Essays on Credit Rating

IPOs

Abstract Large and small business move to expand their business by increasing funds through issuing shares. The reason to go public is that it opens up many financial doors as it raises cash. Therefore, companies trade in an open market to attract maximum investors.It can be explained in a way that if a company issued its stocks to the general public for the first time, the capital structure of the company changes that is it mainly begin to rely on debt for finance. TESCO Plc is one of those companies which in the list of world’s largest retailers. ...

The recent Brexit vote has brought about a number if tensions associated with membership in the European Union and a common European economic area. It has also put into serious question the European Project started in the post-World War II era. Please argue for or against Britain being a member of the European Union. Be sure to cover five broad areas of disagreement economics (Benefits/ Costs), political (Benefits/ Costs), Labor market (who wins? Who lose), social (costs/ benefits), and issue ofan identify? Britain a second-largest economy after Germany is a member of the European Union, has taken up a ...

Credit Risk Management

Commercial Loan Market Commercial loans are debt arrangements agreed upon by the lender (business) and borrower (financial institution) to cover operational costs or fund business projects. During economic downturn, financial institutions are cautious of their lending and consequently import strict regulations that force borrowers to pay a higher interest rate. The agreement between the lender and borrower in the market is documented in a “credit agreement.” In credit risk management, the most important components of the agreement describe the covenants, the security requirements, priority of payments and events of default.

Segmentation of Commercial Loan Market

Financial institutions use credit rating to qualify borrowers based ...

The deterioration in political and economic environment in Brazil is a cause of worry as the portfolio holds 10% of Brazilian bonds denominated in USD. If the situation degrades further, it could result in increased credit risk due of two types, either due to downgrade of credit rating by the credit rating agencies or default on the payment. Either of the situations would lead to decline in value of the bonds and affect the whole portfolio. A downgrade in bond rating would lead to increase in the yield, resulting in decline in bond value. On the other hand, there ...

Companies included in the NYSE are competing in different industries such as Ford Motor under the major auto manufacturers (Yahoo, 2016) while General Electric is operating in the diversified machinery industry (Yahoo, 2016a). However, these companies are operating on a global scale with General Electric’s customers located in 180 countries (General, 2016, p.20) while Ford separates its customers based on geographic regions such as North America, South America, Europe, Middle East & Africa, and Asia Pacific (Ford, 2016, p.8). This means that they are primarily subjected to local as well as international competitors within their operating locations.

Ford

The main ...

Significance of Accounts Receivable Practice

The most primary element for the success of a business is the way in which the systems of accounts receivable management, collections and billing are maintained. Often, this type of management collectively is known as the system of collections management. The main key to the success of this system is to manage it diligently. It is because having large amount of customers is not enough to run a successful business; revenue needs to be collected from these customers (Clarke, 2016). There are a number of reasons for a business setting up the accounts receivable in a given organization. When ...

[Finance] [Why debt security yields vary] There are numerous circumstances that influence the earnings on debt securities and make them alter. The most important of them are:

Variances in term to maturity.

The factor of liquidity. An impact of taxation. Credit risk impacts the earnings on debt securities in the next way: the higher is the credit risk, the higher are yields accordingly. It is essential to take into account that credit rating organizations charge with a certain amount of fee for estimating credit risk. Moreover, the accuracy and oversight of such rating agencies are also to be considered as an important factor. How ...

Identification of Supply Chain Risks in India and China with Proposed Solutions

Introduction As the business world is getting more complex with the rise of globalization pressures and increasing intensity of the global competitive forces, it is critical that organizations must deal with certain risks they are exposed to. Operating in multiple markets with integration into the global economy, businesses face enormous challenges and risks that not only raise the cost of doing business but also cause the loss of competitive edge in the respective market arena. It is necessary that organizations willing to expand their operational activities in other countries should anticipate different risks they are going to face while ...

Credit Risk in Retail Banking

Credit risk is defined as the probability that borrowers will not be able to make payments on borrowed funds. Credit risk combines both the uncertainty regarding the failure of a borrower to make the payments, as well as the expected time taken to make the payments . Retail Banking, more commonly known as Consumer Banking, is offering banking and financial products and services to individual investors or customers. Consequently, there are different types of credit risks involved that these institutions have to deal with. This includes cases in which a customer is unable to make the due payments at a ...

Introduction

The year 2007-08 brought nightmares for the US economy and its participants because least anyone had expected that the world’s biggest economy will cripple and face the worst ever recession after the Great Depression of 1929-1930. While Wall Street lost more than trillion dollars in value, thousands of Americans were left unemployed and the businesses, even the one who had more than 100 years of their presence in the United States, were filing for bankruptcy. On the other hand, Federal Reserve Bank, which once cited economic bubble as the natural event that cannot be prevented( courtesy the ideology ...

How does Torrington fit with the Timken Company?

Since both Torrington and Timken company operates in similar business line and industry, the acquisition of Torrington will be a great fit into Timken as the latter’s management will be able to take advantage of the resources owned by Torrington. Moreover, as stated in the case details, both companies have only 5% overlap in product offering, but the customer list overlap by 80%. Therefore, a single company will be able to create better value for its customers.

What are the expected synergies?

Since Torrington and Timken operate in similar business lines of automotives and industrial bearings, the acquisition will result in some synergies ...

Credit Risk Management Analysis

Credit risk emanates from the peril of loss of principal or shortfall of a financial reward stemming from a borrower default to repay a loan obligation. The failures to honor a contractual agreement of a loan results of a wholesale credit risk. When a borrower envisages to use future cash flow to pay a current debt credit risk will eventually arise. Then the savers will assume credit risk by way of interest payment from the borrower or issuer of the debt obligation. The wholesale credit risk, therefore, emanates from the defaulters of debt obligation that have been acquired from ...

The financial crisis in the Republic of Cyprus was a debt, financial, fiscal and economic crisis in 2012-2013, which led to the paralysis of the banking system and put the country’s economy at pre-default state. The crisis also involved downgrading the Cypriot government’s bond credit rating to negative status by international credit rating agencies. Noticeable was the reluctance to restructure the problematic financial sector of Cyprus by the government of the republic (Dixon 2). There were a number of reasons for the severe banking crisis. Firstly, the economy of Cyprus was centered around the offshore sector. Secondly, ...

Impact of the Internet on Delivery of Financial Services in Canada

Impact of the Internet on Delivery of Financial Services in Canada

Introduction

As the business world these days is highly driven by globalization pressures and increased focus on integration of global marketplaces, the rise of technology has changed the manner in which businesses carry out their activities. Specifically, such a technological revolution could be easily noticed in the finance industry of every economy or country. With an introduction of technological advancement, the nature of finance industry, particularly in Canada, has changed from holding of tangible securities to the intangible assets. People in Canada used to carry stock and bond certificates ...

Savings defines the part of income which is not spent. Savings which is economic variable defines quantifies a person’s physical quality of life and standards of living. Proper banking is effective to improve one’s standards of living. It is the obligations of banks to become creative and create an efficient banking environment in the financial market. Implementing saving habits during the earlier days assist a person and family to attain a more stable life than a person who has no savings (Cummings 2). Embracing norms of saving money is a mode of safeguarding one from protecting someone ...

Insurance Rating

Companies are rated according to their risk of defaulting credit. Credit rating agencies such as S&P and Moody use many criteria to assess the likelihood that a company will default on its debt payment. The ratings of these companies are important because it gives valuable information to potential investors, issuers and the corporations themselves. A good credit rating enables a company to raise money easily in the financial market. S&P assesses a lot of criteria before giving a rating to any company. Some of the criteria used to evaluate the companies include micro and macro regulations, ERM and the ...