Trust Deed Affects Credit Rating

Trust Deed Affects Credit Rating
Will a Trust Deed affect my credit rating?
Yes, a Trust Deed will remain on your credit file for 6 years– or until it completes, in the unlikely event that it lasts longer than six years. Any default
notices that are received after your Trust Deed is signed, can be back–dated to the date of signing, so they will only stay on your credit file for a
maximum of 6 years from the date your Trust Deed is signed.
Is there a minimum debt level for a Trust Deed?
Yes, you need to owe a minimum amount of ВЈ5,000 to your unsecured creditors. Any secured loans (such as mortgages and hire purchase) are not
included in this amount. Similarly, student loans and Court Fines cannot be included in a Trust Deed.
How long will it take to set up a Trust Deed?
The timeframe to set up a Trust Deed varies depending on your individual circumstances. However, on average it will take between 8–10 ... Show more
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Can I borrow money whilst in a Trust Deed?
It is advisable not to take out any further credit. However, in some circumstances this is unavoidable. We would always advise you to discuss this with
us before taking out any further credit.
Any credit taken out after you have signed the Trust Deed will not be included within your Trust Deed as a debt– and you will then have to make the
monthly payments to this debt separately out of your income. It may be difficult to make the monthly Trust Deed payment and repay this debt at the
same time – which could lead to difficulties.
It is likely that any credit taken out once you're in a Trust Deed will attract a high interest rate, as your credit rating will be adversely affected while
you are in the Trust Deed. With any credit taken out after the Trust Deed is signed, the creditor could still take legal action against you if you were to
fall behind with payments.
What happens after I complete my Trust
... Get more on HelpWriting.net ...

Deluxe Corporation: Recommendations for the Company's...
Case #35
Deluxe Corporation
Synopsis and Objectives
In July 2002, an investment banker advising Deluxe Corporation must prepare recommendations for the company's board of directors regarding the
firm's financial policy. Some special considerations are the mix of debt and equity, maintenance of financial flexibility, and the preservation of an
investment–grade bond rating. Complicating the assessment are low growth and technological obsolescence in the firm's core business. The purpose is
to recommend an appropriate financial policy for the firm and, in support of that recommendation, to show the impact on the firm's cost of capital,
financial flexibility (i.e., unused debt capacity), bond rating, and other considerations.
This ... Show more content on Helpwriting.net ...
4. Using Hudson Bancorp's estimates of the costs of debt and equity in case Exhibit 8, which rating category has the lowest overall cost of funds? Do
you agree with Hudson Bancorp's view that equity investors are indifferent to the increases in financial risk across the investment–grade debt
categories? 5. Is Deluxe's current debt level appropriate? Why or why not? 6. What should Singh recommend regarding: * the target bond rating * the
level of flexibility or reserves * the mix of debt and equity * any other issues you believe should be brought to the attention of the CEO and the board
Epilogue
On August 5, 2002, Deluxe Corporation announced plans to raise its debt level to $700 million. During a subsequent conference call with analysts,
Deluxe Corporation's chief financial officer (CFO), Douglas Treff, said:
We ... believe Deluxe is underleveraged. We believe our steady cash flows put us in a position to increase our debt level up to $700 million and still
maintain a strong investment–grade rating. The use of debt will lower our overall cost of capital and as a result increase returns on capital invested.
We expect that the debt will be a combination of both long– and short–term borrowings.
The company also announced a plan to repurchase up to 20% of Deluxe Corporation's stock, or 12 million shares. "At current prices, we believe the

repurchase of

Diageo Essay
Diageo Case
1. How has Diageo historically managed its capital structure?
Diageo sought to maintain the low–debt (conservative) financial policies of the Guinness and Grand Met with goals to keep * its interest coverage
ratio (EBITDA / Interest Payments) between 5 and 8 and * its EBITDA / TotalDebt around 30–35%
Although not quite as conservative as other UK firms (with Equity/Assets ratios of 42%), it was successful in achieving these goals and retaining a
credit rating of A+ (a rough average of Guinness' AA and Grand Met's A ratings) by re
–levering the firm via * issuance of debt to repurchase and retire
shares in fiscal years 1998 and then again in 1999 * and ensuring that cost of capital was managed down at ... Show more content on Helpwriting.net ...
The selling of Pillsbury would ensure Diageo 33% ownership of the General Mills/Pillsbury business without active managerial involvement and the
Burger King spin off allowed floating of shares without tax penalties. In general, divesting of Diageo's non–core business allowed for infusion of
capital that allowed new internal investments and external acquisitions in businesses that can be more easily integrated to Diageo's core competencies
and can generate growth in stable, top–line revenues that are more reflective of the industry cost of capital.
However, it should be noted that Diageo's Food and Fast Food segments had relatively stable cash flows similar to its Alcohol segments; the food
segments even exhibited higher average ROA over time than industry samples (~19.8 to 21.0% vs. 15.4%). However, volatility is lower for the
industry sample than Diageo's food segments although that may be reflective of the much smaller sample size for calculating Diageo's ROA.
4. Based on the results of the model, what recommendation would you make for Diegeo's future capital structure? How might you adjust the
recommendation from the model to adjust for any missing risk factors?
In generating countless Monte Carlo scenario outputs for tax shield gains vs. cost of financial distress, the model simulates

Goodrich-Rabobank Interest Rate Swap Essays
Goodrich–Rabobank Interest Rate Swap
1. How large should the discount (X) be to make this an attractive deal for Rabobank?
2. How large must the annual fee (F) be to make this an attractive deal for Morgan Guaranty?
3. How small must the combination of F and X be to make this an attractive deal for B.F. Goodrich?
4. Is this an attractive deal for the savings banks?
5. Is this a deal where everyone wins? If not, who loses?
Introduction:
Players: Morgan Bank, Rabobank, and B.F. Goodrich, Salomon Brothers,
Thrift Institutions and Saving Banks
Goodrich:
In early 1983, Goodrich needed $50 million to fund its ongoing financial needs. However, Goodrich was reluctant to borrow (short term debt) from its
... Show more content on Helpwriting.net ...
Also, Rabobank had never borrowed in the Eurobond market prior to the deal with Goodrich, and Morgan. Since Rabobank conducted only small
amount of dollar based business, and most of the dollar denominated assets were loans whose rates floated with LIBOR. Historically,
Rabobank was able to fund these loans through the following:
В· Interbank deposits at LIBOR.

В· Prime Eurodollar CD?s.
This was the first time that Rabobank would venture into the Eurobond market. Note: Because of Rabobank?s AAA rating it would be able to borrow
in the Eurodollar market at very competitive rates.
Morgan Guaranty Bank:
Morgan acted as an intermediary guarantor between the Goodrich, and
Rabobank to implement the swap. Morgan was merely agreeing to act as a conduit assuming no default payments. In fact, if Goodrich defaulted it
could not collect the floating rate stream from Morgan. The swap was a two way or no way transaction. This was true for the bilateral agreement
between Rabobank, and Morgan also.
Morgan had an AAAcredit rating, and an international reputation, this guarantee effectively lowered whatever credit risk might have otherwise been
present in the swap agreement to acceptable levels for
Rabobank.
In commissions, Morgan received an initial one time fee of
$125,000.00, and an undisclosed annual fee for each of the next 8 years. The going rate for

Discuss the Causes of the Sub-Prime Crisis and the Parties...
Discuss the causes of the sub–prime crisis and the parties responsible for such a crisis.
Sherman Oh E S
Principles of banking & finance (PBF)
Mr Marvin Ang
26th January 2013
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 ... Show more content on Helpwriting.net ...
A rating agency was required find out the creditworthiness of an investment. This can apply to any company, bank, government or an investment.
There were namely 3 famous rating agencies involved in the crisis namely, Standard & Poor's (S&P), Moody's, and Fitch Group. To give
an example of a rating would be like the big internet search company "Google" would be given a rating like AA+ i.e. a high grade. Many of these
CDOs however were given good ratings such as AAA+ the highest rating possible given by any rating agency. These CDOs did not deserve the
rating as the CDOs were made of mortgages of lenders who were unable to pay their mortgage. The reason for such a high rating was simple. In the
past, rating agencies were paid by the buyer to rate the assets they were going to invest in. In 1970s however, the systems changed and now it was the
seller that was paying the agency for the ratings, on a per–rating basis. This gave incentives for rating agencies to rate more and be more generous in
their rating. A conflict of interest rose and rating agencies were now earning large amount of profit for these CDOs. They were more then happy to
rate them. Moody's earned nearly US$1 billion a year from rating in 2005 and 2006. With an average of $300k per rating why wouldn't they want to
rate more? Aside from that, they had to give a good rating due to

Credit Rating Agencies Essay
1.1 History of Credit Rating Agencies
Credit rating agencies (CRAs) have been playing a significant role in financial markets around the world since the beginning of the twentieth century.
The industry of credit rating originated when John Moody, a Wall Street analyst and the institutor of one of the biggest CRAs in present day,
introduced a system of credit rating for railroad bonds by publishing "Moody's Manual of Industrial and Miscellaneous Securities" in 1909. Until today,
there are now approximately 150 CRAs operating around the world.
Despite the fact that CRAs are now a crucial element in financial markets, it has not always been the case. There was an explanation that financial
markets were well operated prior to the existence of the CRAs in the United States. Since the early of the seventeenth century, the Dutch Republic
already had in place all fundamental components of a modern financial system including securities markets, a banking system, a central bank, a stable
money and a strong public credit. Influenced by the Dutch Republic, England also managed to have all such elements in the late seventeenth century
and subsequently, the United States had all components in the last decade of the eighteenth century. It can be seen at that time that financial markets
were already functioned properly without the existence of CRAs because investors had confidence in the governments that issued public bonds. Most
investments in Europe during the nineteenth century

Financial Innovation Is Constantly Reshaping The World
Financial innovation is constantly reshaping the world. However, the subprime crisis since 2008 has drawn great attention all over the world,
highlighting the limitations and hazards of financial innovation. The financial turmoil began in the United States, at which time, the subprime
mortgage lenders were going bankrupt, investment funds were forced to close and the value of the stock declined significantly. According to
SГЎnchez, the Deputy Governor of Mexican Central Bank, the subprime crisis since 2008 was mainly caused by the phenomenon that the innovation
of many complex financial instruments were extensively used without appropriate regulation (SГЎnchez, 2010). As financial innovation involves a
large number of products and cannot analyze all of them, this essay will only focus on MBS, which has been one of the most important and
widely–used financial innovation since the 1960s. By the end of 2006, the total amount of MBS was $6.4 trillion, 49% larger than the market for
Treasury debt (Fabozzi, Bhattacharya and Berliner, 2010).
Although MBS is only one form of financial innovation, this essay aims to demonstrate that it was a major contributory factor to the subprime crisis
in 2008. The first part will introduce the background of MBS, then analyze the reason for the subprime crisis. After that, it will find out problems the
financial crisis exposed. Finally, it will recommend building a regulatory system to reduce the risk of MBS. It will be argued in this essay that

Bad Credit Rating
Credit Repair Tips – How to Fix Your Bad Credit Rating
By Lisa Brewster | Submitted On May 27, 2011
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Do you have a bad credit rating and are not sure how it happened? You are not alone. Possibly millions of Australians have a bad credit rating, and
many of us are unaware we have black marks against our name until we apply for credit and are flatly refused.
What is a bad credit rating?
A bad credit rating is generally ... Show more content on Helpwriting.net ...
Then the credit repairer negotiates with the creditor who initiated the listing on our behalf to remove the default.
This can also often involve lengthy requests and submissions of documentation until an agreement is reached by the creditor and the repairer to remove
the offending black mark.
Not every credit file is suitable for credit repair. The credit repair company can review our situation and determine whether our case is worthy of
pursuing.
It is advised to research the company and ensure they are a reputable credit repairer before we outlay any money. The best way of knowing we are
dealing with a professional repairer and not a professional con artist, is to check these things:
Can we verify their street address?
Are they an Australian company in Australia?
Do they publish their costs?
Are we required to pay the full costs up front?

Do they provide testimonials from past clients?
A reputable credit repair company (the good ones) will be well worth our investment because they will be up front about what they can do for us. If
and when they do remove our black marks – we will have back the financial freedom we

The Implementation Of Credit Rating Agencies
Credit Rating Agencies (CRAs) have also been blamed for their role in promoting risk taking behaviour. The Basel II Accord (2004) also gave CRAs
a major role to play in financial markets. The complexity of MBSs and CDOs increased overtime, making it difficult for the agencies to assess their
risk accurately. They underestimated the complexity of these mortgages and were slow in downgrading the ratings during bad times, so that their
ratings misled the market participants.
Overtime, various institutions made loans without verifying income and offered floating rate mortgages with payments that were affordable only
initially but increased greatly overtime. Subprime lending became a norm rather than an exception. Eventually borrowers ... Show more content on
Helpwriting.net ...
The structure had always carried the risk of the crisis going global. Investor confidence stumbled globally, the negative sentiment spread throughout the
market and no one wanted to buy these securities, leading to a crash in their prices. Banks, having to use Mark–to–Market accounting practices, were
forced to write–down losses on these securities into their balance sheets. This resulted in large losses across the banking industry in the third and
fourth quarters of 2007 (Tiller, 2010). Bear Stearns finally collapsed on March 16, 2008 and was later sold to JP Morgan Chase.
Lehman Brothers, one of the major investment banks in the US, held massive amounts of CDOs and MBSs in their portfolio and was therefore nearing
bankruptcy. The CRAs gave thebank the ultimatum to find a buyer or else face a cut in its ratings. Lehman Brothers ultimately filed for bankruptcy on
September 14, 2008 due to its inability to raise capital or find a buyer. They had expected that the government would bail them out but that did not
happen. This came up as the first big blow to the financial markets.
There was another instrument that aggravated the whole situation. These were the unregulated, over–the–counter derivatives, including Credit Default
Swaps (CDSs), that were sold as an insurance against default on MBSs. AIG sold huge amounts of these insurance policies, without having enough
money to back them up when

Freeport Mcmoran Case Study
1. Introduction
Freeport–McMoRan also called Freeport or FCX in New York Stock Exchange, operates in exploration, mining and refining of ore containing copper,
gold and silver. Freeport's synergy in creating the world's largest publicly traded natural resources was initiated through the merger and acquisition
(M&A) transactions. Investment banks, J.P. Morgan and Merrill Lynch play a key role as a financial assistance to advice Freeport in the merger
and acquisition transactions. On November 19, 2006, media announced that Phelps Dodge (PD) is to be acquired by Freeport. This opportunity will
eventually benefit Freeport in the future growth, given that PD is known as world's leading producer of molybdenum–based chemicals and ... Show
more content on Helpwriting.net ...
of outstanding shares) + (short–term debt + long–term debt + capitalized leases + preferred stock – cash on hand)
= ($119.72 x 203.5 million) + $(33.7 + 770.1 + 0 + 0 – 4947.4) million = $20.2 billion * EV/Sales
= ($20.2/$11.91) billion = 1.7 * ROE
= Net income/shareholder's equity
= $3017.8/$7690.4 = 39.24%
Theoretically, with the results of the P / E multiples, the company's value or performance can be determined by multiplying the company's profit with
this ratio upon the target company. Phelps's P/E multiples have increased from the previous quarter in which attract companies' attention for
acquisition. Higher P/E means PD use stock as consideration more frequently. In addition to positive EV/Sales, it shows that Phelps has more debt
rather than cash. However, the growth of Phelps' P/E targets a good prospect in future earnings. For ROE, as higher the return is better so, with this
ROE, FCX can use it to compare the other companies.
3. Question 2 c. Along the M&A activity centered around Freeport, J.P. Morgan and Merrill Lynch were involved in nearly all acquisition
processes up to capital raising. Each of investment banks has coverage, M&A and capital market teams, sit as a financial assistance and
responsible for all of the due diligence and valuation work. Looking more closely, the metal and mining industry coverage

UST Case Solution Essay
Key Issue: Is $1b appropriate to enhance UST's firm value and ultimately shareholder value?
Higher leverage is very likely to create value for a firm considering capital structure change by exerting financial discipline and more efficient corporate
strategy changes.
Before evaluating whether $1b is value enhancing in quantitative measure, ability to cope with pre–requisite interest payment and potentially dividend
payment (possibly dividend growth maintenance) should be considered.
Required debt rate and pro forma income statement
Risk determinants
Credit rating agencies take a wide range of factors – debt raising purpose, industry outlook, corporate profile and financial measures into account when
performing corporate bond ... Show more content on Helpwriting.net ...
Pro–forma income statement and interest payment ability
Pro–forma income statement to illustrate interest and dividend payment ability is based on various assumptions as shown in Exhibit 1. Expected cases
are the measures used in the following discussion. Conservatism is adopted throughout the assumptions especially sales growth rate, credit rating and
Medicaid penalty assumptions.
Pro–forma income statement and key credit rating determinants are shown in Exhibit 2 and 3 respectively. Remaining share no. of 158.3m after
repurchase is based on proportional value addition distribution between cash–out and remaining shareholders and this number is inserted to calculate
earning per share and corresponding immediate share price change after announcement of repurchase program. According to Exhibit 3 and industrial
average of relevant grades, only fund flow/ total debt and total debt/ capital measures are not comparable with A credit rating. Considering EBIT and
EBITDA interest coverage are two most important criteria and equity market value is so substantially different from book value which leads to a healthy

Diageo Plc
1. How has Diageo managed its capital structure? Do you agree it is conservative?
Diageo was born as the result of merging Grand Metropolitan plc and Guinness plc. Since the beginning the newly formed company maintained
conservative financial policies inherited from the two parent companies; and in general from the British financial management style. There are many
indications that confirm that Diageo has managed its capital structure using a conservative approach. Firstly, it is worth mentioning that the company
has maintained levels of debt way below its capacity to repay, maintaining the EBIT/interest ratio above optimum levels
Secondly, we can see that the credit rating of the company is A+, practically an average of what the parent ... Show more content on Helpwriting.net ...
2. How would you apply the Equilibrium Theory to Diageo in order to determine the firm's capital structure policy? Would this analysis result in
Diageo being a firm with high or low leverage capacity?
Applying the equilibrium theory to Diageo we can segregate the scale into "benefits of debt" and the "costs of debt". The analysis of each component
of the theory is as follows:
Benefits of debt:
Tax savings – Based on the calculations provided in the case it can be estimated that Diageo has the capability to borrow more debt to some extent
without losing it credit rating. This additional debt (if required) will bring additional tax savings in the future (given that Diageo will be able to
maintain positive earnings). It is also important to note that the marginal tax rate of 27% will substantially contribute towards the savings.
Management discipline – Diageo's management has maintained a strict proportion in terms of debt and equity thereby not borrowing capital
aggressively to alleviate the value of company on pretense. They have paid out dividends in a regular manner in the range of 35–38% of the operating
profit.
Costs of debt:
Bankruptcy cost – The financial statements of Diageo indicate that they have been able to generate steady cash flows and that revenue volatility has
been low. A careful analysis of the case also

What Was the Main Cause of the Financial Crisis in 2007-2009?
The intention of this essay is to provide an in depth and critical analysis of the financial crisis that took place between 2007–2009, in particular
focusing on some key issues raised by the Foote, Gerardi and Willen paper 'Why did so many people make so many Ex Post bad decisions?' Whilst
there were many contributing factors, it is clear that a specific few played a particularly dominant role, primarily the 'Bubble Theory', irresponsible
regulation, toxic CDO's and $62 trillion of CDS's.
'That's what bubbles are: they're examples of mass delusions' (Norcera, 2011). Bubble theory's are by no means a new school of thought, in fact they
date back to the Dutch Tulip bubble in the 1630's and it is these types of bubble that are believed, by ... Show more content on Helpwriting.net ...
Even the largest of investment banks such as Goldman Sachs and Morgan Stanley were so confident in their products that they too maintained large
holdings of 'super senior' tranches on their balance sheets, thus wiping billions of dollars of their balance sheets too. However whilst it is true that the
bankers over zealous nature and thirst to maximise profits lead to the breaching of standards and forfeit of reliable credit checks, they were still
allowed to do it. This leads to the plausible involvement of the credit rating agencies and the Governments lack of regulation and in some cases
irresponsible regulation.
A major concern surrounds the actions of US credit rating agencies, namely Standard & Poor and Fitch. Whilst they may not have anticipated the
financial crisis, they, to a large extend suffered from institutional failure. The mathematical models that had been developed and used by the credit
rating agencies were inadequate to deal with and provide accurate data concerning the riskiness of sub prime mortgages. The mathematical modelling
teams continued to use traditional out–dated 30 year mortgages to asses the likelihood of default. Mortgages issued after 2004 were based on a
different credit rating tool, know as FICO. A FICO score takes into account 5 factors to help determine a borrowers credit risk, length of credit history
and the various types of credit used, the current

The Subprime Mortgage Crisis Devastated From The Global...
Writing Assignment #2
Financial Market
Yuxue Zhang
The 2008 subprime mortgage crisis devastated from the global financial market. People believed that the "Big Three" credit rating agencies played a
significant role at various stages in the crisis. The Reuters, in an article published in 2011, even claimed that credit rating agencies triggered the
financial crisis. The Reuters believed that Moody's Corp and Standard and Poor triggered the worst financial crisis in decades by downgrading the
rating on complex mortgages securities triggered the worst financial crisis in decades. However, the problems of rating agencies have existed for
quite a long time and accelerated the crash down in some extend. In my opinion, despite the significance of the "trigger", the credit rating agencies
served as the "catalyst" for the crisis by inducing the investor to enter under–served markets. First, there is too much trust and investors are over
confident about the rating from the "Big Three". Rating agencies are remarkably profitable businesses, and they exhibit exceptional influential in the
global financial market. As the global capital market grows rapidly, investors seek trustworthy and standardized tool to help their investment decisions.
Therefore, when Moody first introduced the rating system in his "Moody's Analyses Railroad Investment", the system gained recognition quickly and
became popular to investors. When problems of credit risk quickly escalated as financial market grew,

List Of Descriptive Statistics Of Rate, The Index (...
Table 4 summarises descriptive statistics of RATE, the un–weighted (weighted) risk disclosure index (RDI) as well as SSB for all bank fiscal years, as
well as for each of the eight firm years investigated, separately from 2006 to 2013. Table 4 shows a number of remarkable outcomes. First, it reports
that there is a high amount of variation in ratings between banks. For instance, RATE ranges from a minimum of 1 (Default) to a maximum of 19
(AA– which mean very high credit quality) with the median RATE 14.12 (Good credit quality) that indicate most banks in MENA have good
rating, but there has been a continuous decreases in ratings during 2008 and years after which reflects the impact of continues crises beginning
with GFC in 2007 and credit crunch in 2010. For instance, the average banks ratings is 14.4, 14.29, 14.09, 13.77, 13.69 and 13.84 in 2008, 2009,
2010, 2011 and 2012, but RATE begin to increases in 2013 which indicates recovery in MENA banks from GFC crisis effects. Finally, there is evidence
that the level of listed bank RATE before GFC is higher than during and after GFC. Insert Table 4 about here Table 4 shows a high variation degree in
risk disclosures between MENA banks. For example, un–weighted RDI ranges from a minimum of 1 (1.04%) to a maximum of 84 (87.50%) with the
mean banks disclosing 56.24 (58.58%). Risk disclosure level (percentage) indicate a significant level of discretion in the bank management 's decision
regarding risk disclosure level which are

Deluxe Corporation Case
[pic]
By: Michael Malone
Statement of the Problem Rajat Singh, a managing director at Hudson Bancorp, needs to find a way to rejuvenate the paper check corporation. One
main part that needs to be calculated is the appropriate mixture of debt and equity for the firm. The company needs to determine the correct mixture so
that they can both minimize the cost of capital and increase the shareholders value. I will analyze the current and future situation of the company, trying
to find the correct credit rating to use that will increase income. With the new credit rating, I will be able to recommend a certain amount of debt for the
company to take on and be profitable.
Facts and Assumptions When trying to accurately calculate the cost ... Show more content on Helpwriting.net ...
Analysis Using CAPM to provide the calculation for the equity, this presents both positive and negative effects.
Advantages
1. Calculates the amount of compensation the investor demands for taking additional risk 2. Compares the returns of the asset to the market over a
period of time (Beta)
Disadvantages
1. Based on historical data onto the future (Beta is an estimate) 2. Simplifies assumptions about the market and how investors will actually behave.
Taking the CAPM equation, we were able to figure out eh cost of equity and in its credit range CAPM = Rf + (Rm–Rf) ОІ
=3.45%+(11.03%3.45%)*0.85
CAPM= 9.89%
With this, we can then find each of the costs for equity by averaging them within each of the bond rating categories. This showed a very flat
performance in cost of equity. I we compare that to the market beta, our answer for CAPM would change from the 9.89% to the 11.03%. According
to exhibit 8 in the case, a cost of equity of 11.03% is between a BBB and BB bond rating. Therefore, if they were to repurchase stock from investors,
there share prices would in theory go up because they are investing more and more money into the company. With the three debt instruments in the
case, hundreds of millions of dollars would become readily available to the company and be at their disposal. Each of the financing opportunities
provides their own money in different forms. Great companies need these different financing ideas to

Managing Accounts Receivable, An Essential Part Of...
Financial managers have typically been involved in the high–level decision making regarding the financial health of a company. However, the function
of the financial manager has changed over time to include more detailed aspects of the company's cash flow, including accounts receivable. Accounts
receivable is vital to a company's cash flow operations, if you cannot collect the money from your customers, you cannot pay for materials, expenses,
or employees. If your customers are not paying on time, or not paying whatsoever, a business will inevitably lack the cash flow it requires to pay its
own expenses. Consequently, it is essential for companies to have comprehensive policies on the managing of their accounts receivable because it has
proven to be an essential part of business activities. The management of accounts receivable has a direct influence on shareholder value, on the
capability of a company to meet its short–term obligations, such as, paying expenses and creditors. This paper will address how to effectively manage
accounts receivable, by use of a credit policy and why it so critical.
Credit policy refers to procedures that outline how the company will determine which customers are extended credit and how much, the credit terms,
the thresholds to establish on unpaid balances and how to manage delinquent accounts. A company should have a comprehensive, practical, and reliable
credit policy established, prior to offering credit to its customers.
The amount

Ust Case Solution
Key Issue 2: Is $1b appropriate to enhance UST's firm value and ultimately shareholder value?
Higher leverage is very likely to create value for a firm considering capital structure change by exerting financial discipline and more efficient corporate
strategy changes.
Before evaluating whether $1b is value enhancing in quantitative measure, ability to cope with pre–requisite interest payment and potentially dividend
payment (possibly dividend growth maintenance) should be considered.
Required debt rate and pro forma income statement
Risk determinants
Credit rating agencies take a wide range of factors – debt raising purpose, industry outlook, corporate profile and financial measures into account when
performing corporate ... Show more content on Helpwriting.net ...
UST dividend payment ability can be hampered given the following risk factors: anti–trust dispute is resolved in favor of competitors and UST is
subject to further penalty, corporate restructuring or new entrants are encouraged to enter the moist smokeless market; management's continued
lackluster non–core investment performance further harms the company's return over investment; Price value further prey market share of premium
products while premium R&D is not catching up with the pace.
Valuation enhancement and alternative options
Valuation enhancement
Management considering share repurchase program should weigh its benefit of financial discipline, efficient corporate strategy implementation and
utilization of tax shield against the downside of cost of financial distress. It's not the possibility of bankruptcy that causes concerns among equity
holders regarding extent of leverage but the direct costs (legal, liquidation, administrative etc.) and indirect costs (deteriorated corporate image,
management time and attention, agency costs of value–destructing investment, distress asset sales etc.). Exhibit 4 lists the key assumption inputs of
approximating quantitative firm value/ equity value accretion. Levering UST to a larger extent by adding $1,000m does increase firm value.

Valuation addition distribution
However, additional analysis should be done to differentiate value distribution of $328.9m in the case of levering up $1,000m between cash–out

Financial Analysis : Credit Rating Agencies
1Executive Summary
Organisations and governments across the world have become increasingly dependent on debt over the last few decades. Goods and services are
provided on credit and debt is granted to organisations and governments by lenders in different parts of the world. The providers of credit facilities,
also known as investors, require a certain level of comfort that the security issuer will be able to repay the debt.
Investors must analyse the risk associated with the globalisation in the investment market, coupled with diversification in the types and quantities of
securities issued. Credit rating agencies provide these investors with objective analyses and independent assessments of companies and countries that
issue such securities through a credit rating. A credit rating is a statistical method used to determine the likelihood of an individual paying back the
money borrowed.
Credit rating agencies have been in existence since 1900 but it was in 1975 when Securities and Exchange Commission (SEC) based in the United
States of America formally created the nationally–recognized statistical ratings organizations (NRSRO) and instructed broker–dealers to only use the
NRSROs' ratings. Financial institutions were able to satisfy their capital requirements by investing in securities that received favourable ratings by one
or more of the organisations. These NRSRO are subjected to regulation by SEC.
The increased demand for ratings services by investors and securities

Financial Management Of The Healthcare Industry
Slide 1Credit in the Healthcare Industry Hospitals are seen as organizations established to protect the health and enhance the quality of life of the
communities they serve. While this is indeed true, hospitals are also a business, and as such have the burden of remaining profitable. Chief Financial
Officers of health care organizations are tasked with the daunting job of balancing the budget. In an industry of constantly changing methodology and
technological advances, credit ratings are increasingly important. IT IS important to understand what lenders look for when they lend money because
companies often need to borrow money for various reasons: increase cash reserves, refinance existing debt, pay regular operating expenditures,
research and development, capital expenditure, product development, expansion into new markets, strategic acquisitions, etc. There are five criteria
that most lenders use to assess a borrower's creditworthiness: 1.Capacity to generate sufficient cash flows to service the loan; 2.Collateral to secure the
loan in case the borrower defaults; 3.Capital that shareholders have invested in the business; 4.Conditions prevailing in the borrower's industry and
broader economy; and 5.Character and track record of the borrower and the borrower's management. Taken together, these five criteria indicate a
borrower's ability and willingness to repay its debts. It is important to keep in mind that lenders don't give equal weight to each criterion

Financial Crisis of 2008
The Financial Crisis of 2008 was the worst financial crisis since the Great Depression, however a lot of American's want tougher law of be enforced
against executives and companies they think started the mess (Jost/Misconduct). Civil charges have been brought up against major banks for
misleading investors, but a federal judge rejected a proposed settlement saying it was too lenient (Jost/Misconduct). The flood of subprime mortgages
roiling the housing market in the U.S. is also causing the worldwide credit crisis (Jost/Crisis). Investment banks everywhere are taking billion–dollar
losses, forcing them to revalue their belongings (Jost/crisis). This crisis started under the surface for many years then emerged into the public in March
2008... Show more content on Helpwriting.net ...
These realities require outstanding moral integrity, political independence with their heads, and top–level technical expertise (Lagos). One way the
government looks at this financial crisis is just a symptom of a deeper crisis which is a crisis of its own.
The growing executive compensation
Manager's capitalism has replaced owner's capitalism
The failure of gatekeepers , this includes boards of directors, career politicians, auditors, and Wall Street analysts
The management of earnings
These are the Bogle cities particular issues that caused the financial crisis. Mark Roeder, a former executive at the UBS, conducted an analysis that
suggested that large–scaled momentum "played a pivotal role" in the global financial crisis, also known as the financial crisis of 2008 (Lagos).
Involvement of Private Sector The Reserve Bank has been verbal that they are uncomfortable about wealthy Asian governments using savings when
they use the savings to shop around for assets (Saulwick). High levels of public sector involvement could hurt financial markets and the returns
countries are earning on their foreign investments (Saulwick). Dr. Lowe, the person that said this, argued that the private sector in Asian countries
needs to take on a greater role when it comes to overseas investment. He also said the world was moving unavoidably towards financial institutions in

The Subprime Mortgage Crisis Devastated The Global...
Writing Assignment #2
Financial Market
Yuxue Zhang
The 2008 subprime mortgage crisis devastated the global financial market. People believed that the "Big Three" credit rating agencies played a
significant role at various stages in the crisis. The Reuters, in an article published in 2011, even claimed that credit rating agencies triggered financial
crisis. The Reuters believed that Moody's Corp and Standard and Poor's action of downgrading the rating on complex mortgages securities triggered
the worst financial crisis in decades. However, the problems of rating agencies have existed for quite a long time and accelerated the crash down in
some extend. Therefore, besides the "trigger", I regard the credit rating agencies as the ... Show more content on Helpwriting.net ...
Investors assume the credit rating agencies, which full of experienced finance experts, can present a trust worthy and correct rating of credit risks. By
implementing the external credit rating information, excessive trust in the system of credit rating agencies weakens investors' risk management
practices. Therefore, when those big, authoritative rating agencies rate those subprime mortgages as AAAs, investors put more money in the subprime
market and expected to make big money. At first, the investors did make a lot of money in subprime investments, and they invested more and more,
until they saturated the market. When the analysts in credit rating agencies eventually realized the bubble of the subprime market and they began to
downgrade large amounts of mortgage securities, it was too late. When people saw the decline of subprime market and an abrupt downgrading of
mortgage securities, the investors panicked and the market crashed. The rating from credit rating agencies accelerated the flourish of subprime
mortgage market at the beginning, and eventually pushed the process of the financial crisis. Then, why people should not trust the credit ratings? In the
year 2007, Moody downgraded over 5,000 mortgage securities. The downgraded mortgage–backed securities were totaled to $1.9 trillion; some
securities that had

Home Depot Credit Rating
Evaluation of credit rating Memorandum: Credit Rating assignment: Home Depot, Inc. After analysing the financial statements of Home Depot,
we have allocated a "C" rating of credit risk. The proposal is to start with the "C" rating and then to either upgrade to a "B" rating or to be down graded
to a "D" rating. The reason for such a decision is discussed below. Home Depot has a current ratio of 1.19 to 1 which means that it's current assets
covers it's current liabilities by 1.19 times. This is the lowest that it had been for the last 10 years against an average of 1.61. A current ratio of 2 or
higher would usually be a qualifier for good credit risk. The low current ratio of Home Depot will increase the credit risk. Working... Show more
content on Helpwriting.net ...
Gross Profit Rate: The average year on year increase in gross profit rate over the past 10 years was 19.85% (Annexure 2, Table). This indicator
peaked in 1999 at 32.54% and gradually reduced over the past 6 years and ended at 11.83% for the 2005 financial year which is the lowest over
the last 9 years. This is of major concern as it seams that the company can't stop the deterioration in the gross profit rate. Net income as a
percentage of sales: The average year on year increase in net income as a percentage of sales over the past 10 years was 5.91% (Annexure 2,
Table). This is the one indicator that Home Depot has managed to keep stable for the past 10 years. It had shown steady growth over the years and
the 7.20% achieved in 2005 is the highest in the 10 year window period. ii Conclusion After calculating and analyzing the ratios and their trends the
following conclusion regarding the profitability of Home Depot can be made: Growth in Net Sales reduced with 1.3% between 2004 and 2005 while
cost of sales increased with 1.4% over the same period resulting in a reduction in the gross profit rate. In order to conclude on the net earnings, a trend
was calculated with regards to the return on invested capital (assets). The trend, as computed from the table and graph in annexure 2, shows

Improving The Efficiency Of The Market
To improve the efficiency of the market, CRAs act as reliable information providers to collect and process information pertinent for the assessment of
credit quality, and disseminate the results to financial market participants such as investors and portfolio managers. The rating information provided by
CRAs will reduce information asymmetries in the market, and this will lead to a higher level of investor confidence, increased activities in the market
and lower transaction costs.
To begin with, information asymmetry refers to a situation in which the issuer of a debt instrument who is the borrower has more knowledge about its
own creditworthiness than the investors who are creditors. This information asymmetry discourages investors ... Show more content on Helpwriting.net
...
A downgrade will only occur in the event of major changes in the issuer's financial status, which means that a rating will not be reviewed frequently. The
credit rating assists in providing the issuer with a broader range of financing opportunities in a manner that is more efficient than in traditional loan
banking. In this way, the transaction costs are lower and the pools of investors are larger. A rating also has influence on the interest rate of securities
since highly–rated issuers have to pay less interest to compensate the risk of investors.
Undoubtedly, both private and institutional investors are likely to depend on credit ratings as a standard to assist them in making more knowledgeable
investment decisions. It is the same for portfolio managers who can use rating as guidance when they have to deal with a wide range of financial
products originating from different countries. Furthermore, credit ratings can be beneficial for other problems, especially the issue of collective action
among dispersed debt investors, and the issue of principal–agent between investors and their agents. It may not be possible for a single bond investor to
observe the performance of a corporation during a difficult period of time. If a company carries on its business without any measures being taken, the
values that investors are entitled to recover could be reduced. A downgrade of credit rating by CRAs can serve as a warning for investors to

Marketing Analysis : Mgm Resorts International
MGM Resorts International
Denise Watson
Professor Framan
July 21, 2015
Target Market
Geographical Segmentation
MGM serves both local and international customers for their range of businesses. The company targets nearby, destination and convenience customers
by operating in strategic locations and states
Demographic markets
Previously, casinos were known to serve the older generation as their target market. However, the resort style amenities of MGM appeals to the younger
generations. The entertainment segment also attracts the younger generation with resort–style complexes, gourmet restaurants, and trendy nightclubs.
MGM appeals to both older and young customers.
Behavioral segmentation
The MGM attracts five types of customers; recognition seekers, escapist, reward seekers, socializers, and professionals. Escapist seek a getaway to
entertainment sections and resorts located in different areas. The reward seekers are driven to visit the business due to their vested interest in
rewards that casinos tend to offer. Socializers require a form of engagement where they get to meet different people as a form of distraction out of the
ordinary way of life. Professionals make a living out of casinos and pay close attention to what a casino offers.
Psychographics
The casino marketing is directed to individuals who want to have fun and those who are willing to risk their mortgages (Klebanow, 2009)
Importance of identifying target markets to MGM Resorts International.
Not

Dodd Frank Reform And Consumer Protection Act
Dodd–Frank
The full name of the bill is the Dodd–Frank Wall Street Reform and Consumer Protection Act, but it is mostly known as Dodd–Frank. The Dodd–Frank
Act is a United States federal law, which is divided into sixteen titles that places major regulations on the financial industry with the purpose of
restraining another major financial market collapse. The stated aim of the legislation is: "To promote the financial stability of the United States by
improving accountability and transparency in the financial system, to end "too big to fail", to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for other purposes" (Thomas, 2010).
Due to the Great Recession of the late ... Show more content on Helpwriting.net ...
The Office of Financial Research is designed to support the Financial Stability Oversight Council in range of researching and collecting data. The
Director has supreme power and may require any financial institution (bank or non–bank) to provide any needed information for reseaching and
analyzing. The Office can also standardize the way financial data is reported, with the constituent agencies having three years to implement new
guidelines.
Investor Protection Measures and Reform "The Act reviews the powers and structure of the Securities and Exchange Commission (SEC), credit rating
organizations, and the relationships between customers and broker–dealers or investment advisers" (David S. Huntington, Paul, Weiss, Rifkind,
Wharton & Garrison LLP, 2010). It provides corporate governance and executive compensation reforms, such as proxy access, chairman and CEO
disclosures, broker discretionary voting (Corporate Governance); say–on–pay, say–on–golden parachutes, broker discretionary, compensation
committees, executive compensation claw backs (Executive compensation). In order to be active and operational, these provisions require further
action by the SEC, the stock exchanges or other regulators except the say–on–pay, say–on–golden parachute and broker discretionary voting
requirements. Most of

Essay On Money Market
Emerging Economies Selected: India and China
Money Market
1.India
It is a market where short–term funds with maturity ranging from overnight to one year in India which are close substitutes of money even the
financial instruments. It had diversified from conventional platform of treasury bills and call money to commercial paper, certificates of deposit, repos,
forward rate agreements and most recently interest rate swaps.
"The money market fulfils the borrowing and investment requirements of providers and users of short–term funds, and balances the demand for and
supply of short–term funds by providing an equilibrium mechanism" (Money Market in India, 2017). It serves as a mechanism through which central
bank's intervention in the ... Show more content on Helpwriting.net ...
Commercial Paper
"It is an unsecured, short–term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting
short–term liabilities." Maturities on commercial paper is usually below one year. It's issued at a discount from face value and shows market interest
rates. It has collateral and so it is unsecured. It is usually issued by firms which have high credit rating.
India
It was introduced in India in 1990 and it is issued in the form of promissory note. "It was introduced in India with a view to enabling highly rated
corporate borrowers to diversify their sources of short–term borrowings and to provide an additional instrument to investors" (Singhania, Singh, &
Prajapat, 2016). "Subsequently, primary dealers and all–India financial institutions were also permitted to issue CP to enable them to meet their
short–term funding requirements for their operations" (Singhania, Singh, & Prajapat, 2016).
China
"In an effort to promote the direct funding of corporations, improve the liquidity of the shortened of the interest rate market and foster a more
responsive pricing of credit risk, in May 2005 the PBoC allowed non–financial firms to issue commercial paper (CP)" ("BRICs and Beyond", 2007). At
End–September 2006, this segment of the market was already worth ($33bn, or 1.3% of GDP), representing just over half of all non–bank corporate
interest–bearing liabilities and nearly 5% of the total market.

The Crisis Of The Fiscal Crisis
The 2007–2008 US 'credit crunch', also known as 'subprime mortgage crisis', is one of the largest financial distortions that has recently struck US
economy and resulted in the huge slump in the economic activity. Actually, there most likely exists no single reason that has led to the financial crisis
of such degree but rather a simultaneous combination of several practices in the US economy of that time. Experts usually distinguish the following
diverse causes of 2007–2008 US 'credit crunch': the increase in the spread of the structured finance products which lacked transparency, deregulation of
financial sector and lack of financial institutions' supervision, inappropriate credit ratings assigned by credit rating agencies on complex financial
products, excessive lending activities that has led to the increase in credit risk, lack of adequate liquid reserves to back the existing commitments and
some others. Generally, all these causes can be divided into two main groups: one attributed to the fails of government regulations and supervision and
the other attributed to the increased popularity of financial innovations. This essay will discuss all major reason that contributed to the start of the
crunch and prove that credit risk attributed to lending activities is not the root cause but rather one of consequences of the spread of financial
innovations and thoughtless government policy. The structure of the essay is the following. The essay starts with giving a brief overview

Why You Need to Do a Credit Rating Check Essay
Why You Need to Do a Credit Rating Check
A credit check is, in simple terms, a way for a financial institution to estimate how well you will manage credit. Your credit score gives these
institutions a way to assess the risk involved in giving you credit, and helps to decide what kind of interest rates they can offer you. Since your credit
rating will be very important in many of the decisions you make, it is extremely valuable to know where your score falls and what that number means.
The Importance of Your Credit Rating
Every time you apply for credit of any kind, whether it is a car loan, a credit card, or a mortgage, your credit score will be a main deciding factor. Often
times, the decision isn't necessarily whether or not the ... Show more content on Helpwriting.net ...
This is simply because each of these companies receives their information from different sources. It is not that one company is more or less accurate
than another; they just don't necessarily contain the exact same data. A credit report is intended to give a general overview of your past with credit, so
minor discrepancies between reports shouldn't have much of an impact.
How Your Credit Rating is Used
There is no specific system to determine what scores will award what kind of credit, and this information is never published. It frequently differs
between financial institutions, so you may be offered two different interest rates for a mortgage of the same amount when applying at two banks.
It may seem strange that this process isn't more universal, although it reiterates the importance of getting a credit rating check. Especially when you
are intending to take out credit of any kind, you should approach this process with an understanding of how credit rating works, and where your score
falls on the spectrum. You want to ensure that you receive the best possible rates and in turn, save yourself as much money as possible.
Your credit score is something that will stick with you as long as you're alive, so it is important to take charge as soon as possible. It is vital to your
financial security that you get a credit rating check, and even better to make it annual habit.

Credit Rating
When you deal with any lender, it is of great advantage to have a good or very good credit rating. Suppose you know that your mortgage will have to
be renewed in two years. You may need to either repair your credit and/or improve your credit scores.
First, buy the personal credit reports from both Equifax and TransUnion, which cost $25–$30 each. Note that these use different credit score systems,
so you cannot compare them directly.
Second, scan the reports for any outright errors or incorrect records. If someone once initiated collection proceedings against you, that may still be
listed as an open/unpaid debt, even though it may have been long–settled with the former creditor. Correct these erroneous entries by contacting the
credit reporting agency.
Third, you may be able to find a friendly mortgage broker who is willing to discuss your ... Show more content on Helpwriting.net ...
Consider joining and using financial services from a credit union. Because these organizations are dedicated to their clients, who are also the owners of
the credit union they are using, you may get many unexpected benefits which are not general available when you go to the "traditional" banks and trust
companies.
As just one example, consider the profile of the credit union Meridian in Ontario, Canada: with over 70 years of banking history, Meridian is
Ontario's largest credit union, with more than a quarter of a million Members, including over 19,000 business Members. Meridian has $9.9 billion in
assets under management and delivers a full range of financial services online, by phone, by mobile and through a network of 64 branches and 7
business centres. Meridian Members also have access to THE EXCHANGEВ® Network, with more than 2,400 no–fee ABMs across Canada and
340,000 ABMs in the United States (for more information, visit

Moody's Conflict Of Interests
There was clearly a conflict of interest in Moody's. This occurred in terms of the profits that were received from clients. Unlike a normal credit rating
company, they were selling their credit rating to the highest bidder and whoever paid can have their rating be in their favor. NaГЇve to their actions,
they basically in return caused mortgage lenders to push out as more and more loans. Moody's was irresponsible in their decision making and should
have performed a better approach to the impending trouble that was rapidly approaching. Moody's lowered their ratings to lure in lenders and with the
intention of getting them to use their services over their competitors such as S&P and Fitch. In the timespan of two years (2003–2005), WaMu and
Washington Mutual the numbers of subprime loans tripled from 11%... Show more content on Helpwriting.net ...
The main conflict that has plagued Moody's was they were paid by the same institution that issued the bonds it rated. The core of Moody's business
was rating the safety and the security of the bonds issued by companies, government, and the public agencies alike. Their main goal was to satisfy the
bond issuers who naturally would seek out the highest possible rating. However, this conflicted with investors who were more interested in seeking out
a naturally accurate rating that was not false. Moody's was also tasked to rate to the creditworthiness of the various branches of the mortgage–backed
security. Investors had no ideas as to how to assert the safety and security because products were grouped and sold in multiple shares to other
investors. To resolve the conflict the relationship between the issuer of bonds and rating agencies should be better handled. This can occur in the form
of the Securities and Exchange Commission to determine the best possible approach for this to occur. As well as for the house of representative to audit
credit rating companies, investors, and

AAA Credit Rating
Environmentally friendly production of goods and services
Environmentally friendly production is when natural resources are conserved and aren't exploited. The benefits to this type of production is lower
costs (reduce, reuse, recycle), attract new customers as being environmentally friendly makes a business/country stand out from the rest, and there is
improved sustainability. There are various methods to be applied to the production of goods and services in order for it to become more beneficial to the
environment.
We need to incorporate renewable energy for power and electricity through resources such as sunlight (solar panels), wind (turbines), rain (micro hydro
systems), and geothermal heat (power plants) instead of using fossil fuels. ... Show more content on Helpwriting.net ...
We need to increase and maintain our free trade agreements so that our international relations increase so countries can continue to sell and buy
products where a larger variety of goods and services are attainable at a lower price.
Maintenance should be carried out through analysis of the disadvantages of FTA:
An effect of FTA is an increased job outsourcing. Countries concerned about outsourcing can insist that foreign companies build local factories as part
of the deal. They can require that these companies share technology and train local workers in the latest techniques.
Following that, there is degradation of natural resources through deforestation and strip–mining which reduce their jungles and fields to become
wastelands. As a solution, we should regulate the environmental impact through environmental safe guard. More labour laws enforcing satisfactory
working

Current Uk Economic Conditions
Information and definition
UK
The United Kingdom of Great Britain and Northern Ireland is also known as UK, United Kingdom or Britain. United Kingdom is a member of
European Union, G 8, G–20, World Trade Organization, Common Wealth of Nations, United Nations Security Council, NATO, Organization for
Economic Cooperation and Development (OECD). United Kingdom is a well developed country. It has a rich economy brought up by economies of its
individual countries England, Scotland, Wales and Northern Ireland. Landon which is the capital of UK and England is the most important financial
center for international business and commerce. UK is one of the most important globalised countries of the world.
GDP
GDP, or Gross domestic product is a... Show more content on Helpwriting.net ...
Leading up to the crisis, thanks to a buoyant housing market and cheap and easy credit, consumer spending had been rising in the years. "The fall in
output was largely due to a drop in mining and quarrying, after maintenance delays at the UK 's largest North Sea oil field," the ONS said. The
decrease in aggregate demand was caused by the credit crunch and job fears, which meant consumers cut spending, deciding to pay off debt and save
instead; in addition, a fall in demand and the global economic crisis hit businesses and make aggregate supply decrease. Businesses also found that
borrowing from banks – which most rely on – was harder or more expensive. Moody 's now expects that economic growth will be "sluggish" into the
second half of the decade. This means it will take longer for the government to reduce its budget deficit – the amount it has to borrow every year
because it is spending more than it receives in tax revenue. This situation was caused by a series of reasons. The lack of growth makes cutting the
deficit more difficult because when an economy is not growing, less tax is coming in from companies and individuals, while the government has to
spend more on welfare payments, such as unemployment benefit. And as the UK 's debt problem will take longer to get under control, there will be a
deterioration of the country 's "shock–absorption capacity". In other words, it will make it harder for UK to cope with any external problems, such as
a worsening of the crisis

Bad Credit Rating Essay
A large variety of factors can affect your credit rating. Perhaps you didn't understand how your student loans worked when you got out of college,
and your credit rating took a hit. Or perhaps you lost your job and fell behind on your payments a few years ago, and those few months of
unemployment are still hurting your credit score. Here are three tips that will help you secure financing for a vehicle when you have a bad credit score.
#1 Shop For Used Car Dealers That Cater To People With Bad Credit Scores
One of the first things you should do is find used car dealerships that cater to individuals who have low credit scores in your area. Many of these
dealerships work with private loan providers that provide them with a cut for setting–up loans; this provides these dealerships with incentives for
helping out individuals with poor credit. Often times these types of dealers will advertise that they will provide you with financing even if you have
bad credit, poor credit or no credit. These types of dealerships are generally privately owned, smaller dealership. Most larger dealerships associated
with a specific car brand do not target customers with poor credit. ... Show more content on Helpwriting.net ...
If you want to purchase a vehicle that is worth $15,000 and you have already saved up to $7,500 for the down payment, that will show a loan
provider that you have been able to work hard and save money, despite having a low credit score. A large down payment will back up your claims
that you are brining in a steady paycheck. The larger the down payment you are able to provide, the more likely it is that you will get the financing that
you need.
#3 Build Up Your Work

Business Matrix
ACCOUNTING TRANSPARENCY
Charles Katoroogo
Prof Brandy Havens
ACC 303
12/1/2013
ACCOUNTING TRANSPARENCY
Accounting is mainly concerned with general rules, concepts and principles that are established with the purpose of governing different fields of
financial reporting. Accounting principles are also known as accounting principles and guidelines, these acts as the base on which more complex and
critical rules are based. The authority responsible for issuing the accounting standards (i.e. financial accounting standard board) also uses these basic
principles to formulate the accounting standards in a more efficient manner.
Generally accepted accounting principles (GAAP) consist of various rules and principles which are used for ... Show more content on Helpwriting.net ...
Ratio Analysis is used for evaluation of performance of the company by internal as well as external users. These comprises of managers, equity
investors, long–term creditors and short–term creditors. The managers are interested in the profitability and asset utilization ratios of the company as
their incentives and appraisal are based on the profitability and efficiency of asset utilization of their respective divisions. Higher the profitability,
higher is the chances of promotion. Thus, managers are always very keen to analyze the different financial ratios of the company.
Those who invest in equity are always interested in knowing about the profitability, Market and solvency ratios of the company. Higher profitability
ratio is helpful in increasing the market value of the company. The market ratios like dividend yield, price earnings ratio, earnings per share etc. is
useful in determining the exact position of the company's market share. Favorable market ratio indicates the increase in market capitalization for
investors and vice versa. The equity investors are also interested in knowing the solvency ratio as high debt will pose danger to the ownership of the
company. Higher debt is harmful for the liquidity position of the company and in some worst cases; the company even faces the risk of liquidation.
The long–term creditors and short term creditors are majorly concerned about the liquidity and solvency position of an organization. The increase in the
debt

What Is Credit Rating?
Kyle, F
I think other classmates replied well. As Zach mentioned, Table 5–1 clearly shows the bond with a lower rating pays the higher yield. The bond rating
is determined by credit risk underlying an bond issue or an issuing company. Rating agency may select some financial ratios that are believed to affect
the default risk of a subject company. Those ratios are liquidity ratios, asset management ratios, profitability ratios, anddebt–related ratios that are
believed to affect the credit risk of a bond issue or an issuing company. Then, those ratios are blended using appropriate statistical methods to create a
scoring index model which determines credit rating of an issuing company and/or its security issue.
As discussed in M03L01, ... Show more content on Helpwriting.net ...
The bond issue with a protection provided by an insurance company would have less default risk than the bond without such insurance.
Thanks.
JYS
Zach,
Good question. Bond duration is one of complicated topics related to fixed income security. That is why duration concept was just slightly touched in
my lecture notes. That is why mathematical concepts of the duration was placed in the appendix.
Since you raised questions related to bond durations, let me briefly reply them.
As discussed in the lecture notes, duration is nothing but a metric to quantify bond price risk (price sensitivity to a change in interest rate). Let me give
you a naГЇve example, but it really helps understand the duration concept. Supposed that there are two securities: A and B. A gives you $1 next year
and $999 in 100 years whereas B gives you $999 next year and $1 in 100 years. Both A and B have the "SAME" maturity of 100 years.
Which security seems to be riskier? Apparently, you would say security A because relatively large cash flow is paid further in the future. It is clear
that nominal maturity does not represent bond risk. Rather, a kind of effective maturity that considers the present value of the cash flows (i.e., the
speed of cash flows) could represent better the risk underlying a bond issue. The metric developed based on this idea is called Macaulay duration. That
is why the

Credit Rating Case Study
The evidences from previous studies investigating the impact of credit rating changes are mixed. Early studies conclude that rating change
announcements do not have incremental information contents. Weinstein (1977) studies the behavior of corporate bond prices during the period
surrounding rating change announcements using monthly data. He reports no evidence of significant bond price reactions during the 6 months prior to
rating change announcements. However, he finds some price changes during the period from 18 to 7 months before the rating change announcement.
He believes the information which causes the price reactions also leads to the rating change and the rating change announcement is 6 months lagged. In
addition, he reports little... Show more content on Helpwriting.net ...
However, they find no evidence of positive abnormal returns for upgrade announcements. Furthermore, they discover that significant stock price
reactions are associated with announcements of stocks being added to Standard & Poor's Credit Watch list when potential upgrades or downgrades are
indicated.
Hand et al. (1992) examine the daily excess returns of additions to Standard & Poor's Credit Watch list and classify rating changes as expected and
unexpected. They suggest that some information with credit rating changes has already been available to investors from other sources because the
addition to credit watch list indicates a potential upgrade or downgrade. As suggesting by the market anticipation theory, the result shows much
stronger stock price reactions to unexpected rating changes than to expected rating changes. Besides, they find significant abnormal stock returns with
downgrade announcements but less prominent impact with upgrade announcements, which is consistent with the findings from previous studies. In
addition, the negative excess returns are more significant for bonds at speculative grade than for bonds at investment grade.
Although many studies find that equity market reacts negatively to credit rating downgrades, Goh and Ederington (1993) argue that this reaction
should not be expected for all

Notes On Credit Rating Agencies
Literature review:
Dror Pranes (2008) said that the participants of the market have a divergent expectation. But they can be classified as optimistic or pessimistic based on
set of knowledge. He also argues that the credit rating announcement does not give any undisclosed information to the investors or the market. It only
attempts to homogenize the investor's belief.
According to Adelson (2012) credit rating plays a vital role in providing an independent opinion about the creditworthiness of the issuer and bridging
the gap between lenders and borrowers. Lazarescu (2003) says standardising the value judgement in relation to borrowers in the current scenario of
globalisation is contributed by credit rating agency.
De Haan and Amtenbrink(2011) argued that there are flaws in the use of credit rating agencies judgement in regulation and accounting. The agencies
have a substantial impact on the bonds and their interest. But when the bond is downgraded it is harmful. There will be herd behaviour among investors
trying to liquidate investment. Additionally Mathis (2009) said that the construction of issuer pays is a critical problem which may result in conflict of
interest. This will make the issuers to shop the ratings. They will go for the rating agency that provides the most favourable rating.
Journal of common market studies (2012) explains that the rating agencies suffer from shortcomings. The rating agencies maintain transparency about
the data sources and the indicators.

Trust Deed Affects Credit Rating

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