Financial Case Study 2

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University Canada West *

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MISC

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Finance

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Feb 20, 2024

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docx

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2

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FIN2303 Financial Case # 2 Part A : Take a look at the Canadian Andex chart (Attached PDF File) 1. List 10 elements of the Andex chart. All combined Indices performance count as 1 element. a. Inflation (Living Cost) was the greatest during Reagan’s time at 22.75%. b. U.S Large Stock Total Return Index in CAD’s rate of return as increased from $100 to $100,00 from 1950-2016 by 11.5%. c. The GDP was at its peak in 2001/2002 d. Lowest unemployment rate was 2.4% e. Ontario’s to marginal tax rate was 62.4% to 59.5%. f. Highest average household income was $95,000 in Harpers time. g. Stamps began at the cost of 4 cents and has increased to 85 cents plus GST h. Oil cost $2.57 USD per barrel in 1950 i. In 1977-1978 minimum wage was $2.90. j. 5 year mortgage rate was at 21.5%. 2. Why do you thing the Andex chart can be a great tool for financial planning? An Andex chart allows companies and governments to see certain growth over the year such as market rates, GDP, or employment rates. This helps when you are buying stocks or investing in companies, to see growth. 3. After analyzing the chart, name 2 lessons/stories/relationships in the data that stand out personally as important, interesting or surprising. a. Oil pricing in 1950 was something that I found interesting, to be fair I did not expect it to be that low. Oil being a essential product I think it would be slightly higher. b. TSFA accounts come in relation to our lesson on different type of accounts. I thought this account was rental in the pas 5 years was introduced but to my findings it been around for a while. Part B : List the risk-return trade off in ascending order of the following securities: Corporate bonds Government bonds Precious metals Cash Small capitalization stocks GIC’s Large capitalization stocks T-bills
FIN2303 Financial Case # 2 Assign the appropriate securities (from the list above) to the following goals: - Saving for a down payment on a house in the next 5 years - Saving for your retirement 30 years into the future - Saving for your child’s education 15 years into the future - Saving for a new car next summer - Earning a higher return in your long-term savings
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