...interpretation of regression analysis most commonly employed in applied economics; to provide participants with sufficient knowledge of regression methods to critically evaluate and interpret empirical research. On completion of this module students should be able to: demonstrate understanding of the assumptions and properties underlying regression analysis and the principle of ‘least squares’; interpret and manipulate the coefficients of multiple regression and performance criteria; conduct diagnostic checking of the validity of regression equations coefficients; appreciate the problems of misspecification, multicollinearity, heteroscedasticity and autocorrelation. Content: 1. Simple Regression Analysis 2. Multiple Regression Analysis 3. Dummy Variables 4. Heteroscedasticity 5. Autocorrelation Main Textbook: Dougherty, C. (2011). Introduction to Econometrics, 4th edition, Oxford. 2. Module Name: Computational Finance Code: P12614 Credits: 10 Semester: Spring 2011/12 Programme classes: 12 1-2 hour lectures/workshops Aims: The module aims to describe and analyse the general finance topics and introduces students to implement basic computational approaches to financial problems using Microsoft Excel. It stresses the fundamentals of finance; provides students with a knowledge and understanding on the key finance subjects such as money market, return metric, portfolio modelling, asset pricing, etc.; and equips students with the essential techniques applied...
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...International Project Finance Globalization, large scale production and chains of multinationals have become very common in today’s world. Due to this, any business that has to survive and compete with others on a global level has to come up with new and innovative projects to give it an edge above its competitors. Here, we are not talking about projects on a small or medium scale. We are talking about huge multimillion dollar investments in a large scale project as only then can a business make its mark on the world economy. The main cause of people hesitating to do such huge projects is that they do not have enough financial back up to go through with plans involving such huge investments. Since, in the end, every brilliant project plan is dependent on the finance required to carry it through, financing of such a project becomes the primary concern of any planner. The financing must be done prudently so that the best of the financial instrument can be used while the negatives avoided as far as possible. Every financial instrument is applicable for certain projects. Choosing such instrument should be the focus of any project since the project will only remain on paper and never be carried out unless there is financial aid. In the present day, there are many unique financial law solutions for funding large scale projects. Following are some of them described in brief: * Project Finance Loans: Project Finance is a kind of loan structure wherein the repayment is dependent...
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...____________ABC_______________ Student Name: ____________ABC_____________ Student Signature: ____________Anh__________________________ Date of Submission: ____________March 14th, 2010________________ Name of first marker: Mark: Name of second marker: Mark: DISSERTATION PROPOSAL ON VIETNAMESE CORPORATE BOND MARKET: THE CAUSES OF UNDERDEVELOPMENT BY ABCDEF ABCDEF ID: 123456789 14th March, 2010 Table of contents 1. Background of study 4 1. Structure of literature review 6 2. Significance of study 6 3. Research questions and objectives 7 1. Research questions 7 2. Research objectives 7 4. Research methodology 8 1. Research design 9 2. Data collection 9 3. Ethical permission 9 5. Time scale 9 1.6.0 Resources 10 References 11 Appendix 1 12 1. Background The corporate bond market is an important link between savings and investments with the publicly traded debt instruments issued by...
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...Finance has a close relationship to a number of other business disciplines. It is important that we understand why a finance major needs these other skills and abilities. Let's take them one at a time: 1. Economics provides the theory that finance uses. The field of finance is a very new discipline, beginning formally around 1920. Before that, financial problems were referred to as "economic problems" or (even earlier) "problems in political economy." During the 1920s, finance broke away from economics and became a discipline of its own. Think of finance today as being applied economics. In other words, economics provides the theory; finance takes that theory and applies it to real world situations. 2. Accounting is sometimes called "the language of business" and it is certainly true that it is a language that finance practitioners need to be familiar with. Finance majors work with numbers generated by the accounting profession: income statements, balance sheets, cash flow statements, etc. Although finance practitioners don't need to know the intricate details of how these numbers were determined, they do need to know enough accounting to properly use these numbers in an analysis of financial problems. 3. Management provides the communication and organizational skills that all finance personnel need. Finance practitioners spend most of their day interacting with other people, so the ability to work effectively with others is crucial. 4. Marketing skills...
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...FINS1613 Business Finance Semester 2 – 2009 Version 1.0.0 12th October 2009 Contents Page 3 Page 7 Page 10 Page 14 Page 18 Page 23 Page 26 Page 29 Page 32 Page 38 Page 42 Basic Concepts Introduction to Financial Mathematics The Valuation of a Firm’s Securities Capital Budgeting Capital Budgeting Applications – Part 1 Capital Budgeting Applications – Part 2 Risk and Return The Capital Asset Pricing Model Cost of Capital and Raising Capital Capital Structure Dividend Policy Note: This course has prerequisites and, as such, these notes are written assuming that you have sound knowledge from those prerequisite courses. Business Finance– Semester 2 2009 2 Basic Concepts Basic Concepts Background Before we delve into the harder components of business finance, it is imperative that we learn the basics first. Types of Business Forms If you have previously studied Business Studies for the HSC, you can skip this section. Businesses are usually formed based on a set structure. The most common of these are: • Sole Proprietorships This is where the business is owned by a single person. It is very simple, fast to establish and generally has very minimal government regulations. The owner gets to keep all the profits himself so there is incentive to work harder. The downside is that it has unlimited liability (where if the business goes bankrupt, everything the owner owns can be taken by creditors). There is also difficulty in raising large sums of money as you are a single...
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...Evaluation of Financial Performance Financial Analysis - The process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance. Financial ratios are tools used to analyze financial conditions and performance. Financial analysis means different things to different people.Trade creditors are primarily interested in the liquidity of the firm being analyzed. Their claims are short term and the ability of the firm to pay these can best be judged by an analysis of its liquidity. On the other hands, the claims of bondholders are long term. They are interested in the cash flow of the firm to service debts over a long period of time. The bondholders may evaluate this by analyzing the capital structures of the firm, the major sources and users of fund, the firms’ profitability. Five Different groups of ratios have been developed: * Liquidity ratios - A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher...
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...6.0 INTERNATIONAL TRADE FINANCE Learning Objectives: At the end of the subject coverage learners should be able to: • Explain the ways in which international trade is undertaken, settled and financed; • Identify the types of customers engaged in international trade and their needs; • Explain the features and benefits of services provided by banks and other financial institutions in facilitating international trade; • Explain international payment systems and regulations that are in place and the procedures adopted. CONTENTS 1. Introduction to International Trade Finance • The meaning of international trade. • Major parties in international trade. • Reasons for international trade. • Advantages of international trade. • International trade barriers. • The role of banks and financial institutions in international trade. 2. The Foreign Exchange Market • The meaning of foreign exchange market. • Participants in the foreign exchange market. • Functions of foreign exchange market. • The mechanism of foreign exchange transfer. • Relationship between foreign exchange market and money market. • Systems and procedures for inter bank foreign exchange trading. 3. Exchange Rates • Definition of exchange rate. ...
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...Assignment Package 1 (Total 44 marks, Final Exam Weight 10%) Chapter 1 Q1 (a)Why is it important to understand the bond market? (2 Marks) Given that a bond is a debt security that will pay out lump sums over a specified period of time, it is important in the economy for corporations and smaller businesses in general as a financial vehicle that allows these entities to finance their ongoing operations and other investment projects by granting access to financing at fixed(generally) interest rates. As such, it is important to understand the bond market in order to understand interest rate fluctuations at which individuals and businesses borrow funds to finance investment and spending. (b)What is a stock? How do stocks affect the economy? (2 Marks) A stock represents a share of ownership in a corporation. It is effectively a claim on the earnings and assets of said corporation. In practice, stocks are a vehicle for corporations to raise funds for financing growth of the corporation. By issuing shares the company can grow its operations by investing the proceeds of the sale of stock into any type of business activity that would expand its potential profits. In practice, stocks are traded on stock markets which can be highly volatile based on the economic conditions in the specific market. Conversely stocks can have a strong effect on the economy one way or another. If companies are generally doing well in an economy, then the stock market is in a state of growth and thus...
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...Staten 11/09/2013 * Finance * Finance is the analysis of company movements that starts at launch and operation by organization of monetary equipment by many accounts and markets to exchange liabilities, assets and risks. Its purpose is to formulate methods and procedure to establish and regulate funds. * * Efficient market A market whose prices quickly respond to the announcement of new information. * * Primary market Primary market is a part of the financial market where new security issues are initially bought and sold. * Secondary market The financial market where previously issued securities such as stocks and bonds are bought and sold. * Risk * The measurable prospect of the damage investors can take when purchasing securities or stocks when they do not result in the expected returns. There are some(prenominal) examples of financial risk including economic risk, inflation risk, market risk, and money risk. Risk is completely different when compared to returns and considerably influences financial managing for every return is imminent. * * Security A negotiable instrument that represents a financial claim that has value. Securities are broadly classified as debt (bonds) and equity securities (shares of common stock). * * Stock An instrument that signifies an ownership position in a corporation. * Bond * A bond is a form of debt security...
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...Kenya. The study was restricted to the period 2006-2012 quarterly data. During the analysis, mortgage rates were regressed against the CBR rate, inflation, bond rate and Household income for the period under study. The study utilized the Ordinary Least Squares method of econometric estimation to estimate the model. This method is chosen because of its simple and straightforward ability to show the linear relationship among Mortgage Rates, bond rates, inflation, Household income and CBR rate. The regression was done on the logs of the data variables because they change by rates other than certain amounts; this made it logical to take logs because the regression was to seek a linear relationship. From the results it can be concluded that bond rates and inflation had a negative influence on Mortgage rates in Kenya for the period under study. CBR rate and Household income depicted a positive influence on the same. This led to the conclusion from the study that CBR rate and Household income had direct influence on the mortgage rate than inflation and bond rates; other variables like loan to value ratio and density of banks should be included in the model like in the Carlo 2010 Euro system regressions. Key words: Mortgage Rates, CBR rate, Bond Rate, Inflation, Household Income 1.0 INTRODUCTION The Kenya mortgage finance history dates back to 1980s and 1990s where there were 20 housing...
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...benefit is expected to flow. | FASB does not allow the upward valuation of most assets. | ------------- | U.S GAAP has traditionally been more rules-based, but the common conceptual framework is moving towards an objective-oriented approach. | IFRS is largely a principles-based approach. | Companies must disclose their accounting policies and estimates in the footnotes and Management’s Discussion Analysis. | Companies must disclose their accounting policies and estimates in the footnotes and Management’s Discussion Analysis. | CHAP – 25 GAAP (FASB) | IFRS (IASB) | When the outcome of a long term contract can b reliably estimated, percentage-of –completion method is used. | When the outcome of a long term contract can b reliably estimated, percentage-of –completion method is used. | The completed-contract method is used when the...
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...Takyi Outline of Presentation Definition of Key Terms Introduction Research Problems Methodology Key Findings Study Gaps For Future Research Research Questions Literature Review Conclusion and Remarks Definition of Key Terms Financial markets: This is a market where financial instruments are traded. Emerging markets: An emerging market economy (EME) is defined as an economy with low to middle per capita income Financial policy: Criteria describing a corporation's choices regarding its debt/equity mix, currencies of denomination, maturity structure, method of financing investment projects, and hedging decisions with a goal of maximizing the value of the firm to some set of stockholders. Definition of Key Terms Capitalization: The total dollar market value of all of a company's outstanding shares. Capital structure: Refers to the way a corporation finances its assets through equity and long-term debt. Financial structure: The structure of a company's sources of financing, including shareholders' equity, long- and short-term debt, and accounts payable. Research Problem The financial markets in emerging markets have undergone considerable growth in recent times, mainly as a result of the trade and financial liberalization policies adopted by these countries over the past decade (Agarwal and Mohtadi, 2004). This development has expanded the financing options available to firms, but raises the important policy question of...
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...obtain loans, or sell corporate bonds. When they sell bonds they incur an obligation to repay a certain amount, whether with interest or without, as well as administrative costs with the actual sale. The costs associated with either method of issuing bonds are recorded separately and amortized over the contractual life of the debt. For GAAP compliance these costs are debited to an asset account, called the debt issue costs account. IFRS on the other hand, include the costs with issuing the debt by decreasing the cash account, and decreasing the bonds payable by the costs incurred, effectively reducing the amount borrowed (IAS 39). It can be argued that IFRS in principle provides a greater level of understandability by maintaining a level of simplicity, rather than using additional asset accounts for the debt issue costs. Most companies typically do not sell their bonds to the public directly. Rather, they sell the entire issue to institutions such as investment banks who in turn sell the bonds to the public. The investment banks charge an underwriting fee to the company which may take into account the cost the investment bank pays the company for the bonds, and the re-sale proceeds the bank makes on the sale of the company’s bonds. A company may also choose to sell its debt to either a pension fund or an insurance company. This is known as a private placement, which usually have less issuing costs than having an investment bank underwrite a sale of bonds – due to registration requirements...
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...common long term debt options are bonds, notes, and capital leases. These three financing options provide companies with needed resources when looking to finance business opportunities or restructure debt, the company must decide which options if not all are right for their business and restructuring of debt. Bonds, Notes, and Capital Leases Bonds are certificates issued to companies who promise to pay back borrowed money with a fixed interest rate at a certain time or maturity date. The borrower pays the interest or coupon on the bond either annually, semi- annually, or monthly. Bonds that mature in less than a year is called a boll, bonds that mature between one and Ten years are called notes, under writers provide the bond financing and then sell the bonds off to investors for profit on the open market. There are different types of bonds like callable bonds that allow the borrower to pay the bond off before maturity to limit interest paid on the bond. Putable bonds allow the bond holder to demand payment on the principle at an earlier date than specified avoiding coupon payments in the future. Convertible bonds are used by publically traded companies, this allows the principle to be “paid in shares of the company instead of cash” (Money, 2011). Corporate paper are short –term bonds issued to finance business operations. Bonds are used for financing activities for the borrower and investments for the investor. Terms of a bond will depend on the borrower’s...
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...Abstract This paper attempts to discuss current GAAP treatments of both convertible bonds and redeemable preferred stock. This paper will also demonstrate an example as to how the accounting would change on financial statements in regards to these securities. It takes into account present effects as well as future years; in addition it also considers the conversion of bonds as well as how debt covenant restrictions effect these financials. The paper also documents how both capital and operating leases are accounted for in varying situations. It does not examine criteria for designation between the two, rather how they are handled in regards to common situations. The author adds his own thoughts and provides commentary on these topics and gives consideration to the methodology to which they are accounted for. Alternate Financing Decisions Companies take part in many activities that are recorded in their financial statements. They have sales, expenses, production costs, financing activities, assets & liabilities just to name a few. The inflows and outflows of cash needs to be monitored budgets need to be made and management needs to make important decisions regarding the direction the company is going and how they are going to get there financially. This could end up in the taking out lines of credit, selling assets or looking in to other alternate financing methods such as convertible bonds or the issuance of preferred stock. Baker Company a theoretical company in our text...
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