Definition of ‘Risk’ The chance that an investment’s actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment. Different versions of risk are usually measured by calculating the standard deviation of the historical returns or average returns of a specific investment. A high standard deviations
Tag Archives: Finance
As Alistair and Mike (2008) described that behavioral finance was “ Financial decisions of investors can be less than fully rational due to behavioral biases . ” They summarized all evidences of biases which come from psychology literature have been applied in a financial context. This essay choose the most significant four of them which
A company’s most important goal Is to make money and keep It. Profit-margin ratios are one way to measure how much money a company squeezes from Its total revenue or total sales. There are three key profit-margin ratios: gross profit margin, operating profit margin and net profit margin. 1. Gross Profit Margin The gross profit
Mutual funds can be classified into two types – Load mutual funds and No-Load mutual funds. Load funds are those funds that charge commission at the time of purchase or redemption. They can be further subdivided into (1) Front-end load funds and (2) Back-end load funds. Front-end load funds charge commission at the time of
A. What does this mean? What are its implications? Before the 2009 financial crisis banks were conviced that they we’re ｫ too big to fail ｻ Before the 2009 crisis, banks were conviced they were too important to fail in the sens that their importance in the market was such that the states could not
1. What is the difference between stock price maximization and profit maximization? Under what conditions might profit maximization not lead to stock price maximization? 2. Assume that you are serving on the board of directors of a medium-sized corporation and that you are responsible for establishing the compensation policies of senior management. You believe that
Initial Public Offerings (IPOs) have been a useful tool used by companies to finance their operations, for a long time. IPOs have enabled companies access funds without borrowing from lending institutions, as these attract high interest rates. In Initial Public Offerings (IPOs), a company sells its stocks to the public. Funds raised through this means
What do you really know about investment banking? Perhaps, you associate it with those huge mergers, initial public offerings or big corporate transactions which appear on front pages of newspapers. However, to decide if an investment bank is your future destination, certainly you need to know much more. So, let’s try to get some insight
1) Current Ratio-It is a test of solvency or of short-term financial strength of a concern. It is an index of working capital and shows the ability of the concern to meet its obligations and also the capacity to carry on effective operations. Generally, if current assets are twice that of current liabilities, the concern’s
Scenario: A coworker of yours was discussing her investments with a broker. Your coworker was confused because she had purchased a 10% bond but the broker kept repeating that it had a 9% yield to maturity. Explain the concept of yield to maturity. This paper will explain the concept of yield to maturity in reference
California Plant Protection (CPP) is a medium sized security firm, which is considering expanding their business by buying a larger firm named Pinkerton. The first bid was $85 million but this was rejected, and CPP was informed that any bids under $100 million would face the same result. The key questions we have addressed are
On the other hand, compliance with the Sarbanes Oxley Act is expensive, and relatively more so for smaller public companies. While no doubt compliance with the SOX has improved transparency and corporate accountability, at what cost are these aims achieved? Already there are scathing critiques that compliance with the SOX has reduced America’s international competitive
In this paper, I would report in two different parts. One of them is that why a typical university student is likely to be a deficit unit and another part is discussing how any one function of the financial system impacts on a typical university student. Before the paper proceeds, I would first briefly introduce
1. Identify all the accounting policy changes and accounting estimates that Harnischfeger made during 1984. Estimate as accurately as possible the effect of these on the company’s 1984 reported profits. 1. Products purchased from Kobe Steel were included in net sales, as opposed to only reporting the gross margin on Kobe equipment. These net sales
Misablaci Pharmaceutical can perform as a centralized or a decentralized organization. Many factors will determine whether Misablaci Pharmaceutical will employ centralized or decentralized operations. Since Misablaci Pharmaceutical is a large organization extending out globally both centralized and decentralized can be utilize. The company will perform in the centralized mode more effectively in the global operations.
1.We expect the daily hire rates to increase from 2001 to 2002, but then to decrease overall in the long term based on the assessment of the consulting firm. The consulting firm based their forecast on higher demand in iron ore shipments. They claim demand in iron ore shipments has historically shown a strong correlation
Financial constraint is the cash0limited budget which is legislatively-imposed and is under the influence of the Central Government and the Police Forces must operate within them. As it is seen, the presence of financial control is apparent and can’t be ignored, though the importance of financial management is a constraint on policing. Simply saying, financial
In 2001, Enron Corporation went into bankruptcy due to the disclosure of false information in its financial statements. Similarly, when Lehman Brothers collapsed there was no evidence that it had ever publicly disclosed certain detrimental accounting information. Cases of accounting fraud such as these have become increasingly serious. Accounting fraud can result in creditors and
Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product. What are the six steps in the financial planning process?
Financial markets are places or channels for buying and selling newly issued or existing bonds, stocks, foreign exchange contracts, and other financial instruments . On the other hand, financial intermediaries are institutions like commercial banks, credit unions, finance and insurance companies, etc. which borrow funds from savers and then lend them to borrowers . Having
