Dr. P.V. Viswanath

pviswanath@pace.edu

• Discussion Board Assignments (can be found on Course Calendar Page and on Blackboard)
• MyFinanceLab Assignments (can be found on Course Calendar page and on Blackboard) based on the text by Jonathan Berk and Peter DeMarzo, Corporate Finance: The Core, Pearson Prentice-Hall.
• Capital Budgeting Case (See syllabus for details)
• Corporate Governance Assignment (see Blackboard for details)
• Beta Assignment

Financial Markets and Institutions

As explained in the slides, financial functions can be broadly divided into six categories:

• To transfer economic resources across time, borders and among industries
• To provide ways of managing risk
• To provide ways of clearing and settling payments to facilitate trade
• To provide a mechanism for the pooling of resources and for the subdividing of ownership in various enterprises
• To provide price information to help coordinate decentralized decision making in various sectors of the economy
• To provide ways of dealing with the incentive problems created when one party to a transaction has information that the other party does not or when one party acts as an agent for another

Give the name of a specific financial intermediary (e.g. Bank of America or JP Morgan Chase or Visa) for the first five of the functions and write two or three sentences about each one, showing how it performs each of the functions.

Corporate Governance and Corporate Social Responsibility:

Write about ten sentences (not much more) on whether corporations should have the obligation to consider social impact in making their business decisions.  Write brief arguments, both pro _and_ con.  Send it to me by email at pviswanath@pace.edu

Betas

The CPI Card Group Inc. made an IPO filing on August 7, 2015 for $100m. Here is a description of the company from Bloomberg Business:

CPI Card Group, Inc. engages in designing, producing, personalizing, packaging, and tracking of smart cards. It focuses on providing financial, commercial, and identification card production and related services. The company offers contactless smart card using RFID, RFID stickers, physical access cards, and FOBs, EMV cards, and MicroSD; financial, commercial, and blank cards; microprocessor cards; and memory cards that are used for pre-paid telephone, library, access control, parking, and loyalty programs applications. It also provides packaging customization options that include silver foil, iridescent glitter, canvas, hot foil stamp, dimensional FX, metallic flake, and pearl. In addition, the company offers personalization services, such as daily processing for secure and non-secure card programs; bulk DOD ink-jet printing for card programs; and B2B and B2C card issuance, distribution, and smart card and EMV personalization and fulfillment services. Further, the company provides mailing and fulfillment solutions, such as envelope with card and carriers, greeting card with card and greeting card envelope, self mailers, iron cross mailers, and custom designed mailers; printing of corresponding mailing materials, manufacturing and perso of the cards, inline match verification, NCOA data processing, and custom programming; and daily fulfillment, weekly fulfillment, Web based ordering and fulfillment for B2B and B2C, and large direct mail. It serves banking, gift and retail, prepaid, government and security, gaming and entertainment, and loyalty and membership industries in the United States and internationally. The company was incorporated in 1982 and is based in Littleton, Colorado. It has locations in the United States, United Kingdom, and Canada.

We know that a stock's beta measures its sensitivity to market movements. We also know that the stock beta is related to the nature of the product sold by a company, especially its price elasticity.

What is your best estimate of the beta of CPI Card Group? You can use published estimates, as long as you can explain how those published estimates have been computed. Keep in mind, as well, that the beta is a forward-looking number. Beta estimates using historical information are backward-looking and may or may not be the best estimate of the underlying beta, which measures the future tendency of an asset to move with the market. (As mutual funds note, "Past performance is no indication of future results.")