer and not directly
with each other. Secondly, the Nasdaq stock exchange entry fee
is much less as compared to that of New York Stock Exchange.
For instance, the Nasdaq entry fee ranges from $50,000 to
$75,000 while that of New York stock exchange goes up to
$250,000. Thirdly, comparing the companies listed in each
exchange, the New York stock exchange had more than 1,860
companies in 2014 with a capital market of $16.6 trillion while
Nasdaq had a list of more than 2,900 companies but with a
capital market of only $8.5 trillion. Finally on the perceptions
of the two exchanges, while Nasdaq perceives that despite high
tech stocks being more potential to volatility, they are more
growth oriented, New York stock exchange perceives that well
established companies exchanges are more stable stocks
(Mitchell, 2017).
The Free Cash Flows of Gen Electric and Microsoft Companies
Stocks
Free cash flow refers to the cash that an organization generates
via its activities the less the cost of expenditures on assets. In
this case, I will determine the free cash flow for Gen Electric
which is a stock at the New York Stock Exchange and Microsoft
which is a stock at Nasdaq stock exchange for the years 2013
and 2014 from their respective cash flow statements (Easton, &
Sommers, 2018).
For Gen Electric, the net operating cash flow was $27.71 billion
and expenditure on assets was $7.13 billion, therefore its free
cash flow for the year 2014 was $20.58 billion and in 2013 was
$15.121 billion with a net cash operating flow of $ 28.579
billion, and expenditure on assets of $13.458 billion. Microsoft
was, in 2013, its net operating cash flow was $28,833 million
and assets expenditure was $4,257 million. The difference
between the two gives free cash flow for 2013 as $24,576

3. million while in 2014, net operating cash flow was $32,231
million and expenditure on assets was $5,485 therefore the free
cash flow for 2014 was, (32,231-5,485) = $26,746 (Lincy, &
John, 2016).
Financial Ratios for Both Stocks Using the
2016 & 2017 Financial Statements
Gen Electric
Profitability ratios
a) return on assets = Net income/ total assets = (8.18)/382.62 =
(0.021)
b) gross profit margin = [(sales –COGS)/Sales] = 41.92/118.24
= 0.35
Liquidity Ratios
a) current ratio = current assets/current liabilities = 104.23/79.3
= 1.31
b) Cash ratio = [(cash + marketable securities)/current
liabilities] = 218.8/79.3 =2.76
Asset management ratios
a) Inventory turnover = COGS/Average inventory = 76.32/8.7 =
8.77
b) Accounts payables turnover = total purchases/ Average
accounts payables = 118.24/15 = 7.88
Microsoft Ratios
Profitability ratios
c) return on assets = Net income/ total assets = 21204/241,086 =
0.088
d) gross profit margin = [(sales –COGS)/Sales] = 55689/89,950
= 0.62
Liquidity Ratios
c) current ratio = current assets/current liabilities =
159,851/64,527 = 2.477
d) Cash ratio = [(cash + marketable securities)/current
liabilities] = 210,000/64,527 = 3.25
Asset management ratios
c) Inventory turnover = COGS/Average inventory = 34261/2181
= 15.7

4. d) Accounts payables turnover = total purchases/ Average
accounts payables = 21204/7390 = 2.87
From the ratios, both companies are able to finance their short
term obligations as indicated by the current ratio. Also, both
companies have managed their inventories by reducing the
volumes. Finally Microsoft has a desirable gross profit margin
that is above 0.50 but Gen Electric has got a weakness since it’s
below the desirable value of 0.50. Microsoft has a weakness on
the income generated from the assets since it’s very minimal.
However Gen Electric has got a great challenge on the income
generated from the assets since its generating negative amount
from the assets use (Schrippe, & Ribeiro, 2019).
References:
Easton, M., & Sommers, Z. (2018). Financial Statement
Analysis & Valuation, 5e.
Lincy, G. R. M., & John, C. J. (2016). A multiple fuzzy
inference systems framework for daily stock trading with
application to NASDAQ stock exchange. Expert Systems with
Applications: An International Journal, 44(C), 13-21.
Mitchell, B. (2017). The Depression Decade: From New Era
Through New Deal, 1929-41: From New Era Through New Deal,
1929-41. Routledge.
Schrippe, P., & Ribeiro, J. L. D. (2019). Preponderant criteria
for the definition of corporate sustainability based on Brazilian
sustainable companies. Journal of Cleaner Production, 209, 10-
19.
Zeng, Z. J., Xie, C., Yan, X. G., Hu, J., & Mao, Z. (2016). Are

5. stock market networks non-fractal? Evidence from New York
Stock Exchange. Finance Research Letters, 17, 97-102.
· Highlight your responses to each item so I can read them (Use
the Highlight (painting or shading) icon in Word).
TOLERANCE OF AMBIGUITY SCALE
DEVELOPED BY BUDNER (1962)
Please respond to the following statements by indicating the
extent to which you agree or disagree with them. Circle the
number at the right that best represents your evaluation of the
item.
SD = Strongly Disagree
MD = Moderately Disagree
D = Slightly Disagree
N = Neither Agree nor Disagree
A = Slightly Agree
MA = Moderately Agree
SA = Strongly Agree
SD
MD
D
N
A
MA
SA
1

6. An expert who doesn't come up with a definite answer probably
doesn't know too much.
1
2
3
4
5
6
7
2
I would like to live in a foreign country for a while.
1
2
3
4
5
6
7
3
There is really no such things as a problem that can't be solved.
1
2
3
4
5
6
7
4
People who fit their lives to a schedule probably miss most of
the joy of living.
1
2
3
4
5
6

7. 7
5
A good job is one where what is to be done and how it is to be
done are always clear.
1
2
3
4
5
6
7
6
It is more fun to tackle a complicated problem than to solve a
simple one.
1
2
3
4
5
6
7
7
In the long run, it is possible to get more done by tackling
small, simple problems rather than large and complicated ones.
1
2
3
4
5
6
7
8
Often the most interesting and stimulating people are those who
don't mind being different and original.
1
2

8. 3
4
5
6
7
9
What we are used to is always preferable to what is unfamiliar.
1
2
3
4
5
6
7
10
People who insist upon a yes or no answer just don't know how
complicated things really are.
1
2
3
4
5
6
7
11
A person who leads an even, regular life in which few surprises
or unexpected happenings arise really has a lot to be grateful
for.
1
2
3
4
5
6
7
12

9. Many of our most important decisions are based on insufficient
information.
1
2
3
4
5
6
7
13
I like parties where I know most of the people more than ones
where all or most of the people are complete strangers.
1
2
3
4
5
6
7
14
Teachers who hand out vague assignments give one a chance to
show initiative and originality.
1
2
3
4
5
6
7
15
The sooner we all acquire similar values and ideals the better.
1
2
3
4
5

10. 6
7
16
A good teacher is one who makes you wonder about your way of
looking at things.
1
2
3
4
5
6
7
Scoring Key for Tolerance for Ambiguity Scale
High scores indicate a greater intolerance for ambiguity. To
score the instrument, the even-numbered items must be reverse-
scored. That is:
1 = 7
After reversing the even-numbered items, sum the scores for all
16 items to get your total score. This chart will help you score
your tolerance for ambiguity easier.
Copy your original score here
Reverse the even numbers
Copy new items to sum together
new items to sum tog
1
2

11. 3
4
5
6
7

12. 8
9
10
11
12

13. 13
14
15
16
Three subscales can also be computed to reveal the major source
of intolerance of ambiguity – novelty (N), complexity (c), or
insolubility (l). Here are the items associated with each
subscale: ITEM SUBSCALE ITEM SUBSCALE
1 I 9 N

14. 2 N 10 C
3 I 11 N
4 C 12 I
5 C 13 N
6 C 14 C
7 C 15 C
8 C 16 C
Novelty score (2, 9, 11, 13)
Complexity score (4, 5, 6, 7, 8, 10t 14, 15, 16)
Insolubility score (1, 3, 12)
Points: 100 Homework Set 3: Chapters 6, 7, and 8
Criteria Unacceptable Below 70% F
Fair
70-79% C
Proficient
80-89% B
Exemplary
90-100%A
1. Using the two
stocks you selected
from Homework #1,
identify the Beta for
each stock. In your
own words, what
conclusion can you
draw from the
stocks’ current and
historical beta? If
the stock market

15. went up 10% today,
what would be the
impact on each of
your stocks?
Weight: 45%
Did not submit or
incompletely calculated
the Beta for each of the
two stocks selected from
Homework #1.
Partially calculated
the Beta for each
of the two stocks
selected from
Homework #1.
Satisfactorily
calculated the Beta
for each of the two
stocks selected from
Homework #1.
Thoroughly
calculated the Beta
for each of the two
stocks selected from
Homework #1.
2. Using the 2014
financial statements
from your stocks
above and the
equations from your

16. textbook, prepare
the Historical
Average and
Standard Deviation
for each stock.
Weight: 45%
Did not submit or
incompletely prepared
the Historical Average
and Standard Deviation
for each stock.
Partially prepared
the Historical
Average and
Standard
Deviation for each
stock.
Satisfactorily
prepared the
Historical Average
and Standard
Deviation for each
stock.
Thoroughly prepared
the Historical
Average and
Standard Deviation
for each stock.
3. Clarity, writing
mechanics, and

17. formatting
requirements.
Weight: 10%
More than 6 errors
present
5-6 errors present 3-4 errors present 0-2 errors present