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So an in-depth analysis has been done to determine if debt or equity will be a good option for raising capital from the market. The data revealed that due to the environment of uncertainty it is better to maintain a portfolio of both debt and equity instruments. The different debt and equity options are discussed in the report so that companies can maintain tradeoff between risk and return and design the financial plans accordingly.
ABC is an Australian company listed in Australian Securities Exchange (ASX). The company is in service sector and enjoys a high credit rating. It has been found that ABC enjoys sound financial structure as well. At present the company is planning to undertake expansion strategy and for that it has to raise capital. Before finalizing any decision, the management would be interested to evaluate the future of Australian Interest rates in coming months.
For determining the future interest rate, a thorough analysis of Australian market needs to be done; taking into consideration all those factors which directly or indirectly influence the interest rate. Emphasis should be given on both domestic as well as international market conditions.
This paper will also research to determine the appropriate financing instrument for the company as per the future interest rate condition. The main aim of the management is to develop a balance between cost of capital and risk factors.
The research information and data is documented under different section. The first section provides an in-depth analysis of present and future market condition in Australia. The future prospect of interest rate is forecasted undertaking all the factors which influences it. In the second phase a strategy will be developed that helps ABC to finance their business according to the future market scenario and finally in the last section a discussion to support the recommended strategy and how the
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The globalization of the financial markets is going to cause a number of issues for many stock exchanges and force a number of changes which are not necessarily supported by the current infrastructure. There are a number of ways in which financial markets are going to need to respond to the changes in technology leading to globalization.
As the report, Introduction to Financial Markets, declares a financial market is a trading environment where individuals and business entities can buy and sell financial assets, securities, and other fungible products at relatively low transaction costs. Securities consist of bonds and stocks, and commodities include metals or agricultural goods.
This paper will define what financial markets and institutions are and their implication in an economy particularly in a largely consolidating world market.
Financial markets "consist of agents, brokers, institutions, and intermediaries transacting purchases and sales of securities." The individuals and institutions operating in the financial markets are linked by contracts and communications networks that form an externally visible financial structure, laws, and friendships.
Therefore, any modeling of financial assets is directed towards the reduction of the uncertainties & risks involved with the value of an asset or the pricing agreements that govern the variation of the determinants of financial assets' evaluation. Therefore, any such evaluation is performed so s to strike a perfect balance between the non-risky assets and the non-risky assets.
The author states that most governments and other corporate entities usually borrow from the market in form of bonds listed on the capital markets and they have a big effect on the mortgage interest rates. Commodities are also traded in the commodities future markets e.g. crude oil, copper and other minerals.
This increases the demand of host country's currency and hence the host country's currency appreciates at the expense of the multinational's local currency. When many multinationals carry out FDI, the impact is quite bigger and hits the financial markets harder.
Remarkably, the financial markets facilitate the connection between the well-developed financial institutions and the borrowers who want to invest more than they earn, which suits the needs of the savers and borrows; hence,
3 Pages(750 words)Essay
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