Present value Present value is the present of future cash flow. The present value assumes that the dollar today is not equal to the dollar tomorrow therefore it must be adjusted for time and inflation. It is calculated as shown in the case below; Mr. Peky has been given an...
Introduction A money market refers to a financial market that allows trading of short-term securities. This market provides for availability of liquid funds, which matures over a short period. In Bahrain, some of instruments that are traded include treasury bills, commercial papers, repurchase agreements (repos), negotiable certificate of deposits (CDs),...
Introduction Many years have gone by since the Capital Asset Pricing Model was declared dead but it is still widely used to value assets as well as determine the cost of capital of a company. However, no method has come up as a good substitute. Many researchers and authors have...
Introduction The market analysis aims at studying the dynamics and attractiveness of a given market within an identified industry. It primarily takes two separate forms. In the first form, investors use market analysis to oversee and analyze its growth curve to come up with investment decisions. In the second form,...
Introduction Over the span of sixty years, the global economy has experienced remarkable changes. Findlay & OâRourke (2007) states that âIn the early 1950âs, the world economy was essentially divided between developed or industrialized countries in the âNorthâ and developing or non-industrialized countries in the âSouthâ(as cited in Ahearn, 2011,p.1)....
Aim of the paper The paper carries out a financial analysis of four companies. The analysis will entail the application of several theoretical and empirical approaches and tools to evaluate the companies. Some of the ratios that will be used are earnings per share, price/earnings ratios, return on equity, dividend...
Abstract This article analyzes consolidated financial statements and separately prepared financial statements. It brings out the major differences between the two types of financial statements. In the whole article, the holding company is considered to be situated in the U.S while the subsidiaries are located in foreign countries. The article...
Thesis Statement Although the regulations that allow for preventing, identifying, and eliminating fraud in general and financial fraud, in particular, have become considerably more rigid over the past few years in the United Kingdom (Manacorda, 2011), the availability of information technology tools and their integration into the breach of the...
About the company Ocado is a public limited company based in England. The company was formed by a group of three people who worked earlier as bankers at Goldman Sachs. The company was formed in 2002 and it was listed on the London Stock Exchange in 2010. The three founders...
Financial literacy is influenced by the initiatives taken to spread information about the various financial activities in the country. Saudi Arabia has been having very low financial literacy level despite projecting positive results in its economic trend. According to the Al-Attas (2011), a writer with Saudiâs local daily, the Gross...
Introduction China has recorded significant economic growth over the last quarter of this century. This period has also seen the economy change from a centrally planned one to a more market-oriented one. This change in the way the economy is planned has brought about a transformation from a market that...
Introduction The Saudi Arabian Stock Market was established in 1985. Economic experts formulated the idea when a government unit was formed to manage and control Saudi Arabiaâs securities market. The authorities went further to formulate a regulatory body for Tadawul, the Arabic name for the Saudi Stock Exchange also referred...
Background of the companies Pepsi Company (PepsiCo, Inc.) PepsiCo, Inc. is a multinational company that deals with snacks and soft drinks. PepsiCo, Inc. was established in 1965 when the Pepsi-cola Company merged with the Frito-Lay Company. Since its establishment, PepsiCo, Inc. had expanded through acquisitions and mergers with other companies....
Dividend policy is a framework that regulates financial decisions associated with profit payout. However, the effect of dividend policy is a subject of debate. Price earnings and stock value influence a firmâs dividend policy. However, economic analysts counter the assumption using different dividend theories. Two criteria facilitate the dividend theories...
Business models Business models were first invented in the 1990s when the electronic commerce industries and other internet-based firms were established. In the current world, a business model is used as the concept of management theory and practice. A business model is therefore used to describe the strategy and the...
Definition Money is an essential component in everyone’s life. It is used in every sphere of our lives. We work to earn it, and we use it to save, invest or just spend it. It is imperative for us to make personal financial goals. We make financial goals to enable...
Introduction In the Gulf Cooperation Council (GCC) and MENA countries, changes in interest rates significantly influence changes in the net interest income (NII) and net interest margin (NIM). However, there are also factors that affect changes in the banksâ interest rates, depending on the size of the bank. Changes in...
Introduction An initial public offering of any company stock is the sale of company stock to the public. The company does this mostly to increase its capital. This essay looks in detail at the initial public offerâs process, definition, and the elements in the initial public offer. History of IPO...
Introduction The origin of Islamic finance can be traced back to the seventh century. This implies that it is not a new phenomenon. Nevertheless, the commercial implementation of Islamic finance is comparatively new and regardless of the novelty, some prohibitions prominently feature in the Islamic finance analysis. Particularly, Islamic finance...
Dividend discount model Dividend discount model = dividend per share/ discount rate – growth rate (Penman, 1997). For example, Microsoftâs preferred stock has an annual dividend of $8. The expected rate of return is 10%. Thus, the values of preferred stock = (5/10×100) = $50. The common stock was overvalued...
Ticker: 2330 Recommendation: Hold. Price: SR 41.40 Price target: SR 54.58 2009A 2010A 2011A 2012A 2013A 2014E 2015E P/E (x) 27.67 11.71 7.88 13.09 12.02 17.50 15.50 EPS 0.78 2.00 3.13 2.00 3.40 2.36 2.67 Source: Al Rajhi Capital (2014) Highlights The company presents a strong financial position in all...
Summary Islamic finance is achieving a household stature in the world of financial management. Although Islamic finance borrows financial principles from conventional systems, there are differences between the two (Afshar, 2013). In this regard, comparing the Islamic bonds referred to as Sukuk and conventional bonds is tantamount. This paper compares...
Abstract Differing rules that apply to different jurisdictions and under different systems apply different approaches to commodity pricing and indexation. This paper presents a discussion of the different approaches by exploring differences in the rules of commodity pricing and indexation between the conventional banking systems and the Islamic banking systems....
Introduction Joint venture is one of the methods of corporate restructuring. A joint venture is described as one of the business agreements between the parties in which parties agree to create a new business or we can say a new company in which both parties share the assets (Beamish, 1987)....
The selected company for bond analysis and valuation is Accenture Plc (Accenture), which is a leading computer and accessories manufacturing company. The evaluation of a bond offered by the selected company that will pay $100,000 in a yearâs time is carried out on the basis of the inclusion of various...
Hedging Firms in the financial industry do incur various risks such as liquidity and credit risks. In order to offset the risks they face, organizations can be involved in various investment positions referred to as hedges. Thus, hedging is a term applied in financials to indicate investment positions that an...
Introduction The stock market exchange has a critical role in the economic development of any given state. It serves as an effective tool for mobilizing financial resources to aid in economic growth and promote the efficient distribution of resources. The stock exchange market serves various investors, including retail, corporate and...
Introduction A derivative is a contract signed between two parties on an asset whose value is underlying subject to the fluctuations in the market. Derivatives are influenced by the market price and some perfect examples include bonds and stocks which are sold when the prices increases. Other assets include interest...
Introduction The concept of the efficient market hypothesis was developed in 1960 by Eugene Fama. The idea has widely been used across the market. Besides, several research studies on the efficient market hypothesis have been carried out since 1960. The concept of the efficient market hypothesis âholds that the prices...
Introduction Financial statements are reports that are prepared by an entity after every accounting period. Financial statements show an entityâs financial position at the end of the period. It also reflects its comprehensive incomes and respective cash flows. The main purpose of financial statements is to provide information to the...
Financial institutions have used credit based strategies to evaluate credit worthiness of borrowers and counterparties for a long time. Despite their popularity, the strategies present various risks to financial institutions. Jorion and Zhang (2007) aver that banks and financial institutions collapse because of the lax standards in credit assessment. Many...
Abstract Correlation and regression analyses were performed to determine the relationship between car retail price and car mileage in the Dubai market. Research data was obtained through random sampling. A questionnaire was given to randomly selected customers in the Dubai car market. MS Excel was used to perform the analyses....
Investment Goal The goal of this investment plan is to increase the initial capital of AED 400,000 by at least 0.5% within 3 months beginning 08/01/2013 to 11/31/2013. A secondary goal of this investment plan is to invest in international markets within Asia such as the Philippines instead of in...
Introduction In a financial context, the term ethics is assumed to be a subset of general ethics, which accounts for ethical quandaries within the subfield of finance. Unlike in other fields, there are two forms of ethics in finance. These include positive and normative ethics (Aragon, 2011). In the finance...
Introduction Capital is considered the inevitable part of any kind of business. Without capital, the running and survival of a business unit are very difficult. It is the cornerstone of a business. Whatever be the nature of the business organization, that is, be it a big or a small organization,...
Introduction The purpose of this report is to evaluate the viability of the new conference by Business Conferences Plc. This has been accomplished by the use of CVP, Break-even, and Financial Analysis. I hope that after reading this report, you can make a more informed decision on whether or not...
Introduction This paper seeks to present a critical discussion of how the floating exchange rate system allows the central bank to control the money supply in a country. The control of money supply is an ability that has a major influence on a countryâs interest and inflation rates. The discussions...
U.S. Economy and its growth rate The U.S. economic growth indicator shows stable growth from 2010 onwards. The economy reported a negative growth rate in 2009. The gross domestic product (GDP) growth rates in 2010, 2011, 2012, and 2013 were 2.5%, 1.8%, 2.8%, and 3.0% respectively (The World Bank, 2014)....
Introduction General Motors Company is an American multinational vehicle manufacturing organization that is listed on the New York Stock Exchange. The organization is a member of the FTSE 100 Index and its stock code is GM: NYSE. General Motors is headquartered in Detroit. It designs, manufactures, distributes, and markets vehicles...
Among the various responsibilities of the manager is to be able to make sure that the business operations are working according to the policies they lay down. It is therefore their responsibility to make sure that there is adequate financing whenever there is that need in their business. The managers...
Outline This integration paper is an overview of the topics discussed in the entire week. In this week two topics related to the financial systems and financial investment are discussed. The importance of the topics in a real-life situation is also discussed for finding its advantages to the individuals in...
Transaction risk is the risk of loss as a result of in adequate personnel in the business or insufficient systems while financial risk is a nutshell of numerous sort of threat connected with financing. Some of the transactions risks affecting Gumpbell manufacturers are the ones listed below: Inability to manage...
Introduction Over the past few decades, credit unions have gained great popularity around the world. A credit union may be defined as a not-for-profit organization established to pursue service delivery to its members rather than maximization of profits (âHow is a Credit Union Different than a Bank?â par. 1). Credit...
Summary The Enron, WorldCom, and Waste Management Inc. scandals are examples of well-known financial scandals. They led to the loss of investorsâ money and assets worth billions of dollars. The executives of these companies accomplished the scandals through falsification of statements, misrepresentation of revenue, and reporting of fake earnings. The...
Introduction PetsMed Express, Inc. is one of the fastest-growing companies of the last decade in the United States. Even in these hard times of crisis and downturn economy, PetsMed continues to report stable growth and revenues. It has become one of the most recognized brands in the States regarding pet...
Introduction To implement financial or monetary policy, the Central Bank can directly use its regulatory authority or utilise its indirectly influence on the money market circumstances as the reserve currency issuer (money in flow and placed balances) with the Central Bank (Alexander, Balino, and Enoch, 1996), where the indirect instruments...
Kelloggâs Profile Kelloggâs Profile Type Public Traded as NYSE: K S&P 500 Component Issue Type Common Stock Listing Date 12/05/1959 Industry Food processing Founded 19/02/1906 Founder(s) Will Keith Kellogg Headquarters Battle Creek, Michigan, United States Area served Worldwide Key people James M. Jenness (Chairman) John A. Bryant (President and CEO)...
When investing in an economy, a company needs to conduct a cost-benefit risk analysis to determine whether the country is viable for investment; Company A wishes to invest in Djibouti, to determine the riskiness and viability of the intended venture, this paper undertakes the cost benefit-risk analysis of the country...
Sector overview The financial services sector constitutes a fundamental component of the US economy and it is the second largest in the S&P 500 index, thus accounting for 16.72% of the S&P. The sector has undergone notable growth over the past few years. At the end of the 2007/2008 financial...
Introduction The history of managing stocks in the United Arab Emirates (UAE) retreats the to early 1960s when the administration set up some stock entities. The ensuing years witnessed a tolerant stock exchange market being expanded for the trade of stocks through certain agencies that were not specialized and/or licensed....
Introduction According to Luenberger (1997), the relationship between risk and return of risky assets in the market can be investigated by determining the effects of different borrowing and lending rates. This analysis is done by first constructing a portfolio that consists of only risky assets, which results in the determination...
Introduction Efficient Market Hypothesis (EMH) in the past four decades was regarded as a fundamental finance proposition; in the mid-1970s, there existed strong empirical and theoretical evidence in support of EMH that gave the impression that it was invincible. Currently, counterarguments have emerged disproving the EMH which entails how prices...
Introduction The stock market is the center of transactions where securities buyers meet sellers at a certain price. It is a tool for economic development. (Source Webster Dictionary) The Saudi Arabian Market is known as the TADAWUL and is the only securities exchange in Saudi Arabia. TADAWUL was formed in...
Within the subprime mortgage crisis, the interest rate has played an important role in causing the mortgage rate decrease and excessive bank credit leading to the price skyrocketing. To take control over the inflation increase, the Federal Funds have decided to lift the interest rates. Currently, the mortgage price has...
The 2012-2013 fiscal year in Canada can be characterized by a high number of important financial events and scandals in the area of funding and financing, including fraud crimes which were effectively resolved with the focus on the activities of the Canadian investigation centers and police. In 2013, the publicâs...
Introduction The major fundamentals of the International Monetary System are the purpose of currency preferences and rate of exchange mechanism; the exchange rate mechanism is the most important among the two elements (Cooper 33). The IMS has rules and principles that oversee the financial relationships between nations and is a...
Securitization refers to the process of consolidating or pooling together debts such as mortgages, bank loans, and other types of debts and then selling these debts to investors as securities or some cases as bonds. The investors that buy out the debts are the one who takes the responsibility of...
Elements of Income Statement An income statement includes the money that was spent and earned by an organization for a certain duration. The profits are derived by subtracting the money spent from the money earned. Without such a statement organizations would not know when they are making losses and profits...
Literature Review For the financing of international business ventures and high-risk large-scale projects, project finance (PF) has gained considerable favor over the last three decades. Defined as non-recourse or limited financing, project financing is done through a vehicle company. The funding that is obtained is strictly used only for the...
Introduction The movement in prices of securities reflects the general state of economic activities in a country. If prices fluctuate so drastically, it means that the level of inflation is likely to be high. In fairly stable economies, prices of securities remain fairly stable over a reasonable period. On the...
Individualâs ontological beliefs have greatly affected their conceptualization of issues concerning accounting on basis of misconception diverting their understanding of the main dimension of the accounting to something that can almost be stated as misguided. This is as a result of misconception interpretation concerning the accounting dimensions which are teaching,...
The best way to use while using this method in a time series model is through generalizing differences between the two sets of data. If the standard deviation if the data is unknown the following equation is used. Yt =ztβ + ut Yt-1 =xt -1β + ut -1 multiply by...
Introduction In order to optimize the situation with the Australian payment systems, the Reserve Bank of Australia introduced the real-time gross settlement in 1998. Since then, the RTGS values have been increased by almost 70 % and the volumes of these wholesales payments have considerably grown as well. The implementation...
Introduction It is apparent that the spiral effect of the current financial crisis is steadily but gradually taking its toll on both developing and developed world. Sooner than later, the effects of the current economic crisis could become devastating. In a sense, the world risks to lose its hard-won gains...
The world of business and finance is a rather complicated phenomenon due to the numerous rules and laws that regulate the relations between private persons and the whole business entities in it. One should be aware of the supply and demand conditions, price fluctuations, etc. to become a successful business...
Introduction A stock market is a public organization where shares of listed companies are traded at given prices. Unlike the ordinary market, the stock market is not a physical place but rather a network. This paper seeks to discuss the Saudi Arabian stock market. The paper will look at the...
Introduction Mishkin (2007) advanced an argument that upside risks refer to the level at which the value of a security or any other specified capital investment rises past the forecasted value of the security. In addition, Myers and Nicholas (1984) proposed that upside risks denote opportunities and potential to gain...
Every business entity requires some funds at different points during its trading period. The funds are required for start up in the case of a new business and for expansionary or development purposes for the continuing businesses. There are usually two ways of raising this finance, either from external sources...
Introduction The UKâs HM Treasury, in its document âA new approach to financial regulation: judgment, focus and stabilityâ, has proposed altering the institutional structure of financial regulation in the UK.The following essay examines the different potential approaches to the development of institutional structures of financial regulation in the United Kingdom....
Background The term âfinancial crisisâ has become a familiar term within the finance realm. Financial crisis takes different forms depending on the underlying cause and includes crashes of stock markets, currency crises, and bursting of economic bubbles (Eichengreen, 2008). In the past century, financial crises have been somewhat frequent and...
Introduction The capital assets prices model was developed to illustrate the way prices of a risk is informed by the influence of investorsâ preferences and the physical characteristics of the capital assets (Easton, 2009). It shows the relationship between an assetâs price and the risks associated with it. At the...
Executive summary This is a report on Collateralized Debt Obligations (CDO’s). The report defines collateralized debt obligations, identifies the features and operations of CDOs. The report defines liquidity risk and also examines how collateralized debt obligations help the bank to avoid liquidity risk, and also how CDOs create more assets...
Advantages for AMSC to forgo their debt financing and take on equity financing Permanent capital Equity financing is a permanent source of capital because ordinary shares are not redeemable; therefore the funds raised from this source are available for use as long as the company is in existence. It also...
Shareholder value analysis It has been argued that Shareholder Value analysis is flawed in that there are too many steps in the model and too many variables attached to them. However, this essay is concerned with analyzing this statement and in doing so, evaluating the need for each step in...
Introduction The money market is a market in which its life usually lasts for the short term. Securities which are in form of monetary terms are used by traders and businessmen in the money market. That usually mature within a year are commonly traded in the money market. This paper...
Abstract This research has the main objective of determining why project funding is preferred to corporate finance in financing high-profile projects. The economic problem experienced by the world economies marred with the world economic crisis, financing of high-profile projects or large-scale projects is more difficult in this kind of situation....
Introduction A capital market is defined as a market in which a government, a business organization, or a financial institution can accumulate funds to carry on its functions and long-lasting investments. Capital markets have grown in importance to such an extent that they are looked upon as the suppliers of...
Introduction This project analyses the bank and financial sector in Saudi Arabia. It aims at advising a prospective investor on the best stock to invest in. The selected bank for analysis are Al Bilad, Al Jazira and Al Rajhi which are all public owned companies and their shares are listed...
Executive Summary This report focuses on the role of deposit insurance in the financial system. A deposit insurance scheme is a strategy whereby depositors are paid their money by the government or the organization that runs the scheme if a financial institution becomes insolvent (Gracia, 2002, 12). Using secondary data...
Introduction Background to the study Money is defined as any substance that acts as a medium of exchange (Holdsworth 5). Before the acceptable use of money, it was Barter trade where people exchanged goods for goods. This trade had many shortcomings such as lack of double coincidence of wants that...
Introduction Saudi banks were affected by the global economic crisis which was experienced in the year 2008. This affected most operations of the bank and resulted in a decline in its returns. Returns to the bank are sensitive to the economic performance of the country and thus this is one...
Mergers and Acquisitions represent one of the best business opportunities for any company that intends to expand rapidly as well to increase its market share; it is also one of the most delicate processes that can easily lead to bankruptcy of even the most stable companies that have solid base...
The difference between financial stability and monetary stability Monetary stability refers to the stability of the value of money. That is the ability of a country’s currency to maintain its value in the world markets. Money usually loses its value due to high rates of inflation whereby a country has...
Abstract Financial derivatives have been used by investors to make a profit for centuries. Contracts made under financial derivatives are often risky and based on uncertainty. The use of financial derivatives is increasing with time. More than 20 percent of the total population of the world is made up of...
Finance is defined by finance dictionaries as the science of managing financial resources that include money, and money equivalents (Keown et al., 2005). Money equivalents include all organizations assets such as security, bonds, shares and other tangible and intangible assets. In addition, finance concept imply supply, raise or providing of...
Quality control is one of the key aspects of successful business development. It requires extensive control of the manufacturing process, as well as maintenance of the qualification level of the personnel. The aim of this paper is to analyze the case study of Master Plumbing Corporation associated with the increase...
Introduction Sukuk is an Arabic financial certificate and is also regarded as an Islamic bond. As per the Islamic laws of Shari’ah, it is Haram – banned to charge or pay Riba – interest. Hence Sukuk securities are structured in such a way that Islamic laws that are against interest...
The world of business is expanding each day especially with the emerging technological advances, thus making the world like a global village. In their running of daily businesses, financial institutions face various risks and thus must derive ways on how to counter them (Schroeck, 2002). The following paper covers the...
Sources of Finance There are various sources of finance for business to get cash for both its short term and long term requirements. Each source is applicable in a certain situation and has its advantages and disadvantages. Ordinary Shares This requires issuing of new shares to raise funds in order...
The bull spread is described as a reliable investment strategy whose goal is to help an investor realize profit resulting from an increase in the price of given security according to Bull spread (Madura 2010). It is created by choosing to purchase at times of low price and then selling...
Introduction As with every credible language, Accountancy also has its own rules and syntax which comprises the principles on which the system is based, known as the Generally Accepted Principles (GAAP), International Accounting Standards, and US GAAP, etc. forming the theoretical base of Accountancy, and the Double Entry bookkeeping for...
Bonds Bonds are securities that establish a credit relationship between the purchaser (creditor) and the issuer (debtor). The issuer receives a certain amount of money in return to the bond, and is obligated to repay the principal at the end of the lifetime of the bond (maturity). Typically, bonds also...
In accounting for regular serial bond debt service funds various issues come into play. The regular serial bond debt is usually self-amortizing, thus there is no need to create a sinking fund. They also mature in annual installments (Henderson, Peirson and Herbohn, 2008, p. 236). Amortization is the process of...
Since last three decades, there have been dramatic increases in the number of private equity, and the increase in the number of the listed private equity has been due to the increase in the they have outperformed in stocks. (Schmidt,2004). Typically, private equity trades in recognised stock exchanges, and private...
Introduction The impact of enterprises and financial institutions is the best solution for developing economies that considerably contributes to generating jobs, and raising incomes. The soundness of banking systems in developing countries and economies in transitions are usually more important than in industrialized countries since banks tend to dominate the...
Discussion Every firm needs funds to operate, as a result, corporate finance seeks to acquire and manage these funds. Corporate finance refers to the activities that involve money in a business environment (Megginson, 2008, p. 10). Five basic functions are involved in the practice of corporate finance: raising capital to...
This paper gives a critical analysis of the article âPutting Strategy into Shareholder Analysisâ, by George S. Day and Liam Fahey, published in the Harvard Business Review in March, 1990. The article talks primarily about the strengths and weaknesses of the Shareholder Value Analysis method of analyzing alternate strategy options...
Abstract Over recent times, Sovereign wealth funds (SWFs) have been increasingly growing as a dominant force in the financial world. However, so far, very little has been documented about the SWFs (Fotak et al., 2008, p.2); and in the sporadic writings where they have been mentioned, they are mostly portrayed...
Introduction Any financial institution aims to make a profit with minimum cost possible. Banks and other lending agencies get a lot of profit from the interest they charge their customers who borrow money from them. Interest rate is the percentage of additional cash that a borrower should pay on top...
Introduction Bradley Corporation is a rapidly expanding specialist photocopier manufacturer in the UK. The sales budget of the company for the next year reveals a growing trend in the business. The company is expecting that the sales budget estimates will be met or exceeded through proper business policies and strategies....
Introduction The idea of implementing the new type of Boeing airplane by the Boeing Commercial Airplanes Company was rather controversial when it was expressed in 2003 (Bruner, 2008, p. 233; Smith, 2003, p. 42). On the one hand, the officials from the Boeing Company and the market analysts all claimed...
Definition A financial system refers to a complex system dealing with a vast variety of financial activities, but mainly allows the transfer of money between savers and borrowers. The systems are crucial in informing on organizationâs planning and action plans and helping different players in the sector to track and...
