Essays on Borrowing

WACC Calculation: Arrow Electronics Limited

Calculation of WACC WACC: Weight of short-term debt* Cost of ST debt(1-tax rate)+ Weight of long-term debt* Cost of LT debt(1-tax rate)+ Weight of equity* Cost of equity = 0.0019* 0.0274+ 0.2987* 0.0378+ 0.6994* 0.0707 = 6.085%

Calculative Notes:

i) Cost of debt: -Cost of Long-term debt

The cost of long-term bonds issued by the company has been calculated on the weighted average basis:

-Cost of Short term debt The information relating to the short-term debt of the company was available in Note-6 of the financial statement where we found that during the year the amount of short-term debt owed by the company amounts to $13.454 million. The company has also disclosed that short-term borrowings were used exclusively ...

Personal Project Proposal: Understanding Personal Loan Repayment

Personal Project Proposal: Understanding Personal Loan Repayment

Personal finance is an area of major concern for individuals, especially as it regards responsible borrowing. The following project will work to define personal finance issues, specifically regarding the repayment of personal loans. Personal finances can be managed by using formulas and charts to determine the repayment schedule for, and calculate the cost of various repayment plans for personal loans.

Application of Mathematical Concepts

A variety of mathematical concepts can be used to understand, calculate, and compare approaches to personal loans. An algebraic formula can be created to calculate the cost of interest for various repayment ...

The Federal Funds Rate Hike

The New York Times, in an article by Binyamin Appelbaum entitled "Fed raises key interest rate for first time in almost a decade" discussed the pronouncement of the Federal Open Market Committee ﴾FOMC﴿ to increase the Federal Funds rate. The decision came exactly seven years after the financial crisis in 2008 when the FOMC reduced its rates to near‐ zero level to prevent the economy from collapsing. The article described the move as signaling the beginning of the end of the Fed 's stimulus program and highlighted the Fed statement that the Fed intends to increase the rates gradually ...

Introduction:

The use of the credit card payment system has continued to be adopted across the world, and its use has been rated as overwhelming. Substantial literature review on credits cards use reveal that the payment system is gaining ground out of its convenience, advance financial services, credit borrowing and enhanced liquidity, with most of the former liquidation hurdles navigated (Stearns, 2011, p. 45). America was the first country to use the credit cards in the 19th century. Since then, the country has continued the use of the credit card intensively. In the onset, a credit card was only issued ...

The preceding report has yielded the following findings:

Asda is one of the largest retailers in the British market. Asda is willing to liquidate its flaws in order to ensure customer satisfaction and increase consumer base connection to the brand. Improvements manifest themselves through an increase in the number of stores and the enhancement of the quality of services provided, including the online ordering of home delivery, email sending, and club cards.

Improvements are expected to convert customer satisfaction into stable repurchase behavior.

Asda is taking great pains to generate new ideas stimulating the happiness of consumers following their purchase experience. With readiness to change and openness to new ideas in mind, the company will most likely be ...

Introduction

Funding sports organization is an uphill task. In the contemporary environment in which sports organizations operate, managers of these sports organizations are faced with the enduring challenge of financing their institutions in the midst of declining traditional sources of revenue. Some of these traditional sources included media revenues, entrance fees, and tax support. The dwindling sources of revenue have left the managers with minimal resources to maintain the operations and programs of their sports organizations (Bartlett, Gratton & Rolf, 2012, p.522). Managers have also learnt to look beyond this fiscal challenge. This involves the use of innovative approaches to supplement ...

The City

Financial Analysis: Marks and Spencer Marks and Spencer is one of the leading UK leading retail with over 1330 outlets across the globe. The company specializes in home products, clothing, and food. Food consists of the largest share of the company revenue. The company financial statements are prepared and audited by independent external auditors. This makes sure that they reflect a true and fair view of the financial position of the company. This report is based on the company’s financial statement for the financial year 2014 and 2015. The ratios used in the analysis are liquidity, profitability, and ...

International Monetary Fund

International Monetary Fund (IMF) is an international organization with the headquarter in Washington D.C. which consists of 188 countries, which aim is to promote global monetary cooperation, secure financial stability and obtain sustainable economic growth, maintain fair international trade, develop high employment together with reducing poverty all over the world. Together with the World Bank, the IMF is the largest public fund in the whole world

Objectives

It was founded at the End of World War II, in July 1944 at a Bretton Woods’ conference of UN by the decision of 44 countries in order to avoid the same devaluations, ...

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The Capital Structure of Chinese Companies

Introduction Several researches have been conducted to demonstrate the current structure of the Chinese markets, which appears to significantly vary across various industries (Morri and Beretta 2008). Apparently, in order to understand the intricacies of the capital structure in China, it is important to consider that capital structure is different in each industry. For instance, the property industry is different in the sense that the property industry has more collateral assets accompanied by larger that has higher leverage ratio (Liang, Li and Song 2014). On the other hand, the financial sector sets specific standards when ...

Made In China: Chinese Artistic Representations of Capitalist Consumption

In this exhibition, themes of appropriation and authenticity play themselves out in the works of Chinese artists Ai Wei Wei, Tamen, and Liu Bolin. Ai Wei Wei challenges us to reconsider what is authentic and what is consumerism. Liu Bolin’s works represents consumerism in the style of the vacation postcard — except in his photographs, the figure is camouflaged, evocative of the notion of China incorporated into a culture, but not identified. Ta Men’s paintings evoke the original anecdote of authenticity and food in the North American imagination. Chinese art that represents capitalist consumption brings to mind two ...

Petrecca, L. (2012). 'Supersized' drinks on the way out in NYC. Accessed From http://usatoday30.usatoday.com/news/nation/story/2012/09/13/supersized-drinks-on-the-way-out-in-nyc/57775970/1

This form of law is almost impossible to regulate on individuals considering that even if the supersized drinks are reduced to the 16-ounce cap, consumers still have the choice to consume more than one cup. A person may also opt to buy sugary drinks from the grocery and convenience stores which would not be affected by such law. To drink or not to drink is solely a personal choice. As such, a law seeking to reduce the quantity of supersized drinks as a way to improve health is myopic. Instead the government should endeavor to change the mentality of the consumers through ...

- Introduction

1.1 Background developments

Traditionally, accounting standards have been developed by different countries on the basis of local legal, economical and cultural institutions frameworks (Elliott and Elliott, 2009, p. 158). As a result, the standard setting was very country specific. With the globalization process at work for the last 3-4 decades and increasing mobility of capital internationally accepted accounting standards have become necessary to facilitate cross border transactions and make financial reporting comparable between countries and companies thereby leading to a greater transparency for investors (Nobes, 2004). IASB has been set up as a private international standard setter with a mandate to create high quality accounting standards ...

A student debt crisis has gripped the American society. Most students graduate with high amounts of debts which they are never able to pay until late into their adult life. The joy of graduation is often immediately destroyed by the realization that it will take decades for the student to pay all their student debt, notwithstanding other social and economic obligations such as mortgage, and car payments. In this paper, I will explore and examine student debt effect on society. I also analyze how society and the never ending belief in the capability of higher education to lift individuals ...

Business

Melbourne is located in the State of Victoria, Australia. It has the highest population in the State of Victoria. Melbourne has a much diversified economy which is characterized by a well developed infrastructure system, high technology, tourism, good logistics and transportation activities. Due to the presence of a good economy in the city, the business of selling food would do well. High population in the city would create a high demand for the product. However, there are risks which may act as a challenge in selling of the food and beverages. The risks and the mitigation measures are discussed below.

Financial risk involves ...

Executive Summary

The purpose of this research is to try and examine factors that influence business performance of SMEs. The aim of this study is to give the seeing on how individuals ought to begin their business by taking an evaluation at all the elements affecting business performance. Thus help to lessen the danger of disappointment and expand possibilities of success. The study inspected eight variables that impact the SMEs business achievement. These components are SMEs trademark, administration and expertise, items and administrations. (SMEs) Is acknowledged internationally as an apparatus for enabling the citizenry and economic development. It has been connected ...

The last few decades have seen an unprecedented increase in student loan debt levels and in fact, student loan debt has become a financialfully-fledged crisis for many graduates.. Students have been incurring enormous debts and later defaulting or going into forbearance in these payments and because of this, education policy makers and experts have had endless debates regarding how to tackle this problem. The, but the debate has been laden with inconsistencies and lack of consensus and most of the solutions advanced have not made area real impact on the loan deficit.been effective. One of the key problems contributing to ...

Increasing government spending will help the economy

Government spending entails all activities undertaken by the governments in the day to day lives. Government spending emphasizes on it procuring the components that the citizens need. The expenses incurred are usually short term. Government spending can either improve or destroy the economy. It depends on the prevailing conditions in the market and the economic state of the country (Driver, Stephanie 97). However, government spending can be kept in check by formulating fiscal laws that limit the expenses. Government expenditure is undertaken for several different reasons. They vary from provision of social amenities like health care services, schools, and ...

Introduction

SMEs play a crucial role in the market with the provision of opportunities and service to the market segments that are underserved by the well-established firms that tend to serve select niche. However, SMEs operations are subject to various factors including their finance capacity. That means they need adequate finances to venture and thrive in the markets from the onset throughout their growth to become well-established enterprises. In that view, there are various sources of funding that can be utilized and which have different aspects that vary their appropriateness at different growth stages. In addition, SMEs face challenges ...

Introduction

Auditing is a crucial aspect of the business in seeking to ensure that business standards and procedures are followed for the purpose of enhancing business continuity and performance management. In that view, auditing could take different approaches and entails considering several factors that play a crucial role in determining a business going concern capacity. In that respect, this analysis seeks to demonstrate an external audit’s operation by analyzing Carpetright financial reports for the year 2012-2013. To begin with, the analysis provides an explanation of the risk based external audit approach in addition to identifying the factors that may lead the auditor ...

Introduction

This is a strategy adopted by the government through the Central Bank to control macroeconomic shocks due to fluctuation in wages and prices of goods and services. Stabilization may include monitoring the business cycle and interest rate regulation by the central banks. Moderation of these factors leads to changes in unemployment rate, recovery of an economy from economic shock control borrowing and money supply. In general terms stabilization are used to regulate the fluctuation of business cycle. There are two main elements of stabilization policies, that is, monetary and fiscal policies.

Elements of Stabilization Policies

Monetary policy This is the process through which ...

In the Business Ethics course, we encounter philosophies dealing with the appropriate decisions and actions in the face of business circumstances. It is often that business practices solely prioritize raking in money that is possibly disregarding economic impact. To expound on this issue, we would discuss the infamous 2008 Subprime crisis.

The year 2008 made a critical impact to the world of business, especially to the economy of a powerful nation, the United States of America. The economic downfall or in other terms, the financial crisis, that took place in the late 2000s made a lot of people pay for the unfortunate ...

Introduction

The AS-AD framework is a very useful economy tool, which reduces the economy into a simple model of supply and demand. The aggregate demand curve (AD) is given by the summation of consumption (C), investments (I), government purchases (G) and net exports (X-M). On the other hand, the supply curve is a function of the expected price levels. This paper uses the AS-AD model to analyse the economy at various levels of employment, and the adjustments that accompany movement various policy actions. It begins with a depiction of an economy operating at less than full employment, showing that economies often tend towards the ...

Introduction

Using the above definition of amortization, the thesis statement for this research paper can be defined (Nellen et al. 37). It will be based on investigating how buying a car involving a bank can be beneficial or disadvantageous based on acquiring a loan and how it will be repaid by taking a real life example. Moreover, a real bank shall be chosen with an arbitrary rate which the bank shall judge a debtor. In so doing, an analysis of numbers shall be computed to illustrate more on which decision to draw concerning taking a loan for the car.

Discussion

Consider an individual called Steve. His aim is ...

The US federal deficit and the debt are two inseparable problems facing the US since deficit spending began. There is some confusion between the two but the difference is quite simple. The deficit is the amount spending over the fiscal year exceeds the increase in revenue. If we bring in $10 and spend $15 there is a $5 deficit that has to be made up somewhere. It is either cut or funds are acquired elsewhere such as bonds or borrowing through other means. Over time this has a cumulative effect that is the debt which builds interest.

Fortunately since 2009 the ...

In the present era of Corporate Modernization, unlike the traditional activities, it is not the owners which runs the company, infact they hire competent management to work on their behalf. Moreover, every owner(shareholder) consider that the managers so appointed to work on their behalf will act in the best interest of their owners and will assure shareholder’s wealth maximization. Infact, in present complex corporate era, the performance of the company depends upon, how competent the management is adapting the dynamic business environment and related circumstances. Thus, the ability to properly adapt and implement the changes in the ...

The federal deficit is a number that has changed over the years. Between the years 2007 and 2009 the deficit increased from about $160billion to $1.6Billion. It has been drastically shrinking since then but not at a rate that would make everyone happy. Currently the deficit is the lowest since 2008. The difference between the debt and the deficit is quite simple. The deficit is spending over the available revenue that is made up through borrowing of some verity.

There are a few ways that money is borrowed. First of all, it can be borrowed from countries like China by selling ...

Richards (2013, p. 1) first sets out to define the terms to gain a better understanding of the concepts. “Debt” is defined as “borrowing money from an external source with the promise to return the principal, in addition to an agreed upon rate of interest.” Though the terms here are often understood in the negative light, startups, or small companies just beginning to operate, often use debt financing to fund their operations. In fact, even companies with the most robust balance sheets will often times reflect some amount of debt within. In financing terminology, debt can also be ...

Sources of Financing and Dividend Policy

Although each of the stated proposals has its own benefits and drawbacks, Echo Co should choose one that would be the most beneficial for the Company and its finances. In this paper we perform the analysis of each of the stated proposals and give recommendation on the most appropriate option for Echo Co.

Proposal A

Dividends are defined as a distribution of a part of company’s earnings to its existing shareholders (Brealey, 2009). There are several dividend theories in corporate finance which have different approach to benefits and disadvantages of dividends. According to the studies of Gordon (1963) and Lintner ( ...

Discuss the measures that a government can take to improve the balance of trade in the short- term

A depreciation in the value of currency exchange of a country should help boost oversees’ demand for U.S. exports because American firms will be able to supply more cheaply internationally (Keeler, 2007). A country can devalue its currency by a large margin in one or two installments in quick successions so that foreigners can find goods and services of a country cheaper to buy and boost exports rapidly.

Another method that a government can use to improve balance of trade over the short term is to reduce demand in the economy thereby reducing consumer spending in the economy. The government can use fiscal ...

- The Circular Flow Diagram

The circular flow diagram captures the relationship of money and resources between households and firms in the economy. The inner loop represents the flows of inputs for production and goods and services: households sell their labor to firms, and the firms sell the goods and services they produce to households. The outer loop in the diagram represents the corresponding flows of money: households pay the firms for the goods and services, and the firms pay wages and profit to the households.

Households increase savings. The presence of increase in household saving implies that there ...

Quinton Hariis and Till

New York

Brief summary of the presentation

The presenters introduced a topic on credit management. The lending and borrowing of funds is guided by given set of rules and standards relating to the type of credit under discussion. The credit managers have to determine the credit score, which measures the credit worthiness of the prospective borrower. The terms and conditions controlling the issue of credit funds is set by the credit department of the organization or institution offering the loan or credit funds. The credit score is the analysis of the past credit records of the borrower relating to normal ...

This paper will give summary of the main ideas in part III. Thee many facts that are discussed by eth authors are also summarized here. In the book, the chapter talks about this thing. In the chapter, the author argues that the flattening if the world created two billion consumers and not competitors alone. This flattening of the world has made the consumers to demand for more energy. With all these demands, the author argues that there is a need to have additional clean and renewable energy. These additional needs have affected energy and food prices. The environment and global ...

Introduction

Debt in developing countries remains a big challenge even after the IMF and World Bank efforts to cut down these debts to a manageable level. This study aims at identifying some of the factors which have contributed to the increased debts in developing countries. The purpose of selecting the issue is to carry out an investigation as to why the debts in developing countries persist even after the IMF and World Bank efforts to cut them down. Developing economies are characterised by with low GDP, high inflation rates, high interest rates, and low per-capita income hence have unstable economies (Toussaint, 2012). ...

- When a country such as the United States is experiencing serve and prolonged recessionary trend discount rate, term auction, and open market facility can provide useful means of ensuring that the economy returns in the right course. Discount rate is the interest rate that the central bank charges commercial banks and other depository institutions when they receive money from the Federal Reserve Bank's lending facility. During periods of prolonged recessionary trend, the Federal Reserve System should reduce the discount rate in order to encourage commercial banks and other financial institutions to lower the interest rate they charge to ...

1. Role a sample plays in making statistical inferences about the population

The sample plays an essential role in the process of making statistical inferences about the population. Ordinarily, the entire population is usually too large to be fully studied. The limitations that limit study of an entire population include costs, time and convenience in the application of the study modes. A sample from the entire population is selected. It is assumed that the sample would be representative of the entire population and contains minimum bias towards any aspect of the population. The sample, therefore, forms the basis on which the population characteristics are inferred. The researchers assume that the characteristics ...

Question 1

Maintaining a fixed exchange rate is critical in stabilizing the value of a currency against an anchor currency as it makes trade and investment easier and more predictable. Nonetheless, central banks face a number of problems in their attempts to maintain fixed exchange rate, two of which include balance of payment problems when attempting to maintain a weak currency and reduced risk perception while borrowing in foreign currency when attempting to maintain a strong currency. When maintaining a strong currency, a false perception arises that the foreign exchange rate may not change thereby leading to reduced risks perceptions when borrowing in foreign currency such as the case of ...

Credit rating of a country is mainly the ability of a country to repay the loans that it borrows both domestically and from other countries. It is mainly determined by the economic conditions that are prevailing in the country at a certain time. There are other factors that affect the credit rating of a country. This research paper will evaluate the credit rating of South Africa. The research will evaluate the cause of the current credit rating of South Africa and its effects to the country in various sectors of the economy (KRUGMAN, 2009). South Africa is a country that has a very good ...

1. Austerity is the reduction in the deficit financing through reducing the public services that are provide to the citizens. The reduced government spending through provision of less public goods help to avoid deficit financing (Joshua, 2). On the other hand, economic growth is the increase in the total output in the economy. It is argued that austerity policies hinder economic growth since reduced deficit financing lead to less employment hence output in the economy reduces. Another policy that Obama administration has put in place to facilitate austerity is to reduce government spending in some sectors of the economy ...

There is a great comparison between the Roman art and the ancient Greek art in terms of the inspiration and the contribution to the history of creative art. The ancient art work from the Romans and the Greek is known as classical art. While the two depicted a high level of creativity and influence to the population at the time, it is their relationship and inspiration to the modern art that interests many scholars. The roman art borrows a lot from that of the Greeks and is sometimes seen as the replica of the works of great Greek artists such as Callimachus, ...

Comparative politics refers to the assessment of the political situations in all the countries across the world. Therefore, it becomes easy to determine the similarities and the dissimilarities that exist among the countries. The citizenry could use the comparative studies to increase efficacy in their nations thereby leading to the economic developments in the countries. As a result, the economic developments enhance the people’s living standards. The comparative politics entails two main methodologies that include; the area studies approach and the cross-national approach. The area studies approach involves an in-depth examination of a specific country or region. On the other ...

Research Paper: Testing Bender and Ward Model on UK green companies

Introduction In their book, Corporate Financial Strategy, Bender and Ward proposed a new financial theory where they postulated that the gearing ratio of the company affects its market value, which is indicated in the stock prices throughout the life cycle. Accordingly, it is very important for the company to use defined funding source at each stage of life cycle to balance the financial and business risk. In the book, the authors had also described each stage of company’s product life cycle, effect of financial elements such as debt, dividend, profit, PE and risk throughout the stages of the ...

Impact of the Global Financial Crisis

Abstract Increased globalization integrates the world markets for goods, services as well as labor. In that respect, the occurrences in one market have significant effects on the other markets. Thus, there increase in concern over the effects that aspects such as the global financial crises have on corporations’ performance and operations as well as on the labor market. The analysis focused on identifying the global financial crises’ impact on multinationals and the labor. In its findings, the analysis identifies that corporations with high dependence on credit are greatly affected by the crises unlike those with less need for ...

Introduction

In a recent article in the Washington Post (28th November, 2011) by Elizabeth Norton, the real estate market still remains strong despite the harsh economic conditions. There has been continued investment in real estate especially in quality high end apartments. But the general demand has reduced due to high interest rates imposed by several banks and financial institutions.

According to the article, Real estate is one of the biggest portions of wealth among Americans, especially home owners. Washington State has nearly a third of its wealth in form of real estate. As of 2003, the Washington recorded about 1.7 million homes. The ...

Abstract

This paper has identified articles in www.munKNEE.com by, Lorimer Wilson. It has analyzed the same and presented out the findings. First it presents the general economic principles associated with the article; this is followed by identification of the macroeconomic indices which are also examined into details. A discussion of the indices is followed by possible decisions or forecast that could done under each scenarios.

According to www.munKNEE.com by Loimer, some of the general economic that would relate to the article include but not limited to; a) The Phillips curve; the higher the rate of unemployment the higher is the ...

According to the Keynesian theory of recession, economic depression occurs as a result of hoarding of money by key players, like entrepreneurs and consumers in the economy as a result of fear of projected economic hardships. Keynesian emphasized that, there can be no depression as long as there is constant spending even if it a period of depression. Constant spending ensures a constant flow of income which encourages people to spend. Keynesian encouraged the United States government that whenever people tended to hoard money, it was a principle role of the government to initiate spending especially by imposing heavy bills on consumers (Alan 115). ...

Abstract

Shadow banks are broadly as nonbank financial institutions that engage maturity transformation (McCulley, 2007). The broad areas of shadow banking intermediation include: maturity transformation, credit risk transfer, liquidity and leverage. The shadow banking in China is composed of the following three distinct qualities. First is liquidity transformation, high leverage and credit transformation. The second outstanding feature is the limited regulation which does not spell out capital requirements, provisions for loan losses and the ratio of loan to customer deposits. The final characteristic is the existence of their interconnections with other institutions which makes them a source of systemic risks. (Yan ...

John Maynard Keynes is considered one of the greatest economists of the 20th century. He wrote the General Theory of Employment Interest and Money. Sheehan considers it the most important contribution to economists in recent history. He proposed policy prescriptions for saving the capitalist system from both the scourge of communism and saved it from itself. His contribution aided in driving policy after the Great Depression and the economic downturn of the 1930s. He furthered the idea that the free-market had no solutions to the sustained economic downturn. The old ways of reducing interest rates and old policy prescriptions ...

What are the Economic Benefits and Drawbacks of National Level Bailouts by International Organizations?

Identification of Problem The Greek Debt Crisis has recurrently been on the headlines of news reports for the past decade. In 2010, it can be remembered that the first set of austerity measures were introduced and implemented by the Greek Parliament in order for it to receive yet another bailout after the recent Great Financial Crisis of 2008 hammered the already recovering Greek economy down. Before the first set of austerity measures was implemented and the second bailout package was delivered, Eurozone and Euro Group officials were facing the risks of shouldering the potential losses of allowing an ...

Questions over Case Study 11.1

Identify the weaknesses in each strategy. (Hint: How do you think the bond rating agencies reacted to California’s 2003 budget?) The first dangerous strategy identified was -Delay maintenance and replacement of assets—and rely on hope (Starling, 2011). The weakness of this strategy is, in addition to posing a physical threat to the people who can be harmed by these delays, poses a very real threat to the budget. More specifically, Osborn an Hutchison (2004a) note that “avoidance becomes addictive, and the real problems fester and grow, ultimately requiring even more painful solutions (p.29)” The second dangerous strategy ...

Introduction

The world is much smaller than it used to be in many different ways. Comparative education is a process that looks at the different educational traditions in one country or culture and then compares those traditions to the educational traditions in other cultures—this is a way of developing educational theory, and a method for utilising the vast amounts of data now available to glean new insights (Bignold and Gayton, 2009). These processes look at the many issues associated with education and try to draw parallels and examine differences between different cultures and the educational experiences offered by each culture (Bignold and ...

Company History

Gucci, a renowned international luxury goods seller was founded by Guccio Gucci in 1923 Florence as a small shop that dealt in leather goods (Frisa, 2011, pg7). He later expanded the shop from a repair shop selling goods from Germany to a workshop which made the famous Gucci brands. The business greatly expanded in the following years with a large expansion realized in the late 20’s (Frisa, 2011, pg8). The sanctions imposed by Mussolini however meant that the company would have to reduce its annual growth and potential for expansion. The importation of leather was expensive and this led to the use of ...

Abstract 2

Mixed economy system and the allocation of resources 2 Whitbread and Burberry in the mixed market system 3 Fiscal and monetary policy 4 Fiscal and monetary policy impact on Whitbread and Burberry 4 A competitive environment 5 Benefits of fiscal and monetary policies for local brands in the UK 6 Conclusion 6

Works Cited 7

Abstract The research will look at how government intervenes in a mixed market system so that there is proper allocation of resources among people. The intervention from government is required so that the resources are utilized efficiently rather than only on ...

Chapter 7

Define recession and expansion. What are the beginning and ending points of a recession called? In postwar Canada, which have been longer on average, recessions or expansions? Recession: Recession is the phase in the economy during which the economic activity declines. During this period, production, employment, income and all other economic activities falls below the normal level. A country generally experience negative economic growth during recession. Expansion- After recession, the economy slowly starts to recover and the expansion happens. Expansion is the economic period during which the country’s GDP starts to increase because of increased productivity, employment, real ...

Simple interest simply refers to the extra money charged on a loan or earnings from an investment. This type of interest can be determined by multiplying the principal by rate by time which can be in years or months depending on the designated timeframe (Lewis, 1981).

Simple interest (I) formulae

,where

P-refers to the investment amount

R- is the interest rate per year T-refers to the time taken of period for the loan or investment Compound interest (A) formulae , where P-refers to the investment amount r- is the annual nominal interest

I- represents the interest rate

n- is the number of compounding periods per unit nt- Number of ...

Gesovitz reviews Michael Tomz’s influential book on the role of reputation in sovereign debt restructuring. He argues that despite evidence to the contrary reputation theories of sovereign lending still dominate scholarly output on sovereign debt. Although, he thinks that Tomz’s theory of reputation is not fully developed and is weak, he praises the empirical nature of the book and its ability to trace the relationship between sovereign lenders and borrows for a long period of three centuries (2007). This paper seeks to review Gesovitz’s treatment of the theory of reputation in the sovereign debt market. It does ...

Interest rates are the monetary compensation or the cost of borrowing given to the lender(s) or supplier(s) of funds by the borrower(s) or demander(s) of funds or loans (CMU, 2010). The terms required returns and interest rates are similar in that the lender gets compensated for the funds they provide to the borrower. However, required returns are used when referring to equity instruments (investments) like common stock, and the interest rate is used when referring to debt instruments like bonds or bank loans. There are several factors that influence interest rates. They include inflation, risk ...

Grudem’s “Business for the Glory of God: The Bible’s Teachings on the Moral Goodness of Business” gives a balanced view of how individuals are blinded to the way individuals abuse businesses and the way individuals have grown to idolize success, money and as a result, these individuals have lost sight of the fact that for every action, one must put God at the forefront of one’s life. In fact, Grudem believes that many individuals have lost sight of the fact that businesses are solely God’s belongings and not mankind’s. Wayne Grudem is an authority on the ...

While there seems to be nothing to unhinge the economic development, whether in a global or regional context, now that military conflicts are history. Countries engage in mutually profitable trade relationships and enter into trade blocs, conduct strategic planning, develop their respective economies; however, a miscalculation on the part of one country can precipitate the entire region into economic crisis that inflicts all types of damage on the productive capacity, exports, and social welfare. The Asian Financial Crisis of 1997 was one of such regional disturbances that did serious economic damage to countries like China, Japan, Indonesia, and Malaysia. The reason ...

The role of policy makers in any economy is to regulate macroeconomic activities with the main goal of maintaining economic stability. The goal of the policy maker is to maintain stability, which is significant in promoting economic growth and social welfare of the citizens. The policy makers have implemented various policies to stimulate the economy since the financial crisis when government suffered a critical national debt. They are also trying to implement a reliable strategy for balancing the government’s budget in the long- run to solve macroeconomic problems. Therefore, implementing long-term fiscal sustainability is vital for today’s economic growth ...

Executive Summary

Banks such as UK bank get the money that they lend from the deposits. The level of lending is usually dependent on the demand of the funds by the public and on the economic level of the state. When the demand for money is high, UK bank will have to check on the level of money that is circulation before it decides on how much to lend out (Sessa, 2011). It is done to reduce chances of having excess money supply into the economy that may result to the inflation. The bank can use various ways to ensure that ...