Economics

Effect of Dividend Payments on Shareholder Fund

Asquith and Mullins carried out a study to survey the impact of initiating a dividend payment on shareholder wealth. Their main objective was to understand further the impact of dividends on shareholder wealth. The survey made use of a sample of 168 firms. The dividend has been either the first...

Factors Affecting the Efficiency of Financial Institutions in UAE

Introduction The banking sector throughout the world has experienced a lot of crises. This is attributed to poor banking practices, inadequate revenue diversification and capital, credit risks and currency mismatches among others (Tektas & Ozkan-Gunay, 2006). These shortcomings prompted the introduction of liberalization and reforms in the banking sector in...

Financial Statements: The Key Elements

Introduction Financial statements are meant to provide the financial information of an entity as clearly and precisely as possible. They are records that clearly outline the financial activities of a business firm. Financial statements usually include a statement of comprehensive income, statement of financial position, statement of changes in equity,...

Payback Period and Net Present Value

Payback period Payback period is the duration of time a project takes to recoup initial investment. The decision criterion is to accept a project with a shorter payback period. Table 1.0 Ranks of projects using payback period. Rank Project Period 1 Project B 2 years 4 months 2 Project A...

Islamic Loan Versus Commercial Loan

Introduction The core business objective of ordinary commercial banks is to make a profit. Banks lend money at interest rates, and at the same time, they encourage customers to deposit funds at an agreed rate. The deposits are ways through which banks access legitimate funds to lend at higher interest...

The European Economic Crisis and the U.S Crisis

Introduction The European crisis is the financial crisis that affected, and is still affecting, countries within the Eurozone. The predicament is majorly attributed to the countries’ inability to repay their debts free of assistance that comes from third parties. Various intervention measures including European financial stability facility, European fiscal compact,...

Stock Exchange Securities Risks Characteristics

Introduction Stock Exchange is an aspect of the market that provides a medium through which stocks, bonds and securities are exchanged (Gurusamy, 2009). The main players in the stock exchange are stock brokers and traders. Stock exchange also facilitates the issuance and redemption of financial instruments and securities. In addition,...

Porter’s 5 Competitive Positions of Bhp and Woolworth

Introduction The five forces proposed by Porter are very essential in the understanding of a firm’s competitive position within an industry. The tools are simple but powerful in analyzing the business competitive situation (Cheverton 2004, p.113). Porter’s five force tools are not only used in determining the current competitive position...

Implications of New Regulations to Banks Basel Accords

Definition of the Basel accords The Basel accord is a set of regulatory agreements that were set by the Basel committee with the intention of regulating the banks. This happened after it was noticed that banks and other financial institutions were facing unforeseeable risks hence strategies to absorb the impact...

Political Processes and Cultural Factors in U.S.

Introduction Financial reporting is a process of communicating financial information for public or private institution, government and non-profit organizations (Alexander & Britton 2004). Interest groups require financial information when making investment decisions. From the financial information, interest groups compare financial performance of different companies. Therefore, it is importance that standard...

International Banking Regulation: Basel II Accord

Basel II The banking industry involves a risky business. To survive in the industry, the banks have to develop effective ways of taking and managing risks. The contemporary changes in banking and other financial markets have led to the complexity of the risks involved in banking. For instance, when a...

General Motors Company’s Stock Valuation

Stock valuation has been a vital factor when determining investment decisions in the economy. Most of the companies have their stock traded publicly, and General Motor Company is no exception. GM Company was founded in Michigan in the early 20th century. General Motors Company (GM) is concerned with designing, manufacturing,...

Daimler AG Company’s Stock Valuation & Investment

Daimler AG Description of the Company Daimler AG is a German transnational company that deals with the manufacturing of motor vehicles. The headquarters of the company are in Stuttgart, Germany. The firm ranks as the third-largest automobile manufacturer in the world. Apart from manufacturing motor vehicles, the firm also offers...

Discounted Cash Flow for Real Estate Investment

Introduction Real estate is defined as the type of an assets class that is tangible in nature. This class covers a variety of assets such as buildings that include residential property, office buildings, retail as well as industrial buildings. The real estates also covers land that can be used for...

US & UK Regulatory Response to the Current Financial Crisis

The United States along with United Kingdom’s ruling authorities had to formulate various regulations to bring the arising global financial crisis under control. The Federal Reserve of the United States just like the other central banks within the globe had to implement regulations aimed at expanding the money supplies to...

The Analysis of Financial Ratio

Introduction It is worth noting that the company’s financial statements released at the end of each financial year are very important to build strong and sound relationships with the various stakeholders who are involved in the organization’s businesses. Financial ratios are tools used by different stakeholders within the company to...

Financial Reporting: Current Value and Historical Cost Accounting Methods

Introduction Financial reporting is one of the most important accounting practices that profit and non-profit making organizations should integrate into their operation. Public organizations are under a legal obligation to disclose their performance to the public. One of the ways through which they attain this is by publishing their financial...

Brandes Mutual Funds: Investment Policy Statement

Introduction The State of Investment Policy intends to explore constraints, purpose as well as policies of Brandes mutual funds.Brandes mutual fund is based in Canada. Its major objective remains to make adequate returns for its clients. It is also focused towards attaining global excellence. In addition, the Statement Investment Policy...

Islamic Financial Instruments & Conventional Banking Systems

Introduction Islamic banking has grown steadily in the recent past. Past studies have noted that they have moved into other regions like Europe and the wider Asian region. For instance, Juan Solé observes that the Islamic banking system has expanded not only in countries with most Muslims, but also in...

Corporate Finance: Capital Asset Pricing Model (CAPM)

Introduction Capital Asset Pricing Model (CAPM) in finance is normally used to establish a hypothetically suitable return of a security, if that security can be included to a well-diversified portfolio, provided that security is of non-diversifiable risk. CAPM takes into consideration security’s sensitivity to systematic risk or market risk, frequently...

Investment Management: Rational and Irrational Markets

Investment Philosophy and Market View Investment philosophy Investment philosophy can be defined as those strategies or principles that guide an investor in his investment decisions such as value, technical, growth and the fundamentals (Shleifer 2000). In this case, the portfolio is strictly focused on small carefully selected assets, after carrying...

Index Funds vs. Actively Managed Funds

Introduction This paper contains a comparison of the actively managed funds and the index funds. To begin with, the actively managed fund is the liquidity pool which has a portfolio that is used as a platform of a trade by investors to meet their long-term objectives in an investment. On...

Causes of 2007 Financial Crisis

The worldwide financial meltdown is among the various types of financial crises, which are known to have serious long-term implications on the global economy. Various financial economists have tried to raise theories regarding the issue as well as trying to offer possible solutions on how to prevent such situations. The...

United Kingdom Tax System Overview

Introduction Taxation can be described as the way by which governments finance their spending by imposing charges on individuals and companies. Most nations use taxation to encourage and discourage economic decisions (Smith, 2006). For instance, taxation on personal income in terms of the amount paid as interest on mortgage leads...

Eurozone Money Market Future 2012

Introduction The fear of the Euro plunging into dilution had gripped the financial world completely. The developed economies in Europe Union (EU) failed to raise money for their bonds due to a decline in the confidence of the international financial market on euro zone. EU’s debt crisis worsened further since...

India and China Economic Rise Implications on Currency Markets and World Economies

Strong economies are emerging all over the world, but both China and India are still ahead because they are taking international markets by storm. Their rapid growth has pushed them into global markets and possibilities of development in their own regions. Nevertheless, these possibilities are rapidly turning into real development...

Financial Analysis of Wells Fargo Bank, U.S. Bank and JP Morgan Chase Bank

Introduction The aim of every organization is to maximize profit while minimizing costs. The operations of an organization in a given business environment aims at ensuring that the organization achieves its objectives. Financial performance of an organization is important for investors. However, it is not the only measure of the...

Government Policy Effect on the Insurance Market in Saudi

Introduction Government policy has contributed to the growth of the insurance policy in Saudi Arabia. This has mostly been through the creation of favorable conditions for the development of insurance firms and their ability to thrive. The paper has successfully looked at laws that were established in order to increase...

The Foreign Direct Investment: Company’s Engagement Reasons

Introduction Foreign Direct Investment (FDI) is defined as a process where residents from another country acquire ownership of assets of a firm in a foreign country with the purpose of controlling production, distribution among other purposes (Moosa 2002 p.1). The IMF defines FDI as ‘ an investment that is made...

Bank Loans on Businesses Analysis

Introduction American companies seeking to get loans from banks to expand their businesses are unable to access them due to the reluctance of banks to lend. This is because the banks have not yet fully recovered from the losses they incurred from the sub-prime mortgage crisis. The industrial and commercial...

The Federal Reserve Actions Towards Inflation

Inflation is one of the many economic heats that confront the world. Economic experts have always congregated to look for solutions by developing strategies to deal with inflation. Its adverse effects have made the issue to be the most understood aspect of the global economy by the learned and those...

2011 European Crisis, European Union Economic Ploblems

Introduction The European financial crisis arose out of fiscal measures adopted in several European countries. The international community got concerned in late 2009 and at the beginning of 2010. The European countries had accumulated high amounts of sovereign debt. In Ireland, the debt had increased due to bank bailouts. There...

Global Trends in Foreign Direct Investments

Improved international relations, technological development, growth in international trade, and development of reliable communication channels have led to rise in globalization. Globalization is the process through which regional economies integrate into a global network of trade; with globalization, multinationals and private companies are able to take advantage of enlarged global...

Financial Risk Assessment

Introduction More and more economies have developed the tendency to rely on private capital flows to sustain themselves and therefore have also become more prone to risks that come with the volatility associated with such capital flows (Baumol 2007). Researches have been carried out to help establish a comprehensive framework...

Oil Prices Affecting Stock Market in Gulf Countries

Introduction There is a large volume of studies on the correlation between oil prices and macroeconomics variables. Most of these studies have discussed the important effects of oil prices fluctuations on economic activities in the emerging and developed countries. One important factor of using oil price changes as a cause...

Do Analysts and Auditors Use Information in Accruals?

The last several decades could be characterized by the dramatic changes in the structure of society and market. These alterations are conditioned by the blistering development of technologies and approaches used to attain success and become beneficial. Furthermore, the changes in the structure of market conditioned the growth of its...

Risks and Returns Analysis Issues in Business

The risk and return associated with any type of investment bear several similarities. The more the “appetite” for high returns, the higher the level of risk a business entity has to accept. In other words, risks and returns are directly proportional to each other when it comes to investment (Greenwood...

Strategies That Fit Emerging Markets

Introduction Written by Khanna, Palepu, and Sinha (2005), the article ‘Strategies that Fit Emerging Markets’ is an informative piece that acknowledges the biggest challenge, namely globalization, which major businesses face today. Top-level management of large multinational corporations reveals how globalization has made it almost impossible to apply traditional strategies that...

The Use of Debt in Tax-Exempt Economy of Kuwait

Abstract This research will investigate factors that determine the capital financing structure of firms within a tax-exempt economy, Kuwait. It will question why companies in a tax-exempt economy, regardless of the lack of debt incentives, continue to prefer debt financing to internal sources of capital. The research attempts to fill...

Pension Plans and the Economic Troubles

Before the oil crisis in 1974, private and public pension plans were considered in terms of total social security benefit package. The economic troubles arising from the crisis triggered renewed thinking resulting into integration of the two systems. Overall private pensions plans was not a widely practiced tradition and the...

Financial Projections for a Coffee Shop

Dens Coffee shop is set to become a central part of the lives of coffee addicts in Tower Hamlets, London. It will offer the perfect environment for people to meet or just waste the day away as they sip a cup of coffee. The coffee shop will have 1200 square...

Commercial Bank of Dubai Announces Its Quarterly Figures

Introduction Commercial Bank of Dubai disclosed its financial results with reports of positive prospects. The bank had registered a one percent increment in its net profit as compared to the previous year with AED 0.40 earnings per share. Its return on average equity and return on average assets were reported...

Advantages and Disadvantages of Speculation

Advantages of Speculation Speculators play an important role in financial markets, because they give the markets the extra buoyancy needed to carry out trades. They are also important in the financial markets because “they provide information about the fundamental values of investments” (Duffie). Speculators will only buy when the conditions...

Application for Secured Loan for a Japanese Restaurant

I humbly forward my request for a loan of $50,000, which I will use to purchase ABC, a Japanese restaurant. I will secure the loan using my equity of $200,000. I will be comfortable to pay the loan in 5 years’ time covering both interest and principle. Currently I am...

Causes of the Subprime Mortgage Crisis in the USA

The paper is a critical examination of what led to the 2007 subprime mortgage crisis in the United States of America. It is worth noting that the subprime mortgage crisis is a financial as well as real estate crisis that occurred between 2007 and 2010. Subprime refers to the credit...

2007 Financial Crisis Overview and Analysis

Financial systems are the very foundation and heart of a free market economy. Therefore, it is not surprising that the financial crisis witnessed in 2007 to 2008 sent panic waves globally as investors and governments realized the possibility of the total collapse of the world’s economic system. With the proliferation...

How Banks Contributed to Credit Crunch

Introduction Credit crunch refers to an economic condition where the amount of credit available reduces drastically either due to tightened rules by the banks or reduced amount of money available. The crunch may also be caused by Massive external borrowing, merging credit with equity culture, fluctuation in business banking model...

Euro Currency Problems Analysis

It is possible to state that Europe’s debt crisis has become one of the most burning issues of the continent. The countries of the Eurozone are trying to decide whether they need the common currency. The crisis influences the lives of many people living in those countries. Admittedly, it is...