Portfolio Activity Unit 4 financial manaement

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Nov 24, 2024

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Portfolio Activity Unit 4 Financial Management Task The Portfolio entry should be a minimum of 250 words and not more than 750 words. Use APA citations and references if you use ideas from the readings or other sources. For this week’s portfolio activity, please advise the instructor of the following: 1. Utilizing the information provided in your course textbook(s) or other valid sources, briefly compare the coupon rate and the interest rate regarding bonds. What is a par value? 2. Describe the impact of a tax shield on fixed income yields. 3. Please provide a brief update to the instructor on how you feel you are doing so far this term. This assignment will be assessed using the Portfolio rubric. Response Coupon rate is simply defined as the interest rate that is funded or compensated on refurbished income protections like bonds. This activity is computed and or determined yearly on the face value of the bonds and paid to the bond purchasers by the bond issuers. It is considered to be calculated as usually by developing the total coupon payments by the bond's face value. ( Further, both Governments and corporations result bonds to increase as well as enhance capital for their operations. It is simply the rate that indicated the amount of yield paid by the issuer to their purchasers, but it is calculated as a percentage of the face value. Similarly, the interest rate is the quantity or volume that is alleged by the lender to the borrower on the amount lent, and it is calculated once a year on the expanse borrowed. The change in the market scenario has an impact on interest rates. Interest rate is resolved by the proceeding party and is not involved or influenced by the concern price or market value. The bond fees and yield are influenced by market interest rates, with an enhance in market awareness rates decreasing the fixed-rates of the bond. This is why coupon rate is determined using the bond's face significance as the foundation for computation. The issuer of the connections to the client influences the coupon rate. The consequence rate is revealed by the quantity of risk affected in contributing the change to the pledger. Further, the lender decides the interest rate.

As it relates to tax shield, it is a reduction in taxable income that is reached by requesting acceptable tax deduction such as debt interest, examination expenses, charitable contributions, amortization, and reduction. These deductions decrease / reduce a taxpayer's payable revenue in a given year or permit them to accept income taxes to later years. Tax shelters decrease the total expanse of income tax owed by an individual or a company. (Kucukkocaoglu & Gokten, 2017) The formula used to calculate tax shield are as follow:  Tax Shield = Value of Tax - Deductible Expense * Tax Rate Individuals and corporations can reduce their taxable income by claiming tax-free deductions such as medical expenses, charitable contributions, and depreciation. The term "tax shield" implies to a decrease in the assessable amount ( Jonick, C. (2017). It assist the taxpayer since it decreases the measure of charges owed. Likewise, it may similarly suspend the lower income pending the following year. Further, this may not result in a positive impact on fixed income yields since interest expense on dividends is not discipline to acceptable deductions. However, because interest on arrears is chargeable, allowing an overhauled proceeds from debts is highly capable of the benefit to lower the taxable amount ( Jonick, C. (2017). In this forth week, so much has been addressed and learnt. I am proud ot say that I am doing quite well and I do hope that it continues, in order that I excel in this course. Quite a number of topics has been address, thus allowing learn new aspects and concepts of financial management to include, bonds, yield, and the various accounting tool used to assist in building corporations, Businesses and organizations to prevent bankruptcy from occurring. This course is considered to be a form of enhancement and motivation as it will come in beneficial in the near future as I employed with the Pan American Health Organization (PAHO). These new concepts have broadened my financial knowledge base and opened my mind to the subject of finance in general. References: Dauderis, H., Annand, D., & Jensen, T. (2021A). Introduction to financial Accounting. Lyryx Learning Inc. Licensed under Creative Commons BY-NC-SA 3.0. https://lyryx.com/introduction- financial-accounting/ Jonick, C. (2017). Principles of financial accounting. University of North Georgia Press. Licensed under Creative Commons by-nc-sa 3.0. Lyryx Learning Inc. Download the Principles of Financial Accounting [PDF]

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