...Challenges of Nepalese Debt market 1. Introduction Debt market may be short-term, intermediate and long-term. Short-term and intermediate-term financing sources include trade credit, bank loan, finance company loan, commercial paper; inventory financing includes the issuance of mortgages and bonds (Shim J.K; 1989:138). The importance of the debt market in an emerging economy cannot be overemphasized. In the presence of uncertainty and prudential norms, banks often decline to lend for long term projects, and borrowing from overseas markets may be constrained by country risk perceptions and restrictions on capital mobility. In such cases, the market for debt securities may emerge as the mainstay of the credit and capital markets. (Sumon Kumar Bhaumik&SuchismitaBose, 2001) Bond market link having long-term financing needs with investors willing to place funds in long-term interest bearing securities (UN, TW; 2001). When a corporation (or government) wishes toborrow money from the public on a long term basis, itusually does so by issuing or selling debt securities. Theyare generally called bonds (Ross, 1998).A corporate bond is security representing a long-term promise to pay a certain sum of money at certain time over the course of the loan with fixed rate of interest payable to holder of the bond. And the debenture is the bond backed or secured only by the general credit of corporation. (Hampton, 1998) 2. Empirical Studies Though the debt market, debenture and bonds provide...
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...European debt crisis continue to bring influences to the global economy during the week. , During the week, “Standarad and Poor’s (S&P) downgraded Italy’s credit rating from a A+/A-1+ to A/A-1” beacuse of “Italy’s weakening economic growth prospects” and “a view that its governing coalition would limit the government’s ability to respond decisively.” Such a downgrade affects the Australian Forex falling “to a five-week low” and economists expected that currency market is “driven by further news on eurozone debt woes.” Moreover, the three top US banks, Bank of America, Wells Fargo and Citigroup was downgraded by Moody’s because of “the US givernment less willing than before to rescue them if they become unstable.” Such news bring influences to Australia Forex and causing it “trading near its 10-month low as traders worry about a possible recession in the US and Europe.” I was thinking to change my trading position to sell rather than buy for Australia Forex as I found that the market expectations were mianly different from my positive expectations.. However, “Westpac New Zealand senior market strategist Imre Speizer said the mood on currency markets was slightly more positive on expectations world central bankers and finance officials were closer to a decision ona more comprehensive solution for Europe’s debt woes.” Such news gives me confidence that once there is a solution to the present situation to Eurozone the Forex market could rise. Rather than that, another news saying...
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...impact of the European sovereign debt crisis on the foreign exchange market 1. Introduction In 2010, the debt crisis caused the euro to go down 10% in a three-month period. Some largest hedge funds in America discovered this opportunity and short euro in groups to an enormous scale. Later on, the British pound is being infected. It continuously dropped for six days, which wrote the longest dropping period record. In this paper, the objective is to critically analyse how the European sovereign debt crisis affects foreign exchange markets. The theme focuses on the contagion on the markets. The contagion phenomenon exists between foreign exchange spot and derivative markets. One of the channels is the investor sentiment, which makes large scale of influences on both markets and volatility dynamics (Corredor, P., Ferrer, E., Santamaria, R., 2015). It makes sense on aspects like trading volume, effective transaction costs and so on. This paper has two main parts. The first part is to evaluate impacts on foreign exchange spot market through analysing the political channel, bank channel and financial markert channel. The second part is to investigate impacts on foreign exchange derivatives, especially on the foreign exchange swap. 2. Contagious impact on the foreign exchange market 2-1 Impacts on foreign exchange spot (impacts on euro) In this part, we explain how the debt crisis makes impacts on the foreign exchange spot market, especially, we focus on the exchange...
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...INTERNATIONAL MONETARY FUND AND THE WORLD BANK Managing Public Debt: Formulating Strategies and Strengthening Institutional Capacity Prepared by the Staff of the IMF and World Bank Approved by Christopher Towe, Danny Leipziger, and Kenneth Lay March 3, 2009 Contents Page Acronyms...................................................................................................................................3 I. Introduction ............................................................................................................................5 II. The Financial Crisis: Implications for Debt Managers .........................................................6 III. Work Program Linkages ......................................................................................................7 IV. Medium-Term Debt Management Strategy.........................................................................8 A. Developing the Framework.......................................................................................8 B. The Guidance Note..................................................................................................10 C. The Cost-Risk Analytic Tool ..................................................................................11 D. Preliminary Results from Early Application of the Framework .............................13 V. Debt Management Performance Assessment (DeMPA).....................................................15 A. The DeMPA Framework........
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...Describe and assess the product-market and financial strategy Massey pursued through 1976. Where possible, compare Massey's strategy with those of its leading competitors. Massey Ferguson, a true multinational company, is in the business of producing diesel engines, farm machinery and industrial machinery. In 1953, Massey-Harris merged with Harry Ferguson and formed Massey Ferguson by combining their skills to become the world’s largest supplier of diesel engines to equipment manufacturers and the world’s largest producer of farm tractors. Massey’s farm machinery line comprises of several agricultural equipment such as tractors, harvesters, implements etc. The industrial machinery line consisted of industrial tractors, tractor loaders, rough – terrain fork-lifts, utility loaders, log skidders and diesel engines. Diesel Engines were produced by Perkins Engine group in England which were used in Massey Ferguson’s equipment, over 50% of the products were exported to Massey Ferguson’s subsidiaries and affiliates. Market-Product strategy Massey Ferguson was supposed to be in the third position in the worldwide sales of arm equipment in the large North American farm equipment market. Massey Ferguson was well known in North America and Western Europe for producing farm and industrial machinery and had also dealings with governments and public dealings with government and public institutions in developing nations. The regional alignment of the market for Massey’s farm equipment...
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...Debt Financing July 1994 Debt Financing Warning This workbook is the product of, and copyrighted by, Citibank N.A. It is solely for the internal use of Citibank, N.A., and may not be used for any other purpose. It is unlawful to reproduce the contents of these materials, in whole or in part, by any method, printed, electronic, or otherwise; or to disseminate or sell the same without the prior written consent of the Professional Development Center of Latin America Global Finance and the Citibank Asia Pacific Banking Institute. Please sign your name in the space below. Table of Contents TABLE OF CONTENTS Introduction: Course Overview............................................................................. v Course Objectives.......................................................................... vii The Workbook ............................................................................... vii Unit 1: Fundamentals of Debt Financing Introduction ................................................................................... 1-1 Unit Objectives .............................................................................. 1-1 Key Terms..................................................................................... 1-1 What Is Debt Financing?............................................................... 1-2 Sources of Debt Capital ................................................................ 1-3 Debt Markets .................................
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...Public Debt 8 Recent developments with regard to the sovereign debt situation of countries ranging from Iceland to the United Arab Emirates, and more recently, of countries in the Euro‐zone, most prominently Greece, have been a rude awakening for global financial markets. After a protracted period of benign neglect, policymakers as well as investors are beginning to scrutinize more carefully the health of sovereign public finances. Lessons from previous debt crises are being re‐learnt. Escalating public debt does not bode well for macro‐economic stability and growth as it exerts upward pressure on interest rates and crowds‐out domestic private investment. For developing countries, the higher interest cost associated with domestic debt places a substantial strain on budgetary resources, with a negative spill‐over effect on social sector and development outlays and a slowdown in growth momentum. For external debt, creditors may charge a lower interest rate (as is the case with most multilateral and bilateral donors), but the exchange rate risk inherent in the accumulation of foreign currency debt leaves a country vulnerable to developments on the external account and in international markets. Therefore, policymakers are faced with choices not only of what levels of public debt to accumulate, but also the composition of the portfolio with regards to source...
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...Introduction 3 2. Capital structure 4 2.1. Theories 4 2.2. Types of capital 6 2.3. Sources of capital 7 2.4. Reasons of conducting different capital structure 9 3. Capital Structure of NEXT 11 3.1. Comparative analysis of internal and external financing of NEXT 11 3.2. Comparative analysis of debt capital and equity capital of NEXT 13 3.3. Comparative analysis of current debt and non-current debt of NEXT 15 3.4. Financial performance of NEXT 2013-2015 17 4. Conclusion 19 5. Reference 20 6. Appendixes 22 Appendix I 22 Appendix II 23 Appendix III 25 Appendix IV 27 Appendix V 29 Appendix VI 30 1. Introduction Capital structure of firms is arguably one of its most important choices, as Milken (2009) said “It doesn't matter whether a company is big or small, capital structure matters. It always has and always will”. Most companies pay much attention to their capital structure, NEXT is one of the good representative among those companies. NEXT, founded in 1864, now is the largest apparel corporation in UK, which currently operates more than 500 retail stores and its online shopping website in both UK and international market to provide clothing, home products, and accessories for women, men, and kids. Firstly, this report will present some theories of capital structure and reasons of conducting different capital structure among companies. Secondly, this report will analyse the types and sources of capital of NEXT based on the...
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...large and small firms is also omitted and leads to wrong results. So the authors argue that such ratios have undesirable properties for examining the static trade-off theory. Conducting the research, the authors obtained the data from Compustat and CRSP. Frank and Goyal also state that using leverage ratios is not right, because it omits several features. They investigated the static trade-off model of capital structure using 2 regressions that explain debt and equity respectively. The authors describe how to deal with the exogeneity of profits. Frank and Goyal research led to several results: highly profitable firms issue debt and buyback shares while less profitable profitable firms reduce debt and issue equity. Furthermore, firm size plays an important role in determining its capital structure. Comparing with leverage ratios, firm size is not taken into account. Larger firms are more active in the debt market, while smaller firms are more active in the equity market. The researchers also consider that market conditions (market timing) should be...
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...| Debt Management Program in the Philippines | The first debt and debt service reduction operation the World Bank financed was the Debt Management Program Loan to the Philippines, approved in 1990. Its main objective was to help restore the Philippines' creditworthiness by reducing the destabilizing pressures exerted by an excessive debt-service burden. The government, having inherited a huge debt service obligation, formulated a debt restructuring program for the country and a request for debt-relief from creditors, with assistance from the Bank and the IMF. Several events helped improve the Philippines' creditworthiness. Three of them are particularly relevant to the operation. First, the government adopted a program of deep structural and macroeconomic reform. Second, it reduced the debt stock by about $650 million equivalent, or about 2.3 percent of its outstanding debt at the time, using Bank and IMF financing to buy back $1.46 billion of debt from commercial banks at 50 percent discount. And finally, by signaling confidence in the Philippines' commitment to sound macroeconomic reform, the Debt Management Loan opened up international financial markets for the country. However, the program's success also led to a new problem. It encouraged new loans and other inflows of capital, which eventually became a major source of monetary problems and instability. The resulting increase in inflation forced the government to rein in the economy, suppressing growth; the currency...
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...Finance: the study of how individuals, institutions, governments, and businesses acquire, spend, and manage money and other financial assets Financial Environment: encompasses the financial system, institutions or intermediaries, financial markets, business firms, individuals, and global interactions that contribute to an efficiently operating economy Financial Institutions: organizations or intermediaries that help the financial system operate efficiently and transfer funds from savers and investors to individuals, businesses, and governments that seek to spend or invest the funds in physical assets Financial Markets: physical locations or electronic forums that facilitate the flow of funds among investors, businesses, and governments Two Themes: Entrepreneurial Finance: study of how growth-driven, performance-focused, early-stage firms raise financial capital and manage operations and assets Personal Finance: study of how individuals prepare for financial emergencies, protect against premature death and property losses, and accumulate wealth Why Study Finance: to make informed economic decisions; to make informed personal and business investment decisions; to make informed career decisions based on a basic understanding of business finance Six Principles of Finance: Time Value of Money: understand the economic behavior of individuals and the economic decisions of the institutions and businesses that they run; principle pillar apparent in many of our day-to-day...
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...capital structure of a company. Whether a firm is highly leveraged or has lower debt component, it has no bearing on its market value. Rather, the market value of a firm is dependent on the operating profits of the company. Capital structure of a company is the way a company finances its assets. A company can finance its operations by either debt or equity or different combinations of these two sources. Capital structure of a company can have majority of debt component or majority of equity, only one of the 2 components or an equal mix of both debt and equity. Each approach has its own set of advantages and disadvantages. There are various capital structure theories, trying to establish a relationship between the financial leverage of a company (the proportion of debt in the company's capital structure) with its market value. One such approach is the Modigliani and Miller Approach. This approach was devised by Modigliani and Miller during 1950s. The fundamentals of Modigliani and Miller Approach resemble to that of Net Operating Income Approach. Modigliani and Miller advocates capital structure irrelevancy theory. This suggests that the valuation of a firm is irrelevant to the capital structure of a company. Whether a firm is highly leveraged or has lower debt component in the financing mix, it has no bearing on the value of a firm. Modigliani and Miller Approach further states that the market value of a firm is affected by its future growth prospect apart from the risk involved...
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...Amazon.com - Financial Analysis Case Study Introduction The bookselling industry is one of the steady growing industries which have estimated the sales of $27 billion in the year 2006. The sales of the books highly depend on different seasons. The industry has diverse customers who buy different categories of books which includes the trade books, college books, professional books, mass market paper-back books. With stiff competition across the market, the companies are strongly focusing on adopting different ways and means so as to attract more and more consumers and achieving high market share in the industry. Company overview Amazon.com is considered to be the market player in the e-commerce industry (bookselling). Amazon.com was founded by Jeff Bezos, who focused on enhancing the book shopping experience of consumers, with innovation and new ways to sell books online. One of the major players of Amazon.com is Barnes and Noble. Amazon.com started as an online bookstore that has turned into one of the largest online retailers selling items from music and movies to artwork and furniture. As the company website states “it is by design that technological innovation drives the growth of Amazon.com to offer customers more types of products, more conveniently, and at even lower prices.” In this paper you will learn the financial health of the company Amazon.com. The 9-step process written about by Professor Piper will be followed to assess how financially sound Amazon.com...
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...are firm value. We collected data from the Karachi stock exchange (KSE) and State Bank of Pakistan. Contents CHAPTER 1: INTRODUCTION 4 1.1 Background of the study 4 1.2 Problem Statement 6 1.3 Purpose of the study 7 1.4 Significance of the study 7 1.5 Operational definitions of the variables 8 1.5.1 Leverage: 8 1.5.2 Market to Book Value: 8 1.5.3 Profitability: 8 1.5.4 Growth: 8 1.5.5 Size: 8 1.5.6 Intangible: 9 CHAPTER 2: LITERATURE REVIEWS 10 2.1 Theoretical Background: 10 2.2 Empirical evidence: 11 CHAPTER 3: METHODOLOGY 17 3.1 Research Method 17 3.2 Research Model 17 3.3 Research Hypothesis: 18 3.4 Data Collection 18 3.5 Population and Sample Size 18 3.6 Research Technique 19 INTRODUCTION * Background of the study The aim of every organization to adjust their long term and short term debt but mainly in this study it is focused on the long term debt that are occurred through the IPO. Mostly firms issues the debt and equity and by this there would be permanent change in capital structure and that do not affect the firm value The objective of the study is to find out...
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...devastated market crash that impacted the financial market with millions and trillions in losses due to executive mismanagement (Wareham, 2001). The future of the financial healthcare industry depends upon leadership performance and implementation. Erroneous decisions from leadership lead to devastating results in the financial aspect of the healthcare organization, which can prompt the leadership to solicit credit to resolve internal or external obligations. As a result, Campello Graham & Harvey (2010) found that during the financial crisis, 86% of constrained United States firms said that they bypassed attractive investments due to difficulties in raising external finance. In contrast, only 44% of unconstrained firms avoided such investments. Creditworthiness The organization develops creditworthiness based on debts paid and minimum credit established with the lenders. Organizations take advantage of the credit’s contribution to financial stability. The creditworthiness aspect of the organization provides a wealth of additional benefits. The borrower has the opportunity to receive a credit rating by the credit agency, and the credit rating flows across the organization’s performance throughout the life of the business, reflecting the internal and external aspects that might affect the overall credit score. Consequently, the credit agency rates the organization “A” or “BBB –”; these assigned ratings can vary depending upon the credit agency, essentially within the market-oriented...
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