StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Corporate Investment - Essay Example

Comments (0) Cite this document
Summary
Bond market represents an even bigger market than stock markets in terms of amount of transactions. It consists of both government securities and corporate bonds that are traded over the counter. There are two types of markets, a primary market where bonds are traded for the first time and a secondary market, where bond holders sell and buy bonds from each other.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER91.3% of users find it useful
Corporate Investment
Read TextPreview

Extract of sample "Corporate Investment"

Download file to see previous pages Some of the junk bonds are very profitable but they have the highest risk for investment losses. Individuals and corporations must carry out appropriate risk management when purchasing bonds.
The issuer make announcement that bonds are to be issued. Usually, the bond is associated with a face value that is redeemed when it is sold by the purchaser in open market. The bond is issued at a value less than the face value, the difference is the profit for the purchaser. The underwriter takes its commission also. Once the purchaser buys the bond, he/she can sell it in the open secondary market or can keep it till maturity when full face value of the bond will be returned by the issuer. If bond is traded before maturity, the selling price is lower than the face value to accommodate profits for the next purchaser.
Though bond and stock markets operate separately, yet stock market does have an impact on bond market. The company whose shares are trading at premium in stock market has a better chance to get its bonds purchased by many purchasers. Also, they are in a position to sell bonds at a higher discount rate to minimize its own losses when the bond face value is to be returned at the time of maturity. A company that is not doing well on stock market also faces difficulty in selling its bonds in bond market.
I think lower taxes on dividend and ca...
A company that is not doing well on stock market also faces difficulty in selling its bonds in bond market.
PART 2
Data:
500 shares at $30 per share = $15,000
Initial Margin requirements = 55%
= (15000)(0.55)
= $8,250
Hence, Loan amount = 15,000 - 8,250
= $6,750
Interest payment = 13%
= (6750)(0.13)
= $877.5
Dividends received = $1 per share
= $500 (for 500 shares)
1. Sold stock for $40 per share:
Total earnings from sale = (500)(40)
= $20,000
Total earnings + dividends = 20,000 + 500
= $20,500
Total expenses = $878
Net earnings = $19,622
Hence, rate of return = (19,622 - 8,250) / 8,250
Rate of Return on investment = 137.84%
2. Sold stock for $20 per share:
Total earnings from sale = (500)(20)
= $10,000
Total earnings + dividends = 10,000 + 500
= $10,500
Total expenses = $878
Net earnings = $9,622
Hence, rate of return = (9,622 - 8,250) / 8,250
Rate of Return on investment = 16.66%
3. Cash Purchases:
(i) Sold stock for $40 per share:
Total earnings from sale = (500)(40)
= $20,000
Total earnings + dividends = 20,000 + 500
= $20,500
Total expenses = $15,000
Net earnings = $5,500
Hence, rate of return = 5,500 / 15,000
Rate of Return on investment = 36.67%
(ii) Sold stock for $20 per share:
Total earnings from sale = (500)(20)
= $10,000
Total earnings + dividends = 10,000 + 500
= $10,500
Total expenses = $15,000
Net earnings = ($4,500)
Hence, rate of return = (4,500) / 15,000
Rate of Return on investment = -30%
PART 3
I think lower taxes on dividend and capital gains can enhance economic development. This is because if taxes are low, the individuals are able to save ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Corporate Investment Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Corporate Investment Essay Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/miscellaneous/1533996-corporate-investment
(Corporate Investment Essay Example | Topics and Well Written Essays - 750 Words)
Corporate Investment Essay Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/miscellaneous/1533996-corporate-investment.
“Corporate Investment Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/miscellaneous/1533996-corporate-investment.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Corporate Investment

Investment analysis and Corporate Report Analysis: Sainsburys Supermarket Limited

...? Investment and Corporate Report Analysis: Sainsbury’s Supermarket Limited Organizational Background Sainsbury’s Supermarket Limited, known simply as Sainsbury’s, is recognized as the United Kingdom’s third largest supermarket chain. As of most recent estimates the organization retained a 16.5% market share in the UK supermarket sector. The organization has a longstanding history having been formed in 1869 by John James Sainsbury in London, England. The organization rapidly developed during the Victorian era and by 1922 had become the primary grocer in England ("J sainsbury 142," 2011). Throughout much of the 20th century Sainsbury’s became recognized for its foregrounding of self-service retailing methods ("J sainsbury 142," 2011...
12 Pages(3000 words)Essay

Corporate investment: Financial Market Imperfection

...? s Corporate Investment Corporate Investment, Financial Market Imperfections Study Level Table of Contents Introduction 1. Brief Overview of the Topic 1.2. Structure of the work 2. Literature Review 2.1. The main Results of the Topic 2.2. Choosing a country of focus 2.3. Comparing cases 3. Empirical Framework 3.1. Description of the model that you are going to estimate 3.2. Description of the Data 4. Results 4.1. Tables 4.1.1. Table Result 1. 4.1.2. Table Result 2 4.2. Comments 5. Conclusion Abstract This study evaluates the sensitivity of cash flow in the U.S. manufacturing companies from 1970s to 1990s. It explores the variation in the sensitivity in line with certain factors affecting the capital market including institutional...
22 Pages(5500 words)Dissertation

Corporate governance and social responsibility investment

...? Corporate governance and social responsibility investment al affiliation: Part A Question 2 Governance of public companies is regulated by governance codes that provide a frame of reference, which is based on best practices. Companies are expected to comply with the codes, or in the event of non compliance, such corporations are lawfully mandated to explain why they depart from the codes recommendations. Accordingly, comply or explain (CoE) and the quality of expectations in particular are anticipated to be the topmost priorities of the European action plan on corporate governance. The corporate governance codes across Europe were developed by the business fraternity in reaction to a series of corporate scandals and eventual collapse...
12 Pages(3000 words)Essay

CEO Overconfidence and Corporate Investment

... predictions to guide the data collection; the first was that the investment decision of a CEO who is overconfident was more sensitive to cash flows in an organisation as compared to the decision of a CEO was not overconfident. The second was that the investment decision of a CEO who is overconfident is more sensitive to cash flows in firms that are more dependent on equity. Analysis of the data a that was collected from CEO’s of some of the American largest firms confirmed these predictions as true. References Malmandier, Ulrike and Tate, Geoffrey. 2004. CEO overconfidence and corporate investment[pdf] Available at: [Accessed 13 July 2013]... ? CEO Overconfidence and Corporate Investment CEO OVERCONFIDENCE...
4 Pages(1000 words)Essay

Corporate Finance Investment Banker

Corporate Finance Investment Banker
My decision to pursue a career as a Corporate Finance Investment Banker was influenced by the attraction it has by being a fast paced environment and the traits I have that make me especially well suited for the position. It requires the ability to evaluate large amounts of information and make key decisions that can affect the financial health of major corporations. Though to many new graduates this may seem like a stressful position, I find the opportunity challenging and exciting. It is an ever-evolving career that challenges you on a daily basis to learn the latest economic trends, business opportunities, and emerging markets. .
The age of globalization has also opened up new paths f...
2 Pages(500 words)Essay

Relationship between ownership structure, investment and corporate value

...Ownership Structure, Investment and Corporate Value Introduction A number of studies from different and researchers have found link to the relationship between ownership structure, investment, and corporate value. Generally, the management of a firm tends to prefer investments that will maximize the wealth of shareholders. Accordingly, this paper evaluates the literature that is devoted into linking these three essential factors in a business. Early on, Jensen and Meckling (1976) have examined the effect of management and their behavior on the performance and the corporate value they control. A huge part of such literature talks about the relationship between managerial ownership levels, the direct investment decisions made...
6 Pages(1500 words)Essay

The Investment Capital for Corporate Businesses

...Essay The equity market is a major source of investment capital for corporate businesses seeking to finance both new and existing investment initiatives. From your point of view as the Chief Finance Officer for a Multinational Corporation based in an emerging market economy, discuss the role of the stock market as a transmission mechanism for foreign direct investment capital inflows into the emerging economy. Introduction Over the last few years, the financial markets especially the stock markets have grown significantly in the emerging economies. Stock markets are considered as one of the primary sources to raise money for the companies. The higher liquidity of securities in this market appears as one of the major reasons which have...
9 Pages(2250 words)Term Paper

Corporate Investment Banking

...Corporate Investment Banking The banking industry is changing with different products and services ensuring that the customers either personal or corporate get the most competitive deals in the industry. The banks are therefore looking for different ways to be attractive to their customers and innovative ideas that can help the company surpass their competitors in the industry. Corporate investment banking is one of the most important parts of a bank since it generates a lot of revenue for the bank thereby making it a core part of the banking industry. In illustrating the different concepts and fundamental structures of the corporate investment banking and the banking industry as a whole this paper uses the case of Barclays Bank one...
8 Pages(2000 words)Essay

Canadian Corporate Business Law

This was done by virtue of a loan to Ashley in the sum of $300,000 providing Temper with a first mortgage against the suite.
Two politicians invest in Temper, Stefan di Yawn who invests $500,000 in respect of 500 Class A shares and Bob Eh invests $100,000 for 100 Class A shares. In order to secure these investments, the politicians take a security interest in Temper. Shortly after the company experiences some difficulty beginning with Angelina who is photographed spitting on the sidewalks which gets the attention of politician Hillary Squinton who ran her campaign on a clean sidewalks platform. She initiates action against Angelina by taking the matter up with Spitting on Streets Board chaired by Angelina’s boyfriend Br...
11 Pages(2750 words)Case Study

The Real Face of Corporate Social Responsibility

Effective communication is an important tool that has wide-ranging influence in the smooth functioning of corporate bodies. The role of corporate communicators is significant in the administration of the organization and projection of the organization’s aims and objectives in the eyes of the public and stakeholders.

Corporate communicators normally use a variety of techniques to communicate with different people. The administrators and managerial staff use effective communication to disseminate information about the changes that need to be made and make special efforts to create a barrier-free work environment. The barrier-free atmosphere and friendliness testify mutual respect and easy accessibility of management...
9 Pages(2250 words)Assignment

Property Investment Analysis

The Red Book valuation figures offer useful guidance on valuation, however they contain overlapping material from diverse sources. The Mallinson Report has identified the need for the RICS to publish a single, comprehensive and user friendly source of standards for valuers and establish a single point of coordination in the institution’s delivery of valuation services. The Report also states that the information provided needs to be more specific so that it place more specific further education demands on valuers. Additionally, there must be additional power provided to the Institution to investigate problem cases and take disciplinary action when it becomes necessary, despite the possibility of courts exerting a restricting...
13 Pages(3250 words)Assignment

A Small Sports Car as an Investment

The purpose of this report is to determine the “best bang for the buck” if a consumer was looking to purchase a small sports car. A car purchase should be treated as an investment, even though we know that spending money on a vehicle with the high gasoline prices and insurance premiums is probably the worst type of investment money can buy. Therefore, the ultimate purpose is to guide this expenditure in reaping the maximum benefits available.
I will be researching on 2006 2-seated vehicles in the price range of $30,000 - $50,000 in today’s market. The idea is to keep it within the price range mentioned above, so more expensive cars such as Benz CLK and lower-end vehicles such as Honda Civics are not included...
12 Pages(3000 words)Research Paper

Corporate Governance the Need of the Hour

A corporation has to be fair in all its transactions. It is rather a compulsion than the choice to organizations especially, in the epoch of globalization where they need to pool resources from across the globe and win the confidence of the global people. These corporations are therefore governed by a set of codes of values and principals. Top management responsibilities, especially those of the CEO, involve getting things accomplished through and with others in order to meet the corporate objectives (Wheelen and Hunger, 2007. p.33). So, good governance is wholly and solely the responsibility of the top management. 

Corporate governance is about ethical conduct in business. Ethics is concerned with the code of valu...
6 Pages(1500 words)Report

Implications for Personal Investment

The assumption of perfect rationality can be rebutted by the fact that rationality is not the sole driver of human behaviour. On the contrary, our behaviour is contingent upon emotions such as love, fear, pain, and pleasure etc. Human beings only use their intellectual power to achieve or avoid these emotional outcomes (Pompian 2006). Secondly, the assumption of self-interested is also not deemed to be practical because many sociological studies have shown that people are not always self-interested. Had this been the case, then there would not have been a single philanthropist in the world, even people would have avoided negative behaviour such as suicide and alcoholism. The final assumption of perfect information also does not ho...
6 Pages(1500 words)Coursework

Understanding the Corporate Governance

Apart from providing the traditional telecommunication services, the firm has now entered into providing most modern services in UAE such as WiMax internet services, WAP, GPRS, and other more modern services which are also considered as a great step towards making UAE as the country with most modern infrastructure and telecommunication facilities. The overall customer base of the Etisalat has reached more than 74 million across the world thus making it one of the leading telecommunication services providers in the World.
What is also, however, important to understand that the Etisalat, over the period of time, has been able to prove itself as one of the leading corporate citizens in the Region? Its nationalization program, as...
11 Pages(2750 words)Research Proposal

Multinational Capital Investment in Ruritania

The main risk factors with an emphasis on financial issues, which are important for this decision, are examined in this report. Further, the main financial factors to be considered before making the decision are discussed based on investment appraisal techniques. The next section examines the available evidence on the risk factors and estimation for international investment. In section 3, these factors are examined for the country studied here. In section4, the financial issues to be considered based on investment appraisal techniques are discussed. In section5, appropriate recommendations are made regarding the investment decision for the case presented here.

According to Nagy (1984), the main risks in multinational ca...
8 Pages(2000 words)Case Study

Corporate Social Responsibility

Corporate social responsibility refers to the responsibility of an organization that focuses not only on optimum utilization of available resources, but also on ensuring its resources, processes, and products are not causing harm to the society at large, and also try to add greater value. However, the explanation of CSR is not limited to this thought and is perceived differently by different organizations, different groups of population and different regions of the world (Karake-Shalhoub & Karake, 1999).

A holistic understanding why organizations can have such lasting effect on the society may be drawn from Dawe’s (1970; p.214) explanation of sociology that identifies two distinct aspects, sociology of social...
8 Pages(2000 words)Assignment

Corporate Goals and Mission Statement of Apple Organization

Apple inc. (formally Apple Computers Inc.) is a producer, designer and seller of a variety of consumer electronics including personal computers, media devices that include the iPod and iPhone, accessories and peripherals as well as the sales of media and software to support the formerly listed items, including operating systems, music and video applications and various other resources (Freedman & Vohr, 1998).

Apple Inc. is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.

Apple Inc. is thought to be among the most highly successful companies established in...
8 Pages(2000 words)Case Study

Corporate Investment in a Large International Project

...Corporate Investment in a Large International Project Introduction According to the Invest (2010), the French pharmaceutical industry is still in good health, and has continued to attract foreign labs to the third largest pharmaceutical market in the world. In September 2010, the second largest pharmaceutical company, GlaxoSmithKline (GSK), made a €51 million investment in France. The amount is to be used for the new François Hyafil research center (Ile-de-France). Considering GSK invests up to $6.5 billion annually on research and development, its financial base easily accommodates their budget for investing in countries like France. Similarly, as a MNC, GSK does not necessarily have to source for external credit, but instead take...
9 Pages(2250 words)Assignment

Corporate Finance - Fishers Theory of Optimal Investment Decision

...Corporate Finance - Fisher’s Theory of Optimal Investment Decision 1. Discuss Fisher’s theory of “optimal investment decision”. Fisher’s theory of optimal investment decision assumes a perfect market meaning that the rate a firm can lend or borrow at is not affected by the total amount of the firm’s lending or borrowing. Fisher also assumed that all capital was circulating capital thus all capital is investment. Fisher assumed two time periods as investment in one period would lead to output only in the next period. Thus there is a tradeoff between consumption now and consumption later. The optimal investment theory assumes two time periods t=1,2. The output in year 2 is dependent on investment in year 1, the greater the investment...
16 Pages(4000 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Corporate Investment for FREE!

Contact Us