Corporate finance

Per Case 5.2, Facebook, please answer Discussion Questions 1,2,3 on Page 361 1. Is the information withheld from individual investors important in making the decision to buy stock? In this case the information withheld from investors was very important in making the decision to buy stock. Facebook, which made most of its revenue from ads, were losing clients due to their ads not being seen on the mobile app which millions of Facebook users were accessing Facebook through. If the investors had…

judgement and accuracy to yield the best results and ensure the best possible return on their investment. Therefore, the major goal of capital investment decision is to increase the value of firm by undertaking the right project at the right time (Finance World of Maps, 2016). The firm needs to decide which of the given investments will ensure the most value to the business.and not the daily day to day decisions that must be made and can be delegated to lower level…

Key Man Clause What’s Key Man Clause? Key man clause is an important clause for an investment firm. It says if certain numbers of executives are absent, the investment firm won’t be able to make any new investments until these key executives are replaced first. There can be many reasons for which the executives aren’t able to perform their tasks quite well. Since managing investments is a huge task, until the key executives (who are in charge) invest a large chunk of time. When they’re unable to…

Securities are investment products, which represents small fractional rights over a business enterprise or a pool of assets. Business enterprises and corporate entities use securities as a tool to raise capital. Primarily, securities provide their holders with either participatory rights in the earnings and management of the business enterprise or promised fixed returns over the value of investment made through purchase of securities. Securities with participatory rights are called equity…

QUESTION (2): Explain why the costs of selling equity are so much larger than the costs of selling debt. ANSWER INTRODUCTION When a company requires raising capital for new investment, may has two real selections. Option one is to selling equity and option two is to selling debt from financial institutions (Stephen Ross, David Hillier, 2012). The cost of selling equity is greater than the cost of selling debt because when the firm sells equity to individuals, because company and other…

bank made money just by being the middleman. There was little risk for Morgan bank, yet they received an initial fee and yearly fee from B.F. Goodrich in the unlikely case either counterparty defaulted. Rabobank also seized this opportunity to finance $50 million of floating rate Eurodollar. …… Not only did did provide an attractive alternative for savings banks, but it also opened up the international market to investors and other companies looking to follow in the footsteps of B.F.…

1. Introduction The Consciousness of the people on financial literacy in decision-making initially becomes inspirations to this essay. Diversification of financial instruments and the complexity of procedure lead to the people realize on crucial role of financial knowledge. The Financial literacy concept is extensively acknowledged as a pivotal element within many areas of life when people begin to enter the modern global market, such as become an entrepreneur, an investor, or an officer. In a…

This principle given by Vilfredo Pareto, an Italian sociologist and economist, is also known as 80/20 rule. Understanding this rule can help you to stop procrastinating. Originally, Pareto derived his 80/20 rule on the observation that 80% of Italy’s wealth then belonged to just 20% of the Italian population. By extension, the rule has been applied to all aspects of human endeavor. For instance, it’s the  20 percent of the effort that produces the 80 percent of the result  20 percent of the…

Identify and describe your current life stage I am in the middle adulthood “a period of building up : building a family, building a career, increasing earned income, and accumulating assets.” (Rachel Siegel and Carol Yacht, 2107, p. 12). I have two different sources of income: employment and investment. I currently work two jobs and as an investment i rent out a property that pays itself. Besides this property, my other two valuable assets will include a car and a savings account. At this…

The reason most of us work is to make money, the second reason we work is to gain retirement. Martocchio (2013) says companies make retirement plans in one of three ways. They are a defined benefit plan, a defined contribution plan, or a hybrid plan. A defined benefit plan is when a company guarantees a certain amount of money to an employee at retirement. This amount is based on a percentage of an employee's pre retirement pay times how many years of service they have with the organization.…