Even the lowest-level managers and employees are empowered to make decisions and have that valued democratic voice. ADVANTAGES: An advantage of this form of measurement is that it tends to be more encompassing, since it accounts for all uses of capital. It is susceptible to manipulation by managers with a short-term focus, or by manipulating the hurdle rate used to evaluate divisions. The frequently occurring problem, in concern to a lack

Furthermore, the assumed 'cooperation' of these assets when put in portfolio maybe perceived differently by the manager than the reality will be which can lead to losses. On the difficulties side, first of all, the opportunity cost of capital is the hardest assumption to be drawn. Opportunity cost of capital is the expected rated of return which could be achieved from investing in a business endeavor with the same risk.

Finance Any Asset Pricing Theory forms the basic foundation of finance theory, in that it deals with the value of any asset under unknown or uncertain circumstances. The relationship between an asset and its price is the mainstay of the asset pricing theory: the lower the price, the poorer the expected performance. The Arbitrage Pricing Theory derives from this theory. The basic idea in the APT theory is that any sort

S. Legal, 2008). This is primarily due to the fact that unlike equity issues, they do not dilute shareholder's equity or suppress share price. Debt issues are typically conducted with financial institutions only, rather than the markets. However, debt issues have several disadvantages. Debt is an obligation that must be paid. The obligation is both short-term (interest payments) and long-term (principle repayment). However, the payment of this obligation is tax-deductible,

Finance Discuss some of the motivations firms have for setting up production facilities in other countries. Will the effect on the host country differ depending upon the motivation? Explain. Will the effect on the source country differ depending upon the motivation? Explain. What relationship might trade barriers (or the lack of trade barriers) have in determining a company's primary motivation for producing abroad? The reasons for the foreign investment are high profit

In short, the financial institution offered loans to virtually all customers, regardless of their ability to reimburse the loan. As the clients defaulted on their payments, the company found itself in an impossibility to recuperate its investments. Gradually, the value of its share decreased, the investors lost interest and confidence, their assets devalued and they were eventually forced to declare bankruptcy. The same situation was present and Merrill Lynch. 4.