When it comes to financing education, having options like stock and EE Savings Bonds pre-established can enable the options to become more open. In this case, my desired school costs $100,000 to attend. I have the option to sell my 1,000 shares of Apple stock that is currently at 97.92 or my 1,000 EE Savings Bonds (with $100 denominations and 4.25% coupon rate) that are five years from their 30-year maturity date. I also have the option to sell a combination of both. If I were to sell only my Apple stock at today’s current rate, I would have $97,920 which would mean that I would be short roughly $2,100. Whereas, if I were to simply sell my EE Savings Bonds upon maturity in five years, I would have the $100,000 needed to finance my schooling. …show more content…
Whereas, if I waited to sell there is a possibility that the stock could be worth less in the future. Likewise, the advantage of selling my EE Savings Bonds upon maturity in five years would be that I would be able to walk away owing nothing on my educational expenses. Where, with only selling my Apple stock I would have to come up with nearly $2,100 to ensure all costs are covered. The disadvantage of only selling my EE Savings Bonds is that I could lose out on $4,250 by waiting ten years past maturity and an additional $17,000 in payments for the following one to four years after. Nonetheless, an advantage of selling a combination of both stocks and bonds would be that I am not selling all of either my stocks or bonds. This enables them to both build over time, hopefully, and future investments to be made. A disadvantage of selling a combination would be the risk of not allowing the full EE Savings Bonds to mature which could end up making future values smaller. The same can be said about stocks, by selling a portion it could result in either a higher or lower payout in the future were I to …show more content…
Since my stock does not quite cover the full costs of my desired school, going with a combination would ensure that all costs are covered. In order to do this, I would sell half of my 1,000 shares of Apple stock at today’s current rate of 97.92. This would provide me with $48,960 which is nearly half of my educational expenses. This means that in order to ensure all costs are covered that out of my 1,000 EE Savings Bonds I would need to sell just over half and would choose to sell 550 bonds that would cover the remaining costs. Because they mature in five years’ time to be $100,000 by selling 550 bonds, I would stand to have $55,000 from this to finance my educational expenses. While I could lose additional money from doing this in the future, financing my education is a cost that I would chose the make. This would enable me to have a total of $103,960 in order to finance my educational costs which would enable me to ensure all costs are fully
The high yield bond is a bond that features higher returns but with a lower credit rating than typical investment-grade bonds. These bonds can also be referred to as ‘junk bonds’ that are rated as below investment grade by organizations such as Moody’s and Standard and Poor’s. [Appendix #1] Generally, companies that issue high yield bonds may receive their rating due to a few characteristics, such as being less established than typical household brands, showing weak financial performance or they may have suffered a financial setback at some point in their corporate history. Although, high yield bonds may seem to have a relatively negative reputation among investors they possess many attractive advantages which include: diversifying portfolios, greater yields, lower volatility thus makings for a good long-term investment and the fact that bondholders have priority of recovering their money over equity security holders in the case of bankruptcy. These bonds are accessible to investors either as individual issues or through the means of high-yield mutual fund investments. On the other hand, there are certainly risks involved when investing in high yield bonds, such as credit risk where there is the possibility that the issuer defaults on the principal or interest payments over the course of the term and investment in these bonds ultimately depends on how informed the investor is and the amount of risk the investor is willing to tolerate. Similar to other types of securities there is always the threat of economic downturn and risks occurring when investing in international markets, such as political and exchange rate risks. In contrast, high yield bonds are able to mitigate interest rate risks better, and are less vulnerable to drast...
Stein, J. (1992). Convertible Bonds As Backdoor Equity Financing. Retrieved on June 12, 2006, from the World Wide Web at: http://www.financeprofessor.com/summaries/Stein1992ConvBond%20paper.htm.
In its essence, expensing is performed whenever you purchase an asset. But the above section showed the limits to this rule. Typically only costs, which have no long-term benefit or which don’t directly increase the value of the asset substantially, are expensed.
Money securities offer extremely investment that is eye-catching opportunities for investors looking to invest in put choices including calls. The investor made a choice to invest in stock at $30 at this time with a $30 strike price. In a period of two years the investor will be capable to purchase the stock at $30 in regards to expecting an increase of $150 per stock. So he will spend $3,000 as the beginning investment an expecting a returns of $15,000. The rest of the $1000, the investor made a choice to invest in a 6 month CD from a banking corporation. A six month certificate of deposit is a respected savings product as it produces assured interest of up to $250,000 per depositor (Bankrate.com, 2014). The investor will turn around a deposit $1000 that will make him have an interest including the money in the financial corporation. After the course of four years, the CD will cause him to have a profit of
dropout, due to lack of effort, B. finish with an associate’s degree and limit their choices in a job compared, or C. continue after a community college and further their degree at a university. Yet, the third reason is the reason that makes the proposal questionable as to whether it is really a need or if it’s a want by the people that want money handed to them to help their future. If people can afford two more years of college after a community college, or they have scholarships to help them pay for the following two years, then why can they not afford a community college that can be less than a thousand dollars to attend to? The proposal seems to be something that is not totally needed to be one more thing that raises taxes, as there are scholarships for various cases and made to be affordable to further an education after high
Daniels Jr.’s editorial regarding college student debt, it is clearly stated that college student debt is known as one of the biggest financial burdens on adults in the world today. In fact, “After tripling in just ten years, college debt totals more than $1.3 million” (Daniels 2*). That is more money than credit card and auto loan debts combined. Daniels illustrates this fact with pathos, drawing out the seriousness of the situation and the effect on the national debt. A solution for college student debt is almost immediately introduced following the presentation of facts. Daniels introduces Income-Share Agreements, which is a program under which, “A student contracts to pay investors a fixed percentage of his or her earnings for an agreed number of years after graduation, offer a constructive addition to today’s government loan programs and perhaps the only option for students and families who have low credit ratings and extra financial need” (Daniels 2*). Here, Daniels approaches the situation by persuading his audience to understand the seriousness of the situation, and open their minds to this idea of controlling how debt is paid off so that the effects of it are not detrimental to the student. Daniels concludes his editorial with an emotional appeal, stating that without implementation of the ISA, student debts will continue to rise, thus hindering not only their life progression, but the progression of the country’s
Think about it, if people had money left over by the debt being lowered they probably would buy things from the stores and would get tax which means the economy would be making more money. The cost of college should be decreased, which would make the economy we live in a better place. The economy we live in today is pitiful from all the high priced things. “And yet, Baum says, somehow, families are paying for it. "And the reason people are paying for it is because the return to the investment is so high." No matter what a higher education costs them, most Americans think it will be worth it, she says.” (Sanchez, 2014). If the money for college was less students could buy the things that they need for college. Students could also buy things that they need in everyday life, such as food, tissue, or any necessities. If the amount was lessened and students had money left over it could give them the start of their new life. “Colleges have no trouble filling seats, even with rising costs, so they keep spending and increasing tuition.” (Lin,
This is important because it is illogical if you start investing and earning a lot of money in the long run but you have debt in your hands, at the end you will have to pay your debt with the money you earned and that is not a good idea. So, first for Jackson and all college students would be to stay out of debt before you start investing.
There are many concerns that students have when they are going to attend a college such as financial issues, preparing themselves, and adapting to their new environment. By creating a way of gathering money to pay for college will ease the concern of not being able to afford it. Giving students more of a challenge in big school will prepare them for the more difficult work they will need to accomplish. Creating a good suitable environment for themselves, they can excel greatly at the college they
easily pay for the sinking fund. In addition, by buying back bonds. annually, the interest expense is further decreased, thus creating less of a burden on the cash flow. In contrast, an equity-financed. acquisition would spread the net income out over 3 million more.
scholarships and many other forms of receiving money to be able to pay for college without
The challenge in school finance is to find an economic equilibrium or a balance between school and program funding and long-term financial stability. In order to work toward the goal
prices. You may be able to make money by simply selling your bond before it's maturity date.
Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures.
Diversification - By owning partakes in a common reserve as opposed to owning individual stocks or bonds, your danger is spread out. The thought behind enhancement is to put resources into an extensive number of a~sets so that a misfortune in any specific venture is minimized by increases in others. As it were, the more stocks and bonds you claim, the less anybody of them can hurt you (consider Enron). Vast common supports ordinarily own several distinct stocks in a wide range of businesses. It wouldn 't be feasible for a financial specialist to fabricate this sort of a portfolio with a little measure of