...Board of Governors of the Federal Reserve System International Finance Discussion Papers Number 848 December 2005 Fighting Against Currency Depreciation, Macroeconomic Instability and Sudden Stops Luis-Felipe Zanna NOTE: International Finance Discussion Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to International Finance Discussion Papers (other than an acknowledgment that the writer has had access to unpublished material) should be cleared with the author or authors. Recent IFDPs are available on the Web at www.federalreserve.gov/pubs/ifdp/. Fighting Against Currency Depreciation, Macroeconomic Instability and Sudden Stops∗ Luis-Felipe Zanna† First Draft: October 2002 This Draft: November 2005 Abstract In this paper we show that in the aftermath of a crisis, a government that changes the nominal interest rate in response to currency depreciation can induce aggregate instability in the economy by generating self-fulfilling endogenous cycles. In particular if a government raises the interest rate proportionally more than an increase in currency depreciation then it induces self-fulfilling cyclical equilibria that are able to replicate some of the empirical regularities of emerging market crises. We construct an equilibrium characterized by the self-validation of people’s expectations about currency depreciation and by the following stylized facts of the “Sudden Stop” phenomenon: a decline...
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...Ch 13 dq 1. If corporate managers are risk-averse, does this mean they will not take risks? Explain. Risk averse corporate managers are not unwilling to take risks, but will require a higher return from risky investments. There must be a premium or additional compensation for risk taking. 3. When is the coefficient of variation a better measure of risk than the standard deviation? The standard deviation is an absolute measure of dispersion while the coefficient of variation is a relative measure and allows us to relate the standard deviation to the mean. The coefficient of variation is a better measure of dispersion when we wish to consider the relative size of the standard deviation or compare two or more investments of a different size. 4. Explain how the concept of risk can be incorporated into the capital budgeting process? Risk may be introduced into the capital budgeting process by requiring higher returns for risky investments. One method of achieving this is to use higher discount rates for riskier investments. This risk adjusted discount rate approach specifies difference discount rates for different risk categories as measured by the coefficient of variation or some other factor. Other methods, such as the certainty equivalent approach, also may be used. 5. if risk is to be analyzed in a qualitative way, place the following investment decisions in order from the lowest risk to the highest risk: a. new equipment (2) b. new market...
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...responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers. All electronic materials are available on the student website. Week One: Overview of Health Care Finance Details Objectives 1.1 Define basic health care finance terms. 1.2 Describe the four segments that comprise a financial management system. 1.3 Identify financial reporting practices & ethical stds of conduct. Read the Week One Read Me First. Due Self Study Points N/A Reading Self Study Self Study Self Study N/A...
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... | | |Finance for the Health Care Professional | Copyright © 2011, 2009, 2007 by University of Phoenix. All rights reserved. Course Description This course is designed as an introduction to the terminology, processes, functions, and financial reports commonly encountered in health care operations. This course introduces the concepts of basic managerial financial functions, such as budgeting, reimbursement methods, and the responsibilities of health care financial management. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Baker, J. J., & Baker, R. W. (2011). Health care finance: Basic tools for nonfinancial managers (3rd ed.). Sudbury, MA: Jones & Bartlett Publishers. All electronic materials are available...
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...Management Session 4& 5 / Class discussion / 6th & 10thJuly ‘11 All IFM students of PGDM are required to come prepared for a class discussion and participation exercise planned for the week as below: 6th Jul ’11 - Session 4 We conclude the previous topic Globalization & Multinational Business Finance including the Discussion Note: Managing for Value - Yahoo’s Decision to Expand internationally / Finance function in a global corporation; Case study: Ranger Supply Company; and start with, Topic 2 International Financial System, BoP and Foreign Exchange Markets- Government Policies Managing for Value: Impact of Trade Policies on Firm; and How Yahoo!is exposed to Exchange Rate Systems and Intervention. Case study: MapleLeaf Paper Co., Self-evaluation Exercises: Applications: Point Counter-point; Blades Inc. Case; and Small Business Dilemma Readings: Topic 2 & 6 from Jeff Madura; & Topic 2 from Readings in IFM Handout) 10th Jul ‘11 – Session 5 We conclude Topic 2A International Financial System & Government policies; and introduce: Topic 3 International Financial Markets: Foreign Exchange Markets. Discussion Note 1: Managing for value – Intel’s currency trading; 2. Foreign Exchange Markets - Don’t Blame Speculators for Falling Currencies!? Self-assessment: Blades Inc.& Small Business Dilemma. Readings: Topic 3 from Jeff Madura; & Topic 3 from Readings in IFM Handout) Assignment-1(Individual): Article Review – Finance Function in a Global Corporation...
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...This document of STR 581 Week 5 Discussion Questions shows the solutions to the following problems: DQ 1: Although objectives, functional tactics, and action items are included in many implementation plans, why do some organizations have a difficult time reflecting the plans they create? DQ 2: Consider an organization you have worked for or are familiar with. What are the most important metrics used in the strategic control process? Why? DQ 3: Refer to Ch. 8 of Gaining and Sustaining Competitive Advantage and advice what flexibilities companies have in today's business environment. For each response, research a corporation, identify which options the company faced against challenges and what type of flexibility it exercises (please provide source for your research). General Questions - General General Questions Review the sample final exam and compare the answers from 34 through 77 as a team Select one topic per person from Finance and Accounting sections. Subtopics can be found in the sample exam. The remaining sections should be reviewed individually or used as discussions within the team. Finance Accounting · Corporate finance · Investments · Financial markets and institutions · Relevant cost · Resource planning and analysis · Cost-volume-profit (CVP) analysis · Product costing · Financial reporting and analysis Submit one slide per person that...
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...views at this Forum. 2. Much has been said and continues to be said about the foothold which Islamic finance has gained in the international financial landscape. A range of proof points support this contention and justify further projections of the growth trajectory of Islamic finance in the coming decades. Page 1 of 9 We have achieved double-digit growth rates for various components of Islamic finance including sukuk, fund management and Islamic banking, whether at the national, regional or international levels. Additionally there has been increasing acceptance of Islamic finance not only in the Muslim-majority countries but also in certain predominantly non-Muslim jurisdictions. We have also witnessed the growing size of funds seeking Shariah-compliant investments and the increasing participation of multi-national corporations, multi-lateral institutions and conventional institutions in sukuk issuances. 3. It is not my intention today to revisit the benefits of Islamic finance or restate the pre-conditions for its further growth. As I have alluded to, these are welldocumented and well-known to all. Instead I would like to share my thoughts on just two aspects of Islamic finance which make up the theme of our Forum this year – the concept of risk-sharing and of public good. These two aspects of Islamic finance are often over-looked or perhaps under-valued. 4. Islamic finance started as an industry within the conventional framework based on adapted...
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...WP/04/01 Bank of Uganda Working Paper Recognising the Role of Micro Finance Institutions in Uganda Justine Nannyonjo and James Nsubuga _________________________________ Bank of Uganda 2 WP/04/01 BOU Working PAPER Research Department Recognising the Role of Micro Finance Institutions in Uganda By Justine Nannyonjo and James Nsubuga February 2004 Abstract This paper shows that micro finance is an important part of the growth strategy in Uganda and has in the recent years gained increasing recognition. This is evidenced by initiatives and strong commitment by government, donors and practitioners towards supporting micro finance activities in Uganda, and the rapid expansion of the micro finance industry. Integration of Micro Finance Institutions (MFIs) into the formal financial system has been established, while measures have been taken to build capacity and enhance coordination in the micro finance industry, as well as expand the outreach of sustainable micro finance. The paper, however, identifies a number of challenges to the development of the micro finance industry: There is need to strengthen the capacity of MFIs to build their management information systems, and to rebuild infrastructure in underserved areas as well as strengthen capacity for identifying potential market structures, which could serve as the basis on which to build sustainable micro finance services. Other challenges include restoring peace in conflict areas and strengthening...
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...Research Question:- Islamic Finance in Ireland- Prospects and Barriers Introduction:- Islamic finance is relatively small compared to the international financial system, but it is growing rapidly at 15% to 20% annually and expanding very fast due to many factors, increasing in oil prices is an obvious one and the large sum of capital recorded in the books of Islamic institutions. In the last decade Islamic finance started to move into Europe and the USA due to the lack of investment opportunities in the Middle East and the need for its boost to some local economies. In this regard i will try to find out about the emergence of Islamic finance into the Irish financial market and its prospects and barriers. What are the financial benefits for both side and the Irish economy in particular? The trends and prospects for Islamic finance? The barriers to entry into the Irish financial system? Literature Review:- The main topic to be examined is Islamic finance entry to the Irish financial market, particularly the barriers it might face and the prospects and trends. Since Islamic finance and Sharia compliant products are new to Irish market, it is hard to find previous researches about this issue. However, there are quite number of articles focusing on the matter, often written by economists, journalist and concerned people, and there are some reports issued by the like of department of finance, European central bank (ECB) and the Irish Islamic chamber of commerce. Some of the...
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...Personal Responsibility Personal responsibility is taking your life into your own hands and not leaving matters to chance or employing others to make decisions for you. Each person must have the skill set needed to be in control of their finances, their education and their health and not blame others for their success or their failures. It is as simple as paying our debts, using the syllabus to schedule time for assignments or just being honest about what we put into our bodies. Without maintaining self-control, how can a person expect to be prepared for any obstacle that should arise? A person must be able to apply their own ideas and make valid use of their time and resources. When the topic of finances is brought up, collar tugging and brow sweat are common reactions. Practicing personal responsibility will take the intimidation out of finances. Budgets are an effective way to keep track of the money coming in and going out. Having a detailed account of monthly transactions allows a person to allocate funds for living expenses, bills and savings. Practicing responsible borrowing can insure that you do not become upside down on debt to a creditor. Planning for the future by saving is a great idea, but investments play a bigger role. For instance, putting money into a 401K or IRA can help a person prepare a secure financial future making retirement more financially feasible. Also, one of the biggest investments we make in life is the purchase of a home. I saved every penny...
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...professionals areoften viewed asonly having a policy and procedure role focusing mainly on compliance and legal issues or Henchmen for Top Management. They are considered as support functional team having little influence in the overall strategy of the company.HR like most other aspects of business, including marketing, research and development, and strategy formulation is at least partly subjective, a matter dependent on experience and judgment as well as data. But finance and Accounting? The numbers produced by these departments are objective, black and white, and indisputable. According to John Hofmeister, president of Shell Oil Company “If you’re going to be in business and you’re going to work in HR, then you better understand finance, To be blunt, everything that a business line manager should understand.”HR people should be able to read and understand their company’s income statement, balance sheet and that they should be able to deal with the whole budgeting process, capital investments so on. The art of accounting and finance is the art of using limited data to come as close as possible to an accurate description of how well a company is performing.The bottom line of the income statement is net profit.These are the numbers that senior managers use to gauge a business’s performance. They are the basis for many of the fundamental decisions a company’s leaders must make day in and day out.As a HR professional if you can understand the assumptions of the numbers represented in the...
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...As a branch of finance, managerial finance is concerned with assessing financial techniques used in organizations and public institutions in an effort to determine how they affect both internal and external business processes. In essence, managerial finance mix managerial and elementary corporate financial aspects to better organizations’ operations, minimize loses and implement change. As opposed to the technical financial approach, managerial finance seeks to analyze available financial information or data and then derive their inherent meaning in regard to the long term survival of a business. This paper seeks to explicate the role of managerial finance and their implication to the survival of contemporary business enterprises. Financial statements are instrumental to internal users in that it helps them to make key business decisions. Such users include business owners, employees, managers and other stakeholders with a direct interest in an organization. Performing financial analyses on such statements helps such parties to gain an in depth understanding on their implications to internal decision making processes. On the other hand, external users require financial analysis to make decisions regarding their investments in a given organization. These include the government, banks and other financial partners as well as potential investors. Following the above discussion, governments will always ask for financial statements to evaluate or ascertain how an organization...
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...Institution: Memo TO: CSU Funding campaign team members FROM: Yuqing and William DATE: February 5, 2014 SUBJECT: Funding for CSU This memo is a reminder of the meeting we have today. The agenda of the meeting is to talk about what we discussed and to get opinions on the matter. As the campaign group for the CSU funding, it is proper that we use all means and to gather all that is in our disposal for the task. We discussed on how we can acquire funding, and we agreed that we should not limit our campaign to only seeking finances. The essence of this program is to help increase CSU’s finances so that it can services its activities. This can be achieved through the provision finances and by enforcing measures to cut down costs. CSU has tried such measures, in the past, to cut down on its spending. It has done so by increasing its technology use to replace costly manual systems and by sharing services between departments and campuses. In our discussion, we suggested on the same idea that campaigning for funding does not exclusively mean seeking funds. We, therefore, discussed that if we can get people to volunteer, tutor or pursue internship programs, it would be a good measure of cutting down costs. Salary expenses are a significant part of the overall expenses and reducing these costs saves a lot of money for CSU. We also proposed that the target audience, for this plan of the campaign, is the graduates. Students do not have money to cover for their expenses. However, graduates...
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...Report on Capital Structure and the Cost of Capital of AstraZeneca Plc and British American Tobacco Plc. Table of Contents 1.0 Introduction………………………………………… 4 2.0 Background………………………………………… 5 3.0 Capital Structure…………………………………… 6 3.1 Debt to equity……………………………… 6 3.2 Long term debt to equity…………………... 7 3.3 Total debt to capital………………………… 7 3.4 Long term debt to capital…………………... 8 3.5 Balance sheet structure AZN………………. 9 3.6 Balance sheet structure BAT………………. 10 3.7 Discussion…………………………………. 10-11 4.0 Cost of capital……………………………………… 12 4.1 Introduction………………………………... 12 4.2 Weighted average cost of capital………….. 12 4.3 Dividend growth model…………………… 12-14 4.4 Capital asset pricing model………………... 14-16 4.5 Discussion…………………………………. 16-17 5.0 References…………………………………………. 18 6.0 Link to excel workbook……………………………. 18 Capital Structure and the Cost of Capital 1.0 Introduction This report provides financial analysis of two top publicly traded companies from very different sectors. AstraZeneca Plc(AZN) and British American Tobacco Plc(BAT). The structure of the report will be aimed at meeting the objectives of the brief: Empirical observation Comparative analysis Impact of industry conditions Economic environment Business environment For consistency of information all the data used, unless otherwise stated, is obtained from ThomsonONE. ...
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...industries in the healthcare sector includes health services, health insurance, medical equipment and supplies, pharmaceuticals and biotechnology, and other (includes a diverse collection of organization ranging from consulting firms to educational institutions to government and private research agencies. B. What is meant by the term healthcare finance as used in the book? Finance, as the term is used within the health services industry and as it is used in the book, consists of both the accounting and financial management functions. C. What are the two broad areas of Healthcare Finance? Accounting as its name implies, concerns the recording, in financial terms, of economic events that reflect the operations, resources, and financing of an organization. Financial management or corporate finance, provides the theory, concepts, and tools necessary to help managers make better financial decisions. Certain aspects of accounting involve decision making, and much of the application of financial management theory and concepts requires accounting data. D. Why is it necessary to have a book on healthcare finance as opposed a generic finance book? The reason is that while all industries have certain individual characteristics, the health services industry it truly unique. 2. What is the difference between a business and a pure charity? A business such as a hospital or medical practice, sustains itself financially by selling goods or services. Thus, it is in competition with...
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