Essays on Hedge

Company Profile

Revered as the biggest e-commerce website around the globe, Amazon Inc. is an American multinational entity engaged in e-commerce selling and cloud computing. Founded in the year 1994 by Jeff Bezos, the company is headquartered in Seattle, Washington DC. Amazon is the biggest e-retailer in terms of revenue and market capitalization. Beginning with the modest background of selling books and Blu-Ray DVD’s, Amazon today offers more than billion products and is now operating globally with presence in 19 countries. The company is listed on NASDAQ under the ticker symbol of AMZN and is also the constituent of NASDAQ ...

Yale University Investments Office: February 2011

David Swensen definition of efficient markets hypothesis: A financial market is (informationally) efficient when market prices reflect all available information about value. From the case study it can be said that Swensen believed in market timing in markets for stocks, bonds, private equity, real estates, oil and gas. Features of private equity markets that make market timing difficult are valuation, performance, regulation and the ongoing volatility and uncertainty in global markets. Based on the case analysis David Swensen would pick on option two that is a fund managed by energy industry experts with engineering undergraduate degrees from prominent state ...

Abstract

The Madoff Securities scandal was one of the biggest Ponzi schemes to hit America. This essay would examine the Madoff scandal from an audit perspective since it was the complacency (or collusion) of the auditors that encouraged the perpetrator of this scam. While the scam that was pulled by Bernie Madoff, was both large and difficult to spot, its detection also helped expose a crucial flaw that existed in corporate America at the time. This was the lack of regulatory oversight in the Securities business. While one could lay the blame for this scandal on the Regulator, another important ...

The aim of this paper is to discuss the fraud that took place in the Bayou Hedge Fund Group and its impact on the organization’s investors and creditors. The organization was established in 1996 as Samuel Israel III and a gathering of foundations and hedge funds were united as the originator encouraged them to in the long run bring $450 million up with the expectation that the fund would develop to more than $7 billion in a ten year time span. The way that the organizer utilized a portion of the cash for individual use alongside critical exchanging ...

Abstract

This paper explores the challenges faced by women in management positions in international organizations. In order to appropriately discuss the issue, background information on current related problems in the workplace environment is initially discussed. This establishes the context upon which women find themselves in a corporate world ‘built by men, for men’. Women are in a disadvantaged position since they need to maintain a balance between managing the business and taking care of the family; this is in contrast to their male counterparts who can allocate more time for their career. Within such a scenario, organizational as well as ...

PART A

Question one Apple Computer was incorporated in 1977 to design, manufactures as well as marketing mobile communication and media devices (Reuters.com, 2016). Moreover, it also sells different related software, and third party digital applications. Its products are iPhone, Apple television, iPod, Mac, both consumer and professional software applications, iOS and OSX operating systems. The Apple computers Inc. provides a variety of mobile communications, personal computing products, and portable digital players.

Question two

The operating performance of Apple Inc. relies on the general economic conditions. Therefore, for the last four years (1999 to 2002), the demand for the Apple's products has been ...

Galaxy International operates in a niche market; this is because skiing is only possible in very specific areas, and only a limited number of the population skis regularly anyway. Despite this, the company has performed outstandingly well to be achieving the level of sales with a small staff. This being said, Galaxy International needs to raise capital quickly and in an efficient way to successfully continue expanding to fully capture its full market size. By offering a unique product that is flexible yet tough, Jeremy is likely to continue to increase the volume of his sales and therefore the ...

Summary of 2016’s Top 10 Deals Terms

There is a list of companies who have made deals to join businesses in the year 2016. First, Shire Plc is to merge with Baxalta in which Baxalta shareholders are to be given & 47.50 for every share. This means that each member of the company will be allocated $ 18.00 in cash in addition to 0.1482 Shire ADS for every share from Baxalta which amounts to a total price of $ 32.00 billion. Secondly, Microsoft has entered into a contract with LinkedIn in which it Microsoft is to buy all its shares at price of $ 196 in any business deal all ...

Q1. If an asset is owned in Germany by a US company and the dollar loses value (Euro gains value) then the asset’s value would depreciate on the company’s balance sheet. Q 2. Foreign exchange risk is present because foreign exchange rates keep on fluctuating. Q 3. A currency correlation shows the relationship between the values for two currencies.

Q 4. Explain in 2 or 3 paragraphs what hedging is and explain a type of hedge? How does the hedge work?

Hedging is a foreign exchange strategy used by international traders where they aim at limiting losses and remain capable of making profits. It is therefore a way of protecting forex investments against possible losses. This is an essential ...

Abstract

Going international has stood to be the primary means by which corporations have gained access to the global markets. Beyond their home markets, companies have been able to increase their sales and growth rate following the large customer base created and greater access to capital in existence in the larger market. The emerging markets such as China have been the primary focus for the companies seeking to globalize their operations. Companies have used different financial strategies, such as bonds and stocks that finance expansion and growth in the international markets. However, an ultimate understanding of the internationalization plays a ...

The overall aim of every investor is to make a profit. There are various investment tools that are designed to meet the specific needs of the investor. Thus, depending on the investment goals and objectives, an investor can opt for an investment option that best suit his needs. There are both long-term investment and as well short term investment tools. The long-term investments are generally considered to be investments that an investor wishes to hold for a period of more than one year. On the other hand, short term investments refer to the investments that are likely to expire ...

The Boston Harber Hotel is one of the most cherished and prestigious hospitality and accommodation destination for many travelers in Boston city. It has served the service industry with memorable moments of history, recognized as a leader-service provider in the industry. The hotel is located at the historic Rowes Wharf in the Bostan's city scape. It attracts a large number of travelers in the city with a promise of variety of services. Their services range from the normal restaurant services and accommodation services. They also provide human therapeutic services such as the Spa and fitness facilities in the industry. ...

Introduction

In late 2007, the Dow Jones Industrial Average (DJIA) closed at a record low. Stock markets around the world nose-dived alongside the DJIA. Turbulence in the sub-prime segment of the US housing market, paralysis of the credit markets, excessive lay-offs in organizations, steep decline in investments etc. were all some of the indicators that the world was heading for a massive credit crunch. In the words of Mr. Strauss-Kahn, head of IMF, “Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown” (BBC ...

The City and State Where it located

Introduction The Murray Darling Basin as an ecosystem is the third largest river basin in the world and is divided into two sections that is the Darling system which is the northern basin and the Murray system which is the southern basin . The Murray Darling river basin has been a subject of concern over the deteriorating quality of its water and impact on the ecosystem services offered by the basin. This paper studies the various ecosystem services offered by the Murray-Darling basin and the respective value each of the services offers to the various components of the ecosystem. The ...

“The finance industry is multifaceted, offering a variety of positions catering to a number of different skills and interests” (Kochanek). Finance is a lucrative career option and includes several opportunities in the field of commercial banking, corporate finance, investment banking, mutual and hedge funds, financial planning, management consultancy, insurance, equity management, money management, real estate, valuation analysis and the like. The scope of the subject also includes the study of financial data and the analysis of financial determinants that affect the economic health of securities, companies, capital markets and countries alike. Job opportunities in the Commercial banking sector are ...

International FinanceName of the StudentCourseProfessorUniversityDate

International Finance INTRODUCTION

British Airways is one of the leading airlines in the United Kingdom primarily dealing with vacations and flights internationally. They have several subsidiaries and have increased their fleet to 262 planes. British Airways now has flights to 169 destinations.

Company B: Volkswagen

Volkswagen, Europe’s leading carmaker and one of the most successful global companies, reported a 95 drop in 2003 fourth quarter profits which collapsed from €1.05 billion to a plain €50 million. For all of 2003, Volkswagen’s operating profit fell by 50 percent from the record levels attained in 2002. Although the profit crash had more ...

Introduction

Since the landmark case of Enron Corporation controversy in 2001 involving the company’s bankruptcy, the public’s view of structured finance and derivatives has been tainted with suspicion of unethical exploitation. Although the legalities involving the abuse of structured finance by market participants for economic gains is still being explored, recommendations are necessary in order to minimize the impact of a market meltdown.

Defining Structured Finance and Derivatives

The term structured finance is rarely defined, but to give an example, a structured financial transaction often uses an SPE or a special purposes entity. A larger corporation uses an SPE as a subsidiary in ...

Currency Hedge

Over the few decades, the financial markets have seen explosion in the derivative markets. Even though notable investors such as Warren Buffet has called derivatives as the weapon of Mass Destruction’’, still, derivatives accounts for a market worth trillions of dollars as companies around the world use these instruments to hedge their risk exposures. Below we have discussed three traditional derivative instruments and how they are used by the companies to hedge their foreign exchange exposure:

Currency Forwards:

Currency Forwards are the derivative contracts as part of which, one party agrees to buy a predetermined amount of one currency for a ...

Executive Summary

The world experienced one of its worst recession which commenced in late 2007. One of the issues that emerged was criticism on the then accounting standards which prompted standard setters to respond. The G20 countries recommended the formation of financial crises advisory committee which developed various recommendations that led to the improvement of specific International financial reporting standards namely IFRS 10, 11, 7 and 9. Also, the recommendation led to the development of IFRS 12. These development were the key responses by the standard setters which are reviewed to demonstrate how they positively impacted the financial statements

Introduction

Towards the ...

International finance

Question 1: Uses of the balance of payment data It is used in the recording of economic transactions of the residents of a particular country to the rest of the world within a given period. Current account shows the total net amount a particular country is earning if it’s in excess or spending when in shortage. It’s calculated by net income from exports fewer payments from the imports. While the capital account; deals with the recording of the ownership of the foreign assets. It involves the reserve account and loans and investments a country and the rest ...

PRESENTATION

PRESENTATION

Oil: West Texas Intermediate Crude Oil Spot Contract with a 40% share of the portfolio. The oil is the most important commodity in the world economy. It is used as the main source of energy in the world to empower the transport of goods and people, electricity generation and the use of its physical derivatives for polymer manufacture. The oil has always been attached to geopolitical tensions in Latin America and the Middle East, a very important factor in the price of the commodity. US Dollar: Dollar Index Spot with a 25% share of the portfolio. The US ...

Derivatives

Answer 1) In case, the company use 90-day forward contract, it will be required to pay: =300000*(0.40) = $120000

On the other hand, if it go by money market hedge, initially, it will invest:

=300000/1.03 = 291262 ringits In other words, in order to accumulate 300000 ringits in 90 days, the firm will need to deposit 291262 ringits presently. Henceforth, the firm will need to borrow, 291262* 0.404= $117,670 in the spot market.

The borrowed amount will be paid after 90-days with 4% interest, and this compute to:

= 117,670*(1.04) = $122,377 Therefore, by using the money market hedge, firm will need to pay $2377 more than the forward hedge. Hence, it should go for the forwar hedge

Answer 2)

Steps to hedge in the money market a) Borrow, 4000000/1.08= ...

Essay Question: How different investor types impacts Market Efficiency

Individual investors When individuals talk regarding marketing efficiency, they simply refer to the degree to which the aggregate decisions of all participants in financial markets are accurately reflecting the value of companies and their shares at any given time (Allen and Gale, 2000, pp. 236-255). Therefore, it requires the determination of the intrinsic value of the company while providing a constant update to valuations because new information is becoming familiar. Consequently, the more a financial market becomes accurate, it will be able to price securities and the more efficient it is said to be. Thus the principle of the ...

(A case for a parent firm in a net oil exporting country with subsidiaries in a net importing country that has free market economy, politically stable, positive currency speculation and possibility of government defaulting on its debt)

Oil Prices and Exchange Rate

Oil price dynamics have a bearing on the ability of multinational to precisely model the future exchange rates. In most instances, in order to manage the foreign exchange rate risk that the firm is exposed in the international business arena, most multinational will hedge against the risks that are associated with exchange rate fluctuations. As a result, these multinationals minimize the possible ...

REFLECTION PAPER

Reflection Paper Introduction I am a student of global financial management studies at the Regents Business School in London. I actually believe this school is the best choice for training and all other finance-related disciplines. My objective is to work in the financial markets after graduating from university. Some of the areas that I want to focus on include wealth management, private equity, private banking, and the hedge funds. In other words, I am focused on developing a career in the investment banking concentrating on the high net worth individuals across the world. To gain the core competencies required ...

Risk Management at Old Mutual Group

Old Mutual risk management strategies are shaped by the potential impacts on the company's reputation, earnings, liquidity and future sustainability. They are strategic, and the companies closely monitor them. Owing to various strategic changes that the company underwent in the period under review, strategic execution risk is the principal risk facing Old Mutual. The company is faced with other principal risks including, economic situations in the country of operation, shifting credit risk across the group and currency devaluations. There are also other inherent potential risks owing to the changing customer needs, market exposures, liability insurance risks, and interest volatility. ...

BUSINESS FINANCING

Introduction Business owners and managers seeking financing encounters an essential decision regarding choice of whether to borrow money or to make use new equity capital. Given that equity and debts have very varied characteristics, each of them has different effect on cash-flow, earnings, and taxes as well as on balance sheet. They also have different impacts on any company`s dilution, leverage as well as a host for other financial metrics by which companies are measured. Lastly, each business financing options presents a different kind of relationship in relation to the financing source. Thus, a company`s plan on ...

Introduction

Graham and Harvey surveyed about 4,440 firms chief finance officers, and only 392 reviews came back. Large enterprises rely primarily on present value methods, capital structure and capital asset pricing models whereas small businesses likely use the payback period technique (Graham 12). Companies are more concerned about sustaining financial flexibility, healthy credit rating, stock appreciation, and EPS (earnings per share) dilution, especially when the entities are issuing equity. Little evidence was also found that organizational executives have a great concern about asymmetric information, personal taxes, free cash flows, and asset substitution. There is also some support for trade ...

Introduction

Failure to regulate the derivatives market during President Bill Clinton’s and President Bush eras contributed to the economic crisis that hit the U.S in the year 2008. “The Warning” is a documentary that was aired on PBS Frontline in 2009.In the documentary, a former Chairperson of the Commodity Futures Trading Commission (CFTC), Mr. Brooksley Born talks of her attempts to control the derivatives market while she was at the helm of the CFTC. She says that these attempts failed and legislation was passed to prevent her and the CFTC from regulating the derivatives markets. The passing of this ...

China Stock Market and Currency

Shanghai Stock Exchange (SSE) is one of the largest stock markets in the world. The market has over a thousand listed companies, over 6700 listed securities, and over 1100 stocks. Chinese stock market has witnessed sporadic growth that is fueled by the fast economic growth that has been witnessed over the last thirty years. The economic growth was driven by the adoption of various economic reforms and opening up of China to the world. China is now integrated into the global economy and plays a major role in the stabilization of the regional and as well the world economy. ...

When the Genius Failed-The Rise &Fall of Long Term Capital Management (LTCM) provides in depth insight into the world of hedge funds (Lowenstein, 2001). It outlines useful lessons to investors by illustrating the way capital markets can be severe on individuals and entities that have reduced capital markets to precise mathematical and scientific analysis. The text explores who the leading characters are, how they grew, marketed and managed the long term funds, and the factors that led to their collapse. Ideally, the author attempts to make complex financial concepts and structures easy to understand. The book provides examples suggesting ...

The book titled “When Genius Failed: The Rise and Fall of Long-Term Capital Management”, written by one of the famous financial journalists, Roger Lowenstein gives an account of how the 1998 collapse of Long-Term Capital Management (LTCM), a hedge fund panicked the financial markets . The author explains in his book about how banks relied on various brand names that have been established LTCM through its partners and how lenders were ignorant to the assets and strategies of LTCM. He illustrates several examples that suggest the models, strategies and trades used by LTCM, thereby offering valid reasons as to how ...

There are those who would justify the enslavement of humans by pointing to the enormous amount of wealth generated through that enslavement and that that enslavement was a sacrifice to which blacks willingly, though unwittingly, took part. If that were a valid assessment of the enslavement of so many for the benefit of so few, then its validity would sit on the testimony of those who were enslaved. However, that testimony, as found in Fredrick Douglas’ Narrative of the Life of Fredrick Douglas does not support such an outlandish premise. On the contrary, Douglas’ Narrative witnesses the atrocity that ...

Modeling Exchange Rates

Oil price dynamics will have a bearing on the ability of multinational to precisely model the future exchange rates of the foreign exchange in the countries that they operate. In most instances, in order to manage the risk that the firm is exposed in the international business arena, especially on the foreign exchange rate, most multinational will hedge against the risks that are associated with fluctuations in the exchange rate thus minimizing the possible negative effect that a firm may experience (Jain, 2007). Therefore, in order to take a position in hedging facilities such as currency futures, the firm ...

International Finance

1 a. Discuss the corporate control of your business. Explain why your business in Mexico is exposed to agency problems. b. How would you attempt to monitor the ongoing operations of the business? c. Explain how you might be able to use a compensation plan that limits the potential agency problems? d. Assume that you have been approached by a competitor in Mexico to engage in a joint venture. The competitor would offer the classroom facilities (so that you would not need to rent classroom facilities), while your employees would provide the teaching. You would split the profits with ...

Situation

Speculative Strategy: Currency options Option premium = 1,000,000 × 0.0005 = $500 As shown by the diagram, currency options will help ABC Corporation to mitigate the currency risk. It is speculative since it not only protects the firm from unfavourable movements in the exchange rate but also gives it an opportunity to gain profits. It protects the company from downward movements in the exchange rate since the minimum it can receive is $9,200 irrespective of how low the rate falls. However, the gains from forward exchange rate movements are not limited. If the exchange rate is more than the ...

Catalyst Investors, mid-tier hedge fund located at 711 Fifth Avenue Suite 600 New York, is the firm whose employee evaluation form is used to carry out the study. Catalyst Investors use Behaviorally Anchored Rating Scales (BARS). Behaviorally Anchored Rating Scales (BARS) are descriptive in nature, such that the evaluator is required to rank the continuum of descriptive statements relating to behaviors ranging from the least effective to the most effective behavior relating to a given task which the employee possess (Aiken and Lewis 173). Through the ranking, the evaluator will identify which scale best describes an employee.

The Scale Used

. Behaviorally Anchored ...

Introduction

In his book “ When Genius Failed,” Roger Lowenstein`s fundamental argument is that the events and the activities that occurred at the Long Term Capital Management hedge fund ultimately acted as a trigger or precursor to the 2008 Global Financial Crisis that occurred 8 years after the fund`s winding up. Throughout the book, Lowenstein gives a detailed account of the formation, growth, expansion and ultimate fall of the fund which was founded and run successfully for 5 years by John Meriwether. Although Lowenstein does not make any specific reference to the 2008 financial crisis since after the entire ...

The book chosen for review is considered to be one of the most important for understanding the complicated system of derivatives and general reasons of economic crisis. When genius failed: the rise and fall of long-term capital management is the book written by financial journalist Roger Lowenstein who has written articles for the "Wall Street Journal" for more than two years. He has published three books and also initiated various publications for "Smart Money" and "The New York Times". The work When genius failed: the rise and fall of long-term capital management provides readers with fundamental basis for deep ...

Coca Cola most recent financial statements for the year the fiscal year ended 31st December 2015, addresses foreign currency exchange risk in Item 7A. Quantitative and Qualitative Disclosers about Market Risk (Coca Cola, 72). The company faces significant foreign exchange risk because it operates in 72 currencies and earns $23.934 billion from operations outside the United States (Coca Cola, 72). Coca Cola operates in over 200 countries and faces three types of foreign exchange risk, transaction risk, translation risk, and economic risk. The company manages its foreign exchange rate risk on a consolidated basis. The transaction risk is the ...

Forward Hedge

Spot rate US$ 0.74 Forward rate US$ 0.76 US $ received = 800,000*0.76 = US$ 608,000. If Novena Ltd. takes the forward contract they will exchange the Singapore dollars at the agreed forward rate of US$ 0.76 per Singapore dollar. Under the forward hedge Novena Ltd. will receive US$ 608,000.

Money market Hedge

Step I Borrow in foreign currency 800,000/ (1.07) = SGD$ 747,663.55 In the first step Novena Ltd. Should borrow in Singapore dollars. The amount of money borrowed should be the present value of the expected receipt discounted at Singapore borrowing rate. The present value of SGD$ 800, ...

Article Review of Hedge Clipping

Article Review of Hedge Clipping The major issue that is being investigated in this article is about risk management as a result of clipping the hedge. Moreover, the article has presented several advantages of hedge funds over other financial institutions such as banks and brokerage companies. That is hedge funds are not regulated by the SEC, and this provides them with a considerable latitude for investing the money of their customers. This article applies the financial data between the years 1996 to 2003 because from the article; it is clear that Malkiel and Atanu examined the data between 1996 ...

Net receipts

When the exchange rate is GBP1 = EUR1.37

Option 1: Forward contract

We subtract the forward points from the spot rates since the bid forward point is greater than ask forward points. Beck Plc. will have 8.5 million euros hence it will buy British pounds at the ask rate. Amount receivable = 8,500,0001.4047 = GBP 6,051,114.11 Net amount received = amount receivable – forward contract cost/premium = 6,051,114.11 – 0 = GBP 6,051,114.11

Option 2: Option hedge

We use a put option since it is a receivable. The spot rate is more favourable than the exercise rate hence Beck Plc. will not exercise the option. Amount receivable = ...

Hedge fund is the type of investment with relatively low regulating policy. This investment has much more flexible strategies. Most of hedge funds act in the way of borrowing money to increase the risk of investments. They also seek to find short-selling practices that mutual (traditional) funds would rarely use. Most of these practices are usually considered as speculative ones (SEC, 2013). John Cassidy investigated the issue of “funds of funds” and how they work in his article “Hedge Clipping” (2007). First, the number of hedge funds significantly increased over the last 15 years. The biggest of them: Citadel ...

Sarbanes Oxley Section 806 and Whistleblowing

This section of the SOX protects whistleblowers who are working at publicly-traded firms or those who are contractors and subcontractors of these firms. These individuals who provide information about trading, securities, shareholder, bank, accounting fraud are protected under this section even if the whistleblower has not actually given information about the fraudulent acts. The protection is in the form of the prohibition of any retaliatory act on the part of the company on the whistleblower, and if the whistleblower is relieved or terminated, he or she is entitled to reinstatement, lost wages and special damages (Zuckerman Law, 2016).

Dodd-Frank Wall Street Reform and Consumer Protection Act

This ...

Introduction

The industry of finance offers a huge number of options for the upcoming professionals who can easily exploit their potential and make the most from their skills, choosing what suits according to their interest too. Corporate environment though seems ambiguous and challenging but a good initiate and deep understanding of networks can bring an individual to a position where he can introduce dramatic increases to the value of a company and reduce corporate risks with good knowledge of techniques, derivatives, and models (Sapienza et al, 2009). By knowing the attractive features of a position and analyzing the business thoroughly, ...

A Review of “The Importance of Asset Allocation”

The article talks about the importance of asset allocation policy, and how much of the total return comprises of return due to asset allocation policy. The article starts off by illustrating the previous studies done by Brinson, Hood, and Beebower (BHB 1986), Hensel, Ezra, and Ilkiw (HEI 1991) and Ibbotson and Kaplan (2000). These studies are considered one of the main milestones in determining the role asset allocation plays in achieving a higher return. The article points out that although BHB study had pointed out that over 90% of the variation in total return is due to asset allocation, ...

Sovereign wealth funds (SWF) are government funds that are established for investment purposes. These funds derive their finances mostly from the natural resources available in a country such as oil and gas. Merrill Lynch in a bid to assuage their financial shortcomings engaged various SWFs, namely Mizuho Corporate Bank and Korean Investment Corporation in an investment deal. Mandatory convertible preferred stock in the value of 6.6 billion was issued to these particular entities. In connection with these several other agreements were struck. The private placements were entitled to a 9% dividend per annum, a convertible premium of 17%, maturity ...

Business Advice

Abstract Endowments funds are investment funds or financial assets that are donated to academic institutions like universities, NGOs, hospitals and churches. Endowments are generally invested by the fund management teams of the institutions into investment vehicles like real estate assets, equities, bonds and investment funds to generate an extra inflation adjusted income which helps in further asset formation and meeting the ongoing operational costs. XYZ University has decided allocate a portion of its endowment fund for direct investment in commercial real estate. The investment committee needs to take the decision by evaluating the options available in commercial real estate ...

Definition

After the wave of industrialization, wherein factories dominated the landscape and manufacturing was the means by which companies grew, globalization became a byword. Globalization, in simple terms is the internationalization of business, of the products and services attached to it. Globalization is a result of the accessibility of travel, further enhanced by technological advances, which renders physical barriers as non-constraints but simply as geographic facts. Along with this kind of development, businesses were forced to adapt their reach to a global audience, else be devoured by more able competitors. Thus, global strategy was born. Global strategy is defined as ...

About the report

The report is commissioned to discuss the possible financing options for Outdoor Limited which is currently seeking external funding for expansion purpose and is also likely to face liquidity issues once three of its five investors, liquidate their holdings. Henceforth, each of the possible sources of funds will be evaluated considering the present situation of the company The second part of the report will be used to discuss the tools of foreign exchange risk management as the company is exposed to FX risk, citing an outward transaction as part of which it will be paying $2 million in six ...

Executive Summary

The following report provides a detailed and exhaustive description of asset classes according to their characteristics and related advantages and disadvantages. Consequently, the paper considers 5 most important asset classes, including both local and international shares, bonds, cash and listed trusts. Further, according to the given statistical data regarding the levels of revenue of these classes of assets, the author conducts corresponding calculations evaluating their average profitability and effectiveness in investment portfolio along with clarifying what exact type of portfolio should be conducted for an investor operating with these securities in order to achieve maximum level of revenue with ...

DQ 6x

Q1: The principal considerations of a board of directors in making decisions involving dividend declarations There are three principal considerations of a board of directors in making decisions involving dividend declarations: the dividend policy; the type of dividend; and the source of dividend. Dividend policy: The Board must decide between two main policies in dividend declaration: progressive policy and payout ratio policy. Progressive policy may be in any of the three common methods: (1) increase or at least sustained; (2) increasing steadily (at a defined rate); and (3) increasing in real value (Financial Reporting Council [FRC], 2015). Conversely, payout ...

Business proposal Research Tools

Business proposal Research Tools This paper evaluates different business research tools, summarizing the major contents of the materials and the effects thereof to business performance.

Part 1

The article evaluates the different forms of firm ownerships and the inherent benefits thereof. The subject of the research compares hedge funds to private equity funds and there implications to the stakeholders. From the article, it is important that ownership structure changes alter net returns markedly. For example, there is an abnormally positive result from trading when the firm is under equity partnerships compared to other structures. Mietzner & Schweizer, (2014) concludes that private equity ...

Introduction

JP Morgan realized huge trading losses in 2012 owing to an investment transaction, which was carried out through its London office. Under the watch of Chief Investment Officer Ina Drew, who later stepped down, there were a series of unscrupulous statements made by this company with intent to induce unsuspecting customers into making investments regardless of considering the financial position of the company. Some of these machinations included credit default swaps (CDS) being entered and represented as part of the bank's "hedging" strategy. A trader, Bruno Iksil, famously known as the London Whale, accumulated many CDS positions in the ...

About the paper

The paper is commissioned to discuss the short-term debt scenario, foreign exchange risk management process and trends in the financial ratios of Arrow Electronics Limited. In order to achieve a desired outcome in the paper, we will comprehensively analyze the financial statements and accompanying notes provided in the latest annual report of the company, so released on 5th February, 2015.

Advantages and Disadvantages of sources of short-term finance

i) Bank Loans

Advantages:

No dilution of ownership Tax advantages because of interest deductibility No interference in managerial decisions Option to opt for fixed or adjustable interest rate loans Disadvantages: High cost of debt Obligation to pay timely interest and ...

Question 1

Finance is a discipline that describes creation and management of money, credit, assets, liabilities and investments. The creation and management of the various elements in finance are governed by various laws. Most financial assets and liabilities are created through contracts. Lawyers have to be involved in formulating and enforcing contracts in various finance platforms. Therefore, lawyers need to understand finance in order to understand to know how to formulate contracts in finance, interpret existing contracts as well as advise their clients as regards their rights and obligations that arise from financial contracts. The law affects finance from a legal ...

Today, almost seven years after the financial crisis that threw America into upheaval in 2008, the effects are still being felt. In September 2008, the collapse of Lehman Brothers, a global bank, nearly caused the collapse of the financial system of the entire world. What resulted was the worst economic downturn seen by the world since the Great Depression, 80 years ago. The event has been called the Global Financial Crisis and the 2008 Financial Crisis; the period following the collapse became known as the Great Recession.

While the ...

AS 39 is used for an in-depth analysis and dictation of the principles that measure financial assets and liabilities. It also recognizes what contractors would use for the transactions involving assets that are otherwise not financial. IAS 39 for financial instruments came to be as a result of the international accounting standards board. Ideally, a financial instrument is identified when a contracting party becomes allied to the provisions of the instrument at a given time. The IAS 39 comes into play as a measuring factor for the value of such an instrument. It classifies the instrument into the respective a category that is dependent upon ...

IAS 39 Financial Instruments, comprising of recognition and Measurement is an accounting standard used internationally for financial instruments. It was released by International Accounting Standards Board (IASB). Its main purpose is to outline requirements that were needed for the recognition and measuring of financial; assets, liabilities and contracts that are used in the buying or selling of items that are non-financial. The instruments become recognized when the entity becomes a party. IAS 39 came into use on December 2003 and applied to the annual periods that begun on and after 1st January 2005.

It would be swapped and interchanged ...