Nobody downloaded yet

Corporate finance - Essay Example

Comments (0) Cite this document
Summary
The resulting failure of many financial institutions as well as other manufacturing concerns and gradual decline in the economic activity in…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER94.8% of users find it useful
Corporate finance
Read TextPreview

Extract of sample "Corporate finance"

Download file to see previous pages What is however important to note that these crises were largely unanticipated as they emerged due to the subprime mortgages which form a very little percentage of the overall activity that take place in the financial markets. This therefore raises the question of how many investors actually mispriced the risk that has to be included into the pricing of the securities given the fact that market participants always form rational expectations about the future equilibrium prices.
Rational Expectations theory forms the basis of some of the most important macroeconomic models in recent times. The formation of the efficient market hypothesis is also one of the macroeconomic models which utilizes the rational expectations theory and assert that market participants always form rational expectations about the future equilibrium prices. Thus it is useless in predicting the future financial crises as the market participants already discount such future information into their risk calculations.(Hui & Lui, 2002).
However, despite such theoretical assumptions, the current global financial crises were more of a shock for most of the participants as they emerged out of blue and affected almost every market on the earth. This paper will attempt to discuss the question of predicting the future financial crises in the light of efficient market hypothesis and rational expectations and will attempt to answer the question by considering the current global financial crises.
The current financial crises has slowed down the pact of economic growth in many countries including US and UK and many governments have to inject money in order to save their financial systems from complete collapse. These financial crises apparently emerged due to the imprudent banking practices and resulting lending into the subprime mortgage sector.
Over the period of time, the competition for banks became stronger and banks, thanks to de-regulation, were allowed to engage themselves into practices which ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Corporate finance Essay Example | Topics and Well Written Essays - 2000 words - 2”, n.d.)
Corporate finance Essay Example | Topics and Well Written Essays - 2000 words - 2. Retrieved from https://studentshare.org/miscellaneous/1561264-corporate-finance
(Corporate Finance Essay Example | Topics and Well Written Essays - 2000 Words - 2)
Corporate Finance Essay Example | Topics and Well Written Essays - 2000 Words - 2. https://studentshare.org/miscellaneous/1561264-corporate-finance.
“Corporate Finance Essay Example | Topics and Well Written Essays - 2000 Words - 2”, n.d. https://studentshare.org/miscellaneous/1561264-corporate-finance.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Corporate finance

Corporate finance

...? Corporate Finance Introduction The significance of natural gas is growing everyday as energy needs in industrial, transportation, and technological sectors are on the rise. Although other renewable energies like solar power and wind power have been in use, individuals and business organizations still depend more on natural gas due to its easy availability and increased efficiency. In addition, features like easy availability, broader applicability, high safety, reduced noise pollution, and renewability of natural gas improve the scope of natural gas industry. Clean Energy Fuels Corp. (CLNE) is the North America’s largest provider of transportation natural gas and the organization has currently spread...
8 Pages(2000 words)Research Paper

Corporate finance

...TOPIC: CORPORATE FINANCE (a) Introduction: Our are the most treasured assets we have, a such we treat them with utmost care and maximum attention in given to them for the purpose of transparency, progress and the most of which is –satisfaction of our clients. This is most serious because they are our future and we owe them satisfaction with perfection. As you are aware we use fundamental analysis and valuation methods to select equities for you as a guide for portfolio investments. It is in this light that our bank has deem it fit to present to you a fundamental analysis and the valuation of one of the FSTE 100 Companies, which is the “British Airways”. This analysis will include; A fundamental analysis...
17 Pages(4250 words)Essay

Corporate finance

...Corporate Finance Issues Capital Structure and Dividend Decisions “It is ironic that the ic theory of corporate finance concludes that capital structure and dividend decisions do not affect the value of a listed company”. Critically evaluate this theory and discuss competing theories that may shed light on the gearing and dividend decisions of listed companies. (Weight 30%) Gearing and Dividend Policies of Vodafone plc Using publicly available information, critically evaluate the gearing and dividend policy of one FTSE 100 company. (Weight 30%) Corporate Governance “If managers and directors of listed companies choose to ignore the interests of...
18 Pages(4500 words)Essay

Corporate finance

...Corporate Finance Introduction United Metal is considering an alternative proposal of buying components from Amalgamated Components. These componentsare at present being manufactured in house by United Metals. The proposal assumes a saving of $96000 during a period of eight years, which is remaining useful life of machinery purchased by United Metals a year ago the purpose of manufacturing of such components. An effort has been made in this write up to evaluate both the in-house manufacturing and buying proposals in order to arrive at proper recommendations to be made to United Metals. a) Critical evaluation of arguments of purchasing and production managers Purchasing Manger’s arguments 1. The argument of the purchasing manger... Finance...
5 Pages(1250 words)Essay

CORPORATE FINANCE

...Business Finance Article - How to Evaluate Your Business & Improve Your Bottom Line During Recession by Tony Massaro In the current economic condition, with the high recession that is being faced globally, Massaro has taken an initiative to provide businesses with a solution and some recommendations to be able to cope up with the recession and yet be successful. This article talks about the some extremely essential questions which need to be answered by business to ensure that the business is moving in the right direction. In the current scenario, it is a necessity for businesses to evaluate themselves and make necessary changes to be able to survive in the markets. Massaro has also provided clear reasoning to the...
2 Pages(500 words)Essay

Corporate Finance

...Impact of the World’s Flatness on Corporate Finance of the of the Impact of the World’s Flatness on Corporate Finance Introduction I’m sure we’ve all heard of the popular refrain, ‘Money makes the world go round.’ In fact, the 21st century has been distinguished from all of previous history by the lack of borders, open and worldwide employment opportunities, the transfer of technology and education at a breakneck speed. The world is truly becoming more of a global village every day. We cannot be separated from what is happening all across the world, as recent events unfold right across our TV screens 24/7 courtesy of satellite TV and the plethora of channels that work...
1 Pages(250 words)Essay

Corporate finance

... markets, Journal of Financial Economics, 47 (1998) pp. 243-277 Burch Jr., J. C. and Foerster, B. S., 2011. Capital Markets Handbook, Aspen Publishers. Fama, E. F., 1991. Efficient Capital Markets: II, Journal of Finance, Vol. 46, Iss: 5, Dec. 1991, pp. 1575-1617. FSA, 2012. What we do: who we regulate, [online] Available at: [Accessed 9 March 2013]. [Accessed 9 March 2013]. Gomme, P., 2005. Why Policymakers Might Care about Stock Market Bubbles, Federal Reserve Bank of Cleveland, [online] Available at: Healy, P. M. and Palepu, K. G., 2001. Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical... disclosure literature, Journal of Accounting and Economics 31 (2001) 405–440. Honohan, P., 1995....
11 Pages(2750 words)Assignment

Corporate finance

... Corporate Finance In the first scenario, Mark needs to be overhauled without incorporating a brand new control system. The revenue generated is $1.4 million after the plane is operational and this is after one year. Therefore, no revenue will be earned for the first year. Thereafter the revenue earned will be increased with inflation of 2.5%. Revenue for 2nd year = Revenue for 3rd year= Consecutively, the revenue for the other years is calculated similarly for 12 years as shown in Table 2. The total operating cost is $1,181,000. Similarly, the operating cost for the first year is 0 since the plane is not operational. These costs also increase with inflation. Operational cost for the 2nd year = Operational cost for 3rd year... Corporate...
3 Pages(750 words)Essay

Corporate Finance

...Corporate Finance Table of Contents a) Rexam Plc and GlaxoSmithKline (GSK) Pharmaceuticals Limited 3 Calculation of total shareholder return (TSR)3 2) Calculation of mean return of each company (2007-2013) 6 3) Calculation of standard deviation (2007-2013) 8 4) Calculation of correlation coefficient 9 5) Risk and return portfolio 10 6) 10 b) 10 c) 11 Reference List 13 Appendix 1: Calculation of mean return of Rexam Plc and GSK Plc 15 a) Rexam Plc and GlaxoSmithKline (GSK) Pharmaceuticals Limited For the accomplishment of project, two companies are chosen Rexam Plc and GlaxoSmithKline Private Limited. Both the companies are from different sector: packaging and pharmaceutical sector. Rexam Plc is regarded...
7 Pages(1750 words)Essay

Corporate finance

...Corporate finance Contents Contents 2 Introduction 3 Main body 3 Efficiency of financial market 3 Efficient-market hypothesis 3 Random Walk Hypothesis 4 Possibilities of future bubbles and predictability 5 Conclusion 7 References 8 8 Introduction The concept of efficient market hypothesis came in 1960’s when Eugene Fama introduced this theory. According to this hypothesis, beating the market is not possible as prices are already included and talks about all relevant information. The theory is not at all free from controversies. The hypothesis also tells that buying and selling of securities is all about of chances and there is no scope of skills. Recently the global economy has gone through a very...
6 Pages(1500 words)Research Paper
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 finance for FREE!

Contact Us