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TOYOTA MOTOR CORPORATION Name Course Professor Date Introduction Respect for people has always been the philosophy of Toyota especially among its associates. Management notes that the hard work of these associates has made the company a success in its field. In its history, there was only one instance when it was made to choose between corporate restructuring or risking its collapse in the process. The President then was Kiichiro Toyoda who fought for his employees but the company was in the worst of conditions which showed that the company was unsustainable.
He was so discouraged by the lay-offs that had to be done and because of this he resigned from his position as the president of the company. The company then began to nurture the people who remained its only asset. After that, the Honorary Advisor Eiji Toyoda states that From then on, we started building a framework of mutual trust between labor and management. The process was like building a wall, block by block. It then realized that it was important that the company must safeguard its people against future layoffs like that one (CSR Policy: Contribution towards Sustainable Development). Toyota's Performance Today, although Toyota Motor Corp.
went through a decline in the U. S. stock market during the middle part of the five-year period from 2000 to 2005, it has bounced back in the past couple of years and is expected to continue to improve its performance in the coming years. Currently, it is trading at around 72 per share and its average target estimate is 94. 15 per share. However, there may be risks involved, not in the stock itself, but due to the general investor outlook on the U. S.
economy. I think it would be safe to bid around $ 80 per share for the 100 shares in the futures contract that is due to expire after a year from now. This would be higher than the average price during the past 52 weeks, but is safe enough to consider other external risks such as the general turnout of the economy, and it should be the approximate stock price if the expected annual return of around 15 % for the next five years is taken into consideration. As most stocks in the U.
S. are affected by the bearish outlook from investors, Toyota might not be spared even with the entire positive forecast from a number of analysts. Toyota is expected to continue performing well in the automobile industry even as General Motors and Ford are having a rough time. The coming years are also expected to be fruitful for the caretaker, especially with new models that are expected to come out. The trend towards hybrid cars for oil efficiency and alternative fuels should also help automobile sales in the coming years as the world continues to experience an oil crisis. It would be better to hold on to this stock for a long period of time because more profit should come not in the near future but after several years.
Toyota is a stable company and has, so far, been outperforming its competitors in the U. S. , so it should be fair enough to pay higher for it. A lot of people invest in bonds to preserve and increase their capital or to receive dependable interest income. This is because bonds typically have a predictable stream of payments and repayment of principal.
Whatever the purpose -- saving for education or a new home, increase retirement income or any other financial goals, investing in bonds can help achieve these objectives. Particularly true for retirement planning, as in the past decade, the conventional fixed-benefit retirement plans have increasingly been replaced by defined contribution programs. These plans offer greater individual freedom in selecting from a range of investment options, thus, investors must be more self-reliant in securing their retirement lifestyles. Bond Investment Considerations There are various key variables to look at when investing in bonds: the bond's maturity, redemption features, credit quality, interest rate, price, yield and tax status.
Together, these factors help determine the value of your bond investment and the degree to which it matches your financial objectives. TOYOTA MTR CR CORP (As of Sep 14, 2005) Price: 101. 85 Coupon (%): 4. 350 Maturity Date: 15 -Dec- 2010 Yield to Maturity (%): 3. 955 Current Yield (%): 4. 271 Debt Rating: AAA Coupon Payment Frequency: Semi-Annual First Coupon Date: 15 -Jun- 2004 Type: Corporate Industry: Financial (Reports) Offering Information Quantity Available: 50 Minimum Trade Qty: 25 Dated Date: 9 -Dec- 2003 Settlement Date: 20 -Sep- 2005 (Reports) YIELD TO MATURITY Yield-to-maturity is the rate of return you earn on a bond if you hold the bond to maturity. It assumes that the interest coupons you receive on the bond can be reinvested at the same rate. Yields are shown on a before- and after-tax basis. Yield to Maturity (Based on IRR): 4. 60 % Return: Taxable Investment Tax-Deferred Investment Before Taxes 4. 49 % 4. 49 % After Taxes 3. 49 % 4. 49 % How will rate changes affect bond's current value? If Rates Drop to 4 % If Rates Stay at 6 %If Rates Rise to 8 % Bond's Value 103. 19 % 88. 33 % 76. 08 % Gain (Loss) if Sold Today $ 5 $- 10 $- 22 Before-Tax Bond prices and interest rates moves in opposite directions.
If the market interest rate for similar bonds increases, bond price decreases. If the market interest rate for similar bonds decreases, this bonds price increases as investors will be more willing to pay more for it. YIELD TO CALL At Maturity At Call Yield (IRR): 4. 60 % 5. 63 % The higher the call premium the bond issuer must pay should he call the bond, the greater the yield at call will be. There is a direct link between maturity and yield.
This can be best seen by drawing a line between the yields available like securities of different maturities, from shortest to longest. This line is called a yield curve. A yield curve could be drawn for any bond market but it is most commonly drawn for U. S. Treasury market, which offers securities of every maturity and where all issues bear the same top credit quality. Source: Yahoo Finance Current Market Environment (Rates) On Risk Management Basically all investments have a certain degree of risk.
When investing in bonds, it is worth remembering that an investment's return is linked to its risk. This means that, the higher the return, the greater the risk. Equally, moderately safe investments offer relatively lower returns. Also, the longer it takes for a bond to mature, the greater the risk that prices will fluctuate along the way and the fluctuations will be greater where more investors will expect to be compensated for taking additional risks. CONCLUSION Outlook forming term yields in the quarter, if not years ahead, includes increased risk given rising pricing pressures, continued growth and continued Fed tightening. Increased inflation risk due to the hurricane (Katrina), may affect gasoline prices, but with the relatively strong economy and Fed tightening, this will lead to moderately higher long term yields.
Latest market estimates showing term rates to the mid 4 %range by year end partly given the Fed " policy direction. Also, large foreign buying in the Treasury market may cause long term drag on long term yields. It is important to note that management respects employees and believes that the success of its business is because of the creativity and teamwork of each member. They are able to stimulate personal growth of employees all the time. (Guiding Principles 5) WORKS CITED CSR Policy: Contribution towards Sustainable Development. Accessed August 7. 2008 at: web "Toyota." Cusip No. 89233 png 7. Accessed August 7. 2008 at: web Reports.
Yahoo Finance. Accessed August 7. 2008 at: web Rates. Bonds. Yahoo Finance. Accessed August 7. 2008 at: web Vision and Philosophy.
Accessed August 7. 2008 at: web
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Research essay sample on Yield Curve Toyota Motor
