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Google operates in the online advertising business. However, when the company had its moment with regulators it was in the "search engine" business. This effort was undertaken by both U.S. And EU regulators (Crawford, 2012). The issue at hand was not whether Google had legitimately come to dominate Internet searches -- it built its dominance on technological superiority rather than through acquisitions -- but whether or not the company was using this dominance to promote its other ventures. This is still an odd question, given that these other features are still not where Google or any other company earns money. However, the case is similar to that which Microsoft faced for bundling Internet Explorer in with Windows. While many companies offer browsers, nobody can make any money on them anymore.
Crawford (2012) notes, however, that Google is moving towards using personalized technology, vertically-integrated ecosystems (using the Android operating…… [Read More]
Long-Term Investment Decisions
Government regulation borders within the mandated needs in the economy to strike a balance between the market activities and social welfare of the people. The role of government in the market has been seen as one that is indispensable in an economy where this balance is needful. Contrary to this argument, it has also been observed that government involvement in the market economy can to a large extent lead to sub-optimal results. It is agreeable however, that government intervention guarantee the social welfare and production of public goods. These are aspects that are not possible to achieve through the market system (Smith, 2012).
The main reasons for government regulation are to provide public goods such as security and public health and lighting. The production of certain necessary goods in the economy cannot be achieved through the market system owing to lack of a proper measure…… [Read More]
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]
Long-Term Financial Planning
FedEx Corporation was established in 1971 and the company has four distinct business segments that include FedEx Express, FedEx Ground, FedEx Office and FedEx Freight. Over the years, the company has obtained 6-year of CAG (compounded annual growth of 5%). However, the company is likely to obtain similar CAG of 5.9% over the next 8 years based on current economic environment. (FedEx Corporation .2010.
The WACC (weighted average cost of capital) is the average interest rate that a company should pay in order to secure a project. Moreover, WACC is the average rate of return that a company must earn from its current assets to satisfy investors, shareholders and creditors. Since FedEx Corporation is always trying to create value for shareholders, the paper calculates the WACC of the FedEx to evaluate the company ability to generate returns from its assets.
Estimation of WACC of the…… [Read More]
Long-Term Capital Management: The Original Enron?
Three years before energy industry giant Enron Corp. sought protection from creditors and came under the harsh light of scrutiny for the complex web of off-balance sheet deals that masked the firm's huge debt, a very similar scenario unraveled among some of Wall Street's most celebrated financial players. ut while Enron unsuccessfully sought eleventh-hour aid from the power brokers it has bankrolled in Washington D.C., a "who's who" of global financial institutions stepped up to bail out hedge fund Long-Term Capital Management (LTCM) in September 1998. Not coincidentally, the bankers arguably had more to lose from the impending collapse of LTCM than they faced in the more recent debacle.
While they are, of course, very different institutions, the mistakes made by LTCM and Enron are strikingly similar. The near collapse of LTCM ultimately taught bankers around the globe to pay closer attention to the…… [Read More]
Even if LTCM had adequately assessed the volatility of a given asset, there's still no guarantee that it would have been rewarded for doing so. hile there were ready buyers for private option contracts, there were few takers when the value of the asset tanked. Thus, the price of the asset could continue to move downard, exposing LTCM to expensive payouts as the price of the asset continues its downward spiral..
4. Identify at least five reasons why LTCM ultimately failed.
It incorrectly assumed that historical relationships between asset classes would hold when in reality they could be highly volatile. Thus, LTCM had not factored in the Asian meltdown and the Russian bond default.
The company was too highly leveraged and couldn't recover when the market turned against them. The leverage had magnified their returns as desired, but it also magnified its losses, something LTCM did not fully consider.
Its…… [Read More]
According to Cleverley, Song and Cleverley (2011), there are four options for health care organizations for finding long-term debt financing. These four options are tax-exempt revenue bonds, Federal Housing Administration (FHA)-insured mortgages, public taxable bonds and conventional mortgage financing. Tax-exempt revenue bonds are issued against the facility's revenue and these are a low-cost source of debt financing. FHA-insured mortgages need to be approved, which is a tricky process. The approval allows the hospital to have mortgage insurance that lowers the cost of borrowing for hospitals. Public taxable bonds are a typical corporate bond issued with an investment bank as underwriter to the public markets. Conventional mortgage financing often involves placing the mortgage with an investor, but the drawback is these usually cannot cover entire projects.
A health care firm can increase its equity in three ways. The first is through retained earnings, the second from contributions…… [Read More]
long-term success in your specific area of interest. How have your previous experiences prepared you for this professional career? What areas of specialization within the Carroll School of Management do you believe will be most valuable in achieving your goals? What specific short-term career objectives have you set to assist you in achieving your long-term career plans?
I will never feel successful if success means putting up my feet and feeling satisfied. I don't work that way. I will only feel successful for small moments, like when I solve a huge problem in my company or when we avert trouble: when we can turn around a failing operation or stay afloat in spite of falling stock prices. Personally, I could be working in a behind-the-scenes managerial position in a company that I cared about and even if my salary was not great I would be successful because every day I…… [Read More]
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…… [Read More]
The purpose of the take-or-pay clause is to allocate the respective risks of the production and sales of natural gas between buyers and sellers.
According to Gaille, "The seller bears the risk of production. To compensate seller for that risk, buyer agrees to take, or pay for if not taken, a minimum quantity of gas. The buyer bears the risk of market demand. The take-or-pay clause ensures that if the demand for gas goes down, seller will still receive the price for the contract quantity delivered each year."
Although there are other salient risks involved, the two main risks hedged against are the two described above.
184.108.40.206 Transfer of volume risk. According to Meyer, Myers, Kolbe, Leonard and Baker, "Take-or-pay contracts are often signed in transportation industries precisely to shift risk of revenue variances away from the suppliers who have sunk costs in the right-of-way to the suppliers of the…… [Read More]
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…… [Read More]
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…… [Read More]
LTE (Long-Term Evolution)
Long-Term Evolution (LTE)
A Summary of LTE
Implications for Stakeholders
Application of Theories
Structured Cabling Issues
Features of LTE
The Best Choice?
Long-Term Evolution (LTE)
A Summary of LTE
Long-term evolution (LTE) is an emerging technology. It is a standard in wireless communication, and relates to the effective and efficient transfer of high-speed data for both data terminals and mobile phones (Sesia, Toufik, & Baker, 2011). Based on GSM/EDGE as well as UMTS/HSPA technologies, LTE increases both the speed and capacity of a network by utilizing modulation techniques that are new. The 3rd Generation Partnership Project (3GPP) has developed the standard by which other companies must work if they are interested in getting involved with LTE (Agilent, 2009; Khan, 2009; Sesia, Toufik, & Baker, 2011). It was not until December of 2009 that LTE became publicly available. At that…… [Read More]
S. is regulated by both state and federal regulations. Both the Securities Act of 1933 and the Securities and Exchange Commission Act of 1934 are federal laws that govern security issuing. he Security Act of 1933 requires that companies fully disclose information regarding their company as well as the security being issued to all potential investors (Megginson & Smart, 2009). he Security Act of 1993 called for the creation of the U.S. Securities and Exchange Commission (SEC) as well as defining what procedures are necessary for the public sale of securities and for the oversight of public companies. his includes the requirement of companies to file a disclosure form, which is referred to as a registration statement, with the SEC prior to beginning to solicit potential investors. Further, this form must be distributed to all potential investors. he SEC must approve the final registration statement before companies can execute sales…… [Read More]
00. ("Nue Core," 2010) Arcelor Mittal has trailing PE ratio of 23.28 and a forward PE ratio of 7.09. The current ratio is 1.35 and the put call ratio is .55. The price dividend ratio is 45.74, while the beta is 2.70. ("Arcelor Mittal," 2010)
Upon doing a side by side comparison, Arcelor Mittal is the strongest company out of three. This is because their PE ratios remained more stable over the past year and the reading of 7.09 on the forward PE ratio, is an attractive long-term valuation. The high put call ratio indicates that investors have become somewhat pessimistic in the stock. The price dividend ratio is the only drawback, where historically this number should be in the 14 to 17 range. However, given the volatile nature of the steel industry, the fact that they are continuing to pay dividends after a severe recession is a sign of…… [Read More]
role of innovation in determining long-term economic growth and provide three public policies that are likely to encourage innovation. Provide an example of a recent innovation that has the potential to have a significant impact in one or more industries.
he nation needs to experience a situation where its exports are greater than its imports. his causes it to become wealthy and prevents many problems of economic hardship such as unemployment, the output and income in the economy, the price level, and burden of debt, inflation, national discontentment, and market inefficiencies and non-equilibrium that may will be the result of the reverse called a balance of trade deficit. here may also be preference for foreign products as opposed to locally-produced products which results in less of the local products being sold and in increase of their price. Whilst surplus of imports may be good for individual consumers who may end…… [Read More]
Often home-based caregivers, either a spouse or adult child, rely on institutional care only as a choice of last resort, and this is often reported only after their own health and well being begins to be perceived as degraded by caring for the individual in the home, relevant to supplemented home care services as well. (Ducharme et al. 2007, p. 3-31) Researchers in fact contend that individuals will employ a vast variety of coping mechanisms to attempt to remain independent, and though these mechanisms should be supported in the community, when they are productive and effective rather than destructive but that alternatives should be better, in a number of fundamental ways. (Robichaud & Lamarre, 2002) What this trend of last resort means, according to Clemmitt, is that those with dementia and other functionally debilitating and progressive chronic diseases, i.e. he most vulnerable of populations are those who end up in…… [Read More]
Write the memo with the purpose of convincing the vice president of operations to keep one if the company facilities implied the use of numerous concepts regarding persuasion. First and foremost, there was the order of the presented arguments, as well as the organization of the information. The introductory part took care of the parts revealing what, why and how. The content presented the arguments for and against the discussed matter. The arguments against the desired outcome were presented first, which allowed for their deconstruction through the presentation of the pro arguments, which were also more numerous and better supported. The problem was stated from a bigger perspective and it has been insisted upon the long-term advantages of reaching the desired goal. The problem was explained through a variety of perspectives, thus making it easier for the reader to understand its complexity. The expected outcome has been described in terms…… [Read More]
3. The country that I have chosen is South Africa. Absolute advantage is a situation when a country has an advantage in producing an item; comparative advantage reflects a situation when a country does not have absolute advantage but on the balance of trade should produce that good anyway. Compared with the United States, South Africa has absolute advantages in some mineral production, but mainly in the cost of labor. A combination of high levels of unemployment and a weak rand (9.05 to the USD) make South Africa's labor costs substantially lower -- even educated, middle class South Africans earn less than their American counterparts. South Africa has a comparative advantage in some manufacturing and service industries, however. It might not be cheaper than some Asian nations, but it has good technological and managerial capabilities that could give it comparative advantage in a number of light manufacturing and resources industries.…… [Read More]
Equilibrium and Barriers
Barriers to Entry and Long-Term Equilibrium in Monopolistic Markets: Strategy and Market Forces
Introduction Marginal Equilibrium
Barriers to entry can arise out of natural market forces as well as through careful strategic creation or enhancement by incumbent organizations that have a great deal of control over a given market and/or industry. When a specific organization has established a monopolistic or near-monopolistic control over its market and enjoys a great deal of stability and equilibrium with some price flexibility as well, it can be very much in its interest to erect or encourage barriers to entry that thwart the possibility of other entrants into the market, disrupting this equilibrium. As mentioned, many of these barriers to entry arise on their own out of market forces, but they can also be encouraged by strategic decisions within incumbent organizations that influence the market generally and at times explicitly.
Before examining…… [Read More]
" 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…… [Read More]
In the future, this could result in some kind of major restructuring to deal with these issues. The problem is that these changes will occur when the company is facing greater challenges. This will hurt their competitive position, profit margins, stock performance and brand image. The above information will impact an investor's decision, by making them more cautious about purchasing the company over the long-term. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
As far as Pepsi Co is concerned, the management has taken a continuing focus on expanding into new areas. This has resulted in the company owning different food, beverage and snack manufacturers. In these situations, the firm is concentrating on the impact that key acquisitions will have on Pepsi and its ability to enter new markets. ("The Coca Cola Company," 2012) ("Pepsi Co," 2012)
This strategy has proven to be highly successful. As the company is able…… [Read More]
41 in the next three years. The current price for al-Mart implies strong growth prospects. The company does have a sound strategy to retain its new customers and refocus growth efforts on less-saturated markets overseas.
In short, while there can be little doubt as to al-Mart's operational excellence, it is not necessarily a great investment. Growth has in recent years been of the slow and steady variety. The company's present valuation may be symptomatic of its status as a safe haven for investors during tough economic times. This means that the growth implied by its current share price may not be justified. Therefore, while al-Mart is a great company to own, it may not be the best investment at its current price and with the market beginning to show signs of recovery. The 0.20 beta and historic low volatility mean that al-Mart shareholders will not reap the benefits of market…… [Read More]
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…… [Read More]
Take for example investments in quality management as part of the industry-wide supply chain. Process re-engineering of these areas could dramatically reduce the amount of shortages and overages in the supply chain of not only gasoline but the key chemicals and raw materials necessary for its production. Second, the processes of gasoline refining could be made more efficient through process re-engineering and then automated to make them more cost effective over time. The bottom line is that the fluctuations in gasoline prices should not be a decision factor in investing in improving gasoline production efficiency. Rather, the continual pursuit of greater efficiencies in the entire process of gasoline production must first be considered if the entire industry is going to stay profitable and have the potential for longer-term growth. (Lin, Fan, Newman, 2009)
Huiping Lin, Yushun Fan, Stephen T. Newman. (2009). Manufacturing process analysis with support of workflow modelling and…… [Read More]
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.…… [Read More]
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…… [Read More]
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…… [Read More]
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]
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]
It would be difficult for the company to satisfy its shareholders with differing interests, but there is a solution-Net Present Value.
Using Net Present Value (NPV) as criteria to select projects assumes proficient capital markets. In other words, in order to work the company has to have access to whatever budget is needed to continue the positive Net Present Value projects. Sometimes there may also be capital ration and the concept of capital budgeting process becomes more and more complex.
Alternative Rules for Capital Budgeting
While NPV is the rule which maximizes value of shareholders, some companies use other strategies for their capital budgeting decisions. Common alternative strategies include:
Internal Rate of Return (IPR)
Return on Book Value
Investment decisions made from the Profitability index and Internal Rate of Return methods agree with those of Net Present Value. Decisions made using the return on book value…… [Read More]
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]
Pepsi Co Finance Project
The taste of consumers is rapidly shifting. This is because they are becoming more health conscious and want products that meet these guidelines. In the case of Pepsi Co, the company is at a crossroads. They are known for providing a variety of sugary-based snacks and beverages. A few of the most notable include:: Lays, uffles, Doritos, Tostitos, Cheetos, Fritos, Santitas, Quaker oatmeal, grits, rice cakes, Aunt Jemima, Quaker Chewy granola bars, Captain Crunch, Life cereals, ice-A-oni, Quaker Oat Squares, Quaker Natural Granola, Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, 7UP, Diet Mountain Dew, Tropicana Pure Premium, Sierra Mist, Mirinda, Domik v Derevne, Chudo, Agusha and ready to drink teas. ("Pepsi Co Annual eport," 2015) However, to fully understand if the company is a good long-term investment requires focusing on if any financial, human and intellectual capital should be invested. Together, these different elements will determine…… [Read More]
To preserve the forests, however, government intervention and regulation are necessary. Industry does not have the vested interest or the financial resources to research scientific tree farming, because the profits from such research will be a long time in coming.
Thompson's analysis makes economic as well as environmental sense. In the case of some products, like natural resources, private enterprise cannot be expected to take a long-term view and make long-term investments in researching scientific conservation, because commercial industry must show a short-term a profit for the company's owners. The profits from forestry improvement may only be realized after several generations. However, it is still critical that such improvements occur, thus this is an ideal example of when government intervention is required to help the environment and to preserve the future of an industry.
Thompson, Roy a.H "Timber." From Visions of Technology. pp.156-159… [Read More]
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…… [Read More]
It is important to note, from the onset, that a lot has been said about efficient markets, behavioral finance, and investment strategy in the past. The approach Kevin Daly uses could be used to build a case against efficient markets whereby all there is to know about a firm’s value can be derived from the available information about the prevailing stock prices. This is more so the case given that he has been successful relying on a wide range of metrics, apart from current stock price, to identify opportunities. Like Daly, Kenneth French does not believe in efficient markets theory. He is convinced that the markets can be incredibly noisy and driven by emotion such as overconfidence. As a matter of fact, French, like Eugene Fama, is skeptical of the skill most active money managers proclaim to have. He is convinced that in some instances, performance is misinterpreted,…… [Read More]
This literature review looks at the question of SEO return characteristics of large and small firms from several different perspectives. The goal is to determine whether small firms are more effected by the equity offering than larger firms. This section examines the overall evidence for performance issues (including financial anomalies and manager performance) and whether research indicates evidence for a rational or behavioral explanation.
A firm's success in a seasoned equity or initial public offering is determined by many factors that are seemingly disconnected, but which the research shows are interdependent. Among these are the anomalies that cannot adequately be described by rational theories of pricing. As an example, Li (2012) suggests that the cyclical nature of the economy has a far greater effect on certain types of offerings (IPOs and SEOs among them) than was previously thought. Again, the relatively unpredictable nature of firms and investors…… [Read More]
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]
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,…… [Read More]
America's Self-Imposed Economic Limitations
The United States stands proudly and vocally on its reputation as the greatest economic force in the world. Particularly following orld ar II and throughout the protracted conflict that was the Cold ar, the United States asserted its capitalist system as one that would ultimately drive global economic growth and progress. Yet, today, we find the United States at something of an impasse. In the throes of a seemingly endless recession and constantly bombarded with ominous predictions about the unsustainable nature of the American way of life, we must confront the reality that we may have reached the limits of our growth potential. Both because of America's poor prioritization of social needs and its global orientation with respect to free trade, the nation is facing a crisis of stagnancy that may only get worse with time.
America's domestic policies are very much to blame for certain…… [Read More]
83% in 2008 compared to 2007, but by 127.10% when compared to 2004. Shareholder equity is also included in the ascendant trend revealed by Apple for all financial highlights. By 2008, it had increased by 314.30% relative to 2004. Compared to the previous year, the growth was of 44.71%.
The final row of the table deals with the net cash provisions used by the investing operations. These do not reveal a trend, increasing in some years and decreasing throughout others. They however show that Apple has been active in seizing investment opportunities, and that, while some project have returned a significant return on investment, in other cases, the benefits have yet to materialize. In 2008 as compared to 2007, the cash provisions used by the investment operations met an increase of 152.04%. This is the single sign in the financial analysis which may suggest that Apple should not invest any…… [Read More]
Investments may be classified into the following categories: Trading assets, Available-for-sale investments and Non-marketable equity securities and other investments. Certain marketable debt and equity securities are considered trading assets. They are subject to exchange rate and interest rate modifications, so the generated risk is mitigated through the use of derivative instruments.
The 'available-for-sale' includes another category of marketable debt and equity securities. These investments are reported at fair value on the balance sheet with unrealized gains and losses recorded in stockholders' equity, net of tax. If the securities are sold, their cost is calculated using a specific identification method. The gains and losses incurred as a result of selling debt securities are recorded in interest and other (net value). Should the available-for-sale investments be equity securities, they would be recorded in gains (losses) on equity securities. However, every decrease of the value of such securities (stocks) has to be considered…… [Read More]
Long-Term Investment Decisions
Keeping prices inelastic is one way to ensure that a pricing strategy does not impact the reasons for a consumer's purchasing of the product. If price is elastic, it rises and falls with various factors that impact its cost -- and this in turn more than likely will have an impact on whether or not a consumer will buy (unless brand loyalty is the main reason for purchasing, consumers will buy when a product is offered at a "discount" price and move to a different or "off" brand when the price is higher) (Stone, 2010).
However, with products such as low-calorie frozen, microwavable food there is not likely to be a high degree of brand loyalty unless the product has shown itself to be significantly better than other products. Even then any price inflation could upset the consumer base and alter demand. Thus an inelastic…… [Read More]
CSX Railroad Investments
railing only Union pacific and Burlington Northern Santa FE, CSX Railroad is the nation's third largest rail carrier by revenue (nine billion in 2009) according to Fortune 500 (CNN Money 2010). In fiscal year 2009 the company spent 1.4 billion dollars on capital projects designed to "create competitive advantages for customers, grow the business, create jobs and deliver shareholder value" (Progressive Railroading. October 13, 2010). In 2010-2011 "as part of their long-term focus, CSX will invest $1.7 billion annually to maintain their network, comply with new government requirements, install new technology, purchase railcars and build or expand intermodal terminals" (CSX Annual Report 2009). With the resurgence of railroad as a cost effective and efficient method of cargo transportation, CSX understands the strategic importance of capital spending in its efforts to gain competitive advantage in the industry. With that in mind CSX has initiated two projects which require…… [Read More]
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…… [Read More]
Defining the term "good company" on the terms of it recently experiencing rapid growth may be premature in realizing its worth as an investment. apid growth is a tricky idea and may lead many investors down the wrong path if they are unaware of the basics of stock valuation and determining what is right, prudent and wise. Although rapid growth may be an indicator of in fact a very good company to invest in, this criteria alone does not serve the successful investor in all cases.
Value is what is most important in this equation, as the risks involved in the market are unforgiving in those who ignore this idea in its entirety. Hough (2011) agreed with this idea when he wrote "esearchers have long studied the relationship between "value" and "growth" stocks. The difference mostly has to do with price. Value stocks are cheap relative to fundamental…… [Read More]
eturn on Investment Health Management
Health Management and Services: eturn on Investment Strategy,
Solutions and EM as an Incentive for Increased OI
As the medical field continues to grow and therefore continues to become more and more complex and complicated -- especially in viewing the integration of health services and cost analysis -- one can understand the need for critical improvements in the area of health management and services in order to ensure that companies receive the full benefit of the health management solutions which they employ. Healthcare organizations and the physicians they support are vital to the well-being of the human race, yet, when it comes to the balance sheet, many of these entities are facing real emergencies of their own, as costs for medicine, equipment, and indigent care are increasing -- all while reimbursements are going down (Mannino, 2009, p.2).
With increasing costs and diminishing profits, health systems…… [Read More]
Initial Investment = $450,000
The Present Value = -$457,630
Net Present Value= -$672,409
Payback = $1,130,039
Annual Depreciation costs = $90,000/year
It appears that Bender should not go ahead with this expansion as they will appear to lose nearly $130,000 on this investment. The net present value decision suggests that this project does not stand to make any significant amount of money. If the facility could somehow be salvaged at the end of five years, this move would make more sense .
WACC = E/V x e + D/V x d x (1 - Tc)
e = cost of equity
d = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D = firm value
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate…… [Read More]
Apple Inc. Investment Analysis and Recommendations
Apple Inc. is an American multinational company specializing in designing and producing mobile telecommunication devices that include iPhone, computer software and hardware, Apple TV, Apple Watch, iPod, and other electronic devices. Apple was incorporated and publicly registered in 1977. Headquartered in California, Apple is one of the most successful American companies in term of revenue with the annual revenue reaching $233.7 billion at the end of 2015 fiscal year. On February 2016, Apple recorded $521.3 billion worth of market capitalization. While Apple designs the bulk of their products in the United States, the company's manufacturing plants are located in China. Apple also operates in Europe, Japan, Canada, and Latin America. (Apple Inc. 2015).
Board of Directors
Apple Inc. Board of Directors is overseeing by the company CEO (Chief Executive Officer) and other competent senior management. The Board oversees the day-to-day operations of the company…… [Read More]
Organizational performance can be measured in terms of financial, output metrics, or market share performance. An organization is considered to achieve high performance if it is able to demonstrate growth in its all aspects of organizational performance metrics. The three key criteria to measure organizational performances in all industries are as follows:
Financial performance (profits, return on assets)
Product and market performances (sales, market share)
Shareholder returns (total shareholder return, economic value added)
An organization is generally able to claim a healthy financial performance if its annual net profits continuously increase or if the company reaches its own internal financial targets. Product and market performances are measured when organizations can claim a significant share of the total volume of sales in the market. It is generally thought that with the production of high quality goods or services, organizations will be able to achieve their desired market performances (Richard 2009). For…… [Read More]
An example of a short-term project that Wal-Mart undertakes is opening a new store. The company regularly opens new stores, and it takes several months from start to finish for the project. New stores have a relatively infinite life, so they are a capital project, but they are short-term in nature before they begin earning revenues of their own. The life span of the project indicates that equity may be more appropriate for this project. For a short-term project, equity typically comes from working capital by way of retained earnings.
For a short-term project at Wal-Mart financing should be done from cash. The financing decision should be made on the basis of a company's ideal capital structure and the cost of capital, but also should be made with consideration for the company's existing balance sheet. For Wal-Mart, the balance sheet has sufficient capital - $7 billion in cash for…… [Read More]
Several terms and definitions are valuable to understand financial statements. In the United States, financial statements of public corporations are produced in accordance with the U.S. Generally Accepted Accounting Principles. These principles govern how the information for financial statements is compiled and presented. The purpose of these principles is so that all stakeholders can easily understand the statements and make comparisons across both time and across different companies, because the statements are produced and presented in a consistent manner. The International Financial eporting Standards (IFS) are the international equivalent of GAAP. While several countries utilize a national version of GAAP (U.S., Canada, UK, etc.), more than 100 countries use IFS, making this set of standards the most widely-adopted in the world. There is a move to converge national GAAP standards with IFS, including a multi-year project to converge U.S. GAAP with IFS. For now, however, IFS represents a different…… [Read More]
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…… [Read More]
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…… [Read More]
"Pension reform in several emerging market countries has been associated with rapid growth in assets under management and a positive impact on the development of local securities markets." (Roldos, 2004) Finally, the stability of many international securities, located in Britain, Switzerland, or Germany, to take only a few examples, means that using the diverse potential of international investment opportunities does not necessarily entail a high risk.
However, many international sources of revenue tend to be more unpredictable in their returns. A pension fund's security, especially for an older man or woman with retirement on the horizon must be of primary importance. Secondly, international developments can be difficult to predict in the long-term. And finally, international securities may be less tightly regulated in terms of their ethical scrutiny by the local governments, leading to "price distortions, bubbles," and hence greater investment risks. (Roldos, 2004)
China's Pension Fund to Invest…… [Read More]
Information Technology: Smart Card vs. Voucher
Long and Short-Term Costs
Over the long-term smart cards are more affordable than vouchers for customers, sanctuaries and shops because they retain their value over time and continue working without further investment. Vouchers however while perhaps more affordable for customers initially, require pre-payment and additional payments once a voucher is used.
They may prove more expensive in the long-term if lost or stolen, at least to customers. While the sanctuary or shop may invest more money in the short-term to utilize smart cards, over time the investment will actually pay for itself and then some with respect to the added security benefits smart cards offer and the long-term benefits use of these cards offer compared with vouchers (Clark, 1990).
Economic and Social Benefits
Smart cards are considered useful in a variety of applications, making transactions secure and user friendly, hence their popularity (Clark, 1990).…… [Read More]
Where pricing integration typically fails however are in the handling of exceptions. Columbus (2003) makes the point that the use of automated approaches to managing special pricing requests can be one of the highest OI activities of any company. The focus for LOM then is in turning the one-off loan request specifically including a differing rate or structure into a competitive advantage by quickly being able to fulfill it. The use of automated special pricing requests applications and techniques as defined by Columbus (2003) are strong competitive tools that could be used as part of FlashQuote and BFOT overall.
FlashQuote Use Case Analysis
Identifier: FlashQuote Use Case Analysis
Name: BFOT System component that includes quoting, pricing, loan interest rates and the ability to electronically upload the loan, once approved, to the LOS.
Purpose: To more accurately and completely capture the quotes given to prospects over the telephone, the Web, and…… [Read More]
The term "globalization" is a debatable one. Some view globalization as a process that is beneficial -- fundamental to future world economic development -- and also inevitable and irreversible (IMF, 2000). Others regard it with hostility, and sometimes fear, arguing that it increases inequality within and between nations, threatens employment and living standards and disturbs social progress. This paper offers an overview of some aspects of globalization and aims to identify ways in which countries can optimize the gains of this process, while remaining realistic about its potential and its risks.
Globalization offers many opportunities for future worldwide development. However, it is not progressing evenly. Some countries are becoming integrated into the global economy faster than others. Countries that have been successful at integration have reaped the benefits of faster growth and less poverty.
For instance, global-oriented policies resulted in dynamism and greater prosperity for much of East Asia,…… [Read More]
" (Dietz, 1998). Obese children are often taller than their non-overweight peers, and are apt to be viewed as more mature. This is an inappropriate expectation that may result in adverse effects on their socialization. (Dietz, 1998). Overweight children and adolescents report negative assumptions made about them by others, including being inactive or lazy, being strong or tougher than others, not having feelings and being unclean. (American Obesity Association, 2000).
This epidemic did not occur overnight. Obesity and overweight are chronic conditions.
This study was concerned with genetics, family dynamics and parenting, and nutrition and dietary intake, all three of which contribute to childhood obesity. Specifically the researcher will attempt to determine what factors are contributing to the nations epidemic rises in obesity among children and what the effects are of the growing girth that is plaguing the nations children. The objective of the research study will be…… [Read More]
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…… [Read More]