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Iron based superconductor thesis writing

Assignment:
Part I
1. For each of the scenarios below, explain whether or not it represents a diversifiable or an undiversifiable risk. Please

consider the issues from the viewpoint of investors. Explain your reasoning
a. There’s a substantial unexpected increase in inflation.
b. There’s a major recession in the U.S.
c. A major lawsuit is filed against one large publicly traded corporation.
2. Use the CAPM to answer the following questions:
a. Find the Expected Rate of Return on the Market Portfolio given that the Expected Rate of Return on Asset &”i&” is 12%, the

Risk-Free Rate is 4%, and the Beta (b) for Asset &”i&” is 1.2.
b. Find the Risk-Free Rate given that the Expected Rate of Return on Asset &”j&” is 9%, the Expected Return on the Market

Portfolio is 10%, and the Beta (b) for Asset &”j&” is 0.8.
c. What do you think the Beta (β) of your portfolio would be if you owned half of all the stocks traded on the major

exchanges? Explain.
3. In one page explain what you think is the main ‘;message’ of the Capital Asset Pricing Model to corporations and what is

the main message of the CAPM to investors?

Part II:
American Superconductor
As you know from reading through the background materials, the decision to use debt or equity to raise money is not a

decision taken lightly by management. So when several years ago, in 2003 American Superconductor decided to raise funds

through equity it was definitely a major decision that required intense discussions at the highest levels of management.
Read the article below about American Superconductor and do some of your own research using the CyberLibrary and internet

search engines.

Iron based superconductor thesis writing energy science and technology

You can also take a look at the official American Superconductor webpage.
After doing your research, apply what you learned from the background materials and write a two to three page paper answering

the following questions:
What are the advantages and disadvantages for AMSC to forgo their debt financing and take on equity financing? Do you agree

with their decision? How can a company’s cost of equity be determined? Is there a tax deduction from the use of debt

financing? Please explain.
Explain both of your answers thoroughly. Be sure to support your opinions on these assignment questions with references to

the background materials or to other articles in your paper.
Read the article below available in Proquest:
American Superconductor switch ; Westboro company plans to raise money through a stock offering
Andi Esposito. Telegram & Gazette. Worcester, Mass. Aug 26, 2003. pg. E.1
Abstract (Article Summary)
&”AMSC’s management and board of directors believe the decision to forgo a secured debt financing and to adopt an equity

financing strategy under current market conditions is in the best interests of our shareholders,&” said Gregory J. Yurek,

chief executive officer of AMSC. The 265-employee company has operations in Westboro and Devens and in Wisconsin.
Finally, the Northeast blackout &”shined a lot of light on the problems we have been talking about as a company for three to

four years,&” Mr. Yurek said. AMSC products, such as a system installed this year in the aging Connecticut grid and high

Iron based superconductor thesis writing 1029610 Report

temperature superconductor power cables and other devices bought by China for its grid, are designed to improve the cost,

efficiency and reliability of systems that generate, deliver and use electric power. &”We are a company with products out

there solving problems today,&” he said.

Assignment Expectations:
The Case report should be a four to five page report (Part I: two to three and Part II: two pages). Please show your work for

Guillermo E. Gonzalez
Module 3: Case Assignment
FIN301 Principles of Finance
17 SEP 2012