Financial Market Essays (Examples)

While this strategy is effective in some situations, the use of bond markets by an investor requires the development of an effective strategy that will help him/her to achieve a specific financial objective. For an investor seeking to maximize the profit-generating aspects of bonds, the most effective strategy is a passive buy-and-hold bond strategy. As the name suggests, it involves buying individual bonds and holding them until maturity. The effectiveness of this strategy in achieving the stated financial objective is that it lessens or eliminates transaction costs and lessens risks linked to income changes from embedded options.
Conclusion:

Financial markets and institutions play a crucial role in the growth and stability of America's economy as well as global economies. These markets and institutions are characterized with various financial transactions and different types of markets. However, the ability of economic growth and stability is dependent on the effectiveness of the regulatory body.

eferences:

"Capital…

Markets
stock markets struggled towards the end of the month in April. Yousuf (2012) reports that the Dow Jones Industrial Average was flat for the month, the S&P 500 posted a minor loss and the NASDAQ dropped 1.5%. All three indices were down for the final week of the month. One of the reasons why the markets struggled during the week was that a report revealed that the GDP grew at 2.2%, a slower rate than was expected by some observers (Censky, 2012). The report also noted that the GDP was being dragged down by government spending cuts. There was a report on Thursday from the Boston Consulting Group that investment banks would need to cut employees in order to achieve profitability targets, in part because the market for deals is generally down, and expected to stay that way (Reuters, 2012).

Despite the economic weakness, there were some deals that helped to…

Financial markets and securities are very important to business and to society in general. It is therefore worthwhile to examine the relationships that these terms have with each other. The purpose of this essay is to highlight and explain some of the important factors of financial markets and their relationship to the business sector and the economy in general. I will first define the key terms involved before demonstrating the inter-connectablity of these important and relevant ideas.
Investopedia defines financial markets the following way: "Broad term describing any marketplace where buyers and sellers participate in the trade of assets such as equities, bonds, currencies and derivatives. Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade." Using this understanding of the term, many different types of institutions can fall under this umbrella of meaning.

Large and…

Financial System
financial markets are the places where capital exchanges hands. Those with capital to invest are able to invest in businesses that are seeking capital. The same occurs with financial institutions as intermediaries. The result is that the economy benefits significantly from this arrangement. People with good ideas are able to raise capital in order to bring those ideas to market. For businesses, the U.S. financial markets are a source of investment capital that helps them to grow. ith a wealth of financial options at their disposal, businesses are able to thrive. U.S. financial markets also benefit individuals. As consumers, they benefit from having the choice that results from a strong business community. As investors, the U.S. financial markets give them places to earn a return.

The U.S. Federal Reserve plays the role of the central bank of the country, the regulator of the financial system and seeks to manage economic…

Financial Markets
In their seminal 1989 work, Kopcke and Rosengren posed the question "are the distinctions between debt and equity disappearing?" They noted several challenges to the historical distinction between the two, including new instruments that combined elements of each (e.g. preferred shares, warrants, mezzanine financing) and an increased use in derivative securities. They noted that debt instruments were beginning to incorporate equity-like features, in response to market demand for such innovative forms of financing. The authors also note that in the U.S. At least the tax code and regulatory environment was not keeping up with the changes, contributing to the proliferation of hybrid securities. On closer examination, however, none of these changes indicates a fundamental change in the nature of debt or the nature of equity, simply a change in market preferences. Hybrids have not eliminated or even materially altered debt or equity, they have simply offered the market alternatives.

Damodar…

Interest rates are very low in the U.S. right now, and this should mean economic expansion. The U.S. is the largest single national economy is the world, so how the U.S. performs in terms of its economics is an important thing for the world. Growth in the U.S., spurred by low interest rates, should mean growth elsewhere as well, since the U.S. can buy more products from those countries and sell more products to them, too. If the economy begins to grow too quickly, the Fed will have to lower interest rates in order to slow down the pace of growth.

For companies that are looking to overseas markets, it is important to remember that there are foreign exchange issues. Foreign exchange rates are volatile, and this means that companies need to pay attention to how those rates move. A rate change could mean that something is either more profitable or…

The cost of these funds and funds availability continue to go down due to the competition taking place between these savings and earnings channels. The joining of two distinct parties in investing and growth through financial intermediaries is mostly completed via a financial institution supported by Federal Deposit Insurance Corporation (FDIC).
In the financial intermediation process, financial institutions play a key role by channeling monies from loans and savings to needs of individuals, businesses and governments. As individual persons and businesses save their monies at financial institutions, their accounts normally collect transaction or account maintenance fees. The transaction or account maintenance fees are in turn given to another investment opportunity. A clear example of this is that the money collected from a bank's patrons is used as the bank's money for loans or mortgages.

As mentioned earlier, banks are not the only types of financial intermediaries as other organizations can as…

He said that the application for Hong Kong Airlines was to list as a so-called "red chip" (overseas registered Chinese company) that had been approved by the State Council. They way, Grand China, which just two years ago called off a share sale plan due to the global economic crisis, is also the parent company of China Xinhua Airlines, Changan Airlines, and Shanxi Airlines ("Two airlines target," 2010)..
Hong Kong Airlines currently operates 18 aircraft and runs more than 30 routes which include routes to Beijing, Denpasar, Shanghai, Tokyo and Moscow. It also planned to use its IPO finances to fund its aircraft acquisitions. The company had ordered some 33 wide body Airbus aircraft for over a sum of $6 billion, according to Yang (ibid).

The Cathay Pacific Airways Slowdown.

Already, we noted above about the planned delivery of two additional 747-8F freighters from Boeing to Cathay Pacific Airways has been pushed…

The PowerPoint on inflation states that inflation takes place when prices rise across the board in the economy; oil prices going up can influence many other consumer items. And in the Financial Markets PowerPoint, it points out that depository institutions (banks) need capital so they can make loans. But in the Times' article, writers explain that in recent weeks there have been "...a string of unpleasant reckonings for major all Street banks." Several big all Street banks have had to "...slash billions of dollars from balance sheets to account for losses in the mortgage market."
hat that means is that many people are not able to make their mortgage payments, so the money banks have loaned those people cannot be repaid to the banks, and hence, the banks write off lots of money. This is a sad state of affairs, and one wonders what the Bush Administration is going to…

Financial Markets and Institutions
ole of Financial Markets

Financial markets play a significant role in creating wealth in the United States. At the heart of this role is that financial markets facilitate the economically efficient allocation of capital. The holders of capital need places to invest that capital in a way that earns them a return, but they do not always have the best ideas with respect to how to use that capital, nor the skills to do so. There are others who have ideas and skills, but lack the capital to maximize those. Financial markets allow for those with capital to allocate their money to those who need it, and those who need it to acquire it. With opportunities to invest, and opportunities for ideas to come to life, the economy benefits significant. The more efficiently the financial markets can allocate capital, the more they will help the economy to grow.…

The decision of investing or not here then depends on the personal adversity to risk of each individual investor. The general theory states that each investor should construct a diversified portfolio, which adequately balances high risk-high gain shares with medium or even low rates of risk and gains (Hagin, 2004). New Zealand could then be assimilated with a medium risk-medium gain share, and as such would be perceived as a valuable addition to one's portfolio. In this order of ideas then, the recommendation would be that of investing in the country.
eferences:

Amadeo, K., 2009, An Introduction to the Financial Markets, About, http://useconomy.about.com/od/themarkets/a/capital_markets.htm last accessed on December 17, 2009

Hagin, ., 2004, Investment Management: Portfolio Diversification, isk and Timing -- Fact and Fiction, John Wiley and Sons

Healy, J., 2001, New Zealand Capital Markets, Ministry of Economic Development, http://www.med.govt.nz/upload/18163/healy.pdf last accessed on December 17, 2009

Malkin, B., 2009, Financial Crisis: Australia and New Zealand…

functions of financial markets and discusses why a dollar tomorrow cannot be worth less than a dollar the day after tomorrow. Furthermore, the paper explains the cash flows associated with a bond to the investor. And discusses the term "price-earnings (P/E) ratio." In addition, the paper discusses the certainty equivalent approach to estimating the NPA of A project and discusses the problems associated with capital investment process. Lastly, the paper contrasts and compares capital budgeting and strategic planning assesses the agency problems associated with capital budgeting.
Explain the functions of financial markets

The existence of the financial market is just to help and maintain the relations between the users of the capital and the providers of the capital. They also provide an opportunity for both the parties to do transactions with mutual benefits. It is there so that the investor and the investment can do the business smoothly and at ease.…

International Financial Markets and Institutions:
Throughout the globe, today's landscape of international financial market and institutions has continued to experience several changes that require practitioners to examine new models. The need for practitioners to examine new models that are relevant to the state of these markets and institutions has also been necessitated by the recent events that contribute to financial crises, which have been very dramatic. Actually, the recent financial crisis has had significant impacts on the financial institutions and markets resulting in the need for changes. International financial markets and institutions have become an important aspect of economies because they affect daily life. This is primarily because they involve the huge flow of different types of funds in the entire economy that in turn impact the profits of businesses, production of goods and services, and economic well-being of countries. In some cases, the events in these institutions and markets become…

" The code also states when communicating investment information care must be taken to ensure that it is fair, accurate and complete as well as make full and fair disclosure of all matters that could reasonably be expected to impair their independence and objectivity or interfere with respective duties to their clients, prospective clients, and employer.
Evidence indicates Lehman's senior financial executives knew of the Repo 105 transactions and certified the accuracy of Lehman's financial statements and disclosures despite having full knowledge that the company had engaged in the use of these transactions to hide their toxic assets and make their financial statements appear to be in good health when, in reality, they were not. These executives were fully aware that the financial statements were misleading and did not fairly present the true position of the company.

Hiding toxic assets and releasing favorable financial statements to investors each quarter clearly was intended…

Investors from all over the world sunk money into Dubai-based projects, including those of Dubai orld. The global financial crisis, however, has slowed the Dubai economy to such a degree that it can no longer meet its debt obligations. Global investors who had been counting on high returns at relatively low risk are now seeing the value of their debt holdings diminish.
The fluid movement of capital around the world has allowed for thousands of powerful investors to put money into Dubai's economic development, which spreads the risk of such development around the world. Thus, when Dubai's economy falters and the state-run company cannot pay its debts, it reverberates around the global financial markets, which now must deal with Dubai's apparent lack of creditworthiness.

orks Cited:

Giddy, I. (1993). Global Financial Markets. Boston: South-estern College Publishing.

No author. (2009). Standing still but still standing. The Economist. Retrieved November 27, 2009 from http://www.economist.com/businessfinance/displayStory.cfm?story_id=14977157

capital fall if financial markets are no longer segmented? What evidence is there of this effect?
Up until the mid-1940's markets where knows to be restrictive in cash flow movement, this in combination with tax and transactional barriers on ownership by foreign entities meant that equity markets were not developed. They were in fact marked with low liquidity, not enough regulation and inconsistent disclosures.

If capital markets are segmented, then investors can only invest domestically. This means that the market portfolio (M) in the CAPM formula would be the domestic portfolio instead of the world portfolio.

This equilibrium had banks, securities market and capital markets as the primary source of finance. The localized source of finance meant that domestic investors were they only players in the market with most shares, resulting in high cost of capital.

1970's brought on the liberalization of markets in the developed countries which resulted in the eradication of…

China for instance, which was more protective and where the government was more involved in the regulation of the financial sector, feels the economic repercussions to a lesser degree (Batson, 2009).
3. Avoid over-inflation of prices

The root cause of the sub-prime mortgages was the necessity for people to buy houses at unrealistically high prices. As a future recommendation then, better controls should be instated not only within financial markets, but within all sectors. The scope of these controls would be that of ensuring that the retail prices implemented, within the real estate sector as well as in any other industries and sectors, are realistic and pegged to the true costs.

4. ecognition of mistakes (or their possibility) and acceptance of the role of others

The United States perceives itself as the most powerful and developed nation, which it is, but we do seem overzealous at times and do not accept the possibility…

27-29) This provoked financial demands and awareness of the people in different parts of the world. People and businesses are dissatisfied with the traditional financial systems due to lack of opportunities for investors. Businesses today require more diversified portfolios for investments because this will reduce their investment risks and increase the probability of future capital flows.
Increased capital mobility has increased the importance of exchange rates which is serving as a monetary policy channel in some industrialized economies. In mid 2000s, there was a sharp shift in the flow of international investments and savings (geographic pattern) resulting in the segmentation of current account imbalances. This was also a major contributing factor. Additionally, the domestic financial markets were also affected by the change in regulatory environment. The two important factors for this are as follows:

1. apid growth of OTC (over-the-counter) markets of derivatives in terms of complexity as well as volume of…

ecession
Effect of the recession on upon financial market, the real economy and over everyday lives

ecession is defined as the economic slowdown or decline characterized by slowing down of trade, a magnitude decline in the GDP, and a decrease in employment usually lasting between 6 months to a year. This was the situation in the U.S.A. The hardest times being from 2008 through 2009 and the early months of 2010. America is still recovering from the effects of the recession that the country experienced from 2007 to 2009.

The slow down in economy triggered a massive job loss and unemployment rates that shot through the roof, the prices went up and a great deal of uncertainty rippled through the country. This situation has now seen a reverse trend albeit at a slower rate than was expected by many. The unemployment rate in November 2011 fell by 0.4% to 8.6% unemployment as…

economic crisis in Europe and the increasing costs for European countries to borrow money and bail out other Euro countries in financial distress. The EU nations that use the Euro have experienced a crisis among certain countries with high debt requiring bailouts for Greece and Ireland and the likelihood that Portugal and Spain may also need a bailout. Postponing the restructuring of high interest debts has led to further crisis rather than resolving any of the problems faced by insolvent countries. Huge transfer payments from the more powerful Euro countries, like Germany, to the failed economies of Greece and Ireland have made investors nervous and led to less investment at a crucial time. The author suggests that the debts of troubled countries need to be restructured now in order to create a sustainable payment to increase confidence and secure future payments.
Creditors will also have to shoulder some of the…

What role do primary financial markets play in the current economy? What role do secondary markets fill? Describe the relationship between financial institutions and financial markets and suggest a method by which this relationship could run smoother. Support your rationale with at least one citation from the literature.Primary financial markets play a very critical role within the economy. First, they provide critical capital to emerging companies through the IPO process. Here, individuals with excess capital can deploy it through stock ownership of public companies. In exchange for this capital, the companies can then create further products, good, and services that ultimately benefit society. If dont properly, investors will be rewarded through capital appreciation of the stock and dividend over the course of the investors holding period. Primary financial markets ultimately help to facilitate the exchange of capital to businesses that need the capital.Secondary markets are just as important as they…

due to changes in the economical, financial, political and technological changes, the capital markets across the world are highly influenced by the changes. As compared to the past, the development in the financial sector has been observed to be at the highest rates. In order to understand and analyze the changes in the global capital markets the below report has been constructed.
Based on the theme idea, which is the change in the capital market due to many factors and elements, the report below tends to discuss and analyse the impacts of financial deregulation and capital control on financial globalization and international diversification. This will allow understanding of how these two elements are supporting the financial globalization. A part from this, the report will also analyze the role of financial innovation and advancements and technologies on international investments. Moreover, the risks and benefits that are associated with the carry trade…

ehavioral Finance and Human Interaction a Study of the Decision-Making
Processes Impacting Financial Markets

Understanding the Stock Market

Contrasting Financial Theories

Flaws of the Efficient Market Hypothesis

Financial ubbles and Chaos

The stock market's dominant theory, the efficient market hypothesis (EMH) has been greatly criticized recently for its failure to account for human errors, heuristic bias, use of misinformation, psychological tendencies, in determining future expected performance and obtainable profits.

Existing evidence indicates that past confidence in the EMH may have been misdirected, as the theory's models do not show a thorough understanding of trading operations in a realistic light.

Researchers have suggested that a variety of anomalies and inconsistent historical results demand that traditional financial theories, namely the EMH, be reconstructed to include human interaction as a key decision-making process that directly affects the performance of financial markets.

This research paper aims to determine whether or not there is a need for a refined financial model that incorporates the…

Finance
The Effect of the Eurozone Today on Global Financial Markets

Global markets are so intertwined today that what affects one is definitely going to have an impact on another. Case in point, the recent issues in Greece and other European Union (EU) countries have had a global effect and have wrought havoc on the Eurozone. Because if this global connectedness, large banks and organizations like the International Monetary Fund (IMF) are even more important today than they were in the past.

The EU's finances are powered by the countries that have become member nations, but those finances are guarded by the European Central Bank (ECB) and the IMF. The ECB is the institution that is responsible for the Euro, the currency of the EU, and it is also the organization responsible for negotiations regarding the economic difficulties of EU member nations. Since Greece, Spain, Italy and others have had financial problems, the…

Bank of America and Merrill Lynch would have to be separated and Goldman Sachs could no longer be a bank holding company. "Commercial banks would take deposits, manage the nation's payments system, make standard loans and even trade securities for their customers -- just not for themselves. The government, in return, would rescue banks that fail. On the other side of the wall, investment houses would be free to buy and sell securities for their own accounts, borrowing to leverage these trades and thus multiplying the profits, and the risks. Being separated from banks, the investment houses would no longer have access to federally insured deposits to finance this trading. If one failed, the government would supervise an orderly liquidation. None would be too big to fail -- a designation that could arise for a handful of institutions under the administration's proposal" (Uchitelle, "Volcker," 2009).
The Volcker proposal seems sensible,…

Financial Derivatives
This study emphasized the importance roles of financial derivatives, which has been known for the last decade and its effects on the Global financial crisis. It further analyzes the impact of financial derivatives and how it can be controlled to prevent corporations from incurring a lot of risks. It also explains the existence of financial derivatives since 1970, to the recent Global Financial Crisis which occurred in the 2006.

Risk is a feature associated with all productivity. As a result, financial markets adjust themselves to the fluctuation of exchange and interest rates. Hedging risk, these corporations highlight the importance of risk management tools known as Derivatives. Derivatives are defined as financial tools providing investors with effective solutions when avoiding risk caused from market volatility (Dodd, 2006). Financial derivatives are considered to be an effective risk management tool associated with Financial Engineering creating solutions to financial problems (Marks, 2010). In this…

Financial Analysis of Lehman rother
Lehman rothers

The history has been full of financial collapses and financial scandals and one of the biggest financial collapses that a company has ever seen was that of Lehman brother. The collapse of a firm as huge as Lehman rother and a firm which has such great experience of over a hundred years lead the world into a shock. It created doubts in the minds of people regarding the condition of other financial institutions. The history of Lehman rother is rich which is further discussed.

The history of Lehman rother dates back to 1844, when a boy named Henry who was a 23-year-old son of a cattle merchant who immigrated to the United States from Germany and he settled in Alabama State of the United States where he opened dry goods store. In 1847, when Henry Lehman's elder brother arrived to Alabama, the firm expanded to "H.…

S. Treasuries (Gjelten, 2009).
What hasn't happened "officially," i.e. The establishment of a formal IMF SDR world currency system or some other form of a supranational currency, seems to be occurring in the market anyway, but just in a more informal fashion. For instance, already central banks throughout the world are favoring euros and the yen over the dollar as illustrated by the following numbers (Euro, yen to replace dollar as world reserve currency, 2009). During July through September 2009, banks put 63% their new cash into euros and the yen. As a result, the dollar's share of new cash in the central banks was down to 37 compared with approximately 67% a decade ago. Currently, according to the IMF, dollars account for about 62% of the currency reserve at central banks -- the lowest on record (Euro, yen to replace dollar as world reserve currency, 2009). Further, if China itself…

3.2.3 Portfolio Diversification of Investment in Global Property Markets

ecause the global property markets are affected by globalization and specific country / regional factors, means that the overall amounts of risks will vary, the most notable include: transparency and efficiency. Where, each country / region has different on laws and regulations pertaining to the real estate markets. This means that the risks in a number of different markets will depend upon specific market conditions themselves, reflecting these two factors. To protect themselves against these kinds of risks, many investors will often seek to diversify their portfolio. Diversification is: when you are investing a number of different asset classes in real estate, across a variety of countries / regions. The idea is that if a risk occurs in a specific country or region, the other areas that you are diversified in will protect you against the severity of the declines. For example,…

Market Efficient espect Set Information Impossible Makes Abnormal Profits
Market Efficient

In his work, Fama argued that given the massive use of resources by the brokerage firm to conduct studies on trends in the industry, the effects of changes in interest rates on corporate balance sheets and expectations of managers and/or political analysts of the companies should be able to systematically beat a generic portfolio with the same risk characteristics.

Since, according to Fama, professional in every situation, the analyst has a fifty percent chance of beating the market; although its specific capabilities did not exist he would beat a lot of the market. The analyst did "help" the market to be efficient if all the investors, in fact, would hold portfolios composed of stock indices, would open up significant opportunities for professional traders to take advantage of the situation. But the movement of traders to that "new market" would mean that the…

eport: 2

The developments of credit derivatives began in 1980s as a new financial innovation after the swap market started. Swap market provided derivative organizations with profit due to their intermediary position while the credit margins for borrowers were reduced. As the swap market developed there was the development of new interest derivatives so that there were additions to the list of products. Credit derivatives are relatively recent introductions and these are mechanisms for the credit institutions to separate the credit risk from their loans and treat market risk as a separate category so that their pricing efficiency could be more competitive and the concerned organizations could be more competitive in the market. (Credit Derivatives Move Beyond Plain Vanilla)

Thus one can say that credit derivatives are a recent form that can be used by bankers to reduce risk, or increase risks and thus meet their corporate objectives. The general form of…

Financial Analysis
Electronic communication has increased the availability and speed at which financial information is made public. Announcements and stock prices are made available in real time. Aggregated and historical information is widely available on information aggregator sites like Yahoo Finance. Annual reports are publicly available, and securities regulators insist that they be made publicly available.

The increased availability of financial information about companies serves to improve both the transparency and liquidity of financial markets. Investors of all types and abilities now have access to the information that they need to make information decisions. That all companies must produce consistent financial statements according to GAAP also helps with the transparency of financial information. ith easy access to this information, investors can become more educated and more confident. Ultimately, this improves investor confidence in the system and liquidity in the market, improving the market's function.

Because publishing this material improves the function of capital…

Financial Development
Every country has a different level of financial development. The World Bank uses four measures of banking development: depth, access, efficiency and stability. An international banking conglomerate considering expansion will want to understand a country's local banking conditions in order to have the most informed view, to help with making the expansion decision. In this scenario, the countries being evaluated are the United States, Saudi Arabia, Brazil, India, South Africa, Iran, China and Turkey. This report will analyze the banking systems of each of these countries against the World Bank criteria.

Basic Economic Conditions

Before investigating the banking systems in each country, a brief overview will be provided of the prevailing economic conditions in each nation. The size of the economy, measured by GDP and by GDP per capita, is related to the market potential for a bank to enter the country. The more money there is a country, the better…

Coefficients reflect to a rate of change in the dependant variable which leads to one point change in dependant variable. For example, coefficient of -0,05 infers small negative influence of this explanatory variable on the dependant variable, while coefficient of 1.5 implies that 1.5 rate growth of this variable will lead to positive growth by one point of the explanatory variable.
The results of the regression model are as follows:

GDP ($, billions)= 568.04 + 16.07*Interest_ate + 1.19*Disposable_Personal_Income -64.75*Personal_Savings_ate + 0.5*Personal_Expenditure_On_Nondurables - 0.26*Personal_Expenditure_On_Durables.

Coefficients

Standard Error

Stat

P-value

Intercept

1.384E-16

Interest rate

4.089E-13

Disposable Personal Income

2.327E-88

Personal Savings ate

5.196E-34

Personal Expenditure Nondurables

1.085E-05

Personal Exp Durables

The result suggest, that autonomous value of the GDP is rather high, or that explanatory variable that has big negative affect on GDP was not included in the model. Interest rate has the biggest positive affect on the GDP, while simple calculation of correlation between these two variables reflect large statistically significant negative correlation of -0.77.But the P. value…

For example, if spending is encouraged, in the form of lower interest rates, then inflation is likely to grow, at least in the short-term, before the government has a chance to regulate this problem and move interest rates in a different direction. With higher inflation, the purchasing power of the individuals is affected, which might, in turn, lead to a decrease in aggregate demand over time.

At the same time, interest rates are also important because of the impact they can have on other rates, such as the currency exchange rate. If the Central ank increases the interest rate, then investors may move towards that particular currency that offers a higher return on their investment (due to the higher interest rate). They may decide to sell the currency or currencies they are investing in at the present time in order to move towards this more profitable currency.

The fact that the financial…

Dodd-Frank and Sarbanes-Oxley Acts are important legislations in the corporate world because of their link to public and privately held companies. Sarbanes-Oxley Act was enacted to enhance transparency and accountability in publicly traded companies. On the contrary, Dodd-Frank Act was enacted to disentangle the confused web of financial service company valuations. Actually, these valuations are usually hidden by complex and unclear financial instruments. The introduction of Sarbanes-Oxley Act was fueled by recent incidents of accounting frauds by top executives of major corporations such as Enron. In contrast, Dodd-Frank Act was enacted as a response to the tendency by banks, insurance companies, hedge funds, rating agencies, and accounting companies to serve up harmful offer of ruined assets and liabilities brought by systemic non-disclosure (Anand, 2011, p.1). While these regulations have some similarities and differences, they have a strong relationship with the financial markets.
elationship between the Acts and Financial Markets:

Since they are…

financial crisis a "crisis of capitalism?
Compare and contrast the theories of Susan Strange, Karl Polanyi and Giovanni Arrighi. Explain how three of them accessed issues of Financial crisis and its relationship with capitalism

Starting from 2008 onwards, we are currently experiencing an unremitting state of economic recession. Each of the three theorists stated in this essay have different perspectives of whether or not the recession indicates crises of capitalism. Whilst Susan Strange and Karl Polanyi have a more optimist perspective on the subject and indicate that rather than crisis, the recession may, in effect, be, in the first case, a misplaced paradigm (or different, tortured perspective) and in the second case, only a slight wrench that necessitates government intervention for amending a temporary situation, Arrighiri sees the situation as indeed manifesting something that is intrinsically, irremediably, and inherently wrong in the structure of capitalism itself. Each of these views will…

financial system trials tribulations starting early 2008. Indicate major reasons contributed financial market's collapse. Please leave a space reason. -College Level paperOrder ID
Five major factors that contributed to the financial market's collapse

eason 1: Historically low interest rates

The first major contributor to the collapse of the worlds' financial markets was the housing bubble. The Federal eserve dropped interest rates to historically levels after the September 11 terrorist attacks and the dot.com bubble burst. This was to generate more spending and borrowing and propel the nation out of recession. Low interest rates encouraged people to buy on credit. Many people took out mortgages, thinking that this was a good time to buy a house, and many others took out mortgages hoping to 'flip' a house, or sell it for more than they paid for it, as they were convinced that it was impossible for housing prices to go down ("The reasons…

S. firms. he ambiguity can therefore not be ignored.
he work of Gomez-Gonzalez et al. (2012) investigated whether the use of foreign currency derivatives have any effect on the market value of firms using evidence gathered from Colombia. heir results indicated that an increase in the level of hedging ultimately leads to a higher growth in the value of a firm. he use of financial derivates (hedging) is therefore indicated to have a positive impact on a firms' value.

he work of Clark and Mefteh (2010) investigated the relationship between foreign currency derivative usage and firm value using evidence gathered in France and found that the value effect of the financial derivative usage is about 1.5 times higher and was much significant with relatively larger exposure to depreciation while remaining insignificant for firms with lower levels of exposure. his implies that the effects of the hedging instruments depends on the type of…

The article that was written by Conley (2011) discusses the impact that collateralized debt obligations (CDO's) would have upon the subprime loans. These were created in 1987, by the Wall Street firm Drexel urnham. In this product, the investment bankers would take a number of different articles and combine them together as one investment. The various assets that were used included: junk bonds, mortgages and other high yielding investments from the debt. The idea with these different products is that the investment bank could offer customers a stated return on their investment. The way it worked is the brokerage firm would distribute each investor, the stated amount of returns that they would make off of the tranche (the CDO investment). This was derived using a complex mathematical formula that would divide the total amount of interest that was received, from the various high yielding products that were inside the CDO.…

" Bhattacharya (1988). It is used to calculate the value of a company based on its total cash flow. (oss, 1988).
Bhattacharya (1998) states that this theory assumed that lower dividends will lead to reduced levels of new equity and this will bring about a balance between the debt and equity of a company. This is not ture for utilities companies and other monopolistic firms where new equities are rare.

For the "Current Examples" in our table, do we need to find specific company examples that exist today or have happened in the last 2-3 years? Or will it suffice to give a theoretical example of a measurement in a firm that fits the model.

For example, would this be OK.

Efficiency Theory Example

- Production returns based on shared, variable, and per unit costs divided by the total output of a factory in a given period of time.

Instructor esponse: I am ok with any…

stock market and the Banks promote economic growth and it provides a critique of their functions in transitional economies. Every country depends on its economy for its growth. For a country to be stable it has to be stable in terms of its economy. Bank and stock market contribute to a great extent to the economy growth of every country where it provides firms with opportunity to get funds thus encouraging more investment from the firms. At the same time they give information on the ways resources should be allocated. The development of a financially sound, market-oriented banking system is always considered to be fundamental to a flourishing transition. Arguably, it is important to macroeconomic stability and to positive long-term growth prospects. As documented, bank intermediation in transition economies continues to be stunted after a decade or addition of reform, mainly where advancement in banking reforms is inadequate. The…

According to these analysts, "The implicit assumption underlying the price-to-earnings method is that the fair market value of the closely held business can be approximated from the market value of comparable publicly traded businesses. To implement this method, the valuator must be able to identify a set of presumed-to-be comparable publicly traded companies and obtain sufficient information on each to verify the extent of comparability from an economic, management, and financial perspective. No publicly traded company will be precisely comparable to the closely held business being valued, so informed judgment must be exercised" (p. 81). As a general rule, the smaller in size and the more limited the scope of activities of the business being valued, the less likely there will be a set of publicly traded companies that are comparable, or even a single comparable publicly traded company. Publicly traded companies are for the most part large, measured…

Finance: Financial Investment
Finance

Today's investment environment is more dynamic than it was a decade ago. This is particularly the case given that today's global economy is much more complex. Further, with information moving faster than it used to, the ripple effects of events happening in any given place are often felt in far away economies. Essentially, some of the challenges investors encountered a decade or so ago are not the same ones they encounter today. One of the key challenges in today's investment environments is sluggish global economic growth. As Connolly (2014) points out, although the trend could be changing (going by recent performance), "the U.S. economic growth rate has been relatively sluggish." Slow rate of economic growth causes significant uncertainty which is not ideal for investment. Next, it is also important to note that the volatility of equity markets has been rather extreme in the recent past. This year, there…

Pharmaceutical industries have to operate in an environment that is highly competitive and subject to a wide variety of internal and external constraints. In recent times, there has been an increasing trend to reduce the cost of operation while competing with other companies that manufacture products that treat similar afflictions and ailments. The complexities in drug research and development and regulations have created an industry that is subject to intense pressure to perform. The amount of capital investment investments required to get a drug from conception, through clinical trials and into the market is enormous. The already high-strung pharmaceutical industry is increasingly investing greater amounts of resources in search of the next "blockbuster" drug that can help them gain market position and profits. Laws, regulations and patents are important to the industry while spending billions of dollars in ensuring the copyright of their products.
It is the intention of this thesis…

Economics
Why that Dollar in Your Pocket is More than just a Piece of Paper

Money in contemporary society has taken a primary role in life. It affects everything from the quality of a person's social life to the quality and quantity of available food. elow the history, value and use of money are considered.

The first system of economy was a barter system. ecause of issues such as double coincidence of wants as a necessary condition of trade, acquiring goods by this system was often costly in terms of time and effort. In order to reduce transaction time, a money system emerged. The first money emerged in the form of goods. Goods that evolved into money were those that were generally accepted in exchange for goods. Livestock and grain are examples of goods that became money during the years of around 9000-6000 C. Cattle are estimated to probably be the oldest form…

Financial system serves as the economic backbone of the country. Financial markets provide capital to businesses, and home owners and a safe haven for income. The financial system includes a variety of financial institutions (different types of banks, for example) as well as the central bank, the stock market and other peripheral types of businesses like mutual funds. For individuals, the system provides a safe place for deposits, and access to capital for things like mortgages, college education or cars. For businesses, banks are a critical source of investment capital that is used for expansion. Thus, the financial system allows for our economy to grow, and for consumers to be able to afford to live better. For the economy, it is critical to have a robust financial system. hen the financial system is weakened, as happened in 2008, the results for the economy can be devastating (Levine, 2010). This is…

Financial Crisis
Past financial crises provide us with a framework for understanding the best responses to future crises. There are three types of responses, and the best response will contain some form of all three. These are monetary policy, fiscal policy and regulatory policy. The latter is more a long-term response, essentially learning from the crisis and adjusting the legal/regulatory environment to reduce the odds of a similar future crisis emerging. More important from an economic point-of-view are the monetary and fiscal policy responses, and these will be the focus of this paper. In a forward-looking examination, it will be challenging to get much useful from 1907, because the environment then was different in every meaningful way from how it is today, but the responses can still provide some insight into financial crisis response. While all of the crises are different, they all have similar conditions -- there is panic in…

Overall, at&T is the more profitable of the two companies. That Verizon has the stronger gross margins and at&T the stronger net margins indicates that at&T does a better job of controlling its cost structure than does Verizon.

The Industry

The telecommunications industry is highly competitive in both the landline and wireless segments. By 2006, wireless spending had match wireline spending. hile this presents significant opportunities for telecommunications, much of that spending comes in the form of cannibalizing, as wireline revenues have been decreasing steady over the past decade, matching the steady increases in wireless spending.

There are four major wireless operators in the U.S. And over 170 regional players (Megna, 2009). Competition is based on coverage area (capital investment), price and customer service. Both firms can be considered industry leaders. As of 2007, at&T had a subscriber base of 65.7 million and wireless revenues of $10.9 billion. Verizon had a subscriber base…

Financial Analysis
Threats and vulnerability: A case study of Shoe Carnival, Inc.

Shoe carnival overview

Shoe Carnival Inc. is a publicly traded company that offers a range of footwear products for all categories of customers, men, women, children and sportswear. It also offers casual wear products and other assorted products such as handbags. Its headquarters are situated in Evansville, Indiana and it runs over 300 stores across several states mostly concentrated in South, Midwest, and Southeastern states of the U.S. David ussell, who had sold shoes for over 20 years in the traditional way, founded Shoe Carnival after feeling convicted that that was what he wanted to do. In the year 1978, and with is personal savings and some capital from his in-laws, he opened his first store that he called "Shoe Biz." His main idea was to create a shoe store made shoe-shopping fun. The major difference with ussell's stores was the…

Financial Ratios
There are a number of financial ratios that will be valuable to a small business person. A small business is often concerned with cash flow, so ratios that are the most concern fall into three categories -- liquidity, profitability and efficiency. Liquidity ratios measure the ability of the company to meet its upcoming financial obligations. These ratios are important for ensuring that there is enough cash on hand to pay the bills. The profitability ratios are important because the business will be more successful if it is able to manage its margins. Efficiency ratios are concerned with how fast items like inventory or accounts receivable are turned over. These ratios are a direct reflection of the company's working capital, and improvements in these ratios improve the working capital flow.

These ratios are going to be slightly different from those that a large corporation values. The large corporation actually does value…

arket Analysis of House of Fraser
House of Fraser was founded in 1891 by James Arthur in Glasgow. Originally a drapery shop, the store quickly expanded and by the end of 1891, the entire Fraser family was investing in the company. At this point, the store was renamed to Frasers & Sons. Over time, the store expanded from selling draperies to selling clothing, shoes and other department store apparel.

The company has continued to grow through the purchase of smaller companies. In 2005, House of Fraser aquaired Jenner's department store and in 2006 it took over Baugur. In 2008, the company had three new openings in London, Belfast and Bristol. The company continues to grow and is a ripe competitor.

House of Fraser is ranked high in the market overall with its six major competitors being arks & Spencer, John Lewis, Harrods, Debenhams, Selfridges and Fenwick. John Lewis is by far the most…

0
$0.0

Net income available to common stockholders

$17,758.5

$16,468.7

Common dividends

$5,400.0

$5,048.0

Addition to retained earnings

$12,358.5

$11,420.7

Calculated Data: Operating Performance and Cash Flows

2012

2011

Net operating working capital (NOC)

$1,464.0

($2,108.0)

Total operating capital

$144,629.0

$136,320.0

Net Operating Profit After Taxes (NOPAT)

$19,182.7

$17,926.7

Net Cash Flow (Net income + Depreciation)

$17,758.5

$16,468.7

Operating Cash Flow (OCF)

$19,182.7

$17,926.7

Free Cash Flow (FCF)

$10,873.7

N/A

Calculated Data: Per-share Information

2012

2011

Earnings per share (EPS)

$5.26

$4.76

Dividends per share (DPS)

$1.60

$1.46

Book value per share (BVPS)

$22.63

$20.61

Cash flow per share (CFPS)

$5.26

$4.76

Free cash flow per share (FCFPS)

$3.22

N/A

LIQUIDITY RATIOS (Section 3.2)

Industry

2012

2011

Average

Liquidity ratios

Current Ratio

0.83

0.88

1

Quick Ratio

0.22

0.23

0.3

ASSET Management RATIOS (Section 3.3)

Industry

2012

2011

Average

Asset Management ratios

Inventory Turnover

10.71

10.98

8.1

Days Sales Outstanding

5.3

4.85

2.68

Fixed Asset Turnover

3.28

3.23

n/a

Total Asset Turnover

2.31

2.31

2.4

DEBT Management RATIOS (Section 3.4)

Industry

2012

2011

Average

Debt Management ratios

Debt Ratio

62.41%

63.13%

60.60%

Debt-to-Equity Ratio

1.66

1.71

0.65

Market Debt Ratio

35.51%

37.13%

N/A

Times Interest Earned

13.47

12.30

n/a

EBITDA Coverage Ratio

11.94

11.01

N/A

PROFITABILITY RATIOS (Section 3.5)

Industry

2012

2011

Average

Profitability ratios

Profit Margin

3.79%

3.68%

3.79%

Basic Earning Power

13.69%

13.73%

n/a

Return on Assets

8.74%

8.52%

8.90%

Return on Equity

23.26%

23.09%

21.95%

MARKET VALUE RATIOS (Section 3.6)

Industry

2012

2011

Average

Market Value ratios

Price-to Earnings Ratio

12.96

12.56

16.2

Price-to-Cash Flow Ratio

12.96

12.56

10.4

Price-to-EBITDA

0.12

0.11

n/a

Market-to-Book Ratio

3.02

2.90

3.34

There is some significance to al-Mart's ratios in relation to the industry. The company has a higher degree of leverage and it generally has operating ratios that are slightly poorer than the industry average. The…

Financial Accounting
The question is missing a clause. "…is more conducive to ethical behavior" than what? The word "more" invites comparison but there is nothing to compare the current environment to. Well, the current environment is not much different than any past environment. The regulatory environment does not dictate ethics, as ethics exist distinct from laws. Ethical behavior rests on how society itself defines ethics, and is only loosely related to the regulatory environment. So while there is definitely a tighter regulatory environment at least with the introduction of Sarbanes-Oxley and the PCAOB, these laws do not dictate ethics, just behavior (Lennox & Pittman, 2010). Indeed, an increasingly complex regulatory environment only serves to complicate the issue of individual ethics, and creates confusion among business practitioners between legal/illegal and right/wrong, the two operating entirely different conceptual spheres (Jennings, 2004).

The "business" environment is quite vague -- there are many facets to the…

Financial Analysis of Bestwish Limited
Company Overview

Bestwish Limited produces extensive range of quality products such as gift dressing, greetings cards, and plush merchandise of more than 50,000 stocks. The production of different categories of products involve between 2 and 15 processes. The company produces standardized products and custom designed products ordered from customers on contract basis. However, Bestwish Limited is facing challenges to control the costs because of varying production process, reliance on indirect costs and large number of stock keeping units.

Bestwish Limited has just closed the 2010 fiscal year account and the company is finalizing the 2011 budget. Bestwish intends to analyze the 2010 financial statement to present the accurate picture of the company financial performances.

Objective of this report is to analyze 2010 financial statements to assess the viability of Bestwish Limited.

Task

Attn:

Audit Committee of the Board

Finance Director

Subject: Financial statement Analysis

Date: 27 January 2013.

This report verifies the 2010 financial statement of…

Financial esource Management
eaching a financial decision regarding heath care services

All forms of industries deemed financial management as expressive in origin till the 1960's. Its basic and sole role was to ensure financing for completing the business's operatives and functions. The department for business planning or marketing would project a net total for meeting the services and meeting daily demands; managers would calculate the assets required to complete a given project needed, equipment's, supplies and building. Financial management is a field which focuses on business securities as well as the markets in which they are in key demand. Also, more emphasis is made on how businesses can tap new markets and unlock their hidden potential. As a result, financial management books were pretty explanatory and predictable in origin during those times. (Sandrick, 2008).

These days, financial management plays a pivotal role in day-to-day operations of a business. The responsibility of financial management…

Financial Analysis
Assumption Use in the Financial Plan

Additional Assumption in Sensitivity Analysis

FIRST TWELVE MONTH CASHFLOW RESULT

HOW MUCH SHOULD NORMAN PAY FOR THE EXCLUSIVE RIGHT?

FORECASTED CASHFLOW FOR THE NEXT FIVE-Year

CASH FLOW WITH A LOAN AT 8% PER ANNUM

SENSITIVITY ANALYSIS

THE SALES PRICE AND kg SALES GRADUALLY INCREASE AT 5%

THE SALES PRICE PER kg INCREASE AT 10% UT THE UNIT SALES REMAIN AT 5%.

Investment Value Using At Discounted Rate 5%

est Financial Plan and Option

Assumption Use In The Financial Plan

Additional Assumption in Sensitivity Analysis

It is further assumed that price will increase gradually at the rate of 8% per annum and sales will increase at 7% per annum.

For the purpose of analysis, both the sales price and Kg sales will gradually increase at 5%.

Another scenario will be that the sales price per Kg increase at 10% but the unit sales remain at 5%.

est-case scenario assumption, Norman did not exercise his plan to borrow $100,000 at 8%…

Over the last few years, the government has exerted more control on the insurance industry by controlling premium rates meaning the industry has become less competitive on pricing. In addition to this, through Obamacare, the government has set requirements for healthcare insurers which have significantly reduced their medical loss ratio Dinan 396.
The second factor that affects the degree of competitiveness of the industry is the number of companies operating in the industry. This has been the major reason for the hundreds of mergers in the industry since this is the major driving factor for changes in market share. The last factor is government-provided health insurance. The government provides insurance plans which create significant competition for the private companies Vanness and olfe 101()

The productivity measures that can be developed are the number of health insurance consumers, average cost of providing medical cover and price of health insurance premiums. The number…

Market Model Changes
The medtech, or medical technology, industry is a large and intensely competitive industry that produces highly innovative medical devices for hospitals and other healthcare facilities in the effort to save lives and improve health for patients (Research, 2012). It is spread across different segments including, cardiology, oncology, neuro, orthopedic, and aesthetic devices. It relies largely on aging baby boomers, high unmet medical needs, and increased incidence of lifestyle diseases, including cardiovascular disease, diabetes, hypertension, and obesity.

The industry is being challenged by pricing concerns, hospital admissions and procedural volume, uncertainty concerning healthcare reform, Medicare reimbursement issues as agencies are looking for cost reduction measures, and regulatory overhang. There is a rise in patients deferring treatment in elective procedures. "One factor aligning economic and clinical forces: in the U.S., the number of medical practices owned by hospitals grew from 25% in 2005 to 50% in 2008" (practice, 2011). Where hospitals…

As noted, the leverage is deliberate, and probably is designed to deliver these ROEs to shareholders.
H&M pays out a large portion of its profits as dividends. Nordstrom's dividend is healthy for an American company, but far less than that of H&M. Nordstrom shareholders must rely on capital gains to a greater extent. Given that both companies are growing, H&M's ability to deliver both growth and dividends is superior for shareholders. These superior outcomes are, not surprisingly, reflected in the share prices of the two firms, with H&M having the better P/E ratio (22.2 versus 15.4).

In addition to the financials, it is important to consider what recent news might affect the viability of working in these firms in the future. There are no major news stories for either company. Essentially, both are still growing firms, with a moderate growth pace. Nordstrom is still focused on the North American market, while…