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S.-based and each accounts for approximately 8% of the sector.
Knowledge is power in today's business world and where power goes, manipulation can't be far behind. Not a day goes by without talk of a new merger, acquisition or initial public offering (IPO) career in the securities industry can offer exciting work if you enjoy working in a competitive and demanding atmosphere. Investment bankers, stock brokers, and stock traders all make up the securities industry providing services to each other, as well as the general public. The primary differences between the three are the services they provide and who they provide these services to. Investment banking seems to be the most interesting of the three, as well as the most rewarding. This is due to the nature of the job an investment banker must perform. A career as an investment banker has its pros and cons just as any career…
Davis, I.S. (2003) Investment Banking, Palgrave Macmillan.
McAleese, D. (2001) (2nd Edition) Economics for Business, Competition, Macro-stability & Globalization, Harlow: Prentice Hall
Sloman, J., Sutcliffe, M.(2001) (2nd Edition) Economics for Business, Pearson Education
Winters, L.N., (1992) (4th Edition) International Economics, Harper Collins Academic.
Investment Banking Business Model and Financial Stability
The banking industry forms an integral part of any economy. It is the unit of the economy that serves to finance all the other sectors. Through the banking system, businesses can obtain credit and move within the meaningful circle. In every sense, banks fulfill the financing needs of the players in a business setup. The number of companies that are seen to take place in life is all related to the ability to finance their activities. The use of banking instruments to regulate the economy also serves a meaningful role in the economy. This is the role of the investment banks. The central bank in every country serves the role of regulating all the other banks and ensuring fair play in the trade. Banks can either be classified as investment banks or retail banks. Their mandate is distinct and well vouched in the…
Hryckiewicz, A. (Dr.). (2010). Originators, Traders, Neutrals, and Traditioners, Various Banking Business Models Across The Globe. Does the Business Model Matter for Financial Stability? Kozminski University and Goethe University of Frankfurt
De Jonghe, O. (2009. Back to the Basics In Banking? A Micro-Analysis of Banking System Stability. European Banking Center Discussion Paper No. 2009-13S
Planning for one's career is often a difficult and challenging situation to experience. Understanding what's important to you and what skills and personal desires you wish to demonstrate to others to contribute society encapsulate what's important in the process of distinguishing between different career options. The purpose of this writing is to analyze my decision of a future career in investment banking. I will first give background about the career choice and then apply my own personal understanding of how these choices align with my talents. This process of evaluating and applying different standards and options will be beneficial to any person who desires to investigate a career within the investment banking industry or other financial sectors.
Background information about investment banking is important and necessary in order to gather the proper knowledge to make a wise and applicable decision towards a career choice. Investment banking deals with…
applying for the SEO internship on Wall Street for several reasons. Foremost is my great love of finance, particularly the investment field. My major AT WHAT UNIVERSITY is finance and accounting, and I have found my major suits me perfectly, which is why I want to continue my education with work experience in the premier financial district in the United States. I feel my finance and accounting background has prepared me for a sales and trading internship, and that I understand the many issues and complexities this internship would provide. I also feel that I can work well with others, and could develop good working relationships with clients from every type of institution and management philosophy. Helping people invest wisely for their futures is not only a career to me, it is something that can make a vast difference in people's lives when they most need it, and I would…
brave world: Investment banking 2008 (B):KEL380)
Why were proponents of deregulation so successful in the late 1990s? How much can we blame deregulation for the meltdown in the investment banking industry? And how could the government have foreseen and/or stopped the domino effect before the crisis of 2008?
Proponents of deregulation were successful due in part to increase wealth of American citizens. Housing prices were rising at an incredible pace. Many Americans were becoming wealthy by simply "flipping" houses on the market. With this wealth, came an increase in prosperity and a standard of living for many Americans. However, this practice soon came to an end when the housing market bubble burst in late 2006. Much of the blame can be attributed to the greed of the investment banking and financial institutions. Investment banks were essentially giving loans to individuals who could not afford the payment. In turn, the investment…
1) Blodget, Henry. (2010). Goldman Shorted The Housing Market BEFORE It Sold Abacus To Those Idiot German Banks. (online). Available: http://www.businessinsider.com/henry-blodget-goldman-shorted-the-housing-market-before-it-sold-abacus-to-those-idiot-german-banks-2010-4 (April 22, 2010)
2) AOL Real Estate Staff. (2008). Housing Market in 2000s? A Great Decade (online). Available: http://realestate.aol.com/blog/2010/12/07/housing-market-takeaway-it-was-a-great-decade / (April 24, 2011).
3) Author Unknown. (2008) CONDENSED FINANCIAL INFORMATION OF REGISTRANT THE BEAR STEARNS COMPANIES INC. (online). Available: http://sec.edgar-online.com/bear-stearns-companies-inc/10-k-annual-report/2008/01/29/section27.aspx (April 24,2011)
4) Author Unknown. (2008). Subprime Crisis: A Timeline. (online). Available: http://money.cnn.com/2008/09/15/news/economy/subprime_timeline/index.htm (April 23, 2011)
" Investment banking is not for the weak minded or the soft hearted and I must continue to develop my emotions towards this way of thinking.
I know there is much more to learn in the realm of investment banking. The profession itself demands knowledge of more than just business and economic jargon. Good investors know how to spot trends and cycles that others cannot do as easily. This ability, to more or less predict the future, must continually be honed in order to become successful at this profession. Keeping an open mind is absolutely imperative in sustaining a solid development towards understanding and success in this field. Practicing entertaining new ideas, that may seem strange or odd at first should be kept in mind when approaching new subjects for the first time.
Where I Am Going: Short- and Long-Term Plans
My first priority is to finish my MBA program…
Casparie, J. (2007). What Exactly is an Investment Banker? Entrepreneur, 12 June 2007. Retrieved from http://www.entrepreneur.com/article/179958
King, M. (2012). How to get into investment banking. The Guardian UK, 20 April, 2012. Retrieved from http://www.guardian.co.uk/money/2012/apr/20/how-get-into-investment - banking
Rosenthal, J. (2013). Who wants to be an investment banker? The Economist, 21 Nov 2012. Retrieved from http://www.economist.com/news/21566442-dinner-party-problem-who - wants-be-investment-banker
Stephenson, D. (2012). A Career in Investment Banking: Worth the Investment? Firmex, 3 Oct 2012. Retrieved from http://www.firmex.com/blog/a-career-in-investment-banking - worth-the-investment/
This would play a role in helping to bring the Czech Republic into the EU in 2004. The effect that this would have on the Prague Stock Exchange is that it would cause it to rise to 1,940. At which point, it would have a severe down trend economy during 2008 and into 2009. The only difference is: that the various reforms and economic policies that the government was using at the time, helped to contribute to mitigating the effects of the slowdown (as the economy would experience a less severe economic contraction of 3.4%). ("Czech Republic")
The price movements of the Slovak equity market in the last 10-15 years
The ratislava Stock Exchange was founded in 1991 and has been in operation since 1993. ("asic Information") Like what occurred in the Czech Republic the Slovak stock market went through two bear markets that would last until 1998 -- 1999.…
"Basic Information." Bratislava Stock Exchange. 2010. Web. 24 Apr. 2010
"Czech Republic." State Department. 2009. Web. 24 Apr. 2010
"History of the Exchange." Prague Stock Exchange. 2009. Web. 24 Apr. 2010
These types of investments are often illiquid, so the investor needs to view them as long-term investments. However, the lack of liquidity also means that for the most part they have low levels of correlation with the broad market.
Derivatives are another possibility, and their potential impact on the portfolio will be discussed in the next question. They can either increase risk or decrease risk, depending on the type of derivative and how it is used.
Overall, the impact of alternative investments is to reduce the degree to which the portfolio is subject to the equity and fixed income markets. Alternative investments are often used as an ancillary component of the portfolio, to reduce the portfolio's overall volatility but with the hopes that returns will not suffer as a result.
3. Derivatives can be used for a couple of different purposes in a portfolio. The first is to increase leverage…
De Santis, R. & Sarno, L. (2008). Assessing the benefits of international portfolio diversification in bonds and stocks. European Central Bank working paper. Retrieved May 6, 2010 from http://www.ecb.int/pub/pdf/scpwps/ecbwp883.pdf
Driessen, J. & Laeven, L. (no date). International portfolio diversification benefits: Cross-country evidence from a local perspective. International Monetary Fund. Retrieved May 6, 2010 from http://www.luclaeven.com/papers_files/Diversification_JBF_final.pdf
Lhabitant, F. (2000). Derivatives in portfolio management: Why beating the market is easy. EDHEC. Retrieved May 6, 2010 from http://www.edhec-risk.com/edhec_publications/RISKReview1055927251987929638/attachments/EDHEC_WhyBeatingTheMarketIsEasy.pdf
Schweizer, D. (2008). Portfolio optimization with alternative investments. European Business School. Retrieved May 6, 2010 from http://www.wbiconpro.com/339-Schweizer, D.pdfYavas, B. (2007). Findings indicate that co-movements among the U.S., Germany and Japan markets are significant. Pepperdine University. Retrieved May 6, 2010 from http://gbr.pepperdine.edu/072/diversification.html
74). This dearth of information was likely caused by a reluctance to examine investment decisions on the part of investors themselves; nobody likes finding out that their "thought-out" considerations are not any more accurate than gut choices, and in fact, those gut choices likely had more influence than all of their mental work.
In the last decade, however, strides have been made in the study and analysis of investment behavior, revealing surprising details about what goes in to making stock trades. The first important work in the study of individual investment behavior was the realization that human beings do not always act rationally in regards to financial decisions, because according to the previously quoted Brad Barber and his co-author Terrance Odean, "the field of modern financial economics assumes that people behave with extreme rationality, but they do not" (Barber & Odean, 1999, p.41). Although "differences in investor literacy about financial…
Barber, Initials, & Odean, Initials. (1999). The courage of misguided convictions. Financial Analysts Journal, 55(6), 41-55.
Dhar, R, & Zhu, N. (2006). Up close and personal: investor sophistication and the disposition effect. Management Science, 52(5), 726-740.
Grinblatt, M, & Keloharju, M. (2001). What makes investors trade?. The Journal of Finance,
Investment spending is very significant because it is an essential ingredient in economic development and growth. The decrease in the level of investment spending may cause a recession. Most recessions occur as a result of fall in investment spending (Paul & Krugman, 2007). Swings in investment spending are very dramatic than those in customer spending. eduction in consumer spending is normally a result of a progress that starts with a slump in investment spending. The most significant factors that determines investment spending are the rate of interest and anticipated future real GPD. To understand the kind of reasoning, first there is a need to note that planned investment spending is the investment spending that firms intend to pass through over a given period, in contrast to investment spending that happen but is not planned (William & Greene, 2008). Planned spending on investment projects is negatively the same as the interest…
William H. Greene, Econometric Analysis, 5th Edition, Pearson Education, 2008, Table F3.1, U.S. Investment Data, 1968-1982
Paul R. Krugman, Robin Wells, Kathryn Graddy, Economics: European Edition, Worth Publishers, 2007
N.E. Savin and Kenneth J. White, The Durbin-Watson Test for Serial Correlation with Extreme Sample Sizes or Many Regressors, Econometrical, Vol. 45, No. 8 (Nov., 1977), pp. 1989-1996
R.W. Farebrother, The Durbin-Watson Test for Serial Correlation when there is no Intercept in the Regression, Econometrical, Vol. 48, No. 6 (Sep., 1980), pp. 1553-1563
usinesses experience profit cycles implying that market fluctuations are inevitable in an economy. Market demand plays a crucial role in the profitability of an enterprise and consequently affects the investment trend. A profitable firm is more likely to invest money to improve production facilities or to extend its business into other domains. Investors will analyze the profitability of any undertaking and only if the expected revenue is greater than the cost of capital will they invest in the project. Keynesian theory also states that the Marginal efficiency of Capital is inversely related to investment. "[t]o induce new investment 'the rate of return over cost must exceed the rate of interest'. [Richard C.. Johnsson] For all businesses profit is the ultimate motivation and any new venture is undertaken only if the internal rate of return is above the cost of capital defined by the prevailing rate of interest. Hence…
J. Bradford DeLong, From Investment Demand to the IS Curve: Low Interest Rates," Accessed on June 7th 2004, http://www.j-bradford-delong.net/multimedia/ISLM2.html
Richard C.B. Johnsson, 'The Liquidity-Trap Myth', Accessed on 7th June 2004, http://www.mises.org/fullstory.asp?control=1226
Using values found in a table of factors for calculating the present value of a dollar; the periods one through four have the following present value factors:
Year One= .9259
Year Two= .8573
Year Three= .7938
Year Four= .7350
Next these factors are multiplied individually by the net cash flow generated by the investment in each period.
Year One= $500,000
Year Two= $450,000
Year Three= $350,000
Year Four= $320,000
The multiplication calculation reveals the discounted cash flow values:
Year One= $500,000*.9259= $462,950
Year Two= $450,000* .8573= $385,785
Year Three= $350,000* .7938= $277,830
Year Four= $320,000*.7350= $235,200
The total sum of the cash flows net present value is $1,361,765; as such the net present value as compared to the overall investment of $1,200,000 is positive $161,765, and therefore the projected rate of return on this investment is greater than the eight percent cost of capital, and the investment…
Marshall, D. & McManus, W. (1996). Accounting: What the Numbers Mean.
Third Edition. McGraw Hill.
Investments are the assets or items purchased with the anticipation to generate the income in the future. In the economic sense, investments refer to the goods and services purchased and not consumed today for the purpose of generating wealth in the future. Similarly, going to a university or building a factory to produce goods and services are the examples of investments. Within a financial environment, investors purchase assets with the hope that they will appreciate in the future, thus, creating wealth for the investors. Examples of investment in the financial circle include purchasing of stocks, or real estate property with the anticipation that they will appreciate in the future. Despite the benefits that can be derived from the investment purpose, the investment is not something an individual can take lightly. Investors are to implement a careful planning to reap the benefits of an investment. Typically, an investor can lose his…
Costa, D. (2011). The Portable Private Banker Investing Efficiently through Mutual Funds and ETFs. UK. CreateSpace Independent Publishing Platform.
Morningstar (2014). Exchange Traded Funds, Morningstar website. Avaliable from:
Morningstar (2014). ProShares Ultra Nasdaq Biotechnology BIB, Morningstar website. Avaliable from: http://performance.morningstar.com/funds/etf/total-returns.action?t=BIB®ion=usa&culture=en-U.S .
A low payout on investments makes sense at certain times and in certain circumstances. Individuals or entities that receive a lower payout are oftentimes doing so to address issues such as higher tax rates and a deferred tax liability. If the investor's tax rate from income is lower than the tax rate for capital gains, then it makes complete sense to take a lower rate of payout because it saves the investor money on taxes.
Another reason for accepting a lower yielding investment from a business viewpoint is that it can decrease the amount of capital that needs to be raised for certain projects or investments. As one recent study determined "there is extensive literature in corporate finance on the proper way to incorporate flotation costs in the determination of project net present values (NPV)" (Simonds, 2006, p. 25). If a company's flotation costs can be lowered through the…
Economist, (2006) Instant returns, Vol. 381, Issue 8498, pp. 80
Simonds, R.R.; (2006) Income capitalization, flotation costs, and the cost of capital, Journal of Property Tax Assessment and Administration, Vol. 3, Issue 4, pp. 23 -- 29
nvestments: Stock Selection
On March 9, 2009 the stock market settled on a 12-year closing low with the Dow Jones ndustrial Average (DJA), a barometer of the economy and stock market trajectory, closing at 6,547.05. (Twin, A. March 9, 2009). The precipitous plunge for the DJA from an "all-time high of 14,164.53" (Twin, A. October 9, 2007) reached on October 9, 2007 marked the timeline of the country's worst recession since the Great Depression. From the historic lows however, the market has rebounded dramatically closing at 12,105.78 on February 23, 2011, a gain of over 75% from the March lows (CNBC.com. February 23, 2011). The vicissitudes of the stock market over the past three plus years limn the debate over whether an investor who is risk averse would choose to invest in a stock market in which all stocks rise and fall together, or a market in which individual stocks…
Investors are marked by two extremes, the active investor who tracks, analyzes, and disseminates information on the companies in their investment portfolio, the economy, and global financial news which may influence the direction of their stock investments. At the other extreme is the investor who is socking away their five percent contribution with company match into their 401K. This investor cedes to expert portfolio managers, or trusts in the long run upward trend of equities as defined in index funds: S&P 500, Wilshire, and DJIA. While there are investors at both extremes the vast majority fall at some point on the spectrum, engaged but not able to fully commit the time or resources to portfolio management.
In this context the risk-averse investor will likely fall in with the preponderance of investors who have investment portfolios but are not actively managing them. The investor's portfolio may have individual stocks, mutual funds, or index funds. Which leads to the question, which environment would an investor desire to be in to attain their goal of reduced risk concomitant with acceptable return? The answer ironically comes from the same source, yet at bifurcated ends of an investment philosophy.
Warren Buffett considered the world's most accomplished and successful investor for over fifty years posits that a risk-averse individual could reach their investment objectives in either economic environment. In 2009, Warren Buffett entered into an agreement to purchase the remaining shares of Burlington Northern Railroad which his firm Berkshire Hathaway did not already own. His rationale for the purchase was simple "I basically believe this country will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now, and the rails should benefit; it's a bet on the country, basically" (Crippen, A. November 3, 2009). This statement defines an investment strategy which suggests that over the long-term the stock market will generally move higher, the rising tide lifts all boats metaphor. Yes, stocks will fall, sometimes dramatically, across
So, the financial obligation of futures is potentially very large. Thus, the risk in futures is larger than for options where the premium represents the maximum amount that a purchaser of an option can lose. The gain on an option can be realized by exercising the option when it is in the money (For a call option, when the option's strike price is below the market price of the underlying asset. And for a put option, when the strike price is above the market price of the underlying asset), going to the market and taking the opposite position, or waiting until expiration and collecting the difference between the asset price and the strike price. In contrast, gains are attributed to the futures accounts of the parties at the end of every trading day.
Options and futures. http://www.discountcommoditybrokeronline.com/articles/Options-and-Futures.html
What is the difference between options and futures? Investopedia. http://www.investopedia.com/ask/answers/05/060505.asp
Options and futures. http://www.discountcommoditybrokeronline.com/articles/Options-and-Futures.html
What is the difference between options and futures? Investopedia. http://www.investopedia.com/ask/answers/05/060505.asp
(Steward, 2008, ¶ 15).
II: BODY (TITLE TO BE DETERMINED)
To explore the thesis, introduced at the start of the paper, the writer addresses the question: Do the investment risks that customers of conventional banks and financial houses may experience differ from those customers of sharia compliant financial institutions may encounter? During this segment of the research paper, the writer relates relevant information to Investing (Including Risks)
Investing (Including Risks)
Sukuk depict one type of bonds that meet the sharia requirement that interest cannot be charged or received. Sukuk often work so that those who hold them as investments are entitled to a share of the profits of the company that issued the sukuk.
A. Analytical summary
1. Investing (Including Risks)
3. Contemporary Considerations
B. Thesis reworded
C. Concluding statement
Adam, N.J. & Thomas, A. (2004). Islamic bonds:…
Wecker, M.. (2010). The promise of Islamic banking and finance. The Arab-American News
Retrieved September 28, 2010 from HighBeam Research:
History of UBS Organization
UBS is a publicly company incorporated in Switzerland that operates in the global banking and financial services sector. While the organization's principal offices were initially in Zurich, it is currently co-headquartered in Zurich and Basel. This public company was initially founded as Union Bank of Switzerland in 1856 i.e. more than 150 years ago. Following the company's merger with Swiss Bank Corporation in 1998, UBS stopped being a figurative abbreviation of the company. In essence, UBS is no longer considered as the firm's representational abbreviation but as a stand-alone name for this organization. Since its inception, the company has experienced tremendous growth and profitability across all its operations largely because of strategic business policies and practices including mergers and acquisitions like the 1998 merger with Swiss Bank Corporation.
The profitability and success of this company has also been supported by its increased expansion to new regions…
Acton, G 2016. Swiss Bank UBS Sees Third-quarter Net Profit Plunge 60% Year-on-Year, CNBC, viewed 20 May 2017,
Alba et al. 2015. Private Sector Investment and Sustainable Development, Sustainable Finance, viewed 20 May 2017,
Eccles, R.G. & Serafeim, G 2013. A Tale of Two Stories: Sustainability and the Quarterly Earnings Call, Journal of Applied Corporate Finance, vol. 25, no. 3, pp.66-77.
Epstein-Reeves, J 2012. What is 'Creating Shared Value'? Forbes, viewed 20 May 2017,
Long-Term Capital Management
The Failure of Long-Term Capital Management
The Long-Term Capital Management is a popular term relating to hedge funds that experienced massive failure. The fund was initially a success from the time it was launched accumulating over $100 billion in just three years (Yang, 2014). It became highly attractive on Wall Street for everyone because of the astounding profits it made. Despite being run by highly experienced personalities like professors and finance experts, their performance turned sour in 1998 (Yang, 2014). Banks that were giants in the American banking industry were facing a loss of over $1 trillion because of their demise (Yang, 2014). The problem of LCTM occurred and accelerated so quickly that in less than twelve months, $4.4 billion that was part of the $4.7 billion capital had vanished. LCTM was on the verge of collapsing towards the end of 1998, and if it did then,…
Amadeo, K. (2016). What Was the Long-Term Capital Management Hedge Fund Crisis?. The Balance. Retrieved 31 May 2017, from https://www.thebalance.com/long-term-capital-crisis-3306240
Jorion, P. (1999). The Story of Long-Term Capital Management. Investment Review. Retrieved 31 May 2017, from http://www.investmentreview.com/print-archives/winter-1999/the-story-of-long-term-capital-management-752/
Rimkus, R. (2016). Long-Term Capital Management. Econ crises. Retrieved 31 May 2017, from https://www.econcrises.org/2016/04/18/long-term-capital-management/
Yang, S. (2014). The Epic Story Of How A 'Genius' Hedge Fund Almost Caused A Global Financial Meltdown. Business Insider. Retrieved 31 May 2017, from http://www.businessinsider.com/the-fall-of-long-term-capital-management-2014-7?IR=T
investment management in the financial sector. The paper highlights the world's present macroeconomic situation. It further details the macro economic situation and the way it affects investment decisions in several investors. In addition, the paper describes a sample investment programme and provides critical decisions to investors as well as investment vehicles used by the investment moguls. The paper summarises practical exercises in compound investment management growth and the use of capital investment.
Investment management is an important part of the global financial sector, which is key in financing vast business empires. Investment management is incorporated under state laws employing several individuals and creating revenue to key players in the financial market. It is the management of several securities and assets to meet specific objectives for the benefit of the investors. The products used known as investment vehicles can be of minimal risks such as government bonds; carry high risks such…
Development Policies and Anaysis Division. (2012). World Economic Situation and Prospects. Retrieved May Friday, 2012, from www.un.org: http://www.un.org/en/development/desa/policy/wesp/index.shtml
B.P.Eregha. (2010). Interest Rate Variation and Investment Determination in Nigeria. International Business Management Journal, 41-46.
Blume, M. (1978). Inflation and Capital Markets. Cambridge: Ballinger.
Contrarian Investor's Journal. (2008, July 6). Effects of inflation on value of investment. Retrieved May Friday, 2012, from www.cij.com: http://cij.inspiriting.com/?p=482#
Private Sector Investment and Economic Development
Investment and economic development
The ole of Private Sector investment in Economic Development
In the past few decades there has been overwhelming support for growth and development rooted in private investments and market-oriented strategies. A move from public sector driven growth has come as result of the need to reduce the widening gap in the balance of payment account, increasing public debt, rising inflation rate, growing foreign debt fundamentally falling living standards. There has been a shift from the need for large public corporations undertaking productive activities in an economy owing to the realized inefficiency in resource allocation. Corruption and misappropriation of public funds is observable owing to the lacking need to optimally reap benefit from the investment. Unlike in the public sector, private sector investment guarantees optimal productive activities, efficient allocation of productive resource, technological advancements to reduce cost and increase productivity (Dao,…
DAO, M.Q. 2008. The Impact of Investment Climate Indicators on Gross Capital Formation in Developing Countries. The Journal of Developing Areas, 42, 155-163.
GROSSMAN, G.M. & HELPMAN, E. 1994. Endogenous innovation in the theory of growth. Journal of Economic Perspectives, 8, 23-44.
HARRISON JR., W., HORNGREN, C.T. & WILLIAM, C.T. 2012. Financial accounting 9th edition., U.S.A., Prentice Hall
JORGENSON, D. 1971. Econometric Studies of Investment Behavior: A Survey. Journal of Economic Literature, 9, 1111.
Determining the ranking of mutually exclusive projects is another step used by firms in the decision making process. Investments are determined on an annual basis by a business's board in agreement with and limited by the company's spending budget for the year. Once the capital budgeting and sensitivity analysis reports are complete on all projects, the projects are then reviewed on additional factors such as overall purpose within the company, and are ranked from best to worst (Bacon, 1977). Those projects that fail to meet certain numerical hurdles are simply eliminated from the list and not considered by an investment board. Some decisions may be close to certain numerical hurdles but also have other overarching reasons for acceptance. Some examples may include investments for improvements in compliance with legislation. These investments must be done regardless of their overall worth, and typically are more beneficial to a company if done sooner…
Bacon, Peter (1977). The Evaluation of Mutually Exclusive Investments. Financial Management. Vol 6.2, 55-58.
Barney, Dwayne; Danielson, Morris (2004). Ranking Mutally Exclusive Projects: The Role of Duration. The Engineering Economist. Vol 49.1, 43-61.
Mills, Geofrey (1996). The Impact of Inflation on Capital Budgeting and Working Capital. Journal of Financial and Strategic Decisions. Vol 9.1, 79-87.
Pannell, D.J. (1997). Sensitivity analysis of normative economic models: Theoretical framework and practical strategies. Agricultural Economics. 16, 139-152.
investment banker is a person working for an investment bank. Investment banks finance both public and private companies. They arrange for debt financing and they can help put together equity deals as well. A startup company will often seek partnerships with investment bankers in order to secure the financing needed to expand or to make acquisitions. Investment bankers do not normally work with companies that only have an idea.
The stock market is a secondary market where equities are traded. A company does not turn to the stock market per se to acquire capital. The company gets its equity financing from an investment banker, who may then place the shares on the stock market. The company only sees money from the issue of the stock -- the price on the stock market does not go to the company. Investors on the stock market, however, have votes on aspects of the…
After the economic Collapse, precious metals like Gold and Silver have become the safe heaven investment for the investors. Investors know that they will get a high return by investing in these precious metals. The performance of the Gold can be judged from the below mentioned Gold graph.
The red line indicated that the Gold has completed almost a 100% ride in just 3 years because of the intentions of the people to get out their money from other investment option and park in the precious metals. There are risk provisions attached with the investment in these precious metals. Actually the price of the precious metals has been overbought now after the factor of safe heaven investment associated with it. Cautious must be taken by the investors while taking a buying position in the precious metal's investment. Tool like performance indicator of the precious metal will be used by the…
Chance, D & Brooks, R (2009), Introduction to Financial Institutions, Prentice Hall Publications
Chisholm, A, (2010), Introduction to Financial Instrument, Pearson Group Publications
Donald, J, (2004), Commodity Prices and Precious Metals Analysis, Oxford University Publications
There are several issues to consider when selecting an investment banker for an IPO. First of all, the respective bank (or the banker himself) needs to have an established track record that can be proven with concrete figures and performance thresholds. It is important to have relevant data to back assumptions that guarantee the bank's relevance in the industry, particularly in terms of previous successful IPOs and connections in the field. Another important issue will be the investment bank's capabilities: does it have sufficient resources to properly handle an IPO?
At the same time, it is important for the investment bank to match the profile of the company undertaking the IPO: it is useful to have an investment bank that understands the particularities of the business, not only of the financial perspective on things. It will thus also be able to build easier connections related to the IPO in…
1. Lainee, Francois, Plantier, Eric. 2006. Selecting (an) Investment Bank(s) for the Initial Public Offering of a Venture Capital-backed Company. An EVCA Venture Capital Committee Paper. On the Internet at tblueprint.pe/docs/IPO_Manual_2006.pdf. Last retrieved on July 24, 2014
Value (NPV) Process for a Company's Human Resource Program Investments
Re: Instructional Document: Evaluating Needs Present Value (NPV) process for HR Resource program's investments
We have implemented a new Needs Present Value analysis process that will be used on all current and future HR projects as of Thursday, 12/25/2003. Please become familiar with the NPV pamphlets provided and if you have additional questions, contact me at extension 9999.
NPV is an approach used in capital budgeting where the present value of cash inflow is subtracted from the present value of cash outflows. If the NPV of a prospective project is positive, then it should be accepted. However, if it is negative, then the project probably should be rejected because cash flows are negative.
The changing value of money over time is easily seen in the classic bank savings account.
If someone deposits $100 in a bank…
Blockchain technology is an innovative addition to the financial market. What began as a brainchild by the people or person known as ‘Satoshi Nakamoto’, blockchain technology has evolved and become something far greater than most would have imagined. Blockchain technology allows for digital data to be distributed (not copied), allowing for it to become the foundation for a new kind of internet. Businesses have used the technology to implement the use of digital currency like Bitcoin and promote growth of blockchain companies. Some of these successful blockchain companies are: Aeternity, Bitfury, DFINITY, ContentKid, and Blockphase. These companies represent the future of blockchain technology and how far it will go.
Background: What is Block-Chain Technology?
A recent innovation within the financial world, the mastermind behind blockchain technology is ‘Satoshi Nakamoto’. He is the pseudonym for a person or a group of responsible for developing, authoring, making, and deploying bitcoin, bitcoin…
They could not foresee the housing market falling as it did, and the number of foreclosures it would create, and so, they aggressively continued to pursue the market when they should have been cutting back. The top executives left the company, but they were not fired, in fact, Killinger retired, comfortably it would seem. The customers of the bank, especially those with mortgages, are the ones who really will suffer in the long-term. The bank will rebound, but those with foreclosed homes never got the chance for a bailout, and so, they lost everything, while the executives and leaders of the bank are not charged with any wrongdoing. Luckily, the American taxpayers did not suffer, either, because JP Morgan Chase financed the takeover and the continuing operations of the bank.
In conclusion, WaMu's failure came about due to a number of reasons. They invested far too heavily in the sub-prime…
Adler, Joe, and Hopkins, Cheyenne. "FDIC's 'Big One': Long Prelude Gave Way to a Sudden End." American Banker, 29 Sept. 2008, Vol. 173, Issue 188.
Cocheo, Steve. "Kerry Killinger Builds His Dream Bank." ABA Banking Journal 93.8 (2001): 22.
Editors. "Washington Mutual, Inc." New York Times. 27 Sept. 2008. Business, 1.
Ivy, Bob and Shen, Linda. "Washington Mutual Hobbled by Increasing Defaults on Option ARMs." Bloomberg.com. 15 Sept. 2008. 11 Dec. 2008. http://www.bloomberg.com/apps/news?pid=20601087&sid=aNSwdt57nTBI&refer=home
When the market crashes, turns bearish, or severely corrects, investors not only lose objective things such as money, they also lose the sustaining functions of which the investing process (and/or money, which may psychologically represent self-esteem, independence, power, etc.) has been the source. That means, in addition to objectively not having the money to buy that new house or car, self-esteem drops, and the investors capacity to calm themselves down is diminished, motivation wanes, confidence is shaken, and vitality ebbs. A down market represents an injury to our total sense of self and all the functions that sustain it. In a general way it represents a hope or fantasy lost.
For the young investor, with a large amount of earning power remaining in his life, the ups and downs of the market are small obstacles to the long-term objective of amassing a financial nest egg on which to…
Block Sandra. Stable value funds low-cost, reliable investments., USA Today, 11-30-1998, pp 20A.
McEwen David, Best to find out your risk tolerance., The Daily News (Taranaki, New Zealand), 10-08-2001, pp 6.
Luke, Robert. Staff, Step 1: Investors should evaluate tolerance for risk Finance professor's quiz helps determine the asset allocation each individual is most comfortable with.., The Atlanta Journal and Constitution, 04-03-2000, pp S26.
An upsurge of The recent increasing interest in commodity investing is has driving en the development of investment instruments that accommodate the needs ofavailable for investors looking for exposure to commodity prices. Historically, direct exposure to the commodity market has been seen as complicated and often too costlyexpensive for the average investor. However, there are now instruments that offer investors a cheap and easy, inexpensive access to directly exposure to commodity price movements.
This section will explore This part will look more into the different instruments available to investors, and discuss commonly held paradigms about their advantages and disadvantages. This discussion is intended e purpose is to providegive the average investor with more complete and detailed better information about of the instruments well available, before they investing in the commodity market. In this paper, Sseven instruments are discussed in this paper, as follows: Futures contracts, stocks, options, exchange…
Opportunities to Improve elationship Banking at Al ajhi Bank
In an increasingly globalized and competitive marketplace, many banking professionals today are faced with the need to develop informed and timely responses to changes in consumer demand, as well as fluctuations in the global economy that can have a positive or negative effect on investments. In affluent nations, this need has become especially pronounced as billion-dollar deals are routinely involved, and bankers working relationship banking operations stand to assist banks in attracting and retaining wealthy private and highly fluid commercial enterprises as long-term clientele. The enormous amounts of money that are involved make it important to formulate such responses in ways that add value to the banking operation including providing a competitive advantage. In some banks, relationship banking at this level is termed "privilege banking" or "prime account management," but the common feature of these business units is targeting high net…
About Us. (2012). Al Rajhi Bank. Retrieved from http://www.alrajhibank.com.my/corporate_
Constantinides, G.M., Harris, M. & Stulz, R.M. (2003). Handbook of the economics of finance.
Shadow Banking on the International Level
A definition of international shadow banking
International shadow banking is a term that originated from pre-recessionary period in 2007 and was popularised in pose recession period. The term invited the attention of financial experts and researchers towards the emergence of non-banking entities playing banking role. Hence, the Financial Stability Board (FSB) formally identified their existence and role by defining the term shadow banking system (Pozsar et al., 2012).
It regarded non-banking entities as intermediaries in the financial system but external to the banking system. It is not only because they perform banking activities, but also because they perform certain other activities which are not part of the banking system. The definition was considered as valid and readily accepted (Pozsar et al., 2012).
No objection was raised upon the point that there are certain entities which are not banks but playing an active role in…
Pozsar, Z. et al. (2012). Shadow Banking. Federal Reserve Bank of New York, Staff Reports. Taken from: http://www.newyorkfed.org/research/staff_reports/sr458.pdf
FSB. (2012a). Strengthening Oversight and Regulation of Shadow Banking: A Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos. Taken from: http://www.financialstabilityboard.org/publications/r_121118b.pdf
FSB. (2012b). FSB Publishes Initial Integrated Set of Recommendations to Strengthen Oversight and Regulation of Shadow Banking. Taken from: http://www.financialstabilityboard.org/press/pr_121118.pdf
FSB. (2012c). FSB Publishes Initial Integrated Set of Recommendations to Strengthen Oversight and Regulation of Shadow Banking. Taken from: http://www.financialstabilityboard.org/publications/r_121118c.pdf
shadow banking system, its role in the subprime mortgage crisis, and failures of regulation within the shadow banking system. The term "shadow banking system" was coined by PIMCO's Paul McCulley in 2007 (Spanos, 2012) and refers to a banking system that includes financial intermediaries that are involved in creating credit across the global financial system, whose functions are not subject to regulatory oversight (Investopedia, 2012). The question has been debated as to whether shadow banking meets the definition of true banking. Given that the two systems perform similar functions, including credit intermediation and maturity transformation, the two should be considered parallel systems (Noeth and Sengupta, 2011).
The term shadow banking is used to describe any provision of credit taking place outside of the traditional deposit-funded lending system. This definition includes institutions that range from pawnbrokers and consumer finance companies to securities dealers as well as firms that issue corporate bonds.…
Armstrong, R., 2010. Q+A -- Regulating the shadow banking system. Fox Business. [online] Available at: [Accessed 20 April 2012].
Beckworth, D., 2010. "Deposit insurance" for the shadow banking system. [online] Available at: [Accessed 20 April 2012].
Drum, K., 2012. The shadow banking system speaks: It's not time for austerity yet. MotherJones. [online] Available at: [Accessed 20 April 2012].
Hsu, J. And Moroz, M., 2009. Shadow banks and the financial crisis of 2007-2008. Research Affiliates LLC. [online] Available at: [Accessed 20 April 2012].
alternative investment vehicles have been using by the investors to reduce the risk and maximize the profit. In this paper, we will discuss alternative investments opportunities and reducing the risk of portfolio by using the stock index future. Buying or selling the stocks is highly risky because of weak economic conditions. Investors should include various types of assets in the portfolio so that portfolio will not suffer the impact of a decline of any one security. For example; if an investor uses stocks and bonds in his/her portfolio, if stock price decline due to market fall then, the bonds would get higher return and it will eliminate the risk of decline. In the portfolio management it says that "not putting all eggs in one basket," it means investor should not invest in only one asset; they should construct the portfolio containing various types of assets. Thus, the portfolio must be…
Sushant, Portfolio management, "Tips for diversifying your portfolio," retrieved through; http://www.portfoliomanagement.in/tips-for-diversifying-your-portfolio.html
Hedged your portfolio using stock index future (2002), published by Chicago Mercantile Exchange (pp-1, pp23).
"The Case for Hedge funds," Tremont Advisors Inc. & Tass Research, 3rd edition, Feb 2003 (pp 9)
Absolute Returns: The Risks and Opportunities of Hedge Fund Investing," byAlexander M. Ineichen, published by John Wiley & Sons, 2002,-Page 36.
This also implies inadequacies in fiscal sustainability, which influences investments in private sectors.
The second channel happens through the level, composition and quality involved within the public investment, which shows the level at which the public investment replaces the private investments (Schmidt- Hebbel, Serven, & Solimano, 1996).
The final channel regards the level of taxation on the corporate earnings and the rules applicable in depreciations.
There have been arguments that fiscal policy and public expenditure reduces the private investments in two different manners. These include increasing the interest rates or lowering the private funds involved in financing the investments.
According to the neoclassical theory, the interest rate is also an imperative variable in finding the level of investment. Consequently, it results into a negative effect because it upsurges the interest payable in investments. Concurrently, McKinnon and Shaw, contends that this is likely to cause a positive relationship between the investment…
Shrestha, M.B. (2005), "ARDL Modelling Aproach to Cointegration Test," Proceedings of the 46th Annual Conference of New Zealand Association of Economists, Paper
No. 13, Wellington, July 2005.
Keynes, J.M. (1936). General Theory on Employment, Interest and Money., London,
" (Grabel, 2004) Good institutions serve as the basis for economic growth due to right market-based and market-guided incentives being created which include those stated in this study and specifically: (1) rule of law; (2) competitive markets; (3) low taxation (4) noninflationary monetary policies; and (5) free trade. (2002) Good institutions serve to "Foster other cultural patterns of conduct, hard work, savings and industriousness, honesty and trustworthiness, creativity, and self-responsibility. These are the bases of the wealth of nations." (Easterly, 2002; as cited in: Ebeling, 2002) These tools are helpful in avoiding and mitigating economic risks in development.
Easterly, W (2002) the Elusive Quest for Growth: An Economists Adventures and Misadventures in the Tropics (Cambridge, MIT Press) Chapter 2
Krueger, a.O (1998) Why Trade Liberalization Is good for Growth, Economic Journal 108
Demetriades, P. And Hussein, K.A (1996) Does Financial Development Cause Economic Growth? Time-Series Evidence From 16 Countries,…
Easterly, W (2002) the Elusive Quest for Growth: An Economists Adventures and Misadventures in the Tropics (Cambridge, MIT Press) Chapter 2
Krueger, a.O (1998) Why Trade Liberalization Is good for Growth, Economic Journal 108
Demetriades, P. And Hussein, K.A (1996) Does Financial Development Cause Economic Growth? Time-Series Evidence From 16 Countries, Journal of Development Economics 51, pp387-411.
Grabel, I. (2003) International Private Capital Flows and Developing Countries, in H-J. Chang (ed.) Rethinking Development Economics, London: Anthem Press.
Investment and Trade Over the Next 30 Years
Perhaps the most notable trend in recent economic history has been the falling-away of the influence of the G7 nations of United States, Japan, Germany, ritain, France, Canada and Italy and the explosion of economic clout in the developing world (What is the G7, 2012, Wise Geek). All eyes are looking to China, in terms of the trending of trade and investment patterns. China is the world's largest potential market, and still has untapped growth in terms of its vast consumer marketplace. That is why the Chinese economy is often seen as a barometer of the health of global demand. For example, in the last quarter, "trade was a net drag on growth last year as the world's second biggest economy turned in its slowest rate of expansion since 2009, at 9.2 per cent, with each quarter's growth in 2011 successively weaker…
Edwards, Nick. 2012. China surprises with March trade surplus. The Globe and Daily Mail.
Viewed 24 Apr 2012 at http://www.theglobeandmail.com/report-on-business/international-news/china-surprises-with-march-trade-surplus/article2396805/
Greenblatt, Alan.2011. As Europe ages, its economies look vulnerable. NPR. Viewed 24 Apr
2012 at http://www.npr.org/2011/09/24/140736119/as-europe-ages-its-economies-look-vulnerable
Credit isk Management
Banks are an important part of the economy of any nation. Traditionally, the banks operate as financial intermediaries serving to satisfy the demand of people in need of various forms of financing. Through this, banks enable people to purchase home and businesses to expand. These financial institutions therefore facilitate investment and spending that are responsible for fueling the growth of the economy. In spite of their vital role in the economy, they are nevertheless prone to failure and just like other types of businesses, they also go bankrupt. Unfortunately, the failure of banks can have many and significant implications than any other type of business. As witnessed during the great depression, and in recent times following the global economic crisis and recession, the stability or lack of it in the banking system could trigger economic epidemics that would impact millions of people. With respect to this, it…
Bank for International Settlements (BIS). (2001). Consultative Document -- Overview of The New Basel Capital Accord. Basel Committee on Banking Supervision.
Basel Committee on Banking Supervision (1988) "International Convergence of Capital Measurement and Capital Standards" (www.bis.org/publ/bcbs04A.pdf).
Benston, G.J. (1998) "Regulating Financial Markets: A Critique and Some Proposals." Hobart Paper no. 135. London: Institute of Economic Affairs.
Blundell-Wignall, A., Atkinson, P. And Roulet, C. (2013). Bank Business Models and the Basel System: Complexity and Interconnectedness. OECD Journal: Financial Market Trends, Issue 2.
This is significant because it shows how some critics of contrarian investing will often point to the various instances of speculation and assume that it is contrarian investing. In some cases the psychology of consumers can become so extreme, that the definition of what is speculative expands greatly. As a result, using contrarian investing in conjunction with other indicators / tools can help prudent investors and traders, be able to identify when the market condition are becoming more extreme.
Contrarian Indicators and Tools
When using the different contrarian indicators / tools in conjunction with one another, you can begin to see how this strategy can be used, to effectively determine if the market conditions are overbought or oversold. There are number of different tools that can be utilized to indentify major changes that are occurring in the trend of a stock or the market averages. These would include: headlines…
"3M Historical Prices," Yahoo Finance, http://finance.yahoo.com/q/hp?s=MMM&a=00&b=2&c=1970&d=04&e=25&f=2010&g=v&z=66&y=0
"3M Reports First Quarter Results," 3M, http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MjA2NjEwOHxDaGlsZElEPTMzNDE0MXxUeXBlPTI=&t=1
"3M Reports Fourth Quarter and Full Year 2008 Results," 3M, http://library.corporate-ir.net/library/80/805/80574/items/322063/054431D4-6347-45F1-AF4D-85CCA5F89C52_mmmQ4release.pdf
"American Depository Receipt." Investopedia, http://www.investopedia.com/terms/a/adr.asp
Ethics, Values, Social esponsibility
Bailout of Banking Industry in United States
Ethical Compliance by Banking Industry
It is quite common in American history that government comes for the rescue of companies and organization in the time of financial crisis. General motors' acquisition was one such example where saving GM meant saving the nation. When Government takes measure for the welfare of any segment of the economy, it then becomes responsibility of the organizations that they comply with social responsibility and ethical standards so that it should respond to its social character and use the benefits provided by the government in the honest fashion. The recent bailout of banking sector by U.S. government, and the misappropriation and misuse of these funds, have raised a big question mark on the compliance to ethical standards by the bank.
United States government has a long history of bailing out its financial institutions. Some of…
Amadeo, K. (2012). What Exactly Was the Bank Bailout Bill? retrieved from http://useconomy.about.com/od/criticalssues/a/govt_bailout.htm
Applebaum, B. (2009). Financial Rescue I.G. Says Banks Funneled TARP Aid to Various Expenses, The Washington Post, Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2009/07/19/AR2009071901770.html?nav=hcmodule
Congressional Budget Office. (2010), Report on the Troubled Asset Relief Program -- November 2010, Retrieved from http://www.cbo.gov/publication/21942
Davis, M. (2009). Top 6 U.S. Government Financial Bailouts, Retrieved from http://www.investopedia.com/articles/economics/08/government-financial-bailout.asp#axzz1ujUlc2ZS
Another issue worth mentioning is that prior to the acquisition of 2007, the BB&T employees were already being offered training programs in convenience banking. The programs were basically revolving around the techniques which would be implemented by the organization. In this order of ideas, the most focus was placed on the De Le ue coin counting machine and the Datacard 150i instant issue debit card machine. Employees were taught how to operate, maintain, balance and audit the according operations. Emphasis was also placed on the elationship Bankers in reference to the new account bounding process including free gifts and the efer-a-Friend process. The improvement plan sees the continued training programs which teach staff members how to most efficiently operate the new systems and how to explain their benefits and functionality to the customers. Also, BB&T should remain channelled on the emergent changes affecting the market and the industry and should…
2009, BB&T Corporation, Hoovers, http://www.hoovers.com/bb&t/--ID__14758 -- /free-co-factsheet.xhtmllast accessed on February 9, 2009
2009, Website of the BB&T Corporation, http://www.bbt.com/last accessed on February 9, 2009
2007, InSite Communicating Within, BB&T Insite
Coastal Federal Bank Unveils the Carolina's Most Convenient Bank, PR Newswire
The asylum automatically granted under the Swiss constitution was denied for those seeking it for religious reasons. y 1942, only 9,150 foreign Jews were legally resident in Switzerland, an increase of just 980 since 1931. It was the Swiss government that requested the German government to help it identify Jews by stamping all Jewish passports with a prominent letter "J," following the Nuremberg acts in 1935. "y 1942, acting at the behest of Switzerland's establishment and the majority of its people, its authoritarian police apparatus was dedicated to keeping the country 'pure' and to saving it from being 'overrun with Jews'." Until 1942, the working Jewish community in Switzerland was forced by the government to support Jewish refugees.
The other side of the German interest in Switzerland's banks was related to the business of Germany and the looting of conquered countries. y 1941, Germany had exhausted all of its foreign…
Bazyler, Michael J. Holocaust Justice: The Battle for Restitution in America's Courts. New York: New York University Press, 2003.
Borowiec, Andrew. "World's leaders gather in Geneva." The Washington Times. http://washingtontimes.com/world/20-5793r.htm .
Bower, Tom. Nazi Gold. New York: Harper Collins, 1997.
Clarke, William. "Nazi Gold: The Role of the Central Banks - Where Does the Blame Lie?" Central Banking, Volume VIII Number 1. Summer 1997. April 22, 2005. http://www.bigeye.com/nazigold.htm .
Marketing in Banking
The topic being researched for this doctoral work is marketing in the banking industry. Before delving into the research too much for this topic, the researcher will first enumerate the goals that are to be attained. These goals, as also suggested by the parameters of the assignment, include meeting proper validity and reliability standards, avoiding bias, not posing hypotheses or ideas that are self-fulfilling prophecies or that have desired answers on the part of the researcher. There is also the consideration of using critical reasoning and strong logic skills so as to avoid making conclusions that are not supported by the evidence and/or that are completely contradicted by that same evidence (Leedy & Ormrod, 2010).
eliability & Validity
eliability and validity are two hallmarks of any good research and they must both be satisfied for the research outcomes to have any staying power or good ongoing reputation…
Leedy, P.D., & Ormrod, J.E. (2010): Pages 1-8, 28-35
Morris, F. (2009, October 2). Enforcing the Law - Eight Years Later. New York Times.
Retrieved August 18, 2013, from economix.blogs.nytimes.com/2009/10/02/
190). The Act also helped to create a "too-big-to-fail" mindset (Walter, 2004) that would have profound implications during the economic downturn of 2008 and beyond.
Why did you include this piece of legislation in your list? The Act is described by Sammin (2004) as being "the biggest revision in financial services law since the Great Depression" (p. 653).
iegle-Neal Interstate Banking and Branching Efficiency Act of 1994
What were the problems/conditions giving rise to the legislation? apid consolidations among the nation's banks were creating the potential for diverting needed banking resources from communities (ose, 1997).
What were the major provisions of the Act? The iegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (hereinafter "the Act") contained the following major provisions:
A. Bank holding companies that are adequately capitalized and managed can acquire a bank anywhere in the United States one year after this law is enacted.…
Alexander, K., Dhumale, R. & Eatwell, J. (2006). Global governance of financial systems: The international regulation of systemic risk. New York: Oxford University Press.
Coustan, H., Leinicke, L.M., Rexroad, W.M. & Ostrosky, J.A. (2004). Sarbanes-Oxley: What it means to the marketplace; from support to apprehension, accounting professionals express their thoughts. Journal of Accountancy, 197(2), 43-44.
Feinberg, R.M. & Reynolds, K.M. (2010). An examination of entry and competitive performance in rural banking markets. Southern Economic Journal, 76(3), 624-625.
Gup, B.E. (2003). The future of banking. Westport, CT: Quorum Books.
Among the more obvious reasons is the simple elimination of overhead and initial construction costs for new bank branches. Though such costs are shared by all banking customers, it requires a sizeable initial investment on the part of the bank, and customers might not be plentiful enough to make the sharing of these costs feasible for either potential customers or the banks. With mobile banking, not only are the overhead costs of a physical branch eliminated, but many transactions can actually be conducted without any contact between the customer and bank personnel. This further eliminates costs associated with branch banking while allowing more affordable access to more complex services.
This reduction of overhead costs is observable in other forms of branchless banking, as well, as can clearly be seen in the massive reduction in costs when point-of-sale third party agents were introduced to the microfinance arena (CGAP a 2009). Additional…
CGAP a (2009). "Mobile banking: Overview." Accessed 13 November 2009. http://www.cgap.org/p/site/c/template.rc/1.11.14910/
CGAP b (2009). "Technology: Project profiles." Accessed 13 November 2009. http://www.cgap.org/p/site/c/template.rc/1.11.45745/
WorldBank. (2008). "Mobile banking to transform microfinance." Accessed 13 November 2009. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21765683~pagePK:64257043~piPK:437376~theSitePK:4607,00.html
Both short-term investments and long-term investments have advantages and disadvantages. One of the main advantages that short-term investments have is their potential for quick growth as they are only expected to last a couple of weeks to a few months. These types of investments allow a company to have more control over their money. On the downside, short-term investments carry a higher risk and have demonstrated a higher rate of fluctuation as compared to long-term investments (Mussi, 2007).
An advantage of long-term investments is that they have the ability to "gain small amounts of money over a long period of time. The slow-but-steady pace of long-term investments allow for a much greater degree of stability and a much lower risk than short-term investments (Mussi, 2007). Long-term investments that benefit from this growth and stability include savings and retirement funds as these investments mature over the years. Because these types of…
The ASPIRA Association. (n.d.). Short-Term and Long-Term Investment Options: Facilitators
Manual. Retrieved 17 July 2012, from www.aspira.org/files/user/u1/Inv_Fac_M5_V3_FR.pdf
CNN Money. (2012). Investing your money basics. Retrieved 17 July 2012, from http://money.cnn.com/magazines/moneymag/money101/lesson4/index.htm
Long-term investments. (2012). Investopedia. Retrieved 17 July 2012, from http://www.investopedia.com/terms/l/longterminvestments.asp#axzz20vK110dQ
The success rates of this venture are increased as investors are willing to risk their money in the hope of increased gains. Otherwise put, shareholders "can accept downside risks because they fully share the upside as well" (Dynamic Equity, 2002). egardless of the sources used in contracting the necessary money, the organization would still have to retrieve a minimum of $40 million revenues during the first year in order to be profitable.
7. Exchange ate isk
Some managers at the Wilson Company argued that the organization should contract its loans in enminbi, or the Chinese currency. The measure would, according to them, help the company protect itself against currency exchange risks. Considering that the company comes to disregard this suggestion, the situation would present itself as follows:
the exchange rate is of one M to 0.2 USD, meaning basically that a United States dollar can be purchased for 5 enminbis…
Fabozzi, F.J., Peterson, P.P., 2003, Financial Management and Analysis, 2nd Edition, John Wiley and Sons, ISBN: 0471234842
Hull, J.C., 2003, Options, Futures and Other Derivatives, Prentice Hall, ISBN 0130091448
Roworth, G., 2005, The 7 Keys to Business Success, Buzzle, http://www.buzzle.com/editorials/4-25-2005-69063.asp last accessed on May 18, 2009
Walesh, S.G., 2003, Managing and Leading: 52 Lessons Learned for Engineers, ASCE Publications, ISBN 0784406758
Price of bond= 0.385543*1000 +6.144567*100= $385.54.64+$614.45
Price of bond= $1,000
So, price of bond B. is $1,000 b. For market interest rate equal to 12%:
Price for bond a:
Market interest rate is equal Coupon rate is equal Face value Frequency Number of years to maturity Number of Periods Discount rate annually Discount rate per period n, periods r, per period 12%
10% $1,000 Annual 20-20-12.00% annual 12.00% 20-12.00%
Now we need to calculate PVIF and PVIFA.
For calculation of PVIFA (i, n) and PVIF I is equal to 20 periods and n=12%
PVIFA= (1- 1/(1+.12)^20)/.12
Price of bond= 0.103667*1000+7.469444*100=$851
Price of bond a = $851
Price of bond B:
Market interest rate is equal Coupon rate is equal Face value Frequency Number of years to maturity Number of Periods Discount rate annually Discount rate per period n, periods r, per period 12%…
Investments and the Irrelevance Proposition
The expected rate of return on an investment is calculated by taking the expected return and dividing it by the amount invested. If there is a return of $6 on an investment of $100 the rate of return is 6%.
When a customer states they are unhappy with this return, and it is suggested that they borrow $90 to help pay for the investment, which has an interest rate of 4%, the broker is suggesting that the investor goes from an unleveraged position where there is no borrowing, to a highly leveraged position, where there is a high level of borrowing.
Looking at the effect this will have on the investment the first consideration is to look at the investment itself; if the investor borrows $90 and invests $10 of their own, there is still a total investment of $100, and the return for…
Baye Michael, (2007), Managerial Economics and Business Strategy, McGraw-Hill/Irwin
Miller, M. H, (1991), Financial Innovations and Market Volatility, Cambridge, Massachusetts: Blackwell Publishers
Though this research will not provide all necessary data for such a project to be undertaken, it will explore the issue form a side and perspective not often utilized, shedding light on an essential yet often-overlooked aspect of the foreign trade relationship.
Qualitative research is perhaps not the first thing thought of when conducting a trade analysis, but its importance to a proper understanding of the trade relationship cannot be overstated. Such research and analysis requires that the situation be examined in its human terms in addition to the numeric values and inferences drawn from quantitative research and analysis. In determining the perceived motivations and barriers to direct investment, this research will essentially be attempting to analyze and predict responses to changing business situations, and such research almost necessarily takes on a qualitative form (Bavdaz 2009). The predictive value of the proposed qualitative research is, in this instance,…
Bavdaz, M. (2009). "Conducting research on the response process in business surveys." Statistical Journal of the IAOS 26(1/2), pp. 1-14.
Diefenbach, T. (2009). "Are case studies more than sophisticated storytelling?: Methodological problems of qualitative empirical research mainly based on semi-structured interviews." Quality & Quantity, 43(6), pp. 875-894.
MOFA. (2003). "Saudi-British Relations." Ministry of foreign affairs. Accessed 6 March 2010. http://www.mofa.gov.sa/Detail.asp?InSectionID=2306&InNewsItemID=28862
Lavery, B. (2005). "World Business Briefing | Europe: Britain: Saudi Prince Buys the Savoy." NY Times 20 January, pp. 6.
Moller ended up becoming the most profitable stock in my portfolio during the first week of investing, with a gain of over 10%. Throughout the month, Moller has continued to outperform any other stock in my portfolio, so my investment risk paid off. So far, my least performing stock was Zoltek, another energy company.
My overall investment strategy, I discovered, was more high-risk than I had initially thought. However, I did need to balance my portfolio with some more stalwart stocks, in order to ensure that I would not lose all of my investment capital. I bought 1000 more shares of Citigroup, 100 shares of Deutche Bank, and 1000 shares of Home Depot. Many of these companies have not been performing well recently, but they are good long-term investments.
Then, because Moller continued to perform well, I purchased 5000 more shares, which increased my immediate profit percentages considerably. If the…
American Investment ecovery Act
Throughout American history there has been an emphasis on maintaining a balance of power between different branches of government. This is from the belief that concentrating too much authority in one area will lead to inevitable abuses in others. To prevent this, the federal government and states have always practiced these basic principles. As a result, there are varying interpretations as to the overall scope of power given to particular branch. (McNeese, 2001)
In 2009, these issues were continually being brought to forefront with the American ecovery Act and einvestment Act of 2009. This law was designed to provide the economy with additional amounts of stimulus to address the lingering challenges from the financial crisis. However, the process of enacting this legislation, there were increased amounts of controversy surrounding the balance of power between the President and Congress. This is because the Democrats had an overwhelming…
The American Investment and Recovery Act. (2009). Fiscal Accountability. Retrieved from: http://www.fiscalaccountability.org/index.php?content=cog09-13#
The American Investment and Recovery Act. (2009). GPO. Retrieved from: http://www.gpo.gov/fdsys/pkg/BILLS-111hr1enr/pdf/BILLS-111hr1enr.pdf
Estimated Impact of American Investment and Recovery Act. (2012). CBO. Retrieved from: http://www.cbo.gov/sites/default/files/cbofiles/attachments/05-25-Impact_of_ARRA.pdf
Wickard v. Filburn. (2012). Case Briefs. Retrieved from: http://www.casebriefs.com/blog/law/constitutional-law/constitutional-law-keyed-to-stone/the-powers-of-congress/wickard-v-filburn-2/
Calculating nvestment Values
When a firm has a number of investment options but can only undertake one, the firm is likely to undertake some assessments in order to determine which is likely to provide the optimal return. n the first scenario there are three potential factory expansion choices, with the need to determine which will create the greatest value for the firm. The investment levels and the expected net profit per annum have been supplied. This may be used as the basis for a comparison.
The assessment method used is a straightforward approach which looks at the return on the capital to be invested. t is assumed that the firm want to gain the greatest potential return and that there will be other investment opportunities for any capital that is not used to fund the factory expansion.
To calculate the expected return the expected net profit is divided by…
If it is assumed that the profit level remains the same, the use of the dividend discount model can be used to assess the firms' value
. If it is assumed that the profit level remains the same, and does not decrease, and an alternate investment over a long period of time will yield 11%, this will give the firm a value of $509,090, this is above the asking price. Therefore, while the firm has a low level of assets, it is generating income. The issue that would hold back a purchase would be the current decline in profit and concern for the reason this is declining and Gino's reason for sale. If there are no other negative factors then $200,000 may be a fair price.
Dividend discount model calculator can be found at http://www.moneychimp.com/articles/valuation/dcf.htm
Human Resources as Critical Investments
IN AN ORGANIZATION'S FUTURE
The purpose of this paper is to explore whether or not the human resources (HR) within an organization should be used as critical investments. To support this exploration, the terms "human capital," "human assets" and "intellectual capital" will be discussed, on the merits of each specific term as well as in relation to one another. Finally a conclusion will be drawn that determines if human resources should be viewed as any or all of the above terms, and if HR managers should utilize them as critical investments in an organization's future.
To begin, the overarching term "human resources management (HRM)" must be understood. HRM essentially is an all-encompassing term that refers to how an organization's human resources are used to achieve the organization's overall objectives or strategic directions. HRM includes a continuum of activities that can be compartmentalized into seven categories:…
Boone, Christophe, Arjen van Witteloostuijn. Industry Competition and Firm Human Capital. Small Business Economics. 1996. Vol. 8. Pp. 347-364.
Boudreau, John, Peter Ramstad. Measuring Intellectual Capital: Learning From Financial History. Human Resource Management. Fall, 1997. Vol. 36, No. 3. Pp. 343-356.
Bradley, Keith. Measuring Return on Human Assets in Companies. Feb., 1993. London School of Economics, Business Performance Group.
Finance: Financial Investment
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…
Connolly, M. (2014). The Stock Market in 2014: Up, but Volatile. Retrieved from www.nhbr.com/The-stock-market-in-2014-up-but-volatile/
Gold, M. (2011). Fiduciary Finance: Investment Funds and the Crisis in Financial Markets. Massachusetts: Edward Elgar Publishing.
MSN. (2014). Apple Inc. (NASADAQ: AAPL). Retrieved from http://investing.money.msn.com/investments/stock-ratings/?symbol=AAPL
Foremost, Richardson also recognized that Roth had indeed generated financial progress. Despite this however, he was uncertain as how should he proceed and most of his conflict management was based on separate discussions with the parties. It was a positive approach since it gave a fair chance for all parties involved to state their viewpoints, but it was inefficient as it did not lead to a resolution of the conflict.
3. The conflict created at Educational Pension Investments by the hiring of a new investment broker with a visionary and aggressive approach could have been resolved more effectively if the chief executive officer had implemented the concepts of the collaborative approach to conflict management. In this order of ideas, Dan Richardson should have represented the liaison between Mike Roth and the older senior executives and should have communicated the interest of each party more clearly. Additionally, he should have created…
Life Insurance a Good Investment?
Life insurance may be grouped into two basic categories: term and whole life insurance. The primary difference between term and whole life insurance is that a term policy is life coverage only. In the case of death of the insured, term insurance pays the face amount of the policy to the named beneficiary. Term insurance may be purchased for periods of 1 to 30 years. Whole life insurance combines a term policy with an additional investment component. The investment may be comprised of bonds, money-market funds, or stocks (Feldpausch, 2004). This type of policy builds cash value that one may borrow against. The three most common types of whole life insurance are traditional whole life policies, universal and variable. Whole life and term insurance policies allow one to lock in the same monthly payment over the life of the policy.
Overall, whole life insurance carries…
Feldpausch, C. (2004). Why do I need life insurance? J. Mich Dent Assoc, 86(5), 30.
Hasman, J.J., Chittenden, W.A., 3rd, Doolin, E.G., & Wall, J.F. (2004). Recent developments in health insurance, life insurance, and disability insurance case law. Tort Trial Insur Pract Law J, 39(2), 453-492.
Kane, L. (2002). Life insurance. What kind? How much? Unless you choose your policy carefully, you could end up paying too much, or being left without coverage. Med Econ, 79(13), 44, 47-49, 53.
ental Investment May Seem Safer than it eally Is" offers counsel regarding the pros and cons of venturing into rental property investments (Bernard, 2013). The article explains the appeals of using rental investments to create a new profit stream -- low interest rates, low home prices, potential for supplemental income and the potential for rents to rise in the future. With a turbulent stock market and fickle returns on mutual funds and other investments, many people have come to view owning and operating rental properties as a safer alternative.
However, the piece also warns about the other considerations that many fail to take into account -- tenant issues, unforeseen expenses and competition for the best deals. Many new investors may underestimate the amount of work required to successfully manage and maintain a property. As the article points out, screening tenants, collecting rents, or evicting when a tenant loses a job…
Bernard, T. (2013, March 30). Rental Investment May Seem Safer That It Really Is. New York Times. pp. B1-B5.
Birger, J., Caplin, J., & Feldman, A. (2004). Getting Real About Real Estate Investing. Money, 33(12), 122-128.
Neuman, W. (2005, April 17). Seeking Nest Eggs, Investors Buy Nests.New York Times. pp. 1-5.
The Big Long. (2012). Economist, 405(8813), 77-78.
" (edhead 2008) (Manow 2001)
These factors are showing how institutional investors are playing an important part in offering additional amounts of liquidity to a variety of businesses. This helps them to address a number of issues they are facing ranging from managing strategic acquisitions to having additional financing for bringing new products or services in the marketplace. When this happens, these organizations become more competitive and flexible in meeting the needs of customers. (Manow 2001)
Institutional investors and the short-termism theory
However, one the biggest criticisms of the role of institutional investors is they are encouraging companies to focus on meeting short-term objectives. This is because all investors want to see an increase in their profit margins. When this happens, the price of the stock will move higher from these favorable perceptions. During the annual proxy vote (for the board of directors), this ensures that they will be reelected…
Bhojraj, S, 2003, 'The Effects of Corporate Governance,' the Journal of Business, vol. 76, no.3, pp. 133 -- 142.
Davis, E, 2002, 'Institutional Investors, Corporate Governance and the Performance of the Corporate Sector', Economic Systems, vol. 26, no. 3, pp. 203 -- 229.
Manow, P, 2001, Comparing Welfare and Capitalism, Psychology Press, London.
Palley, T, 1997, 'Managerial Turnover,' Journal of Economic Behavior, vol. 32, no. 4, pp. 547 -- 557.
Annie's Investment In Atelier's Bonds
Call price =$1,080
Call price = Face value+ interest (Extra payment to the bond holder)
Interest Income = Call Price - Face Value = $1,080 - $1,000 = $
After 5 years, Stock price = $ (30 x 50) = $1,500 If she sells the stock at the end of the 5 the year, then she will get income from sale of Stock = $ (1500-1000) = $500. Therefore, at the end of 5th year, Stock price will be greater than the Call Price and as such, the can convert the bonds into common stock.
Converting the bonds is a safe option for Annie since common stock is a safe, income-producing alternative to bonds. While convertible bonds give up some of the upside of a stock, the dividend component and the reduced volatility make them attractive investments for retirement accounts and accounts with a need…