...Decline Value of the U.S. Dollar For more than sixty years the United States dollar has been the central reserve currency for the world. A reserve currency, also referred to as an anchor currency, is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves (Carbaugh, 2011). As the world’s reserve currency, the U.S. dollar is used throughout the world as a medium of exchange and is used as the global currency for products traded within the global market. In recent years the status of the U.S. dollar has been contested by a select few around the world. Leaders are unconvinced about the future of the United States economy as their deficits are exceeding record highs. The following analysis will discuss the history of the world reserve currency, how the U.S. dollar became the controlling currency and the benefits the U.S. has experienced as a result of having the controlling currency. Presenting analysis will also discuss the cause of mounting concerns over the future of the United States as well as the effects if the dollar was to lose its status as the world’s reserve currency. Finally, alternatives for the dollar will be evaluated as well as what the United States can do to maintain the standing of the dollar. History of World Reserve Currency During the 1800’s and the first half of the 1900’s the British Pound served as the foremost world reserve currency. Due to WWII Great Britain accrued a high amount of debt...
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...Women of the generations before mine were forced to hear the collective voice of society telling them to stay in the home. While some of those women chose to go with the flow, others laid down their dust mops and aprons in search of opportunity. The latter group of women of which I speak grew larger and larger as the decades passed. Today, women aspire to be more independent and successful than their mothers, and wish for their daughters to do the same. While most young women view this pressure from their parents to “make something of themselves” in a positive light, I do not. Perhaps I am subconsciously trying to rebel, or perhaps I am just going through a biological phase in my life, however I want nothing more than to have a modest job and then have a family. While having a child before you were twenty was the norm forty years ago, we are now told to wait until we are approaching thirty. We are told not to depend on men. I suppose the issue I have with this, is that society still dictates when and what women should do in their lives. Our mothers have a lot to do with the adults we become. My mother was single for the majority of my childhood with the exception of a short lived, dead end marriage. With no siblings, my mother and I depended on each other. She always said that she wouldn’t have it any other way, but I now realize that could not have been true. My mother has been in nursing for twenty five years and has recently been expressing her desire for me to follow...
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...human existence, but the price of diamonds is substantially higher. In other words, the utility obtained from water is obviously very great, while the utility obtained from diamonds is substantially less. The key question that arises is: Why are diamonds so much more expensive than water? Total and Marginal Insight into, and clarification of, the diamond-water paradox results by differentiating between total utility and marginal utility. Total Utility: This is the overall satisfaction of wants and needs obtained from consuming a good. That is, total utility is the accumulated amount of satisfaction, or the total value, generated by several units of a good. Marginal Utility: This is the extra satisfaction of wants and needs obtained from consuming one additional unit of good. That is, marginal utility is the incremental satisfaction generated by, and the value of, a single unit of a good. Water provides humans with an enormous amount of total utility. Water satisfies A LOT of wants and needs for A LOT of people. Water provides a high level of total utility because it is plentiful--water, water everywhere! However, because it is so plentiful, the marginal utility of water is relatively low. An extra ounce of water provides very little additional satisfaction....
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...projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from 2 year CDs at current rates to 3 month CDs. If all interest rates are projected to decrease, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. If all interest rates are projected to decrease, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from 2 year CDs at current rates to MMDAs. If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail deposit customers to switch from MMDAs to 2 year CDs at current rates. 2. A bank has a positive repricing gap using a six month maturity bucket. Which one of the following statements is most correct? (Points : 1) If all interest rates are projected to increase, to limit a profit decline when this occurs, the bank could encourage its retail loan customers to switch from 1 year adjustable rate loans to Fed Funds loans. If all interest rates are projected to decrease, to limit a profit decline when this occurs, the bank could encourage...
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...goodwill step 1 impairment test. Although it was not required, I think it could have been beneficial considering the declines of the past few quarters. They did review ASC 350 and determined that the test was not necessary. If they reviewed ASC 350 then we might assume that they performed a qualitative assessment of the factors listed in 350-20-35-3C (a) through (g). In the first three quarters of 2012, management explained the decline in earnings due to “continued slowing economy and reduced consumer spending.” Deterioration in economic conditions and a decline in earnings compared to expectations are both factors that can cause a drop in the fair value of the reporting units. Galaxy also experienced a sustained decline in their share prices for those three quarters. They had stock prices of $56.75 in 2011 that then dropped each quarter and was down to $25.25 by the third quarter of 2012. If after these factors are considered and management determines that it is not likely that the fair value is less than the carrying value then step 1 and step 2 of the test are unnecessary. Considering that Galaxy management did not perform the interim step 1 test, I would assume that they came to the determination that fair value would not have dropped to less than carrying value. According to the FASB standards this is acceptable, but I would have liked to see the fair values recalculated considering the new financial data to be sure. Based on their explanation, I think that Galaxy management...
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...3. i) Contrast the effect on the price of both bonds if yields decline more than 100 basis points. (No calculations required.) (5 marks) If bond yields decline more than 100 basis points, the price of a straight bond will increase more than that of a similar bond with a call option. Callable bonds exhibit price compression as yields decline. As bond yields decline, interest payments become more uncertain as the likelihood that the issuer will call the bond increases. Therefore, upside price appreciation is limited. If bond yields decline more than 100 basis points, Callable Corp will recall the bonds because the debt could be refinanced at a lower interest rate. Please see the chart in the below: [pic] As one may observe, callable bond prices rise at a decreasing rate as yields decline and exhibit negative convexity (red line). ii) State and explain under which future interest rate environments would the Callable Corp. bond be preferable to the Straight Corp. bond. (5 marks) Through an investor’s perspective, the Callable Corp. bond would be preferable to the Straight Corp. bond during a stable or increasing interest rate environment. Callable Corp.’s bond pays a 4.25% coupon payment versus Straight Corp’s 4.00% coupon bond. This is not a surprise because issuers will pay a slightly higher interest rate than would be necessary for a similar straight bond to compensate for uncertainty (prepayment risk). Therefore, if interest...
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...financial crises are major disruptions in financial markets characterized by sharp declines in asset prices and firm failures. Most people think that the financial crises result from the subprime crises. Investors have no confidents on the mortgage-backed securities. Six categories of factors play an important role in financial crises Asset market effects on balance sheet: A sharp decline in the stock market is one factor that can cause a serious deterioration in borrowing firms’ balance sheets. In turn, this deterioration can increase adverse selection and moral hazard problems in financial markets and provoke a financial crisis. On other side, the unanticipated declines in the aggregate price level decrease the net worth of firms. Debt payments are contractually fixed in nominal terms; an unanticipated decline in the price level raises the value of borrowing firms’ liabilities in real terms but does not raise the real value of firms’ assets. A sharp drop in the price level therefore causes a substantial decline in real net worth for borrowing firms and an increase in adverse selection and moral hazard problems facing lenders. Since the uncertainty about the future value of the domestic currency in developing countries, many nonfinancial firms, banks, and governments in developing countries find it easier to issue debt denominated in foreign currencies rather than in their own currency. Deterioration in financial institutions’ balance sheet: Financial institutions play...
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...Table of Contents 1. Introduction…………………………………………………………………………....3 2. Equity Analysis………………………………………………………………………..3 3. Recommendation……………………………………………………………………....6 4. JLG Equity Analysis Template………………………………………………………7 5. Value Line Report……………………………………………………………………12 INTRODUCTION PepsiCo is a world leader in convenient snacks, foods, and beverages, with revenues of more than $39 billion and over 185,000 employees. PepsiCo owns some of the world's most popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). Their brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the Quaker Oats Company, including Gatorade, in 2001(http://phx.corporate-ir.net/phoenix.zhtml?c=78265&p=irol-homeProfile&t=&id=&). I’ve selected PepsiCo as my investment and Value Line report was the key factor in my decision. EQUITY ANALYSIS Equity analysis includes analysis of traditional and value-based metrics. Traditional metrics include expected growth rates, price multiples, projected ROE, fundamental stock return and residual income. Expected growth rates and price multiples combined with relative valuation measures...
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...Because of interest rate increases that occurred between the date that certain securities were acquired and March 31, 2010, a material portion of the portfolio was “underwater.” Company A evaluated this decline in fair value to determine whether it is other than temporary and concluded that the decline is temporary. Company A provided the auditors with a brief memo documenting its conclusion as of the period end as follows: M EM O R AN D U M TO: FROM: DATE: SUBJECT: Company A Files Controller March 31, 2010 Assessment of Impairment As of March 31, 2010, management has reviewed the investment portfolio and has identified the following investments with a fair value below amortized cost: Investment Municipal bonds Corporate bonds Acquisition Date 9/30/08 7/30/07 Amortized Cost $8,500,000 $8,200,000 Fair Value $7,500,000 $6,800,000 Unrealized (Loss) ($1,000,000) ($1,400,000) Duration of Impairment 18 months 32 months We have determined that the debt securities are not other-than-temporarily impaired on the basis of the following facts: • • • • We do not intend to sell the debt securities as of March 31, 2010. We have determined that it is not more likely than not that we will be required to sell the debt securities before recovery of their amortized cost bases. The decline is attributable solely to adverse interest rate movements. The principal and interest payments have been made as scheduled, and there is no evidence that the debtor will not continue to make them as scheduled...
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...operations through more and more debt, possibly due to lesser cost of debt. This is visible in the DER of HUL at 0.07 and 1.084 of Britannia. Interest Coverage Ratio The interest coverage ratio is a measurement of the number of times a company could make its interest payments with its earnings before interest and taxes. Lower the ratio, higher is the company’s debt burden. This is measured as the ratio between the profit before interest and taxes to the interest amount paid that year. The ICR of Britannia has improved over last year from 20.77 to 29.62.But in case of HUL there has been a drastic improvement .ICR has rose from 122.22 to 409.36. Earning Per Share Over last one year, EPS has declined for Britannia due to drastic decline in profits, and hence the EPS has fallen from Rs 75.51 to Rs 48.77.However in case of HUL the EPS has declined due to slight increase in the number of shares and decrease in the net profits. PBIT to Sales The ratio between the profit before interest and taxes (equal to the operating income, in our case) to that of the sales for the given period during which the profit has been earned is a measure of the profitability of the company for that period. PBIT to Sales ratio has dropped in case of Britannia from 7.53% to 3.6%.The ratio has risen in...
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...Yield Curve and Bond Valuation Name: Lecturer: Course: Date: Yield Curve and Bond Valuation Question 1 and 2 Based on the information retrieved from the Board of Governors of the Federal Reserve System on a 1-month business day, the following information concerning historical dairy interest rates on the U.S treasury was obtained. The rates were picked from the current dates (1st January2012) back to five years a go (1st January 2007). Whereby, if that date was not a business date the preceding date was selected as shown in the table below. |Business Date chosen Five Years Ago |1st January 2007 | |1-month Nominal T-bill Rate on that date |5.02% | |3--month Nominal T-bill Rate on that date |4.79% | |6-month Nominal T-bill Rate on that date |5.11% | |1-year Nominal T-note Rate on that Date |5% | |5-year Nominal T-note Rate on that Date |4.68% | |10-year Nominal T-note Rate on that Date ...
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...impairments. Other-than-temporary impairment occurs when there is a decline below the fair value and amortized cost of a debt security classified as available-for-sale or held-to maturity. “The company writes down the amortized cost of the security to the fair value and includes the amount of the write-down in net income as a realized cost.”(Wahlen,Jones,Pagach pg.13-46) According to the OTT’s investment policy, it has classified all equity and debt securities as either available-for-sale or held-to-maturity. Happy New York & Co. According to this investment which has been classified as available-for-sale has a decline fair value but the company does not intend to sell this investment. Because the fair value of $15 at the end of the year was less than the cost of $20 when the 11 shares of stock were purchased in the beginning of the year, the investment is considered other-than-temporary impaired. OTT would record the decline in value by debiting the Loss account of $55 and crediting the Investment account of $55. This unrealized holding loss which resulted from changes in the fair value is reported in the accumulated other comprehensive income as a separate component of shareholder’s equity until realized. Beary Beary Notes On this investment, it is also considered other-than-temporary impaired as the company intends to sell the investment and the amortized cost of the debt security has a decline fair value. The loss of $7 is recorded in earnings. It is recorded by debiting...
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...A small sample survey of the impact of malls on small shops and hawkers in Mumbai points to a decline in sales of groceries, fruits and vegetables, processed foods, garments, shoes, electronic and electrical goods in these retail outlets, ultimately threatening 50 per cent of them with closure or a major decline in business. Only 14 per cent of the sample of small shops and hawkers has so far been able to respond to the competitive threat of the malls with the institution of fresh sales promotion initiatives. ANURADHA KALHAN India is attempting to do in 10 years what took 25-30 years in other major global markets. However, to-date there is very little understanding of what the impact of corporate retail will be on the so-called unorganised retail sector and the agricultural sector (the country’s two largest sources of employment). This preliminary study is aimed at investigating the impact of malls on small shops and hawkers. O rganised corporate retailing is poised to become the business of the decade in India. Retailing presently contributes about 10 per cent of India’s gross domestic product (GDP) and 6-7 per cent of employment. With some 15 million retail outlets, India has the highest retail density in the world. But only 4 per cent of these outlets are more than 500 sq ft in size and almost all are familyowned shops and establishments [Mukherjee and Patel 2005]. The value of organised retail is expected to grow 2.8 times in the coming four years to a Rs 1,000 billion...
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...available to provide insight and information for clients/investors/brokers. Primary market A market where the security is purchased directly from the issuer by the investor The primary market allows companies to offer bonds and stock to the public for the first time. It is closely related to the secondary market dependent upon one another to be most effective. Secondary market The transactions of stock from investors and dealers without the involvement of the company This market allows for the trading and selling of shares in stock. Without this market, the stock market would not exist. Once again it is dependent on the primary market. Risk The possibility of losing value towards investments Any investment incurs some risk for example of the stock crashes or market value declines. FIN 370 Week 1 Individual Assignment Defining Financial Terms Get Tutorial by Clicking on the link below or Copy Paste Link in Your Browser...
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...Part I Introduction To understand Financial Trend Analysis encompasses an understanding of one of the most challenging responsibilities facing local governments, and cities across the entire country are more aware now than ever before of how necessary it is to achieve a quality level of fiscal health to be sustainable over the long term. Governments can utilize analytical skills and financial indicators to perform assessments of the organization’s fiscal health. This type of assessment we are able to gain some insight on an organization & determine what symptoms might be contributing to its fiscal distress. It also provides information on what additional testing and analysis needs to be done in order to get a more accurate picture of the organization’s fiscal problems. Problems can then be treated in the most effective way to achieve the level of fiscal health that needed in order to serve its citizens. City Officials Chelsea City Council Juanita Champion jchampion@cityofchelsea.com David Ingram dingram@cityofchelsea.com Alison Moore Nichols alisonnichols@cityofchelsea.com Tony Picklesimer tpicklesimer@cityofchelsea.com Dale Neuendorf dneuendorf@cityofchelsea.com Part II Chelsea Financial Overview & Indicators Part A Community Indicators A-1 Population The Government, incorporated in 1996, is located in Shelby County in north central Alabama. In the year 1996, its population was estimated at 906 and has grown to 2,949 today, making...
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