impact on the firm profitability along with reducing the liquidity risk. Liquidity is one face of coin and profitability is other. It clarify that working capital management is directly proportional of firm profitability. US financial crises highlighted problems in already identified factors for working capital management. Introduction of Basel 3 accord also directed us toward working capital management to hold liquidity in financial sector. Current business world is
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FIN 675 - CORPORATE FINANCIAL STRATEGY - 3 CREDITS Instructor Details: Instructor: John Manley, Ph.D. Office: Finance House, 85 Beechmont Drive, New Rochelle, NY Phone: 914 637 2733 Fax: 914 633 2286 Email: jmanley@iona.edu Office Hours: half hour before class and by appointment Prerequisite: MBA 550 – Finance for Managers Course Objective: Upon completion of this course, the student should have an understanding of 1. governance issues of the firm [chap. 1
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A Resolution of the Distress Risk and Leverage Puzzles in the Cross Section of Stock Returns Thomas J. George e-mail:tom-george@uh.edu C. T. Bauer College of Business University of Houston Houston, TX 77240 and Chuan-Yang Hwang e-mail:cyhwang@ntu.edu.sg Division of Banking and Finance Nanyang Business School Nanyang Technological University Singapore 639798 April 2009 Acknowledgments: We are grateful to David Bates, Alex Boulatov, Gerry Garvey, Rick Green, Bing Han, Praveen Kumar, Scott Richardson
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portfolio and give recommendations based on the calculated outcomes. To begin with, we have gathered the following information pertaining to two companies of your club’s interest. Company Name | Return | Risk | Registon Co | 15.4% | 8.87% | Sharq Co | 14.0% | 4.9% | From the above return and risk information, our investment club has also came out with three potential portfolios of how much to invest in Registon Co and Sharq Co. This is shown below: Portfolio | Proportion
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a firm’s business risk? Operating leverage is the use of fixed costs rather than variable costs. If most costs are fixed, hence do not decline when demand falls, then the firm has high operating leverage. Effect of operating leverage More operating leverage leads to more business risk, for then a small sales decline causes a big profit decline Typical situation: Can use operating leverage to get higher EBIT or operating income with higher quantity sold, but risk also increases.
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Titman (2001) MM I Definition – Financing and risk management choices will not affect firm value if the following conditions hold: (1) Total cash flow to a firm’s financial claimants are unaffected by these choices; (2) Efficient markets Frictionless and complete markets are clearly sufficient for capital structure irrelevant. MM II Corporation need not be concerned about the market conditions and needs of investors when designing their financial structures Definition – the cost of capital of
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Papers 19 • 2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang China’s new exchange rate regime, optimal basket currency and currency diversification Bank of Finland, BOFIT Institute for Economies in Transition BOFIT Discussion Papers Editor-in-Chief Laura Solanko BOFIT Discussion Papers 19/2011 23.7.2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang: China’s new exchange rate regime, optimal basket currency and currency diversification ISBN 978-952- 462-714-6 ISSN 1456-5889 (online)
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Literature review The essence of financial management is the creation of shareholder value. According to Ehrhard and Bringham (2003), the value of a business based on the going concern expectation is the present value of all the expected future cash flows to be generated by the assets, discounted at the company’s weighted average cost of capital (WACC). From this it can be seen that the WACC has a direct impact on the value of a business. (Johannes and Dhanraj, 2007). The choice between debt
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that are vital for corporate managers. We will discuss most of the major financial decisions made by corporate managers both within the firm and in their interactions with investors. Essential in most of these decisions is the process of valuation, which will be emphasized throughout the course. Topics include criteria for making investment decisions, valuation of financial assets and liabilities, relationships between risk and return, capital structure choice, payout policy, the effective use
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ht is the time-varying hedge ratio, given by: ht=δS&P,FTSE,tδS&P2 Because we want to get the result only focus on the two-index, we ignore the currency flotation by assume that the currency rate is perfectly hedged. At very beginning, risk manager have assumed that the volatility is constant over time, which allow us to estimate it use sample variance of past time: δ2=1T-1t=1T(rt-r)2 By estimate the historical data, our find the variance tend to be clustered, it is obvious to see all
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