Investment Banking Essays (Examples)

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Investment Portfolio Exercise

Words: 2933 Length: 10 Pages Document Type: Term Paper Paper #: 67160599

Finance

The portfolio I constructed consists of Google and Apple. The rationale for this seemingly simple portfolio is actually quite complex. The portfolio maximizes my long-run wealth, and this paper will explain how this will work. The bottom line for me is that no other portfolio was going to deliver the same benefits as a 50/50 portfolio of these two technology giants.

Description of the Portfolio

Portfolio theory holds that a diversified portfolio will perform in line with the market on a risk-adjusted basis. This means that when a portfolio is fully diversified it will have a beta of pretty close to 1.0. But the thing about understanding this portfolio theory is that you have to take into account a wide range of factors in constructing the optimal portfolio. This paper will in part walk through this process of constructing this very dynamic portfolio that will deliver me superior returns.…… [Read More]

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Investments in Human Resource Programs

Words: 371 Length: 1 Pages Document Type: Term Paper Paper #: 23895552

Value (NPV) Process for a Company's Human Resource Program Investments

Company Memo

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.

Simple Example:

The changing value of money over time is easily seen in the classic bank savings account.

If someone deposits $100 in a bank…… [Read More]

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Banking and Blockchain Technology

Words: 3467 Length: 11 Pages Document Type: Essay Paper #: 48480511

Introduction

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…… [Read More]

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Banking and the Current Fiscal

Words: 1661 Length: 5 Pages Document Type: Thesis Paper #: 70964429

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…… [Read More]

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Banking Response to the Financial Crisis

Words: 3415 Length: 10 Pages Document Type: Essay Paper #: 33344151

Financial Crisis

The American banking system was in crisis from late 2007 through to early 2009. The subprime mortgage crisis had left many banks with large amounts of so-called "toxic assets" on their books, mainly in the form of subprime mortgages and mortgage-backed securities that were now under water. The mortgage-backed securities were one of the biggest problems, because they were presented as being of investment grade, which did not align with their risk characteristics. For a time shortly after Washington Mutual failed, there was concern that the banking system was at risk of failure. Invoking the doctrine of "too big to fail," the Bush Administration responded with the Toxic Assets Relief Program, or TARP, wherein the federal government bought back some of the worst assets from the banks in order to stabilize their banking systems.

Since that point, the U.S. economy has recovered, albeit slowly. The stock market recovery…… [Read More]

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Banking Customer Service a Comparison Between USA and China

Words: 2524 Length: 9 Pages Document Type: Term Paper Paper #: 51918725

customer service as adopted in the U.S. And China. It has 5 sources.

In layman's terminology customer service could be defined as the way an organization keeps its customers happy. However, in reality, this is different and more complex as one go into the depth of the definition of customer service. For some customer service is about keeping the customer informed while for others it is about assisting the customer when they want and the way they want it; and yet there are others who consider customer service is the all encompassing service that organizations provide to clients as they demand it. These perceived concepts of customer service although not wrong but does not actually define it in its true essence per se. The reason is intrinsically linked with why customer service is needed and what importance does it hold in our daily lives.

Customer service according to the researcher…… [Read More]

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Ethical and Financial Risks of Banking Industry Meltdown

Words: 942 Length: 3 Pages Document Type: Essay Paper #: 4428235

Banking Industry Meltdown: The Ethical and Financial Risks

The 2008 financial meltdown has been rated as the worst global economic crisis after the Great Depression of 1930. It shook the financial fabric of all the nations regardless of their economic status. It also led to the closure of most of the world's renowned banks and other financial institutions. Analysts have related the problems and the causes of this meltdown to the failure of the banks in their use of derivatives (Will, Handelman, Brotherton, 2013). Derivatives are defined as the financial arrangements that financial institutions formulate in order to hedge out against a future loss. The nature if these financial assets are that they are highly profitable and at the same time perilous (Beder & Marshall, 2011). The allure of profits is what baits the managers to adopt and use them in their institutions. This study focuses on the ethical dimensions…… [Read More]

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Financial and Investment Analysis

Words: 4393 Length: 17 Pages Document Type: Term Paper Paper #: 66975489

Investment Analysis

Investing money for the future is one of the key components of creating a secure future, and retirement. While many Americans do not plan for future years, other then a company retirement plan and social security retirement benefits, research shows that when a person takes an active role in their retirement planning, they are more likely to create a future which will support their standard of living after they have stopped punching a clock, and commuting to the office.

Regarding the Social Security administration and the SSI benefit program, at its inception during the 1930's the system was based on one beneficiary receiving payments from over 20 contributors. As the population shifted toward longer lives, current estimates are that one beneficiary is receiving payments based on 8 workers paying into the system. In the near future, as the baby boom generation retires and Gen X and Gen Y…… [Read More]

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Stock Exchange Investment

Words: 1013 Length: 3 Pages Document Type: Term Paper Paper #: 31208359

Investment Strategy

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…… [Read More]

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Corporate Investment Analysis

Words: 620 Length: 2 Pages Document Type: Essay Paper #: 43672299

Investment Analysis

There is a significant difference between bonds and stocks, and they should not be treated the same when evaluating a portfolio. There are a handful of similarities, such as the fact that their value derives from the net present value of expected future cash flows, but the two securities are fundamentally different.

A bond entitles the holder to a cash flow from the issuer. Equity represents a share of ownership in the company. From this arises the first key difference -- the risk. Risk refers to the chance that the expected cash flows will be disrupted. With equity, this means that the earnings could drop, reducing not only the dividend but also the future profit potential as well. The value of the company's cash flows is likely to change if the company's performance suffers a downturn. With a bond, the only risk is the risk of default. Default…… [Read More]

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Commodity Investment Instruments

Words: 870 Length: 3 Pages Document Type: Research Paper Paper #: 68925004

Investment Instruments

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…… [Read More]

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Opportunities to Improve Relationship Banking at Al

Words: 4847 Length: 19 Pages Document Type: Essay Paper #: 36667476

Opportunities to Improve Relationship Banking at Al Rajhi 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…… [Read More]

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Shadow Banking on the International Level

Words: 1641 Length: 4 Pages Document Type: Term Paper Paper #: 2478417

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…… [Read More]

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Shadow Banking Failure of Regulation During the Sub-Prime Crisis

Words: 2890 Length: 9 Pages Document Type: Research Paper Paper #: 57764477

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.…… [Read More]

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Qatar's Foreign Direct Investment Law

Words: 2234 Length: 7 Pages Document Type: Research Paper Paper #: 39708819

Qatar's Foreign Direct Investment Law

Qatar's Foreign Investment Law

Why is Qatar Attracting Foreign Investors?

Qatar's Foreign Direct Investment

Foreign Investor

How to Apply

Investment Laws

Investment Sectors

Qatar's Investment Environment

Qatar's Foreign Investment Law

With a population of approximately 1.7 million people, Qatar happens to be one of the tiniest states in the Arab Gulf. Although Arabic is the official state language, English remains one of the country's most widely spoken languages (CIA). The country's capital is Doha. Being a constitutional monarchy, it is also important to note that since the 19th century, this Gulf Arab State has been under the leadership of the Al-Thani family.

According to the state's Ministry of Economy and Commerce -- MEC, the country has in the recent past been striving to make economic diversification a reality. In the words of MEC, "although oil is the main contributor and component of the gross domestic…… [Read More]

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History of Central Banking in the United

Words: 1854 Length: 5 Pages Document Type: Term Paper Paper #: 93797581

History Of Central Banking in the United States of America

History of Central Banking

This paper discusses the history of central banking system in the United States of America. It analyses the establishment, operations and functions of the central banks that existed in the history of the United States of America. The closing of these historic central banks is also being discussed in the preceding paper. It also puts light on the main functions of the central banks.

History of Central Banking in the United States of America

A central bank can be defined as an authority that is responsible for formulating strategies that directly affect the supply of money and credit in a country. In specific terms a central bank uses its monetary policy tools, including open market operations, discount window lending and changes in reserve requirements, in order to adjust the rates of interest and the monetary base…… [Read More]

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Alternative Investment Vehicles Have Been Using by

Words: 3136 Length: 11 Pages Document Type: Essay Paper #: 92173206

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…… [Read More]

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Workplace Assessment Corporate Banking Corporate Banking Which

Words: 1170 Length: 4 Pages Document Type: Essay Paper #: 21605089

Workplace Assessment: Corporate Banking

Corporate banking, which is also called commercial banking, generally means a bank or division or a bank that mostly focuses on loans and deposits that belong to large businesses and corporations (Banker, 2014). This is different from the more retail banking sector, which is focused on small businesses and individuals (Kumar, 2013). There are many different kinds of services that corporate banks provide. These include lending, investing and clearing deposits, and organizing products that can be used for clients (Kumar, 2013). These products are generally specialized in that they are designed for those particular clients and not for others. Major companies and financial institutions use these types of banking services, because they are more appropriate for larger companies as opposed to smaller ones or individuals.

Overview of the Job

In order to work as a corporate banker, a person needs education and training. However, the education…… [Read More]

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Mutual Fund Analysis Investment Management

Words: 1190 Length: 3 Pages Document Type: Term Paper Paper #: 23910187



When looking at risk, the fund does have a beta higher than that of its large cap blended peers. The beta of the fund is roughly 1.23 as compared with a beta of 1.04 for many of its peers. This can be attributed to the large concentration in financial stocks which tend to have high betas relative to the market. This is to be expected as financial shares raise disproportionately more when the economy recovers and fall just a much when the economy enters recession. The standard deviation of the portfolio is also higher at 18.15 relative to its peer group standard deviation of 15.86. These numbers again reflect the volatility inherent in a portfolio with 40% of the assets in cyclical industries such as banking and technology.

To improve performance and volatility in the fund, I would recommend two courses of action. First, I would lower the expense ration…… [Read More]

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Role of Private Investment on

Words: 14411 Length: 40 Pages Document Type: 'Literature Review' chapter Paper #: 672069

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…… [Read More]

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Corporate Finance Investment Assessment Questions

Words: 2676 Length: 7 Pages Document Type: Term Paper Paper #: 17561796

28%

This gives project B. An IRR of -0.028%

Part C

Using the above assessments each may indicate which investment may be preferred. Using the payback period project a has a payback period of 4 years, whereas project B. has a payback period of 3 years 8 months. If the fastest payback period is preferred than project B. will be chosen.

The NPV which discounts the net revenues into a net present value shows that Project a has a loss of 1,576 and the loss for Project B. is 1,074. If assessed only on this basis, project a makes the greatest loss. However, the basic rule of NPV is that investments should only be made in projects where there is a new positive value, otherwise the firm is not earning the amount it is costing them in payments to support the capital used to fund the project (Weetman, 2010, p269).…… [Read More]

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Capital Investment Planning and Budgeting

Words: 1325 Length: 4 Pages Document Type: Research Paper Paper #: 26641655

Capital Investment and Budget Planning

Capital and Investment Budget Planning

For all governments, long-term expenses are something they must deal with. This is to ensure that the continuing needs of an area are met through facilitating economic growth and addressing the demands of the general public. To fully understand this process requires examining the capital and investment budget planning process. This will be accomplished by comparing the city of Toronto's budget presentation with the 8 step method and carefully analyzing this model. Together, these elements will highlight how administrators are able to account for spending on large projects and ensure that there is enough funding to meet these needs every single year.

Part

Compare Toronto's capital budget presentation with the eight step model

For the most part, the city of Toronto is following the eight step model to highlight the long-term needs of the area between 2009 and 2018. Some…… [Read More]

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Content Analysis of Banking Web Site Commonwealth Bank in Australia

Words: 4869 Length: 16 Pages Document Type: Research Proposal Paper #: 27359167

Banking Website

This report is providing customers with ideas and insights about the financial industry. However, the writer should not be held accountable for the conclusions and recommendations that are made.

Letter of Transmittal

In this research project we are focusing on the changes that are taking place inside the financial industry. This is accomplished by carefully examining the websites of Commonwealth Bank Australia with NAB. We then compare the two with one another by looking at various marketing strategies that are used in a literature review and analyzing the findings with one another. What we determined is that both financial institutions are using similar tools to target specific demographics of customers.

Table of Contents

Introduction

Problem Definition

Methodology

Data Analysis

Results and Discussion

Limitations and Future Research

Conclusions and Recommendations

Exhibits

Reference List

Appendices

Table 1: Top Financial Institutions

Bank

Total Assets

BNP

$2.69 billion

Deutsch Bank

$2.5 billion…… [Read More]

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Four Investment Scenarios in Capital Markets

Words: 635 Length: 2 Pages Document Type: Term Paper Paper #: 92855857

Investment Scenarios

During the last several years, the U.S. economy has been going through a number of challenges. As it went through a major economic contraction and began expanding. However, the underlying rates of growth have not been sufficient enough to erase the job losses that were created from the last recession. This means that there are two scenarios that are most important today. ("Kiplinger Economic Outlooks," 2013)

Outward shift in supply of capital occurs in situations where new sources of capital enter the market, either from a domestic savings (people desire to save more) or foreign investment sources. The greater the supply of capital requires banks and other intermediaries to reduce the interest rates and encourage more borrowing. Net result: Lower interest rates and more capital invested.

In this situation, the outward shift in capital is resulting in an increase in the money supply and available sources to lenders.…… [Read More]

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Short-Term Investment Strategies

Words: 492 Length: 2 Pages Document Type: Essay Paper #: 33648329

Investment Practices and Strategies in the U.S. Treasury

Treasury Tax & Loan (TT&L) notes

This program was established in 1978 to provide Treasury with an effective tax collection mechanism designed to assist in balancing the Treasury General Account (TGA). Through this program the Treasury collaborates with over 9000 commercial financial organizations whose mandate is tax payment collection. Almost ten percent of these institutions also hold funds and pay interest to Treasury. The program is divided into three sections collectors, retainers, and investors. The collectors, which make the majority receive payments from customers and remit the funds to Treasury's account. Retainers unlike the collectors retain specific amount subject to interest and the funds can be called by the Treasury. The investors, collect, retain and receive funds from the treasury through investment channels (United States Government Accountability Office, 2007).

One major advantage of this program is the ability to provide the Treasury…… [Read More]

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Trade and Investment

Words: 901 Length: 2 Pages Document Type: Research Paper Paper #: 55204237

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, Britain, 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…… [Read More]

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Psychological View of Investment &

Words: 1828 Length: 6 Pages Document Type: Essay Paper #: 44339313

" (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.

Bibliography

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,…… [Read More]

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E-Banking on the Banking Industry

Words: 14760 Length: 35 Pages Document Type: Term Paper Paper #: 37455739

The growth of Internet has led to a desire to understand the characteristics of the users, their reasons for using the service and what the users do when connected. A huge and expanding 'Internet watching' industry has progressed to provide such data. Some statistics can be collected directly from the Internet about traffic volumes and the geographical segmentation of its users and these provide a reasonably accurate picture of what is happening. The number of host computers which are linked to the Internet continues to expand every year by over 60 per cent and their geographic distribution is concentrated within a very few countries. U.S. dominate the amount of computing power present on the Internet, and accounts for over 60 per cent of all of the host machines. There are some differences in the ways that different countries have responded to this technology. Japan and France have a relatively lower…… [Read More]

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Foreign Direct Investment Into Ukrainian

Words: 3105 Length: 10 Pages Document Type: Term Paper Paper #: 88790246

However, the development and implementation of the new fiscal regulations could expand throughout numerous years.

Lack of incentives and transparency in the privatization process - the current administration is basically blamed for its refusal to privatize large state owned companies and numerous banks. In addition, the government is also accused that when they do indeed agree to the privatization of a bank or company, their procedures and reasons are not made public. (Wold Bank, 2001)

These issues, alongside with other significant matters have been raised by international organizations and their quick resolve is vital for a balanced economy. While the North Atlantic Treaty Organization places increased emphasis on military strategies and alliances, the European Union places increased interest on all aspects of life. In this order of ideas, the European organization imposed numerous conditions including, amongst others, the reduction of taxation, the implementation of transparency policies and the reduction of…… [Read More]

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Credit Risk in Banking in Agreement With the Basel Accords

Words: 13816 Length: 50 Pages Document Type: Thesis Paper #: 65664414

Credit Risk 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…… [Read More]

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Japan's Banking Crisis Rubber Rules

Words: 5738 Length: 21 Pages Document Type: Term Paper Paper #: 22758828



The Japanese economy stagnated since 1990:

when real Gross Domestic Product (GDP) grew at an average of just 1.2%.

Since 1995, growth was extremely slow averaging less than 0.7% on year-to-year basis." ("Banking Crisis... "5) During the last quarter of 2003, however, the GDP increased 7% (Annexure 2), the most since 1990, demonstrating growth rate of 2.7%, for the entire year. Some economists argued, however, this 2003 growth did not reflect a complete economic recovery but signifies a short-term phenomenon, not a long-term reality.

Nakamae contends that the BOJ's reaction to the Japanese weakening economy only weakened the economy further and that doing nothing would have been better than the steps Japan took and further argues that.".. central banks react to economic bubbles by creating further bubbles....

Amid the economic and political fallout that descends when a bubble bursts,... In an effort to boost demand and thereby reduce the fallout…… [Read More]

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Financial Statement Analysis Westpac Wbc Westpac Banking

Words: 2163 Length: 8 Pages Document Type: Essay Paper #: 77127990

Financial Statement Analysis

Westpac (WBC)

Westpac banking corporation is one of the largest banking organizations in Australia, and the largest bank in New Zealand. Westpac provides arrays of banking and financial services in Austria, which include institutional banking, retail banking, and wealth management services. Established in 1817, Westpac is the first bank established in Australia. Since its formation, Westpac has increased in its strength, and at present Westpac has the market capitalisations that reach $69.5 billions and total assets worth 618.3 billions. (Westpac Annual Report, 2010).

The objective of this paper is to analyze whether Westpac could be a potential company to invest my $50,000.

With the present economic crisis where many companies have suffered financial losses, it is critical to subject a company to financial analysis since I have decided to invest my $50,000 on the medium-term investment; there is a need to make thorough analysis on the company…… [Read More]

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Venezuelan Banking Sector - Bbva

Words: 2819 Length: 10 Pages Document Type: Research Paper Paper #: 18074344

This would then imply an increased on-the-job satisfaction, generated by a reduction in stress and organizational pressure. The increased satisfaction on the job materializes in increased performances and an increased support in helping the bank reach its overall objectives.

Aside from the direct impacts upon the satisfaction of the customers, the benefits of introducing the newer technological advancements have also resulted in more efficient communications. This was available between company representatives and shareholders, customers, employees, as well as communities.

Future benefits of the investment are also likely to materialize in the following years. As such, the $95 million funds allocated to the modernization of BBVA Banco Provincial would increase the number of customers. It would also imply that the current customer base becomes more loyal, ensuring as such constant and reliable corporate incomes. More specifically, the investments in technology are expected to increase the sector of private loans by 27%…… [Read More]

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Ethics Values Social Responsibility Bailout of Banking

Words: 2576 Length: 8 Pages Document Type: Essay Paper #: 77183960

Ethics, Values, Social Responsibility

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…… [Read More]

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Contrarian Investment Strategies Over the

Words: 26080 Length: 73 Pages Document Type: Thesis Paper #: 63152795

"

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…… [Read More]

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History of Swiss Banking in

Words: 2877 Length: 7 Pages Document Type: Term Paper Paper #: 3277343

The asylum automatically granted under the Swiss constitution was denied for those seeking it for religious reasons. By 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. "By 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. By 1941, Germany had exhausted all of its foreign…… [Read More]

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Convenience Banking Bb& t - Convenience

Words: 2868 Length: 10 Pages Document Type: Thesis Paper #: 17480843



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 Rue 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 Relationship Bankers in reference to the new account bounding process including free gifts and the Refer-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…… [Read More]

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Goldman Sachs and Wisdomtree Investments

Words: 896 Length: 3 Pages Document Type: Research Paper Paper #: 60122833

Business Improvements

Since the two companies operate in different target markets and with substantially different product mixes the recommendations must be customized for each firm. Goldman Sachs is considered a top trade recommendation for 2012 by many accounts as the firm is largely financially successful and the institutional client services dominate the businesses revenue stream (Craig, 2013). The most pressing recommendation for Goldman Sachs would be to integrate a more robust enterprise risk management system (ERM).

Risk management is becoming an important consideration for many organizations. There are several aspects to risk management that apply to Goldman Sachs and their current operating model. The 2008 financial crisis revealed many unseen sources of risk in the financial system. Although Goldman Sachs is considered to have one of the industry's best risk management systems, it stands that the company that the organization could further develop their model (Popper, 2012). Risk management is…… [Read More]

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Financial Stability Through Bank Diversification the Banking

Words: 3156 Length: 10 Pages Document Type: Essay Paper #: 16266436

Financial Stability Through Bank Diversification

The banking industry of the United States of America is witnessing a major shift in the revenue making procedures. The banks are now inclined towards generating income from non-interest-based sources such as fee income, service charges and trade revenue etcetera instead of the traditional process of loan making. Noninterest income has always played an influential role in the revenue generation of the banking system. It'd evident from the fact that by the year 2000 the noninterest income accounted for forty three percent of the total banking revenue which is a massive rise from the twenty five percent in the year 1984.[footnoteRef:2] (Stiroh, 2004) [2: Kevin Stiroh, 2004. "Diversification In Banking: Is Noninterest Income The Answer?" Journal of Money, Credit and Banking 36(5), 853-882]

According some scholars, the shift in the revenue generation process, on the one hand, has led towards an evident increase in the…… [Read More]

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Marketing in Banking the Topic Being Researched

Words: 1936 Length: 6 Pages Document Type: Dissertation Paper #: 96208134

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).

Reliability & Validity

Reliability 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…… [Read More]

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Foreign Direct Investment and the Impact of Terrorism

Words: 3956 Length: 12 Pages Document Type: Term Paper Paper #: 31922188

Foreign Direct Investment and the Impact of Terrorism

Foreign Direct Investment provides many opportunities for both the expanding company and the host country. The host country receives an influx of business into their economy and the expanding company receives the ability to expand into new and emerging markets. There are many factors that weigh into a decision to expand and invest in another country. Of course, one of the key factors is a stable economy. The travel and tourism industry is one of the key industries that engages in foreign direct investment. This is especially true among the big chains. The following research will explore the factors that weigh into a decision to invest in a country, and will then focus on the impact that terrorism, has on this decision.

Patterns of FDI Growth Over the Past 20 Years

As the world moves toward a more global economy, there is…… [Read More]

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Mobile Microfinance Mobile Banking in

Words: 839 Length: 3 Pages Document Type: Research Proposal Paper #: 86947651

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…… [Read More]

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U S Banking Financial Sector Legislation in

Words: 2448 Length: 6 Pages Document Type: Essay Paper #: 73033002

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.

6.

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).

Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994

1.

What were the problems/conditions giving rise to the legislation? Rapid consolidations among the nation's banks were creating the potential for diverting needed banking resources from communities (Rose, 1997).

2.

What were the major provisions of the Act? The Riegle-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.…… [Read More]

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Iceland Banking Crisis the Banking Crisis That

Words: 593 Length: 2 Pages Document Type: Term Paper Paper #: 64779401

Iceland Banking Crisis

The banking crisis that occurred in Iceland first emerged in 2008 and continued for a few years by most accounts. The small country had experienced a vast number of consolidations of banking and financial services over the years and there were only a few dominate players in this industry. Much of the industry had been opened up through liberalization in the industry's regulations that had allowed for a string of mergers and acquisitions to consolidate the industry. In the beginning there seemed to be a lot of advantages to this strategy. One of the benefits is that the industry was able to produce quantities of scale that allowed for expenses related to things like transaction costs to be reduced.

Another advantage to financial deregulation was that the larger firms that emerged had more bargaining power due to their pooled resources to be able to secure investments with…… [Read More]

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Long-Term V Short-Term Investments Short-Term

Words: 677 Length: 2 Pages Document Type: Essay Paper #: 83805782



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…… [Read More]

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Foreign Direct Investment in Brics

Words: 4051 Length: 15 Pages Document Type: Thesis Paper #: 20055918

Foreign Direct Investments in Russia

The evolution of FDIs in Russia can be divided into three distinct time periods: 1996-1999, 1999-2002 and 2002-2006. Throughout the first period, foreign direct investments registered a steady growth from 0.65% of the GDP to 1.68%. Throughout the following period, they significantly decreased to 1.00%. Finally, in the third period, direct investments registered increases and by 2006, they would represent nearly 3% in the country's gross domestic product. For the overall period, the trend was an ascendant one.

FDIs and the Indicators of Institutions

VOICE -- with a value of -0.5687, the freedom of the Russian population to choose their own leaders and speak their minds remains limited; nevertheless, it has not managed to discourage foreign investments

POLSTAB -- of a -0.8474, the political stability remains a delicate issue within the Russian Federation, but neither this has discouraged investments

GOVEFF -- the quality of the…… [Read More]

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Oil Investment Contract Companies Commercial Law

Words: 5811 Length: 20 Pages Document Type: Essay Paper #: 41562057

Commercial Contract Law to Increase Oil Investment in Kuwait

When it comes to the industries of natural resources and energy, the law of investment protection is particularly of great concern. According to the statistics of July 2013, it was revealed that 25% of the cases that have been registered with ICSID have addressed the issues concerning gas, oil and mining sectors. Moreover, another 12% of the cases are relevant to other energy sectors that include electric power.

Investments in the energy sector, including oil, are usually very capital-intensive as well as long-term in nature. Moreover these investments are regulated at the greatest levels, and are of concern for the public, since valuable resources are involved along with the essential services. These are the main reasons why such investments are extremely vulnerable to national and governmental interface. The aforementioned attributes of investment in the energy sector increase the possibility of conflicts…… [Read More]

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Finance Investments and the Irrelevance Proposition the

Words: 758 Length: 2 Pages Document Type: Essay Paper #: 67436206

Finance

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…… [Read More]

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College Investment 25 000 Investment P 25 000 R

Words: 493 Length: 2 Pages Document Type: Essay Paper #: 88840177

College Investment

$25,000 Investment P= $25,000

r= 2.47%

t= 5 years n=

F (t) = P (1 + r/n) nt

F (t)= $25,000(1 + 2.47%/1)

The total amount of the investment is $28,243.84 after 5 years (maximum amount of time for CD as advertised).

Bank offers Certificates of Deposits for 19, 37 and 59 months (U.S. Bank, 2011). Although this Grandmother would like to save for a child's education and therefore has more than five years, many banks only offer a 5-year product.

If the grandmother invests all $25,000 into the CD at the advertised rate, she will have $28,243.84 at the end of the five-year period. Therefore, the grandmother has made $3,243.84 profit. This is calculated at an interest rate of 2.47% and is calculated annually. If inserted into the formula, p = $25,000, t=5 years and n=1.

According to FinAid.org, the cost of college for a student who…… [Read More]

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Aztec's Capital Investment Company Overview

Words: 2788 Length: 11 Pages Document Type: Case Study Paper #: 15554400



Thus, the paper provides the following recommendations on the strategies that the company will use to prepare its 3-year financial plan to achieve its corporate objectives.

First, Aztec needs to rely more on the share capital as source of fund than raising fund from the bank loan. Loan capital is the fund borrowed from the bank while the share capital represents the funds raised by selling shares to the public. Typically, share capital should be clearly a preferred option of raising fund because the company only liable to pay dividends for such funds which is only between 2 and 3% of the market value of the equity per annum. On the other hand, loan capital is a borrowed fund that has a fixed interest which a company should pay no matter its financial conditions.

Aztec would enjoy several advantages from raising fund from the share capital. First, the company will…… [Read More]

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Opportunity to Make an Investment

Words: 1373 Length: 5 Pages Document Type: Term Paper Paper #: 79767541

Present Value

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%

PVIF= 1/(1+0.12)^20

PVIF=0. 103667

PVIFA= (1- 1/(1+.12)^20)/.12

PVIFA=7.469444

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%…… [Read More]

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Global Financial Investment Globalization Has

Words: 2193 Length: 8 Pages Document Type: Thesis Paper #: 96124904

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). Regardless 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 Rate Risk

Some managers at the Wilson Company argued that the organization should contract its loans in Renminbi, 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 RM to 0.2 USD, meaning basically that a United States dollar can be purchased for 5 Renminbis…… [Read More]

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Foreign Direct Investment and Free

Words: 920 Length: 3 Pages Document Type: Essay Paper #: 77277848

For instance, Kirkpatrick, Parker and Zhang (2006) emphasize that, "FDI in infrastructure responds positively to an effective domestic regulatory framework. By implication, where regulatory institutions are weak and vulnerable to 'capture' by the government (or the private sector), foreign investors may be more reluctant to make a major commitment to large scale infrastructure projects in developing countries" (para. 1). A pattern of governmental involvement is apparent in varying degrees among the developing nations that have experienced the most significant economic growth as a result of foreign direct investment.

In an increasingly integrated global marketplace, it is apparent that increased trade will equate to increased economic growth but the level of growth will be directly related to how well developing nations are able to attract the finite amount of FDI that available.

Advantages of Foreign Direct Investment and International Trade

A distinct advantage of foreign direct investment is that it provides…… [Read More]

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Financial Investment Finance

Words: 818 Length: 2 Pages Document Type: Term Paper Paper #: 83000087

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…… [Read More]

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Human Resources as Critical Investments

Words: 2881 Length: 10 Pages Document Type: Term Paper Paper #: 56788812

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:…… [Read More]

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Foreign Direct Investment

Words: 1405 Length: 4 Pages Document Type: Term Paper Paper #: 32458808

Foreign Direct Investment

Discuss the impact of corporate taxation on corporate decision-making, particularly investment and transfer pricing decisions

Taxation has a direct correlation to corporate profits and subsequent earnings per share. Taxes are a necessary aspect of the capital markets. In many instances, taxes are needed to maintain the overall economic system in which corporations operate in. Aspects such as national security, infrastructure, social safety nets, and other firms of government initiatives, are financed through taxes. Corporations benefit as they can now operate in a more efficient, credible, and transparent business environment. Taxes however, when excessive can discourage foreign direct investment within particular countries.

Taxes particularly for equity investors, have a profound impact on the overall attractiveness of securities. For one, investors are often taxed twice due to capital gains and dividend income. For instance, investors in equities often receive dividend payments throughout the duration of the year. These payments…… [Read More]

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Finance Calculating Investment Values When a Firm

Words: 686 Length: 2 Pages Document Type: Essay Paper #: 84841420

Finance

Calculating Investment 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. In 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. It 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…… [Read More]

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American Investment Recovery Act Throughout American History

Words: 2438 Length: 8 Pages Document Type: Essay Paper #: 98187978

American Investment Recovery 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 Recovery Act and Reinvestment 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…… [Read More]

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Business at First My Investment

Words: 659 Length: 2 Pages Document Type: Term Paper Paper #: 86233949

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…… [Read More]

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Capital Budgeting the Initial Investment

Words: 526 Length: 2 Pages Document Type: Research Proposal Paper #: 39796836

9688%. Therefore the NPV is going to be as follows:

Post Tax

Depreciation

Net Flow

PV

WACC

NPV

3) to: Management

Re: New Project

The net present value of the project is $6,954.47. Therefore, we should accept the project. The cash flows are discounted by our weighted-average cost of capital. This rate is used as the discount rate because it represents what new money costs JNJ. New capital must come either as debt or as equity. We calculated the cost of equity and the cost of debt. Then, we weighed these figures against our current capital structure in order to determine the weighted average cost of capital. If a project only returned what it costs the company to acquire the capital in the first place, the net present value would be zero. Therefore, if the project has a positive NPV, this means that the project returns to JNJ more than…… [Read More]