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Investment Essay Topics & Paper Examples

Capital Market

~ Capital market is the market for leading and borrowing of medium and long term funds. ~ The demand for long-term funds comes from industry, trade, agriculture and government (central and state). ~ The supply for funds comes from individual savers, corporate savings, banks, insurance companies, specialized financial institutions and government. *SIGNIFICANCE: ~ A sound and efficient capital market is extremely vital for the economic development of a nation. ~ So, the significance of capital market has increased. ~ The following points clearly bring out the role and significance of capital market in India. i)CAPITAL FORMATION: ~ Capital market encourages capital formation as it ensures speedy economic development. The process of capital formation includes collection of saving effective mobilisation of…

Strategy Explanation Paper

Investment Objective Our investment objective is to seek an abnormal profit in 3 weeks trading period with minimal risk, to achieve Top 3 National position. Investment Strategy In order to achieve our investment objective, we created rule of thumb as follows: •Abnormal profit In order to gain an abnormal profit, we seek a stock with high volatility. Before the competition started, we did a lot of brainstorming, not just within us but within our university mates who also joined this competition. Through that, we learn stocks from various conglomerates group perform better and more volatile than others. We sort our list from Bhakti Group, Bakrie Group, Lippo Group, also Sinarmas. We also learnt that a diversification doesn’t minimize any risk,…

Export Finance in India

Credit and finance is the life and blood of any business whether domestic or international. It is more important in the case of export transactions due to the prevalence of novel non-price competitive techniques encountered by exporters in various nations to enlarge their share of world markets. The selling techniques are no longer confined to mere quality; price or delivery schedules of the products but are extended to payment terms offered by exporters. Liberal payment terms usually score over the competitors not only of capital equipment but also of consumer goods. The payment terms however depend upon the availability of finance to exporters in relation to its quantum, cost and the period at pre-shipment and post-shipment stage. Production and manufacturing…

Caledonia Products Integrative Problem

The following observation will describe the decisions made by a financial analyst who is working for the capital budget department at Caledonia Products. The organization has asked Team B to evaluate the potential risk involved in an upcoming transaction and identify several options in how to proceed. Because this is the team’s first assignments dealing with risk analyzes the team has been ask to further explain the details. The organization analysis will focus on free cash flows, projection of cash flows, projects initial outlay, cash flow diagram, net present value, internal rate of return, and if the project should be accepted. Why focus on project free cash flows Team B believes that Caledonia should focus on the project’s free cash…

Generoso Pharmaceutical & Chemical Inc.

I. TIME CONTEXT After five years of combining the Central Luzon region, in 1978, David established a company called Generoso Pharmaceuticals and Chemicals or GPC with Elizabeth a business associate, Rafael Buenaventura who was a salesman like David. The team set up shop at the Generoso residence in Tarlac. II. VIEWPOINT The Generoso pharmaceuticals and Chemicals Inc. is an industry where selling the Medicine and Drugs etc. that owned by David with Elizabeth and Rafael. The problems of this industry are how to make compete to the other Pharmaceuticals industry, because those days there are many industries that sell the same product, How to make and generate their funds and how low will be stay in the Pharmaceuticals industry. III….

Grand Metropolitan PLC

Company Background and Issues Grand Metropolitan PLC was a multinational holdings company that faced a hostile takeover threat in the late 1980’s and early 1990’s. The company specialized in wine and spirits. The headquarters for operation was in London, England at the time of this case. The major dilemma at hand is avoiding a takeover. The economy was bad at the time, and the company’s stock price was thought to be undervalued, as their low P/E ratio of 13.3 indicated. Management needs to find out why their stock price is so undervalued. A new strategy of Grand Metropolitan’s was to capitalizing brand value on the balance sheet. Another strategy of management was to divest in low growth areas and invest…

Impact of Project Investments on Firm Value

Generally in all decisions concerning investments in capital projects, the management selects only those projects that are expected to contribute a positive net present value. Further the project should be capable of providing an internal rate of return which should be greater than the hurdle rate. (Ross et al 2005) These criteria for the selection of capital projects are considered valuable from the perspective of the evaluation of the capital projects. However the phenomenon of value maximization of the firm is not being focused by these evaluation methods. It may be noted that a project will be considered financially viable only when it satisfies the condition of meeting the evaluation criteria and should also be in a position to provide…

Investment and Risk Tolerance

Question 1: How do the concepts of behavioral finance create opportunities for HelloWallet? The current financial advising sites such as HelloWallet as well as its competitors, such as Mint.com and Yodlee, provide budget and virtual financial advising service based purely on user bank transactions and spending category. The HelloWallet system allows the user to create and track customized budget plan. What is more important is that the system can automatically provide financial advice and saving tips by using data mining techniques. However, HelloWallet and its competitors do not provide any financial analysis and evaluation based on user behavior and their psychographic characteristics, such as user personality, values, attitudes, interests and risk tolerance in terms of willingness. These psychographic classifications are…

Performance Measurement

Nowadays, businesses operate in an uncertain environment and the managers can never know what will happen in the future (Arnold, 2005). Meanwhile, the economic crisis has turned that world upside down; it is a change for ever. The global economy was changed during the past two decades; because of globalization, the firms are not only trade or invest in the company’s domicile, but also trade or invest in other countries. Then management will face a lot of business risk in global economy. There are many different way to define risk; simply, risks are opportunities to be seized. Risk management identifies risks with new opportunities to increase the probability of positive outcomes and maximize returns. The aim of this essay is…

Transformation of Asean Community to Aec and the Effects to Thailand

Recently, the world has experienced financial crisis, those countries that have been powerful and have strong economies such as the members of European Union (EU) such as the United Kingdom, France and Greece, are facing a big financial collapse. So now a new economic community is arising with intense competition because new markets are developing and financial opportunities are sought. Association of South East Asian Nations (ASEAN) is one of significant players in the world’s economy for centuries. It has emerged strongly from the financial crisis offering the new opportunities for investors and businesspeople. The interest and attention of investment are moving to the ASEAN area more and more each year because of the available untapped market in the ASEAN…

Why I Started Working

Job is something that everybody should have in life in order to provide with their needs and goods. In a few paragraphs, I am going to tell you why I started working. A person will usually start working if he or she feels in need. However, I started working for three reasons. The first and most important reason I started working is to save money. Money is everything, without money you can’t do anything in life. Everybody needs to have a safe place to put their savings money. A bank account is a good example of saving money. I save money especially for my emergency funds. For instance, if I get sick or hurt, the money that I save will…

Case Analysis on Capital Structure Pioneer Petroleum

Introduction: This landmark case seeks to break the risk-reward trade off involved in calculating Capital Cost. The object of the solution must be to minimize project risks while maximizing project opportunities available. We want a rate and a rating system that does not unnecessarily reject “the best available projects – i.e. highest net positive free cash-flows at that time.” Particularly in times of excess capacity, this will marginally contribute to increasing company wide yields, but will not necessarily match the company-wide yield imposed by investors. History of the Company and Background of the Case: Sometime in July 1991, one of the critical problems confronting management and the board of Pioneer Petroleum Corporation, hereinafter referred to as Pioneer, is about Capital…

Case Marriot and Flinder Valves

1. Why is Marriott’s CFO proposing the Project Chariot? To improve the financial performance of the firm, by re-structuring the company in two separating activities to distinguish those that require a large fixed assets (Real estates ownership) and those with relative low amount of assets (Management services and others). By dividing in this way, the large amount of debt will go with the real estates ownership called Host Marriott Corp. (HMC), whereas the rest of activities will go to Marriott International (MII). Doing so, the value of the 2 firms combined will exceed this year’s book value, according to expectations (see appendix 1). 2. Is the proposed restructuring consistent with management’s responsibilities? It is, as it clearly separate the activities…

Financial Markets and Return

Problem 1 (BKM, Q3 of Chapter 7) (10 points1) What must be the beta of a portfolio with E( rP ) = 20.0%, if the risk free rate is 5.0% and the expected return of the market is E( rM ) = 15.0%? Answer: We use E( rP ) = β P *(E( rM ) – r f ) + r f . We then have: 0.20 = β P *(0.15-0.05) + 0.05. Solving for the beta we get: β P =1.5. Problem 2 (BKM, Q4 of Chapter 7) (20 points) The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will…

Ict Procurement Trends in the Uk

This report presents the findings from a survey of 136 UK enterprises regarding their approach to Information and Communication Technology (ICT) procurement. The survey investigates the way that UK enterprises like to purchase technology, as well as the major IT and business objectives influencing their IT investment strategies. Introduction and Landscape Why was the report written? To highlight the criteria on which UK enterprises select their IT providers as well as the roles which have influence while making IT purchasing decisions. What is the current market landscape and what is changing? UK enterprises are set to increase their IT spending in 2013. Kable’s survey shows that ICT spending in the UK is being driven by investments in core technology areas…

Financial management

Q1. What are the goals of financial management? Ans. Financial management means maximization of economic welfare of its shareholders. Maximization of economic welfare means maximization of wealth of its shareholders. Shareholder’s wealth maximization is reflected in the market value of the firm’s shares. Experts believe that, the goal of financial management is attained when it maximizes the market value of shares. There are two versions of the goals of financial management of the firm- Profit Maximization and Wealth Maximization. Profit maximization Profit maximization is based on the cardinal rule of efficiency. Its goal is to maximize the returns with the best output and price levels. A firm’s performance is evaluated in terms of profitability. Profit maximization is the traditional and…

Stock Market and Economic Growth

Abstract This paper investigates the causal relationship between stock market development and economic growth for Germany for the period 1965-2007 using a Vector Error Correction Model (VECM). The purpose of this paper was to examine the long-run relationship between these variables, applying the Johansen co-integration analysis based on the classical unit roots tests. The results of Granger causality tests indicated that there is a unidirectional causality between stock market development and economic growth with direction from stock market development to economic growth. Keywords: Stock market; Economic growth; VAR model; Granger causality. 1. Introduction Stock market development has been the subject of intensive theoretical and empirical studies [1, 2]. More recently, the emphasis has increasingly shifted to stock market indexes and…

Assessment of the Future Financial Health of the Company

An assessment of the long term financial health of the firm is an important task for outsiders like chartered accountants, creditors, borrowers, banks, financial institutions, public and shareholders considering the extension of credit and for insiders in their formulation of strategy. History abounds with examples of firms that embarked upon properly ambitious programs and subsequently discovered that their portfolio of programs could not be financed on acceptable terms. The outcome frequently was the abandonment of programs in mid stream at considerable financial and organizational cost to the company, its vendors, its employees, and/or its creditors. A necessary first step in the evaluation of a firm’s financial health is the development of a comprehensive series of questions. It is possible to…

Berkshire Partners: Bidding for Carter’s

1. Berkshire brought expertise in finding the right financing structure and operational and strategy related to the retail and manufacturing industry. Berkshire managers believed that the equity portion of a capital structure should be at least 25% to order to achieve the desired results as far as return and to show true commitment to the lending base. When determining the capital structure, they also seriously took into account such questions as: Is this the appropriate amount of leverage for a business of this type; what do the rating look like; how difficult will it be to get financing and what about financing costs? Once Berkshire had taken an equity position in a firm, Berkshire would help the firm management by…

Foreign Direct Investment Confidence Index

The Foreign Direct Investment (FDI) Confidence Index influences a business’s future decisions for ventures on foreign soil. Businesses use the index to compare countries for the most and potentially best prospective investment in order to profit from expansion. The FDI Index lists the top countries that are projected to be the most compelling to directly invest in fixed and variable assets in order to achieve management control (Ball, Geringer, Minor, & McNett, 2010). According to Ball, Geringer, Minor, and Mcnett (2010) in International Business; The Challenge of Global Competition, “if a nation is continuing to receive appreciable amounts of foreign investment, its investment climate must be favorable.” Through analysis of projected countries for foreign investment, a company can determine if…

Worldwide Paper Company

Bob Prescott, the comptroller for the Blue Ridge Mill, was weighing the pros and cons of adding a new-on site longwood woodyard. Two primary benefits for this new addition include eliminating the need to purchase shortwood from an outside supplier and creating an opportunity to sell shortwood on the open market. Also, the new woodward would reduce operating costs and increase revenues. Blue Ridge Mill currently purchases shortwood from the Shenandoah Mill, which is a direct competitor. If Blue Ridge Mill decides to utilize longwood woodyard then the company would decrease its WACC from 15% to 9.77%. Blue Ridge Mill can then make better investment decisions with a lower WACC. The new woodyard would begin in 2008 where an investment…

Sources of Internal and External Finance

All businesses need money to function sufficiently. Where this money comes from is defined as sources of finance. There are two different types of sources of finance: internal (capital from inside the business) and external (capital from outside the business). New businesses starting up need money to spend in long-term assets such as premises and equipment. They also need cash to pay for materials, pay wages, and to pay the day-today- bills such as water and electricity. In-experienced entrepreneurs often underestimate the capital needed for the everyday running of the business; this is the reason many businesses fail due to cash flow issues even when profitable. Internal sources of finance can be found in existing capital of the business, which…

Enginineer Economic and Costing

The HKSAR government announced to the public on 24 October 2006 that the former site of Hong Kong International Airport (Kai Tak Airport) would be redeveloped as an international cruise hub. The whole project included two sub projects, “Site formation” and “Cruise terminal and ancillary facilities building”. In project costing Inflation factor is applied as refer to government inflation index in 2009 (2%) and 2010 (2.7%). As the reason of project postponed, the total cost increased nearly one billion dollars compared to the original plan due to retendering and ASD government requirements. Within project costing considerations, maintenance cost in cash flow out is estimated to be roughly 221.9 Million per year from 2013. For project revenue, two main factors based…

Exploring the Concept of Project Appraisals

Project appraisal is a generic term that refers to the process of assessing, in a structured way, the case for proceeding with a project or proposal. In short, project appraisal is the effort of calculating a project’s viability.[1] It often involves comparing various options, using economic appraisal or some other decision analysis technique. Or in other terms it is Systematic and comprehensive review of the economic, environmental, financial, social, technical and other such aspects of a project to determine if it will meet its objectives. Project appraisal is a structured, systematic and a comprehensive process to assess the financial, economic, social, environmental and technical viability of a project. The quality of the project appraisal is the main determinant of success…

Investment strategy

Adams discontinuity based investment strategy revolved around making investing in companies which were in in the process of or on the fore of exploiting dramatic and sudden changes in well developed markets. Adams focused on both discontinuities and a targeted investment strategy in his search for above average returns. Adams operationalized his discontinuity based investing method by hiring only engineers as partners, leveraging their technical training in the search of promising markets in which to invest. Overtime ACM’s investment focus evolved to focus on markets which he and his partners were already relatively familiar with and had already recognized as attractive. From a Limited Partner’s perspective Adams strategy in comparable to a growth-investing strategy many fund managers implement in the…

Economic Development of India

The capital market is the market for securities, where Companies and governments can raise long-term funds. It is a market in which money is lent for periods longer than a year. A nation’s capital market includes such financial institutions as banks, insurance companies, and stock exchanges that channel long-term investment funds to commercial and industrial borrowers. Unlike the money market, on which lending is ordinarily short term, the capital market typically finances fixed investments like those in buildings and machinery. Nature and Constituents: The capital market consists of number of individuals and institutions (including the government) that canalize the supply and demand for longterm capital and claims on capital. The stock exchange, commercial banks, co-operative banks, saving banks, development banks,…

Is Coca Cola the Perfect Business?

A. One of the most important skills to learn in managerial economics is the ability to identify a good business. Discuss at least four characteristics of a good business. Based on the article about Coca-Cola, there are five essential characteristics of a business for it to be considered as a “Good Business”. First, it should be appealing to both young and old alike. Second, it must have a distinct characteristic which cannot be easily imitated by others. Third, it must already made an impact to the market because it has already earned a large portion of market share. Fourth, profit margin and rates of return should be high. And Lastly, it must have a competitive advantage or economic moat. Appealing…

Lockheed management

We examined the decision to invest in the Tri-Star project by forecasting the cash flow associated with the project for a volume of 210 planes. We also asked what a valid estimate of the NPV of the Tri-Star project at a volume of 210 planes as of 1967 would be. We found this to be -$584 M. This was clearly an unacceptable NPV for capital budgeting on the project. A break-even analysis revealed that the project reached economic break-even with the production of 275 planes at $12.5 M per unit but did not reach value break-even at that level of production. Despite industry analysts predicting 300 units as Lockheed’s break-even sales point, at this level, net present value remained insufficient…

O’Grady Apparel Company

Analyzing Risk and Return on Chargers Products’ Investments Junior Sayou, a financial analyst for Chargers Products, a manufacturer of stadium benches, must evaluate the risk and return of two assets, X and Y. The firm is considering addng these assets to its diversified asset portfolio. To assess the return and risk of each asset, Junior gathered data on the annual cash flow and beginning-and end-of-year values of each asset over the immediately preceding 10 years, 1997-2006. These data are summarized in the table below. Junior’s investigation suggests that both assets, on average, will tend to perform in the future just as they have during the past 10 years. He therefore believes that the expected annual return can be estimated by…

Weighted Average Cost of Capital and Wide Hurdle Rate

1) How does Teletech currently compute its hurdle rate and how does it evaluate risky projects? What is wrong with this method? Teletech computes it’s hurdle rate by averaging the past 10 years annual weighted average cost of capital (WACC) rates, and then “massaging” the result into a round percentage. This is not an ideal way to calculate the hurdle rate as it reflects rates of financing from the past when borrowing rates were in different ranges. Teletech evaluates risky projects by determining if the present value ratio is greater than 1 (PV inflows/PV outflows). Projects that had a ratio of greater than 1 are given further consideration but those that fall below 1 are summarily dismissed. The firms used…