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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money. Debt and equity financing are two different financial strategies: Taking on debt means borrowing money for your business, whereas gaining equity entails injecting your own or other stakeholders’ cash into your company. Two ways of bringing in capital to an organization are through Debt financing and equity financing. One of the resources for debt financing is through loans and lines of credit. Some of the loans include a small business loan (SBA loan). The Small Business Administration (SBA)
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the financial side of CPK. We believe that the CFO, Susan Collyns, can facilitate success of the firm by implementing the following measures: • Increase advertising spending • Increase leverage using debt financing by changing the existing capital structure and purchasing US treasure securities • Repurchase the company’s stock Advertising: CPK spent 1% of its sales on advertising, far less than the 3% to 4% of sales that casual dining competitors, such as Chili’s, Red Lobster, Olive Garden
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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 levered equity is equal to the cost of capital of unlevered equity plus a premium that is proportional to the market value of debt-equity ratio The process of tailoring or repacking securities is costless and competitive MM III With perfect capital markets, financial transactions
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FINA 351 – Managerial Finance, Chapter 13, Capital Structure, Notes 1. What is Capital Structure (CS)? It is the mix of debt and equity on the balance sheet. The basic capital structure question is: How much debt is right for this company? Contrary to what your momma may have taught you, according to the so-called finance experts too little debt may be just as costly as too much debt, because debt financing is usually the cheapest source. This is why it is often said that debt is a two-edged
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Executive Summary DuPont has been known for its low reliance on borrowings. In the 1970’s, the company had to assume a substantial portion of debt of Conoco, a newly acquired company. In 1983, the managers have to decide about the future optimal target debt ratio. Should the company continue to keep about 40% of its assets financed via debt or should it strive to lower its borrowings to 25%? We defined several criteria to determine our choice – return, risks and other quantitative and qualitative
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Overview Team E chose to adopt and implement a middle of the road strategy in production, pricing, financial and capital (both purchase of machine/plant and project) decisions. By eliminating extreme choice options in pricing, production and financing, Team E strove for consistency in an effort to maintain steady growth and find the optimal capital structure. We finished the simulation in fourth place as shown in Exhibit 1, which represented a 148% increase in Accumulated Wealth. Exhibit 1 - Accumulated
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CAPITAL STRUCTURE/LIQUIDITY ORRF | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | LTD/Equity | 35.26 | 72.13 | 62.73 | 32.03 | 15.03 | 41.97 | 18.33 | 5.26 | %change | | 104.56% | -13.03% | -48.93% | -53.10% | 179.30% | -56.32% | -71.29% | CVLY | | | | | | | | | LTD/Equity | 89.61 | 63.33 | 46.94 | 117.04 | 81.06 | 50.01 | 30.41 | 65.48 | %change | | -29.33% | -25.87% | 149.31% | -30.74% | -38.31% | -39.19% | 115.34% | | | | | | | | | | | | | | |
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labor productivity and wages. The choice of production level or quantity is affected by the market structure in which a firm is operating. Therefore, the market structure of pure competition is introduced this week to explain how different businesses look at the revenue and cost structures. The topic of cost curves indicates the trade-offs between fixed and variable costs as well as labor and capital. Cost Concepts OBJECTIVE: Identify production level to maximize profits. Resource: Ch.
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analysis of Blaine Kitchenware’s capital structure, I recommend share repurchase. Stock repurchase would result in a change in firm value and stock price for Blaine Kitchenware, and it will also contribute to optimal debt capacity through allowing the firm to utilize tax deductible financing. Blaine currently faces many risks as a result of the surplus cash including takeover threat and inappropriate payout structure. Blaine Kitchenware’s current capital structure and payout policies are inappropriate
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