1.) Focus on a governmental agency and how it impacts ethical compliance. Discuss the agencies purpose and what you believe it is doing to combat unethical business practices. If you were in charge of setting policy, what would you do differently?
2.) Discounted cash flow techniques are capital budgeting techniques that take into account both the time value of money and the estimated net cash flow from an investment. These techniques take into account the fact that cash flows that occur early in the life of an investment will be worth more than those that occur later. The primary discounted cash flow technique is called net present value. Describe this method. How is the NPV calculated and what is the decision rule?
3.) Read the “Global Economic Crisis” story on p. 215. Discuss what it means to have the treasury bond downgraded and what ripple effects happen because of it.
4.) Suppose you owned a portfolio consisting of $250,000 of U.S. government bonds with a maturity date of 30 years. Would your portfolio be riskless? What if your portfolio consisted of $250,000 of 30-day Treasury bills? Every 30 days your bills mature, and you reinvest the principle ($250,000) in a new batch of bills. Assume that you live on the investment income from your portfolio and that you want to maintain a constant standard of living. Is your portfolio truly riskless? Can you think of any asset that would be completely riskless? What security comes closest to being riskless? Explain.