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Debt Essay Topics & Paper Examples

Causes of the Sub-Prime Crisis

According to www.investopedia.com, the world “subprime” defines to “A classification of borrowers with a tarnished or limited credit history” and that is what led to the titanic crisis of 2008-2009. This essay will explore the events, which eventually led to many mortgage delinquencies and foreclosure of these sub prime borrower’s homes, causing the insurance company AIG and many other banks to foreclose thus forcing bail out money from the American government to prevent the next great depression. In the past, traditional mortgage loans that could be acquired from the banks could only be loaned under the grounds of the borrower’s financial status and credit rating. If one did not have good credit rating, the bank would not be able to…

Euro Currency Market

The money market in which Eurocurrency, currency held in banks outside of the country where it is legal tender, is borrowed and lent by banks in Europe. The Eurocurrency market is utilized by large firms and extremely wealthy individuals who wish to circumvent regulatory requirements, tax laws and interest rate caps that are often present in domestic banking, particularly in the United States. ‘Eurocurrency Market’ Rates on deposits in the Eurocurrency market are typically higher than in the domestic market, because the depositor is not protected by domestic banking laws and does not have governmental deposit insurance. Rates on loans in the Eurocurrency market are typically lower than those in the domestic market, because banks are not subject to reserve…

Capital Structure : Samsung and Intel

As per the table above, it is clear that in 1997, the capital structure of Samsung Electronics was highly leveraged. The capital structure of Samsung was 85 % debt and 15 % Equity compared to Intel with a 33 % debt and 67% Equity as per the financial data Year End 1997. The healthy blend of a 33 % debt to a 67 % of equity for Intel ,a chip manufacturing firm based in the US, indicates that the company is efficiently managing its investments by optimally utilizing debt to eventually result in an increase in value for the shareholders. Samsung Electronics has 70 % of its USD 9 billion debt in the form of foreign currency loans. This is…

Why Do Financial Institutions Fail?

Do you remember that there was an extremely important historical event, which is the worst financial crisis since the Second World War. The most serious result was that all the investment banks in Wall Street failed, which was a block of healthy development of the world economy. Here is a reason why these investment banks failed. Was it resulting from the wrong policy made by American government or investment banks themselves? Although many people subscribe to the belief that investment banks should take responsibility for the wrong policy, this is in fact a common misconception that we need to clear up. The government should take most responsibility for investment banks failing. Some people say that the reason investment banks failed…

Security Interests

Of all of the possible questions available in the text I found this one on page 519 of the text to be relatively interesting because I wanted to know how agreements with collateral were drawn up. I was interested to know what all was involved and what was required for such a contract to be enforceable. My questions revolved around these areas. What is a security interest? What are the requirements or qualifications? What makes a security interest enforceable? Why are these requirements necessary? A security interest is the interest in collateral, personal property or fixtures, that secures payment or performance of an obligation. Security interests are created as a means of collateral against any value given by a secured…

The Importance of Having a Budget

Having a budget is not a choice but a necessity. It is important for everyone to have a budget in order to balance the amount of income with expenditure. Having a budget can help us plan our finances. With a financial plan, we will know where the money we have goes to. It is essential for us to be able to take control over our money and not have our money control us. Therefore, we must be able to decide how we should spend and save our money no matter how much or how little we have. This way, we are in control of our finances. Being able to control our finances means that we must also be smart to…

Consumer Credit Scheme

Executive Summary Internship is an essential part of BRAC universities BBA program. As per the requirement of the BRAC University I have to perform 90 days or three months internship which will help to prove my potentiality in the practical field. I achieved the opportunity to prove the potentiality, which has given by the Prime Bank Ltd. to commence my internship in the motijheel branch from 27th January to 27th April, 2009. As per the requirement of the internship program I have to prepare a report on the Prime Bank Limited with a specific topic. I was assigned in the credit division (corporate credit and retail credit division) so I have chosen “Consumer credit scheme” as my Project topic. Prime…

Burden Arising Out of Public Debt

In India, the traditional concern for public debt has been with fiscal deficits (both Centre and State) and with the size and maturity of the country’s external debt. Somewhat less attention has been paid to the level, cost and structure of its overall public debt, both domestic and external. The outstanding liabilities comprises of the Internal (Market Borrowings, RBI Treasury Bills, small savings and deposits, provident fund, reserve fund) and External liabilities. The total outstanding liability of the Government of India as per 2004-05 (BE) was nearly Rs.20 lakh crores (64% of the GDP), of which internal debt account for 97 per cent. Adding the State government’s outstanding liabilities of Rs.9.11 lakh crores the total outstanding liability exceeds the GDP…

George Marunich: Honda Accounting

Honda follows the standards given by the Financial Accounting Standards Board as well as the Securities Act 1934. Honda has maintained statements which are based on the assumptions of the management. Being a manufacturing firm depreciation has been a very important accounting practice. Companies operating in different countries would have to need different policies as well as rates of interest. The red flags found were the increasing gap in accounts receivables in relation to sales and unusual increase in inventories in relation to sales. Net sales decreased by 9.4%. Research and development has also been used as a mechanism to show capital expenditure of huge amounts of $5,733 million. Some of the other key bookkeeping practices include the practice of…

Strategies Used by the Banking Industry

In depressed economic times, Banking is an industry that is prone to substantial financial losses, from customer’s closing their depository account to an increase in outstanding loan delinquency. An increase in consumer and commercial loan defaults can damage the integrity of a Bank’s outstanding loan portfolio. Such deterioration can lead to an increase of “Non-Performing Assets”. Once a loan is nonperforming, (usually when a debtor has not made their scheduled payment for at least 90 days, but there are other reasons why a loan can be deemed “non-performing”) the odds that it will be repaid in full are considered to be substantially lower. The non-performing asset is therefore not yielding any income to the lender in the form of principal…

Amortization and Sinking Fund

Amortization (or amortisation) is the process of decreasing, or accounting for, an amount over a period. When used in the context of a home purchase, amortization is the process by which loan principal decreases over the life of a loan. With each mortgage payment that is made, a portion of the payment is applied towards reducing the principal, and another portion of the payment is applied towards paying the interest on the loan. An amortization table shows this ratio of principal and interest and demonstrates how a loan’s principal amount decreases over time. Amortization (business), the allocation of a lump sum amount to different time periods, particularly for loans and other forms of finance, including related interest or other finance…

Bankruptcy Among Youth

1.0Introduction Bankruptcy becoming the issues toward many youth nowadays. The worst is the bankruptcy was involves with many youth where below than age 30. According to Credit Counselling and Management Agency in New Straits Times (2011), an average of 41 Malaysians are declared bankrupt daily, with the majority failing to make repayment for car purchase loan. In short, the problem of bankruptcy among youth has to be taken seriously. 2.0Problem Statement Statistics by the AKPK indicated that the number of individual bankruptcy cases had raised by 11.2% to 18,053 cases in 2010 and increased by a further 6.2% to 19,167 cases in 2011 (Curbing Credit Card Abuse, 2012). According to a survey by the Education and Research Association for Consumers,…

Pawnshop Theoretical Background

Pawnshops offer financial services known as micro-lending which is an important source of credit in many developing countries, especially in Asia. Pawnshops can provide these financial services to poor and low-income households for a variety of reasons. One is that pawnshops fall under less regulation than other financial institutions. Pawnshops used to operate like a sari-sari store with very little government control. In fact the only time these units came into contact with government agencies was when they paid business registration fees and income taxes. They were not even covered by the usury law enacted in 1916. (Mario Lamberte – 1988) Another reason pawnshops can provide these financial services to poor and low-income households is that their loans are backed…

Business Law and Ethics

Dealing with government regulation in business is an integral part of a manager’s responsibilities. Recognizing what actions might violate particular consumer protection regulations is crucial to protecting the company and to insuring its profitable operation. Government regulation is found every day in the operation of businesses large and small, and once understood, it allows managers to make good decisions regarding business practices. When you have completed this topic, you will be able to: •list the common types of regulations designed to protect consumers, •identify types of illegal consumer credit practices, •describe the warranty protection provided to consumers, and •describe the purpose and role of the Federal Trade Commission (FTC) in consumer protection. Read Chapter 40, “Consumer Law” Read the following…

Bond Valuation

Discuss the impact of Standard & Poor’s downgrading the U.S. credit rating in 2011. Address current and likely future impact on U.S. business, individuals, the global economy and current financial practices. Provide specific examples to support your response. The impact of Standard & Poor’s downgrading the U.S. credit rating in 2011 shows us as consumers and investors that we should keep watch on all aspects of the government’s spending. A persistent crisis of confidence in the stock market could put the economy in a tailspin. The impact it would have on current U.S. business, individual global economy and current financial practices in nothing new that this country does not already know or should have seen in the past several years….

Business Transaction

1.1 – Account Receivable(AR) (AR and Management Policy: Theory and Evidence – Shehzad L. Mian & Clifford W. Smith, Jr) The basis of my subject “Bad debt expense estimation model” stems from account receivable. Account receivable is the term used by companies to describe money owed to them by clients or customers for goods and services provided. Bad debt expense is that portion of account receivables that will not be collected. Therefore, without any receivables a company will not have bad debts, thus no need to estimate any bad debt expense. Business to business transactions are mostly done with a promise to pay for goods and services provided at a later date. When a company sells its products or provides…

Is Is Ethical to Charge Interest

When we talk about banks, loans or even money, it is very common to hear words such as interest, usury, risks, etc. We mention these words very often and many times we do not even know what they mean. But this is not it; it gets more interesting when we start linking all this stuff with other topics such as religion, ethics and moral values. Going back to the beginning, when we start talking about banks and money, it is known by everybody that banks’ main business are the loans and the interests they ask for them, which many people do not like. They also refer to the banks as usurers, arguing that the interest rates they charge are too…

Money, Power, and Wall Street

The meltdown of 2008 struck the banks when they were unable to adequately deal with the financial crisis. Banks are designed to create and protect one’s wealth, but they took advantage of the people, and let people take many loaning risks that they couldn’t afford. Banks created the credit default swap which transferred credit of fixed income products between parties. In learning about the credit default swap in class, it is understood that the buyer receives credit protection, whereas the seller guarantees the credit. Therefore, the risk of default is transferred from the holder to the seller of the swap. But swaps allowed companies to shed the risks they didn’t want to take. When the banks first created the swaps,…

Butler Lumber Company Case Study

Summary of Facts. Butler Lumber Company is a Pacific Northwest based lumber distributor that sells plywood, moldings, and sash and door products. The sole owner of Butler Lumber is Mark Butler, accompanied by one administrative assistant and ten employees who focus on repairs and labor intensive work. Because of Butler Lumber’s competitive pricing scheme, it has seen rapid growth in the past few years. Due to the rapid growth and a shortage of cash in 1990, Butler Lumber Company is seeking to take out an additional loan in order for the business to sustain itself and grow in the coming years. Butler Lumber has the option to accept a loan of $250,000 from Suburban National Bank, or accept an unsecured…

Land of Bondage, Land of the Free

The tao does not come here tonight to be judged, but to judge, Hear then his accusations and his sentiments. I indict the Spanish encomendero for inventing taxes impossible to bear. I indict the usurer for saddling me with debts impossible to pay. I indict the irresponsible radical leaders who undermine with insidious eloquence the confidence of my kind in the government. You accuse me of not supporting my family. Free me from bondage and I shall prove you false. You accuse me of ignorance. But I am ignorant because my master finds it profitable to keep me ignorant. Free me from bondage and I shall prove you false. You accuse me of indolence. But I am indolent, not because…

Fixed Income Securities

Objectives: This course is intended to analyze the fixed income securities markets and its implications for investments. It will analyze the market characteristics, instruments, selling techniques, pricing and valuation issues, floating rate instruments, risk and return of fixed income securities, portfolio management techniques, term structure modeling, corporate debt and convertibles, bonds with embedded options, sub-national debt analysis, credit risk analysis, and interest rate risk management with swaps, options and futures. The course intends to cover the specific features of the Indian Fixed Income Securities Markets. The course will construct several Excel based techniques to analyze bond cashflows analytics. Course Structure: The course will include lectures, bond cash flows analysis, term paper assignments and class exercises. Contents: Lecture 1: Indian Fixed…

New Century Case Analysis

1. What appeared to be New Century’s strategic objectives? Describe and evaluate the business model the company had adopted to achieve these objectives. New Century Financial Corporation was founded in 1995 went public in 1996 and was also listed on NASDAQ. New Century’s primary goal was to originate and sell subprime mortgages. The main activities of the company included generating, retaining, selling, and servicing home mortgage loans for subprime borrowers who couldn’t get finance from other sources. By 2006 New Century expanded its product range to include fixed-rate mortgages, adjustable rate mortgages (ARMs), hybrid mortgages, and interest-only (IO) mortgages. The products were from the two Company’s divisions of Wholesale Loan Division and Retail Mortgage Loan Division, which was different in…

Financial Markets Study Questions

14.1 What are financial markets? What function do they perform? How would an economy be worse off without them? Financial markets are institutions and procedures that facilitate transactions in all types of financial claims. Financial markets perform the function of allocating savings in the economy to the ultimate demander(s) of the savings. Without these financial markets, the total wealth of the economy would be lessened. Financial markets aid the rate of capital formation in the economy. The economy would be worse of without financial markets for several reasons. Savers would not be able to earn a return on their savings. People who need capital wouldn’t be able to get the funds from other people and so would have to rely…

Are Imf Loans Good Poor Countires

A poor country with a weak government is suffering from shortages in terms of financial resources. Most of its population lives below poverty levels, there is high unemployment, low literacy rate, food shortages, no clean water and due to a combination of drought and lack of technology, no crops to export. As if it didn’t have enough problems, the country has debts to pay back to foreign governments, investors and agencies. This is where the IMF, which Easterly calls ‘the world’s most powerful creditor’, steps into the picture.[1] It was originally set up by the West in order to prevent large trade imbalances and unstable currencies. However, it shifted focus and started bailing out poor countries in financial crises. It…

United States public debt

The United States deficit, surplus, and debt will always have an impact on taxpayers. In the state of high deficit the government seeks ways to cut and save money for debt payment. The government does this by pulling funding from programs that have little government impact. Increasing taxes also supplies the government with extra income. In addition to the reduction or elimination of certain tax credits, the government analyzes school funding for cost effectiveness. Each step the government takes has a trickling effect on taxpayer’s dollar. The Effects of U. S. Deficit, Surplus, and Debt When a surplus exists, the government has extra funds to spare and infuse into the economy. This surplus will increase government programs. When the government has…

Johnson & Johnson

It should be no surprise that there is developing research suggesting that certain organizations that meet the criteria of being compliant or ethical are inclined to perform better in the financial market on fundamental operational metrics, including shareholder buy in and return. The characteristics found in successful businesses are typically the same as businesses that are also labeled as ethical or compliant. Organizations that focus on being accountable, good communicators, consistent, and controlled, generally outperform their peers financially. This is why most organizations have a code of conduct when it comes to legal or acceptable business behavior. Considering industry standards and government law, and in turn creating a code of ethics within a business, can help the organization understand how…

Example Of A Financial Aid Letter Of Appeal

If you have lost your financial aid and need to learn how to write an appeal letter to the Financial Aid committee of your school, it is best to either ask a financial aid counselor that works in your school’s financial aid office or the specific person who sent you your financial aid letter of suspension. Each school may have different requirements but the reasons for the suspension are usually about the same. Most schools already have their own appeals forms but it is also good to send them a personal letter from yourself as well as a letter from a faculty member in your area of study vouching for you that you will strive hard to fix the areas…

Money, Power, and Wall Street

The meltdown of 2008 struck the banks when they were unable to adequately deal with the financial crisis. Banks are designed to create and protect one’s wealth, but they took advantage of the people, and let people take many loaning risks that they couldn’t afford. Banks created the credit default swap which transferred credit of fixed income products between parties. In learning about the credit default swap in class, it is understood that the buyer receives credit protection, whereas the seller guarantees the credit. Therefore, the risk of default is transferred from the holder to the seller of the swap. But swaps allowed companies to shed the risks they didn’t want to take. When the banks first created the swaps,…

Debt Free Speech

Imagine yourself 50 years down the road. Debt free. Ready for Retirement and not worrying about a thing in the financial life. Wouldn’t that be great rather than living like most of the world today. Filled with debt and nowhere near retirement only because they did not save and stay out of debt the correct way. People these days are more in debt than ever. People from the age 41 to 46 are six thousand dollars in debt on average according to money.cnn. Investing 100 a month for 18 months with 5% interst will result in fourty eight thousand dollors when the 18 years is done. If us teenagers started doing that when we get jobs we will be rich…

Personal Budget

When one examines financial success for an individual or business what are the attributes does one inspect? Would you look at the individual’s or businesses’ gross income? Perhaps one can examine the educational level of the individuals to determine their financial success? Or maybe it is the individual’s drive and risk appetite that created their success? Maybe, success can be attributed towards the individual’s ability to design and implement that plan? Ultimately, each one of these questions plays a pivotal role in the success of an individual or business. The purpose of this memorandum is for the couple of Homer and Marge Simpson. Upon initial consultation with Homer and Marge, liquidity was a major concern. Both expressed interest in freeing…