Small practical cases. Write the report in MS Word document and embed the MS Excelworkings within the word document.

Question Part A

1.1. Write an essay on the institutional arrangements that ensure that managers work toward increasingthe value of a firm.

1.2. Explain, using an example, the term agency costs as related to a corporation.

Question Part B

2.1. Explain the time value of money concept, focus on the key reasons for difference in value of moneyat different points of time.

2.2. Which one would you prefer and why? Work out the value of these investments after 1, 5 and 20years.a. An investment paying an interest of 12% compounded annually.b. An investment paying an interest of 11.7% compounded semi-annually.

2.3. Imagine you take a loan of 30000 euros @5.5% rate of interest to be repaid in equal monthlyinstallments in 15 years. Calculate the equal monthly installments and also present the loan amortizationtable.

2.4 Retirement Planning: Write down your age today, and the retirement age in your country, round off inyears. Imagine you need to accumulate 2Million Euros until your retirement age, and you have an option toinvest your savings @ 4% per annum. If you choose to invest equal amount on yearly basis to have 2MEuros by your retirement, how much should you invest every year?

Question Part C

Mr. Morris had $100,000 in his account. Using this fund, he made a portfolio of two NYSE listed stocks on01 Jan 2019 in the ratio of 60:40, i.e. 60% funds in Stock 1 & 40% funds in Stock 2. If you would Morris,which two stocks would you choose and why? Calculate and analyze the following by downloading datafor these two chosen stocks.

The daily stock data of both stocks can be found on market websites such as finance.yahoo.com.Download daily data for 1 year from 1 Jan 2019 – 31st Dec 2021.

Using the stock data of the two stocks, you are required to explain the below concepts and thencompute for the given stocks:

a. Average return of both the chosen stocks

b. Annualized standard deviation of returns of both the chosen stocks

c. Correlation coefficient of returns of the two chosen stocks. What does this correlation coefficientsignify about the correlation of the two stocks and corresponding decisions from an investor?

d. Portfolio return of the portfolio of two stocks.

e. Portfolio risk (standard deviation) of the portfolio of two stocks.

f. Critically analyze your investment decision in these two companies. Given an option,would you like to invest in any other company? Or would you like to have a different ratio ofinvestment in the two? (10 marks)