...willing buyers and sellers. Another elegant definition of liquidity is the probability that the next trade is executed at a price equal to the last one.[citation needed] A market may be considered deeply liquid if there are ready and willing buyers and sellers in large quantities. This is related to market depth that can be measured as the units that can be sold or bought for a given price impact. The opposite is that of market breadth measured as the price impact per unit of liquidity. An illiquid asset is an asset which is not readily salable due to uncertainty about its value or the lack of a market in which it is regularly traded. The mortgage-related assets which resulted in the subprime mortgage crisis are examples of illiquid assets, as their value is not readily determinable despite being secured by real property. Another example is an asset such as a large block of stock, the sale of which affects the market value. The liquidity of a product can be measured as how often it is bought and sold; this is known as volume. Often investments in liquid markets such as the stock market or futures markets are considered to be more liquid than investments such as real estate, based on their ability to be converted quickly. Some assets with liquid secondary markets may be more advantageous to own, so buyers are willing to pay a higher price for the asset than for comparable assets without a liquid secondary market. The liquidity discount is the reduced promised yield or expected return...
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...Assignment Title: Understanding Ireland’s Economic Crisis and Recovery Words Count: 1500 words (Excluding references) Introduction In 2008 Ireland plunged into one of its most severe economic crisis recorded since pre-war times. This paper looks at the monetary policies and conditions during Ireland’s recessionary years and in conjunction the key features and policies that were introduced by monetary authorities in order to restore financial stability in Ireland. This includes looking at policies such as the recapitalisation of banks and blanket guarantee in order to stabilize the banking system. Following this an insight into Ireland’s people and the banking systems combined. This deals with restructuring loans given to households and companies. A huge emphasis was placed on mortgages given to households during the boom times. Prevailing monetary conditions and policy context for the Irish Economic Crisis When Ireland was announced “in recession” back in 2008 numerous monetary conditions and policies were to blame. Ireland had issues with its banking systems. Its banks needed urgent and constant capital injection to the point the government alone could no longer support them. This soon highlighted that there were clearly further solvency issues underlying. The cause of the recession was blamed on the ever expanding property market to its bust point. This played a significant factor but was not the...
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...Dell’s Working Capital Question1 Understand that this was a paradigm shift in this industry. A customer who is used to walking into a store, buying, and walking out is looking for instant gratification. What did Dell offer which other players were not offering to counter this? Answer 1 The most important thing that Dell offered was a “customized systems” within a few days. This was something that other competitors were not able to offer as they had already built systems in inventory with them and at retailers’ / resellers’ store. Dell was also the first to offer toll free telephone lines that the customers could call to place the order and on-site technical support. -------------------------------------------------------------------------------------------------------- Question 3 How did keeping low finished goods inventory vs its competitors help Dell when Intel had to replace faulty Pentium chips? Answer 3 Low finished goods inventory helped Dell as it did not had to dismantle already assembled PCs to replace the faulty chip. It was able to quickly manufacture systems with the updated Pentium chip while others who had a considerable inventory of already built systems were still selling systems with the flawed chip or had to go through the costly processes of recalling and dismantling the systems to correct them. -------------------------------------------------------------------------------------------------------- Question 5 In 1995, how many days did it take...
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...their own financial instrument, such as, stocks, bonds, property and others. This personal investment is in aims of improve the liquidity and efficiency of the equity and capital of the individual. Basically, the individual investors have to develop their own investment plan and framework based on different characteristics of the individual investors. This is because the personal investment is very subjective, whereby it is totally based on the characteristics and the degree of risk tolerance of the individual investors. However, before investing into the financial instruments, the individual investors should develop an investment plan and strategy. This investment plan is included the risk tolerance and personal constraints which can related to the allocation of the financial assets. Inside the investment plan, the individual investors also have to state down what will do, what will not do, how to invest and include the investment guidelines. The investment plan also included the investment framework for making wise the investment choices, and also can help the individual investors’ reason through the decisions which may have the major impacts on the future financial goals. Furthermore, the investment plan also divided into few categories in order to understand more about the personal investment. The first part is risk and return objectives, which meant are depend on the individual investors. This part simply explained that the degree of risk tolerance and the expected return...
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...FINC 6016 Financial Instruments and Markets Final Exam Guide * The final exam for FINC6016 Financial Instruments and Markets will be held on Thursday, November 13, 2014 at 1:50 pm. Please check the location for your specific exam on the Sydney Student section of the University of Sydney website. Note that there are multiple venues for the final exam due to the large class size – you may not have the same room as other students in the class. * The final exam is worth 50% of your total mark for the course. It will last for three hours, plus ten minutes reading time. You are allowed a non-alphanumeric calculator for the exam (which will be checked). Please ensure that you bring your student ID card as well. The formula sheet you will receive is attached to the end of the exam. * The exam consists of two parts * Part A: 45 Multiple Choice Questions, worth a total of 15 marks. These questions cover material from later portion of semester only (since the second multiple choice mid-term examination), but there will be obvious benefits to understanding material from earlier in the course.. * Part B: 5 short-answer questions with multiple parts, worth a total of 35 marks. These cover material mainly from the second half of the course, but an understanding of some parts of the first half of the subject would help (particularly the management of financial institutions, capital accords and the problems with Basel II, and duration gaps, duration measurement...
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...Today there are still approximately 7000 banks. In most other countries there are just a handful of major banks – often 4 to 8 institutions dominate the market place. What explains the vastly different character of the banking system in the U.S. from that of other countries? Similarly, most other countries have not in the past provided government sponsored deposit insurance, though some have put it in place as part of their response to the credit crisis. Does the unique structure of the U.S. banking system indicate a greater need for such insurance? In 1933, banks in the United States were unsecure and there was widespread fear based on the previous closures. Depositors panicked as banks were experiencing difficulties. What differentiated U.S banks from other banks is that US banks were composed of two main banks: national banks that were following the federal law and regulation and which it could share funds and resources across US, and the State banks that were following the state law and regulations. It was proven after the crisis that local units banks were more vulnerable to the crisis than national banks. Many states restricted branch banks form developing that made some banks riskier and it limited their liquidity. In 1929 crash, customers were unable to pay back their loans that led to a severe liquidity problem as payment of loans and deposits provided most of the cash flow and backing of American banks, which led to bank closures. From another point, the absence of...
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...2008 FINANCIAL CRISIS Name Course Date 1. Background The financial crisis commenced in August 2007 after the preceding inflation. The crisis became more defined throughout 2007 and gained momentum in 2008. This took place even after the financial regulators and the central banks’ tireless attempts to tame the situation. It is alleged that the main factors that influenced its manifestation include corruption, fraud, speculation, greed, bankers and bankers’ bonuses. However, the academic discourse, politics or media has been unable to solve the mystery surrounding the main causes of the crisis[1]. The mystery is academically relevant to the world of research just like the Great Depression, whose causes are still being discussed. Other sources believe that the crisis might have been as a cause of human failures especially following the refusal to bail out the Investment Bank Lehman Brothers. The housing bubble was the immediate trigger of the 2008 financial crisis. The following were the triggers under the housing bubble. I. Subprime lending A subprime mortgage is the mortgage that is readily acceptable without imposing strict measures of standard on it. Before the 2008 financial crisis, there existed a fierce competition between mortgage lenders. The competition between the mortgage lenders ensued from the struggle for market share and revenue. It also took place in tandem with limited supply of creditworthy borrowers which put unconditional stress...
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...Introduction: The primary purpose of financial and accounting management is to organize, plan, control and direct the financial and accounting activities, but to ensure that every stakeholder is adequately served. The effectiveness of financial and accounting management, therefore purely depends on the policies, regulations and frameworks that are designed and being evolved from time to time. According to Gray, Owen and Adams (1996) financial management is the core business discipline which is meant to ensure that financial resources are deployed in the most effective manner, within the best interest of every group of stakeholder. Moreover, the importance the financial management also increases in current business context because of the fact that economic and financial contexts have become uncertain and unpredictable in every region across the world. At the other end, financial management also supports the business activities and operations which include investment decision making, pricing, financial reporting as well as to meet the legal and regulatory obligations. This report also focuses on the different aspects of financial analysis and management to reflect its validity, reliability and usability in practice. The purpose of this report is to understand and examine the different aspects of financial management, which will be helpful to understand the effectiveness of financial management and its different aspects. In order to achieve the report’s objectives, below paper...
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...2008 FINANCIAL CRISIS Name Course Date 1. Background The financial crisis commenced in August 2007 after the preceding inflation. The crisis became more defined throughout 2007 and gained momentum in 2008. This took place even after the financial regulators and the central banks’ tireless attempts to tame the situation. It is alleged that the main factors that influenced its manifestation include corruption, fraud, speculation, greed, bankers and bankers’ bonuses. However, the academic discourse, politics or media has been unable to solve the mystery surrounding the main causes of the crisis[1]. The mystery is academically relevant to the world of research just like the Great Depression, whose causes are still being discussed. Other sources believe that the crisis might have been as a cause of human failures especially following the refusal to bail out the Investment Bank Lehman Brothers. The housing bubble was the immediate trigger of the 2008 financial crisis. The following were the triggers under the housing bubble. I. Subprime lending A subprime mortgage is the mortgage that is readily acceptable without imposing strict measures of standard on it. Before the 2008 financial crisis, there existed a fierce competition between mortgage lenders. The competition between the mortgage lenders ensued from the struggle for market share and revenue. It also took place in tandem with limited supply of creditworthy borrowers which put unconditional stress...
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...Royal Dutch and Shell Write-up Sebastian Fersch, MiFFT2013 Jimish Gandhi, MiFFT2013 Ryan Kruger, MiFFT2013 Rafa Leon, MiFFT2013 1. What are cross listings and dual listings? Where are RD and Shell listed? What are ADRs? Cross listing is the listing of a company’s common stock on a different exchange than its primary and original stock exchange. For a company to be cross-listed, it must meet the requirements of all the exchanges its shares trade on. Cross listings provide companies with more liquidity and a greater ability to raise capital. A Dual Listed Company (DLC) is a corporate structure in which two corporations function as a single operating business through a legal equalization arrangement, but retain separate legal identities and stock exchange listings. Almost all DLCs are cross-border, and have tax advantages for the corporations and their shareholders. Royal Dutch and Shell used to be a DLC until 2004 with listings on nine exchanges across Europe and the United States. While Royal Dutch traded primarily in the U.S. and the Netherlands, Shell traded predominantly in the U.K. In the U.S., Shell shares traded as American Depository Receipts (ADRs). An ADR is a negotiable certificate issued by a U.S. bank representing a specified number of shares in a foreign stock that is traded on a U.S. exchange. An ADR allows you to own shares of a foreign company while realizing any dividends and capital gains in U.S. dollars. It is now a single entity with primary...
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...Issues 1. What do you think is happening at Lloyd's and The Emporium? 2. What financial ratios and questions raised in your analysis of the two companies' financial statement support your opinions? Facts Lloyd's is a quality furniture company, its headquarter is located in Scranton, Pennsylvania, and manufactured a limited line of high-quality home furnture for distribution to department stores, independent home furnishing retailers, and regional chains. The other company is The Emporium department store in St. Paul. In March 2002, Richard Allan , an assistant credit analysis for the Quality Furniture Company. He was concerned about the changes in tow of accounts in Minnesota--Lloyd's, Inc and the Emporium department store. He therefore brought the credit folders of these two customers to the attention of Watt Ralpson. Lloyd's retailed quality home furniture from three locations - one is in the downtown section of Minneapolis and the other in nearby suburban area. Sales were somewhere seasonal, with a slight downturn in the midsummer months and a slight upturn in the December holiday season. Lloyd's sale were 75% from cash and credit card and 25% from six months installment terms. Installment term called for 25% down and the balance in equal monthly payments over a six month period. There are four shareholders before June 2001, two of four original partners sold their shares in the company to the two remaining owners. Lloyd's had been a customers for over 30 years,...
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...Financial Reporting and Analysis: Case Financial Analysis of British Airways  Submitted To: Submitted by: DATE: 27th December 2009 CONTENTS Introduction Page. 3 History Page. 3 Board of Directors Page. 3 Ratio Analysis Page. 4 - 13 Conclusion Page. 14 Introduction British Airways plc or BA is the flag carrier airline of the United Kingdom. BA has its headquarters in Waterside near its main hub at London Heathrow Airport and is the largest airline in the UK based on fleet size, international flights and international destinations. Its second hub is London Gatwick Airport. British Airways has discontinued all direct overseas flights from UK airports other than Heathrow, Gatwick and London City Airport. BA's UK passengers originating at non-London airports must now connect via London or use other airlines with direct services. History British Airways (BA) was created in 1972, when the British Overseas Airways Corporation (BOAC) and British European Airways Corporation (BEA) managements were combined under the newly formed British Airways Board. This effectively made British Airways into the national airline for the United Kingdom...
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...THE HISTORY OF MONEY In the beginning, there was no money. 1. Self-sufficiency: families produced what they consumed and consumed what they produced. 2. There was no need for exchange. 3. No exchange meant no need for money. The advent of specialization spurred exchange, which led to the earliest barter systems. BARTER Barter is defined simply as good-for-good exchange. There are two main difficulties with barter. 1. Double coincidence of wants: • Occurs when traders are willing to exchange their products for what others are selling. • It’s a single coincidence if I’m willing to exchange my apples for your oranges; it’s a double coincidence if you too are willing to exchange your oranges for my apples. 2. Rate of Exchange: • The rate at which bartered goods are exchanged • How many apples per orange, for example. Arrived at during negotiations between the two bartering parties; these negotiations are transaction costs because they take time which might otherwise have been used better (opportunity cost) As the economy became more complex, with more producers and more consumers, barter became increasingly cumbersome. Number of goods produced and exchanged increased, so the negotiation of exchange rates became increasingly complicated, as there was no common measure of value. ADVENT OF MONEY Money was designed to solve the problems that arose from the earliest barter systems. Money is anything that is generally accepted by custom or law...
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...KOTA FIBRES What does the forecast show? Do you like how it is constructed? The company has projected gross sales to reach 90.9 million rupees in 2001, an forecasted growth of approximately 15 million rupees over the previous year. In spite of the large increase, there are several additional financial factors which need to be taken into account in evaluating the forecast. For instance, Total asset turnover gives an understanding of the efficiency with which the firm uses its assets to generate sales. Total Asset Turnover in this particular case is suboptimal at best. In 2000, Kota had a total asset turnover ratio of .18, with a ratio value of .17 in projected for 2001. This shows major inefficiencies in the management of assets by the company, as it only turns its assets over .18 times a year. They may want to increase this ratio number by increasing their amount of total assets. Kota Fibres as a company (as far as its financial statements are concerned) is very capable of satisfying its short-term obligations as they come due. With a current ratio of 3.24 and quick ratio of 2.38, Kota is operating within acceptable levels (acceptable values are 2.0 and 1.0, respectively). However, the forecasted ratio for 2001 shows that this ratio drops to 1.5:1, which is below the acceptable level of 2.0 set for a manufacturing firm. This means they will have some problem paying their bills on time with the projected production and sales levels. Kota Fibres, in 2000, had a quick ratio...
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...D) cash flow Answer: B Comment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) reversibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status. Diff: 2 Topic: 9.1 Properties of Financial Assets Objective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status 2) Which of the below is NOT one of the eleven properties of financial assets? A) convertibility B) currency C) liquidity predictability D) tax status Answer: C Comment: The eleven properties of financial assets are (1) moneyness, (2) divisibility and denomination, (3) reversibility, (4) cash flow, (5) term to maturity, (6) convertibility, (7) currency, (8) liquidity, (9) return predictability, (10) complexity, and (11) tax status. Diff: 2 Topic: 9.1 Properties of Financial Assets Objective: 9.1 the many key properties of financial assets: moneyness; divisibility and denomination; reversibility; cash flow and return; term to maturity; convertibility; currency; liquidity; return predictability or risk; complexity; and tax status 1 Copyright © 2010 Pearson Education Inc. Publishing as Prentice Hall 3) Which of the below are THREE of the eleven properties of financial assets? A) return...
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