Corporate finance

1. What is the maximum amount of new loans that this bank can make? The bank is only required to keep 10% of the demand deposits as reserves. 10% of $99000 is $9900. The bank can therefore make loans up to $99,000 - 9900 = $89,100. It has actually made loans worth $66,000. So even with no change in the required reserve ratios the bank can still make additional loans worth $23,100. 2. Assume that the bank makes these loans. What will the new balance sheet look like? If the Fed reduces…

follow a common norm in which their ratio is between 1 and 2. Being within 1 means the company finds its projects with a slightly greater emphasis on debt and less equity. The goal is to not be above 2, as that is when a company borrows a lot to finance their operations, meaning creditors have twice as much money in the company as do equity holders. Since Canadian Tire is under 2, it has less exposure to economic interest rate increase and changes in credit conditions. Although, equity is…

1. Poison pills Poison pills, first introduced in the mid -1980s, are the most effective takeover defense and thus warrant the most discussion. Poison pills are rights or securities that a firm issues to its shareholders, giving them valuable benefits in the event that a significant number of its shares are acquired. There are many varieties of poison pills, but all share the basic attribute that they involve a transfer from a bidder to shareholders who do not tender their shares, thereby…

01:42 01:42 What is 'Total Debt To Total Assets' Total debt to total assets is a leverage ratio that defines the total amount of debt relative to assets. This enables comparisons of leverage to be made across different companies. The higher the ratio, the higher the degree of leverage, and consequently, financial risk. This is a broad ratio that includes long-term and short-term debt (borrowings maturing within one year), as well as all assets – tangible and intangible. Total Debt To…

2.2. Corporate value theories 2.2.1. Valuation David Frykman (2003) identified three bases of valuation, including cash flow, return and operational variables. Thus, a great number of valuation approach such as EVA and DDM can be used under certain conditions. However, the most common valuation approach is the discounted cash flow model(DCF). It considers perspectives of all claimholders in the company. Economists define the corporate value as the present value of expected free cash flow of…

from the information asymmetry between the managers and investors, equity might be under-priced. This will make equity as an expensive source of finance. However, retained earnings are not affected by any problems. Also, debt is less sensitive with this problem as it requires fixed payment of interest. Transaction costs can resemble a firm’s sources of finance in a similar way. Baskin (1989) proved that costs for borrowing can be as low as 1% of the amount raised whereas the costs for issuing…

The Life-Cycle Hypothesis (LCH) posits that as households transition through different financial stages over the life cycle, consumption and wealth accumulation will vary as individuals attempt to hold their marginal utility of consumption constant. The Behavioral Life-Cycle Hypothesis (BLC) posits that the marginal propensity to consume is based on a consumer’s financial wealth, which is determined by the components of the consumer’s lifetime financial resources. The key assumption of the BLC…

stake in the new company, with current BPM shareholders owning the remainder. Banco Popolare and BPM will transform from cooperative banks into joint-stock companies in line with the provisions envisaged in the reform of the cooperative banks. The corporate governance will be based on a traditional management and…

TOWS MATRIX STRENGTHS (S) S1 A Cash-rich company S2 Backed by strong shareholders S3 Low level of debts WEAKNESSES (W) W1 Significant reliance only one business W2 Sluggish marketing strategy OPPORTUNITIES (O) O1 Technology advancement O2 Globalization O3 Population growth O4 WTO O5 AFTA S1,O2 W1,O1 THREATS(T) T1 Inflation T2 Tainted money lending industry reputation due to loan shark activities T3 Interest rate uncertainty S1,T3 S3,T1,T3 W1,W2,T2 6.0 RATIO ANALYSIS 1. Liquidity Ratio •…

EXCLUDED . National Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 097 , 31-42.  Guntupalli, P. S. (2016). Exploring the impacts of “Pradhan Mantri Jan-Dhan Yojana’- PMJDY, in urban areas, w.r.t. Mumbai . IOSR Journal of Economics and Finance (IOSR-JEF) , 82-86.  Rai, D. S. ( 2015). PRADHAN MANTRI JAN DHAN YOJNA: AN AMBITIOUS PLAN FOR FINANCIAL INCLUSION. RESEARCH FRONT , 25-32.  Raval, D. H. (2015). Shaping New India through Financial Inclusion in form of PMJDY . International…