Using Project Finance To Fund Infrastructure Investments

Using Project Finance to Fund Infrastructure Investments
USING PROJECT FINANCE TO FUND INFRASTRUCTURE INVESTMENTS Throughout most of the
history of the industrialized world, much of the funding for large–scale public works such as the building of
roads and canals has come from private sources of capital. It was only toward the end of the 19th century
that public financing of large "infrastructure" projects began to dominate private finance, and this trend
continued throughout most of the 20th century. Since the early 1980s, however, private–sector financing of
large infrastructure investments has experienced a dramatic revival. And, in recent years, such private
funding has increasingly taken the form of project finance. The principal features of such project financings
have been the ... Show more content on Helpwriting.net ...
This encouraged the formation of stand–alone power producers able to borrow large sums on the basis of the
long–term power purchase agreements they had entered into with electric utilities. Since these projects do
not directly involve a government or a government agency, they are somewhat beyond the scope of this
article. So are projects in Australia, which have primarily been in extractive industries rather than in
infrastructure. In the U.K. by contrast, the government has been directly involved in a growing number of
infrastructure projects since it announced in 1992 the establishment of the Private Finance Initiative (PFI).
The PFI is designed to involve the private sector in the financing and the management of infrastructure and
other projects. Private finance has so far been used principally for transportation projects such as the £320
million rail link to Heathrow airport, the £2.7 billion Channel Tunnel Rail Link, a £250 million scheme to
build and maintain a new air traffic control center in Scotland, and projects worth more than £500 million to
design, build, finance, and operate (DBFO) trunk roads. But the potential scope of the PFI is wide. Over
1,000 potential PFI projects have been identified, and the government has signed contracts to build and
maintain such diverse
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The Role Of Finance And Its Effect On Portfolios, Managing...
BSAD 310: Business Finance
Whittier College
Radoniqi
Summer 2016
Quiz #1
1. Explain the role of finance in society.
The common perception is that finance is associated with wealth management – enlarging portfolios,
managing portfolio risks and tax liabilities, ensuring that rich grow richer. On the other hand, good society is
considered to be the one in which people respect and appreciate each other. From that point of view it seems
that finance and good society are like an oxymoron, finance goals are contradicting with those of society.
There are conspiracy theories like Pax Morgana that the financial system is guilty for the Great Depression.
That theory was revitalized nowadays with the 2008 financial crisis as well. The ... Show more content on
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Illustrate these decisions with examples.
Among the most important decisions that a company takes are the following ones: dividend distribution,
investment decisions and financing decisions.
2.1. At the end of each year when financial statements are verified by the auditors, the company management
is facing the dilemma: what to do with the profit? The dilemma is related with the question whether to please
shareholders by giving them large dividends or to keep the money in the company for investment purposes.
This decision however does lie exclusively in the hands of the company management. If they decide large
dividends, then the funds needed for investments and growth will be reduced significantly. This may
jeopardize the company's competitive position – without investments, the company's future is always at
stake.
2.2. If the company's shareholders decide to vote small dividends then the management will have more funds
for investments. As a rule companies approve those projects that have a positive net present value and the
rate of return is higher than the hurdle rate.
2.3. If company profit is not sufficient to cover the investment plans, then the company has to start looking
for external financing in order to fulfil its investment program. Financing however may be costly if company
results are not good enough to motivate any bank to give a loan. If banks refuse a loan, then the company
should try to raise funds on the stock

Global Finance Paper Fin 370
Global Finance Paper
University of Phoenix
Sadaf Asghar, Ryan Crooks, Joseph Martinez, David Trejo, and Anthony Thorton
FIN/370: Business Finance
Nikita G. Silver
January 10, 2010
Global Finance Paper
In today's global marketplace, doing business abroad has become as common as getting dressed each day.
Technology has bridged the gap for entrepreneurs and corporate visionaries to expand into global markets
with ease. Extensive risk analysis and market research must be communicated effectively to enable strategic
financial steps that maximize shareholder equity and minimize company risk and exposure to be exercised.
This paper will identify and discuss various factors that will impact global finance over the next 10 years ...
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International banks would decrease in size due to the lowered flow of U.S. dollars and reduce the chances for
poor investments. The other two scenarios result in a continued global crisis, as countries such as China may
remain focused on exports and foreign investors holding the U.S. dollar may lose confidence in the American
financial system causing a rise in the cost of capital. These situations are likely based on the Triffin dilemma,
or the loss of confidence in the American dollar. According to Ahamed, "The risk of such a situation is
clearly on the minds of Chinese policy makers. Zhou Xiaochuan, the Governor of the People's Bank of
China, explicitly referred to Triffin's dilemma in a speech this March on the need for reform of the
international monetary system" (2009).
Direct Foreign Investments
Deardorff (2001) stated that, direct foreign investments refer to the particular countries and kinds of
countries toward which a country's exports are sent, and from which its imports are brought, in contrast to
the commodity composition of its exports and imports. Besides, direct foreign investments also can be
defined as the situation in which a foreign investor owns10% or more of the ordinary shares or voting power
of a local company. Thus, the pattern that the direct foreign investments follow is that of a bilateral trade.
Business risk An organization

Merrill Finch Inc. Essay
8 – 23 MERRILL FINCH INC. RISK AND RETURN
a. (1) Why is T–bill's return independent of the state of the economy? Do T–bill's promise a completely risk–
free return? Explain
(2) Why are High Tech's returns expected to move with the economy, whereas, Collections' are expected to
move counter to the economy?
1. The 5.5% T–bill return does not depend on the state of the economy because the Treasury must redeem the
bills at par regardless of the state of the economy; therefore, T–bills are risk–free in the default risk sense
because the 5.5% return will be realized in all possible economic states. Consequently, this return is
composed of the real risk–free rate, (i.e. 3%, plus an inflation premium, say 2.5%). As the economy is ...
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Calculate the missing CVs and fill in the blanks on the row for CV in the table. Does the CV produce the
same risk rankings as the standard deviation? Explain
The coefficient of variation (CV) is a standardized measure of dispersion about the expected value; it shows
the amount of risk per unit of return. CV = /. CVT–bills = 0.0%/5.5% = 0.0. CVHigh Tech = 20.0%/12.4% =
1.6. CVCollections = 13.2%/1.0% = 13.2. CVU.S. Rubber = 18.8%/9.8% = 1.9. CVM = 15.2%/10.5% = 1.4.
When we measure risk per unit of return, Collections, with its low expected return, becomes the most risky
stock. The CV is a better measure of an asset's stand–alone risk than because CV considers both the expected
value and the dispersion of a distribution–a security with a low expected return and a low standard deviation
could have a higher chance of a loss than one with a high but a high .
e. Suppose you created a two–stock portfolio by investing $50,000 in High Tech and $50,000 in Collections.
(1) Calculate the expected return (rp), the standard deviation (p), and the coefficient of variation (CVp) for
this portfolio and fill in the appropriate blanks in the table. (2) How does the riskiness of this two–stock
portfolio compare with the riskiness of the individual stocks if they were held in isolation?
1. To find the expected

Defining Financial Terms and Role in Finance Essay
Running Head: DEFINING FINANCIAL TERMS AND ROLE IN FINANCE
Defining Financial Terms and Role in Finance
University of Phoenix
FIN 370/ Finance for Business
November 10, 2010
Defining Financial Terms and Role in Finance The following paragraphs contain financial terms and their
role in finance. The terms are finance, efficient market, primary market, secondary market, risk, security,
stock, bond, capital, debt, yield, rate of return, return on investment, and cash flow. The fourteen terms all
have an important relationship in the world of business. The first term is finance. Finance is managing
money or supplying funds to provide a resource. A bank or loan company is a source of finance because they
both provide cash. Cash is ... Show more content on Helpwriting.net ...
The price is more or less than the issue price of the original company. The fifth term is risk. Risk is the
uncertainty or chance of a difference in the actual return earned on investment and the expected return earned
on the investment. There are three types of risk: market, credit, and operational. The company return on an
investment depends on which risk the company took. For example, people and companies take risk
sometimes when they make a financial investment or provide equipment and supplies for an opportunity to
receive a high return on their investment. The role of finance for a risk is the uncertainty if they will receive
payment for their investment. The higher the risk means the higher the return. The lower the risk means the
lower the return.
The next three terms have a correlation. The terms are security, stock, and bond. Security in finance is the
relationship and representation of stocks and bonds. Some securities are interest and dividend based.
Common and preferred stock, bonds, notes, debenture, and option are some examples of securities. A stock
represents ownership in a business, has face value, and may not carry a maturity date. A stock's role in
finance is as follows. Common stock has no fixed rate of dividend and has voting rights. Preferred stock has
a fixed rate of dividend and no voting rights and preferred are the two types of stock. A bond is the last term
of correlation. A bond is a fixed income security. A

Risk Management For Bidding Strategy Of Wind Power Producer
Risk Management for Bidding Strategy of Wind Power Producer in Electricity Market: Comparative Study
Line 1: Authors Name/s per 1st Affiliation Line 2: Author's Name/s per 1st Affiliation Line 3 (of Affiliation):
Dept. name of organization Line 4: name of organization, acronyms acceptable Line 5: City, Country Line 6:
e–mail address if desired Line 1: Authors Name/s per 2nd Affiliation Line 2: Author's Name/s per 1st
Affiliation Line 3 (of Affiliation): Dept. name of organization Line 4: name of organization, acronyms
acceptable Line 5: City, Country Line 6: e–mail address if desired Abstract–Basic guidelines for the
preparation of a technical paper for an IEEE Power & Energy Society Conference are presented. This
electronic document is a "live" template. The various components of your paper [title, text, headings, etc.]
are already defined, as illustrated by the portions given in this document. The abstract is limited to 150 words
and cannot contain equations, figures, tables, or references. It should concisely state what was done, how it
was done, principal results, and their significance. Index Terms––The author shall provide up to 5 keywords
(in alphabetical order) to help identify the major topics of the paper. The thesaurus of IEEE indexing
keywords is posted at http://www.ieee.org/organizations/pubs/ani_prod/keywrd98.txt. Nomenclature The
most important notations used throughout the paper are listed below for quick reference. Indices and Sets: t
Index for time

Managing Investment Growth Of A Diversified Portfolio
Managing Investment Growth In order to maximize a portfolio's return, it is important to analyze risk and
diversify securities, while adhering to the goals of an investor. Through analyzing the different classes of
risk, one can match investments to an investor's risk tolerance and return requirements. Even though some
investments may present greater risk they are countered by a higher rate of return and vice versa, less risk
corresponds to a lower return. Moreover, investment risk can be substantially reduced through
diversification, which spreads a portfolio across different industries, businesses and investment options. The
makeup of a diversified portfolio continually changes based on an investor's time horizon and investment
goals. In accordance with the Modern Portfolio Theory (MPT), one can maximize return while reducing risk,
through assessing investments standard deviation and beta. When applied to the capital asset pricing model
(CAPM) an investor can determine what the expected rate of return should be and if the risk is worth it.
Therefore, by analyzing risk and diversifying investments one can maximize an investment growth,
increasing a portfolios return.
Investment Risk Investment risk assesses the overall level of uncertainty or volatility associated with an
investments potential returns. As a result, investment risk helps determine the likelihood of receiving an
increased or decreased amount of the expected return on an investment. While risk is

Value At Risk And Risk Management
Value at Risk Framework or VAR framework is mainly used for financial risk management or financial
mathematics in measuring the risk element on a definite portfolio of financial assets, present in any
economic organization. This particular portfolio comprises of time event and probability, which states the
threshold of the risk loss value over the period of time. These risk loss values are assumed to be according to
the market to market pricing, no trading and normal market which contributes in this risk valued portfolio.
The risk management of Value at Risk is done by risk managers which are responsible for measuring and
controlling the risk levels that are present in an organization. Considering the modern portfolio theory, the
third constituent of portfolio is amount of investment which then creates a mean–variance framework risk.
This framework risk is defined in terms of possible variation in the expected portfolio which will describe
the risk value loss in financial assets of an economic organization.
The Value at Risk framework and management help an organization in analyzing the risk loss in the financial
resources, which increase its use in many businesses, organizations and institutions. (Hassan, 2009) The
organization use this VAR framework in analyzing the potential losses in many risk management ideas which
include stress testing, backtesting, expected shortfall, tail conditional expectation and economic capital.
These are the few important ideas that have been

Case Study: The Failure Of LTCM
FACULTY OF MATHEMATICS AND ECONOMICS
HOW TO MEASURE SYSTEMIC RISK
By
Moses Kipkemei Kangogo moses.kangogo@uni–ulm.de A thesis submitted to ULM UNIVERSITY in partial
fulfilment of the degree of
MASTER OF SCIENCE
INSTITUTE OF FINANCE
Supervisor:
Prof. Dr. Gunter L¨offler
Assistant supervisor:
Prof. Dr. Andre Guettler
January 2015 ii Declaration
Unless otherwise indicated in the text or references acknowledged, this thesis is entirely the product of my
scholarly work. Any inaccuracies of fact or faults in reasoning are my own, and accordingly, I take full
responsibility. This thesis to the best of my knowledge, is original and has not been submitted either in whole
or part for a degree in any other university. This is to certify that the printed ... Show more content on
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(iii) Tighter supervision
The SIFIs are required to be subjected to intensive and effective supervision which will bring down the level
of systemic risk in the financial sector.
(iv) Counterparty exposure limits These institutions are required to limit their total exposures to
counterparties.
(v) Activity limit
These institutions should limit certain activities that seems riskier and not part of the core objectives of the
institution. The banking institutions are limited by the "Volcker
Rule" which is included within the Dodd–Frank Act.
(vi) Effective resolution regimes for financial institutions
These regimes are to be subjected to international standards to ensure that any institution that fails can be
resolved without causing disruption to the entire financial system.
18 Systemic risk and systemically important financial institutions
(vii) Liquidity buffers
SIFIs should have appropriate level of liquidity to meet its emergency needs that may include cash to repay
its debt and to protect its withdrawal deposits.
3.2 Drivers of systemic

Basic Finance
Finance has a close relationship to a number of other business disciplines. It is important that we understand
why a finance major needs these other skills and abilities. Let's take them one at a time: 1. Economics
provides the theory that finance uses. The field of finance is a very new discipline, beginning formally
around 1920. Before that, financial problems were referred to as "economic problems" or (even earlier)
"problems in political economy." During the 1920s, finance broke away from economics and became a
discipline of its own. Think of finance today as being applied economics. In other words, economics
provides the theory; finance takes that theory and applies it to real world situations. 2. Accounting is ... Show
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Since insurance also enjoys some tax benefits, utilizing insurance investment products may be a critical piece
of the overall investment planning.
Tax planning: typically the income tax is the single largest expense in a household. Managing taxes is not a
question of if you will pay taxes, but when and how much. Government gives many incentives in the form of
tax deductions and credits, which can be used to reduce the lifetime tax burden. Most modern governments
use a progressive tax. Typically, as one's income grows, a higher marginal rate of tax must be paid.[citation
needed] Understanding how to take advantage of the myriad tax breaks when planning one's personal
finances can make a significant impact.
Investment and accumulation goals: planning how to accumulate enough money – for large purchases and
life events – is what most people consider to be financial planning. Major reasons to accumulate assets
include, purchasing a house or car, starting a business, paying for education expenses, and saving for
retirement. Achieving these goals requires projecting what they will cost, and when you need to withdraw
funds. A major risk to the household in achieving their accumulation goal is the rate of price increases over
time, or inflation. Using net present value calculators, the financial planner will suggest a combination of
asset earmarking and regular savings to be invested in a variety of investments. In order to overcome the rate
of inflation, the investment

Alok
Definition of 'Systematic Risk'
The risk inherent to the entire market or entire market segment.
Also known as "un–diversifiable risk" or "market risk."
Interest rates, recession and wars all represent sources of systematic risk because they affect the entire
market and cannot be avoided through diversification. Whereas this type of risk affects a broad range of
securities, unsystematic risk affects a very specific group of securities or an individual security. Systematic
risk can be mitigated only by being hedged.
Even a portfolio of well–diversified assets cannot escape all risk.
________________________________________________________________________________
Definition of 'Unsystematic Risk'
Company or industry specific ... Show more content on Helpwriting.net ...
Within the Momentum Model they used two approaches to forecasting future earnings estimate revisions. 1)
an approach based on past changes in analyst's estimates. These small revisions would then encourage other
analysts to update their estimates. This would lead to earnings estimate leapfrogging and a herd effect. They
captured this effect in its "Estrend" or earnings estimate "trend" model. Candidates with large increases in
analysts' estimates were candidates for buying and companies with large decreases in analysts' estimates
were candidates for selling short. 2) the second approach to forecasting future changes in analysts' earnings
estimates was based on earnings surprises...company announcements of quarterly earnings that were
significantly different from the consensus of analysts' expectations. A stock price increase immediately
following the announcement of a positive earnings surprise usually would signal that the earnings were
indicative of good future outcomes for the company. However, a stock decline might signal perhaps that,
while the last quarter may have been better than expected, other information released in the announcement
was indicating that the improved earnings were unlikely to be sustained. So for a given stock, Numeric's
models determined both an Estrend score and an earnings surprise score. These scores were then combined
in a weighted

Cfa Level 3 2013 Summary
Behavioral Heuristics – Check Anchor/OAR Availability– Conservatism, Anchoring, Overconfidence,
Ambiguity aversion, Representativeness, Availability
Traditional Finance – TF–RAR – Risk averse, Asset integration, Rational expectations
Behavioral Finance – BF–LAB – Loss averse, Asset segregation, Biased expectations
Type of Investors – CMIS – Cautious, Methodical, Individualistic, Spontaneous
IPS Process – OCSAEEA, Old Cars Sell At Eastern European Auctions – Objectives, Constraints, Strategy,
Allocation, Execution, Evaluation, Adjustments
IPS Constraints – URLIT – Unique, Regulatory/legal, Liquidity, tIme, Tax
TDA vs. TEA – Higher Enders Take TEA – Higher Ending Tax rate TEA better
Residence vs. Source – Pay Greater rate with ... Show more content on Helpwriting.net ...
This is a sign of heuristic–driven bias.
Behavioral finance assumes that:
1.investors are loss averse, which means they prefer uncertain losses to certain losses.
2.investors exhibit biased expectations, due to overconfidence in their ability to forecast the future.
3.investors construct portfolios via asset segregation, meaning that they tend to focus on an asset's individual
investment features versus its impact on the overall portfolio position
By admitting his mistake but reiterating other projections, one used the "single predictor" defense.
Feeling that they should spread out their risk, but not knowing how leads to the 1/n diversification heuristic.
Often times, participants will only have a rough understanding of the effects of correlation and
diversification and will simply divide their assets equally over the investment options in the plan in an
attempt diversify their portfolio.
DC participants tend to hold excess stock of the company they work for due to familiarity and a perceived
endorsement by management.
The endorsement effect refers to the misconception that by offering an investment as an alternative, the
sponsor is implicitly endorsing it as a good investment.
Note that the status quo bias refers to a lack of action on the part of the participant. Also note that putting too
much in company stock would be an example of an investor being "boundedly selfish" in that there does not
seem to

Intro to Corporate Finance Chap. 1
Chapter 1
INTRODUCTION TO CORPORATE FINANCE
GOAL
Today, corporate finance managers must make decision in a much more coordinated manner and generally
has direct responsibilities for a control process. Because there are financial implications in virtually all
segments of business, she/he must have sufficient knowledge of finance to work these implications into the
area.
At the end of this chapter, you should be able to:
Undenstand the nature of corporate finance .
Understand financial management framework.
Identify the basic corporate finance goals.
objectives and functions of corporate finance.
Finance is the science of management of money ... Show more content on Helpwriting.net ...
This leads to the basic differentiation between wealth maximization and profit maximization approach. There
are several arguments of why getting as much profit as possible will not ensure the firm's viability in the
long–term. In contrast to wealth maximization, the profit maximization holds on to the following views in
term of:
1. Time Horizons. It focuses on short–term benefits and tries to gain as much profit as possible regardless of
the long–term effects.
2. Timing of Returns. It does not consider the timing of returns and thus time value of money.
3. Distributions of Income. It tends to ignore the owners wish to receive a portion of earnings in the form of
dividends.
4. Risk. It gives less consideration to risk in an attempt to maximize profits, as higher risks will associate
with higher return.
Other goals of the firm are essential to be stated to avoid any misunderstanding. In order to achieve wealth
maximization, the following goals are essentials:
1. Maximization of profits. To make profits is essential to provide stability and growth in operations and

rewards to individuals and institutions that contribute to the firm. It is essential, however to consider the
above constraints and the risk of making a decision that is higher risk relates to higher return.
2. Maximization of

Global Finance Industry : Risk Assessment
Global Finance Industry IT Risk Assessment
Desiree M. Kamansky
University of Maryland University College
CMIT 425
28 April 2017
TABLE OF CONTENTS
Executive Summary...........................................................................................3
Background Information......................................................................................3
Purpose of the Risk Assessment.............................................................................4
Duties and Functions..........................................................................................6
Risk Assessment for Security................................................................................7
Risk Impact.....................................................................................................7
Topology of the Network.....................................................................................8
Security of Networks..........................................................................................9
Access Points...................................................................................................9
Internal Access.................................................................................................9
External Access...............................................................................................11 ... Show more content on
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Security of information is crucial in any organization regardless of the activities it undertakes. As such, in the
event you are developing a project, key interest has to be taken concerning the threats or risks likely to take
place. It is imperative to handle either tangible or intangible issues associated to security. For GFI to regain
its reputation, it is important to comprehend the security issues that should be handled. The report will
describe various security efforts aimed at making GFI more secure.
Global Finance Industry IT Risk Assessment
Background Information Global Finance, Inc. (GFI) is categorized as a financial public company. It is traded
on The New York Stock Exchange (NYSE) and it specializes in the management of finance, approval of loan
application, overall processing of loans, and money management investment for its clients. GFI has
responsibility over thousands of accounts in different states, for example, Canada, the U.S., and Mexico. It
has more than 1,600 employees and consistently boosts the annual growth rate of approximately 8 percent.
GFI has a management strategy that is well established and centered on scaling performance of operations
assisted by automation and innovations in technology. In the past few years, Global Finance, Inc has been a
victim of numerous cyber–attacks from intruders which have given rise to revenue losses of about $1,700,
000 and client confidence

Starting Off With The Gordon Growth Model
Starting off with the Gordon Growth Model was developed by Professor Myron Gordon of the University of
Toronto. It explains that if any investor is aware of the dividends handed out in a year by any company, and
at what rate that dividend will grow, the investor is able to determine the actual value of the stock, which
describes what the investor should pay at most for the selected stock issued by the company. (Ozyasar, 2015)
The Gordon Growth models inputs are relatively easy to determine. The dividends can be found using any
platform or the general news (since they are announced publicly). The investor generally has an idea of the
required return he/she demands of a certain stock they are investing in i.e 12%. The problematic issue arises
in determining the rate at which a dividend will grow. This is determined through being able to make
assumptions on what product will grow in the market or in general which company will grow, which usually
makes final results "inexact" Ozyasar describes. The limitation of the Gordon Growth Model arises when
there is no constant growth rate on a stock dividend, which in reality as Ozyasar describes is almost never the
case. Despite these limitations the GGM is still a powerful tool used by investors constantly to make
decisions on what required return or growth rate would they require for a stock to be favorable and from that
an investor determines how to move on with their portfolio. For example Michael Blair discussed the use of
the

A Research On Risk Management
Risk management is a paramount activity in order to ensure long–term survival in the banking industry. In
order to remain as a going concern JPM has put in place vigorous infrastructure to mitigate and measure
risks across the firm.
Such infrastructure includes a risk department overseen by the Firm's Chief Risk Officer (CRO) and an
asset–liability committee (ALCO) which monitors the Firm's balance sheet, liquidity risk and interest rate
risk. The primary duties of the CRO as defined by JPM (2014 Annual Report, pg. 110) are as follows:
Establishing a comprehensive credit risk policy framework
Monitoring and managing credit risk across all portfolio segments, including transaction and line approval
Assigning and managing credit ... Show more content on Helpwriting.net ...
Credit Risk
Define:
Credit risk is defined by JPM as "the risk of loss arising from the default of a customer, client or counterparty
(2014 annual report, pg. 110)". This fairly broad definition encompasses large corporate clients, institutional
clients and individual consumers. In addition, JPM identified that the primary drivers of credit risk arise from
(1) residential real estate, (2) credit card, (3) auto loans, (4) business banking and (5) student lending
businesses.
In order to further define the characteristics of credit risk, the firm uses methodologies such as (1) a scored
exposure rating, and (2) a risk exposure rating to estimate the likelihood of counterparty default.
Scored Exposure
As securities are underwritten and issued to customers, they are transferred or essentially securitized into a
portfolio. Scored exposure is used a term that encompasses the scored portfolio held in consumer and
community banking (CCB). This portfolio predominantly includes residential real estate loans, credit card
loans, certain auto and business banking loans and student loans (i.e., the loans issued by consumer bank
Chase, as acquired by investment bank JPM following the alleviation of the Glass Steagall Act). According
to JPM, credit losses on their CCB loans are measured based on "statistical analysis of credit losses over
discrete periods of time and estimated using portfolio modeling, credit scoring, credit scores, and other risk
factors".

Notes On The Value Of Diversification
The value of diversification Introduction Every finance students have learnt diversification is to reduce total
risk by investing a basket of assets in portfolios. But what contributes to the success of portfolio
diversification? A large number of assets? A variety types of asset allocation? Adding international
investment? Numerous of risk factors? They are all indicators of a well–diversified portfolio. In this case, we
will discuss about the advantages and disadvantages of diversification in portfolio management with related
indicators. On one hand, some mention dynamic and numerous assets allocation in the portfolio will reduce
both risks. While some also state the benefit of introduce multi–factor portfolio pricing models. On the other
hand, arguments arise demonstrating adding international investment may disappoint investors because
foreign market could be correlated and moved together. Another disadvantage could be the correlated assets
collected weaken the effect of diversification. At the end, a balanced conclusion will be drawn to support the
useful diversification. Dynamic and numerous asset allocation benefits Since there are two types of risk we
need to account for: systematic risk and idiosyncratic risk, the easiest one to be diversified away is the
idiosyncratic risk. It is known that an optimal portfolio could gain on diversification by investing a large
basket of stocks. This is a good way to offset firm–specific risk. According to Bodie, Kane and Marcus

Irc, Cva and Var
Table of contents
I. Introduction 3
II. Incremental Risk Charge – IRC 4 1. Strengths of Incremental Risk Charge Model 4 2. Weaknesses of
Incremental Risk Charge Model 4 3. Effectiveness of Incremental Risk Charge Model 5
III. Credit Valuation Adjustment (CVA) 6 1. Strengths of Credit Valuation Adjustment 6 2. Weaknesses of
Credit Valuation Adjustment 6 3. Effectiveness of Credit Valuation Adjustment 6
IV. Stressed VAR 7 1. Strengths of Stressed VAR Model 7 2. Weaknesses of Stressed VAR Model 8 3.
Effectiveness of Stressed VAR Model 8
V. Conclusion 9
VI. References 10
VII. Appendices 13 1. Reflective Statement 13 2. Evidence of the preparation 15 3. Evidence of my
contribution and engagement with the session 16 ... Show more content on Helpwriting.net ...
Weaknesses of Incremental Risk Charge Model Under BCBS's approval, banks are expected to improve their
own IRC models to calculate risks for individual positions or sets of positions (BCBS, 2009b). It means the
Committee hopes banks will have their own choice of liquidity horizon which is appropriate with their
business without any issued industry benchmarks or standards (Stretton, 2011). However, it leads to
inconsistence within banking system. Furthermore, supervisors have to face with more difficulties in process
of evaluating banks' IRC model. Although IRC helps bank to capture risks more effectively, especially when
market and credit risks collide, there is a significant weakness still be existing. It is the overlap of
counterparty credit risk cooperated with over the counters (OTC) and repo–style transactions between IRC
and CVA (Stretton, 2011). As a consequence, it will lead to duplicate capital charge for the banks. Suggested
by Linsz (2010) – the corporate Treasurer of Bank of America, the Committee should apply an integrated
approach to combine the overlapping risks by deleting the risk above in IRC model, hence build up more
accurate capital charge for banks. In fact, Bank of America thinks duplicated capital charge is inappropriate
with risk management practices (Linsz, 2010). 3. Effectiveness of Incremental Risk Charge Model
According to BCBS (2009b), IRC model mainly compounds two types of risks: default risk and credit
migration risk. The origin

China Development Industrial Bank
CHINA DEVELOPMENT INDUSTRIAL BANK A case study Submitted to: Dr. Felix D. Cena, Phd
Submitted by: Jose Farley Y. Tagle Lalaine D. Cosadio Cherryl L. Villaruel Raymund S. Belleza July 17,
2011 Given: Assume that you recently graduated with a major in finance. You just landed a job as a financial
planner with China Development Industrial bank (CDIB), a large financial services corporation. Your first
assignment is to invest $100,000 for a client. Because the funds to be invested in a business at the end of 1
year, you have been instructed to plan a 1–year holding period. Further, your boss has restricted you to the
investment alternatives in the following table, shown ith their probabilities and associated outcomes. ... Show
more content on Helpwriting.net ...
High Tech Inc. is an electronics firm. When the state of the economy is above average or at its boom,
consumers purchase more products of High Tech Inc. than they would if the state of the economy gets worse.
Under this circumstance, we would expect High Tech's stock price to be high if the economy is well. Thus,
High Tech's returns are positively correlated with the economy because the firm's sales, and hence profits
will experience the same ups and downs with the economy. The opposite holds true with Collections Inc.
because the nature of the business is on collections of past–due debts. If the economy is in recession, people
are not expected to pay their debts on time. Consequently, this firm will be collecting a lot of past–due debts,
thus making its stock price to increase. The opposite will happen if the economy is performing well. This
explains why Collection's expected return moves counter the economy. Collections Inc. is considered by
many investors to be a hedge against bad times and high inflation, so if the stock market crashes, investors in
this stock should do relatively well. Therefore, this stock is negatively correlated with the economy. b.
Calculate the expected rate of return on each alternative and fill in the blanks on the row for r(hat) or the
expected rate of return in the previous table. The expected rate of return, , is expressed as follows: Here is the

Functions Of An Efficient Portfolio
A. Portfolio; feasible set; efficient portfolio; efficient frontier
A portfolio is a group of financial assets, differing in possible risk and return, and is managed by an investor
or a group of professionals. Generally, a higher return expected by a portfolio owner generates a higher risk
as well, and vice versa. The mix of financial assets can range, and these can include stocks, bonds, mutual
funds, and cash equivalents. Stocks are considered the most volatile of these options and thus generate the
highest return/highest risk, with bonds being one of the safer options, which only generate a low return/low
risk.
A feasible set of portfolios refers to the possible combinations of financial assets that an investor can have,
according to ... Show more content on Helpwriting.net ...
In contrast to portfolios with less diversification, which tend to be sub–optimal and below the curve, the
efficient frontier curve outlines diversified portfolios that are optimal. This is depicted by the graph attached.
{See Graph 1}
As outlined in the example diagram provided by YoungResearch, the efficient frontier adequately
demonstrates the impact of diversification, showing how it is a factor in determining the curve 's optimal
portfolios, determined by the amounts of risk (measured by standard deviation of annual returns) and return
(average of annual returns). For example, a portfolio with only 100% stocks would generate a large return of
12.5%, though also a large risk of 17%. This is the opposite to a portfolio of 100% bonds, where the return
would be smaller at 9%, though with significantly less risk at approximately 9%. Consider the bundle with
10% risk and 10.75% return, which is the one composed of 50% stocks and 50% bonds. This may be viewed
as a more favorable option for the investor, as return is higher than a portfolio with only bonds, though with
less risk, compared to a portfolio with only stocks.
{See Graph 2}
B. Indifference curve; optimal portfolio
Indifference curves represent the utility the consumer would obtain as a function of certain variables. In
portfolio theory, this would mean utility as a function of both expected returns and standard

Case Study Of Renault
Renault is French automotive manufacturer founded in 1899 by the Renault brothers in Boulogne
Billancourt. The company is now employing about 127,000 people all around the world.
Since 1999, Renault is linked to the Japanese automotive manufacturer Nissan trough an alliance, to become
the world fourth largest automotive group.
However, after several chess, the group decided to review its strategies and hire a new CEO. Therefore, the
company hired Carlos Ghosn as the new CEO of the group. He quickly established a new strategy for
Renault and he also wanted to implement a brand oriented strategy of a more global perspective than before.
In February 2014, Carlos Ghosn presented his mid–term review of the strategic plan for the group.
In ... Show more content on Helpwriting.net ...
Assess whether they are appropriate for the effective management of enterprise wide risks
As I mentioned above, suicides at Renault marked the minds of management team, but not only from a
human point of view, also from a marketing point of view.
Indeed another suicide took place on the workplace at Renault Cleon near Rouen (France), the employee left
a note before his suicide that said: "Thank you Renault, thank you for the years of pressure, blackmail to
work at night... Where the right to strike does not exist, do not protest or you will receive threats..."
Renault denied all charges about this case. Since the current crisis at Renault and the new director, all seems
less "politicized".
Orders come mainly from new director, and he has almost full power to turn everything around, including
more complex cadences of restructuration taking crisis apologize.
Renault previously was seen as a model for workers with many unions and full use, with many advantages.
Since this new direction, multiple suicides occurred, and more strikes appear to denounce the destruction of
hundreds jobs.
Previously the dialogue between unions and management was cordial, it is now almost

The Risks Of The Shipping Industry
The Risk sources in the Shipping Industry along with current opportunities and future threats to the
company's core business
"Technically, shipping risk can be defined as the 'measurable' liability for any financial loss arising from
unforeseen imbalances between the supply and demand for sea transport" (Stopford 2009). More specifically,
shipowners may face eight different risk types during their operation in the tanker market.
These risks can be categorized into the following types (Kavussanos and Visvikis 2006):
Business risk: Is the risk generated by volatility in freight rates which cause uncertainty to the shipowner's
income, in other words fluctuations in EBIT (Earnings Before Interest and Taxes).It depends on the demand
and the price of the product sold. It is influenced by (a) freight rates, (b) voyage costs (fuel costs, port
charges, canal dues and broking commissions), (c) operating costs (manning, repairs, maintenance, stores,
insurance and administration) and finally (d) exchange rates as income is counted in US dollars while costs
are counted in current exchange.
Figure 6. Average earnings of all tankers – Brent & Arab Crude Oil Prices.
In Figure 6 we distinguish the bunker price fluctuations. Bunker is a derivative of Crude Oil and as it
fluctuates it increases the volatility and the amount of risk exposure of the shipping company. More
specifically as the chart depicts, when Brent Crude Oil goes up the Average Tanker Earnings follow the
opposite

Finance: Weighted Average Cost of Capital and Market Risk...
Cost of Capital questions and practice problems
Questions
1. What does the WACC measure?
2. Which is easier to calculate directly, the expected rate of return on the assets of a firm or the expected rate
of return on the firm's debt and equity? Assume you are an outsider to the firm.
3. Why are market–based weights important?
4. Why is the coupon rate of existing debt irrelevant for finding the cost of debt capital?
5. Under what assumptions can the WACC be used to value a project?
6. How should you value a project in a line of business with risk that is different than the average risk of your
firm's projects?
7. Maltese Falcone, has not checked its weighted average cost of capital for ... Show more content on
Helpwriting.net ...
If Dot.com's marginal tax rate is 38%, what is its after–tax cost of debt?
7. Reactive Industries has a market value of debt of $20 million, with a rate of return of 6%, a market value
of preferred stock of $10 million, with a rate of return of 8% and a market value of common stock of $50
million, with a rate of return of 12%. Its tax marginal tax rate is 35%. What is its WACC?
8. The common stock of BCCI has a beta of 0.90. The T–bill rate is 4% and the market risk premium is
estimated at 8%. BCCI's capital structure is 30% debt, having a 5% YTM, and 70% equity. What is BCCI's
cost of equity capital? It WACC? BCCI pays tax at 40%.
9. RiverRocks is considering a project with the following projected free cash flows:
|0 |1 |2 |3 |4 |
|–50 |10 |20 |20 |15 |
The firm believes that, given the risk of this project, the WACC method is the appropriate approach to
valuing the project. RiverRock's WACC is 12%. Should it take on this project? Why or why not?

10. RiverRocks (whose WACC is 12%) is considering an acquisition of Raft Adventures (whose WACC is
15%). What is the appropriate

Risk Pooling in Health Care Finance
Risk Pooling in Health Care Finance Peter C. Smith and Sophie N. Witter Centre for Health Economics
University of York York YO10 5DD United Kingdom Report prepared for the World Bank Workshop
Resource Allocation and Purchasing in Health: Value for Money, Reaching the Poor World Bank,
Washington DC, May 14–15 2001 Revised November 2001 Phone Fax E–mail + 44 1904 433779 + 44 1904
433759 pcs1@york.ac.uk Acknowledgements The authors would like to thank Jack Langenbrunner, Maureen
Lewis, Alex Preker and Paul Shaw of the World Bank, Philip Davies of the World Health Organization, and
participants at the workshop for comments. Risk Pooling in Health Care Finance Contents RISK
POOLING IN HEALTH CARE ... Show more content on Helpwriting.net ...
28 EFFICIENCY OF
SUPPLY.................................................................................................................................................. 29
QUALITY OF CARE
.......................................................................................................................................................... 30 7
LOCAL CIRCUMSTANCES
........................................................................................................................................30 8 CONCLUDING
COMMENTS......................................................................................................................................32
REFERENCES
.............................................................................................................................................................................33
A. TECHNICAL APPENDIX
.............................................................................................................................................38 A.1 M
ODELLING THE NUMBER OF

Corporate Business Finance
Corporate Business Finance
Seminar 5
Project Finance
Lauren Leigh Essaram
207507339
Ruvimbo Mukorera
206525531
27 September 2010
Submitted in partial fulfilment of the duly performed requirement of International Business Finance, School
of Economics and Finance, University of KwaZulu–Natal
Abstract
Non–recourse financing has grown in popularity, especially in developing countries. It has done so more
specifically in the basic infrastructure, natural resources and also in the energy sectors. Large–scale
investments are mostly financed by project finance, due to the costs and complexities that face the standard
sources of finance. The main feature of Project Finance is in the accurate estimation of cashflows and a
precise ... Show more content on Helpwriting.net ...
There are a diverse range of definitions given for the term project finance, but in essence the underlying
theme that runs through them all is that it involves the creation of a legally autonomous project financed with
equity from one or more sponsoring firms and non–recourse debt for the purpose of investing in a capital
asset (Esty, 2006: 213). In simpler terms, according to R. J. Herring (2006), project finance can be defined as
a form of financing structure that is specialised in order to offer a few cost advantages when there is a large
amount of capital being invested. Project finance involves the use of funds that are raised for a specific self–
contained venture such as construction or a developmental project (Qfinance, 2009: 1). It is a useful and
innovative financing technique that has helped with the timely financing of many important and high–profile
corporate projects such as EuroTunnel, EuroDisneyland, Enron's Dabhol Power Plant, Iridium, Globalstar,
Global Crossing – the Atlantic Crossing and Pacific Crossing cables, Canary Wharf and so forth (Esty, 2006:
214). This type of financing can help with the facilitation and start of projects anywhere in the world, but is
especially good for projects that are undertaken in developing countries in which great difficulty arises when
trying to secure financial resources for a new project (Henrique and Sabal, 2006: 5). Project finance uses a
well engineered finance mix in order to

Notes On The Value Of Diversification
The value of diversification Introduction Diversification is worth more than a word. It works on reducing the
total risk of a portfolio with different asset types. But what contributes to the success of portfolio
diversification? A large size of portfolio? A variety types of asset allocation? Adding international
investment? Numerous of risk factors? They are all indicators of a well–diversified portfolio. But it is hard to
achieve a perfectly diversified portfolio in reality because you cannot diversify all types of risk. Following,
we will discuss about the advantages and disadvantages of diversification in portfolio management under
circumstances. On one hand, some mention that dynamic and numerous asset allocations in the portfolio will
reduce idiosyncratic risk and some level of market risk. While some also suggest benefit exists of
introducing multi–factor pricing models to cover different risk factors. On the other hand, arguments arise
demonstrating adding international investment may disappoint investors because foreign markets could be
correlated and moved together in a global world. Another disadvantage further defined will be the correlated
asset allocations weaken the effect of diversification. At the end, conclusion will be drawn to support the
useness of diversification. Dynamic and numerous asset allocation benefits Since there are two main types of
risk we need to account for: systematic risk and idiosyncratic risk, the easiest one to be diversified away is

Peachtree Securities Case Essay
Peachtree Securities Case
1. The return on a 1–year T–Bond is risk–free since it does not vary according to the state of the economy.
The T–Bond return is independent of the state of the economy because the estimated return is 8% at all
times. The only possible factor affecting a T–Bond may be inflation. 2. If we were only to consider the
expected return, then the S&P 500 appears to be the best investments since it has the greatest expected
return.
3. The standard deviation provides a measurement of the total risk by examining the tightness of the
probability distribution associated with the different possible outcomes whereas the coefficient of variation
measures risk per unit. The coefficient of variation is a
better ... Show more content on Helpwriting.net ...
Nevertheless, such reduction in diversification would make risk increase. The complete table "Risk and
returns of portfolios" provides the different changes.
5. The portfolio between TECO – S&P 500 has an expected return of
14.3% and a standard deviation of 14.1%. In this portfolio the correlation is greater than the one in the other
portfolio because the risk–reducing effect is much lower than the one in the portfolio TECO
– Gold Hill. (See all the possible combinations on TABLE 2).
6.
a) The portfolio's risk would decrease if more stocks were. The correlation between stocks is also relevant.
b) I think investors consider the risk as a whole rather than by each. Nevertheless, if a big part of a portfolio
is made up of a risky stock, it would make the portfolio more risky as a whole.
c) Total risk is made by Diversifiable (company–specific) risk and market (non–diversifiable) risk. Unique
events to a particular firm cause the diversifiable risk while factors that affect all companies cause the market
risk. The difference between diversifiable and market risk is that diversifiable risk can be reduced by
diversifying whereas market risk can not be eliminated.
d) No, because the market compensates risk diversification if you don't diversify is your fault and you should
be willing to accept the risk. 7.

The Role Of Debt Of Project Finance Essay
Table of Contents
Introduction 2
Role of Debt in Project finance 2
Pros and Cons of project finance debt 3
Identifying Project Risks 3
Difference from Corporate Lending: 4
Introduction Project finance is a term used freely by a number of professionals including bankers, journalists,
and academics in order to describe a variety of financing activities. Project finance is a decades–old term that
preexists corporate finance. However, the rolling growth in infrastructure undertakings in the developing
world funded by privately financed organizations is continuously attracting greater attention. When
considering financing for development, there are two main issues that need to be taken into consideration.
Firstly, the capability of financing must ensure adequate public spending meets anticipated social and
economic ventures. Secondly, the ability of long–term financing to provide economies that require and
growth and development enough capital to grow to their full potential. Government and intergovernmental
organizations play major roles in the provisions created in order to finance a development project. Between
the years 2000 and 2010, investments in local and external unindustrialized countries grew four times from
roughly $1.6 trillion to $6.9 trillion. The International monetary fund predicts that this value will double
again to $13.8 trillion by 2019. Developing countries in Africa have seen similar trends, all be it on lower
magnitudes. There was a triple in

Diversification: A Technique that Reduces Risk
Diversification is a technique that reduces risk by allocating investment among various financial instruments,
industries and other categories it aims to maximize return by investing in different arias that would each react
differently to the same event. Most investment professional agree that although it does not guarantee against
loss, diversification is the most important component of reaching long financial goals while minimizing risk.
Different types of risk–
Investors confront two main types of risk when investing
1. Undiversifiable –This type of risk is commonly known as systematic or market risk. This risk is associated
with each and every company. Causes are things like inflation ray, exchange ray, political instability, entrust
rate. This type of risk is not specific to a particular company or industry and it cannot be eliminated or
reduced through diversification, its just a type of a risk that investors must accept.
2. Diversifiable– This type of risk is opposite to systematic risk known as unsystematic risk and is specific to
a company, industry, market, economy this can be reduced through diversification the most common sources
are business risk and financial risk. So the main motive is to invest in different assets so that they will not all
be affected the same way by market events.
a) The economy of scale and economy of scope needs to diversification. Diversifying significantly helps in
growing a firm's ability to grow more rapidly. The main reason

A Current D / V Using Market Values
A Current D/V using market values: 41.%
B Risk–free return (rf): 4.58%
B Equity beta: 0.97
B Market risk premium (rm – rf): 7.43%
B Levered cost of equity (re) at current D/V: 11.79%
C Cost of debt (rd): 3.43%
C Corporate tax rate (t): 41.63%
D Unlevered cost of equity (re) at D/V = 0% 9.36%
E Average cost of capital (r*) at D/V = 60%: 7.03%
A) Current level of leverage:
The current level of leverage for Marriott Corporation is 41% as it the market leverage in the exhibit 3,
which is the book value of debt divided by the sum of the book value of debt plus market value of equity.
B) Cost of equity:
The risk free rate is taken as 4.58% as it is the average of the Long–term U.S. government bond returns from
1926 to 1987 in exhibit 4.
The equity beta given is 0.97, calculated for the period 1986 – 1987 using the stock returns. This beta gives
us the risk attached to Marriott Corporation's shares.
The market risk premium is calculated as 7.43%. As the market risk premium is the difference between the
expected market portfolio return and the risk free rate. The expected market return is 12.01% for the period
1926 – 1987, mentioned in exhibit 4 in S & P's 500 composite stock return index. The risk free rate is 4.58%.
The cost of equity is calculated using the CAPM formula:
Expected return = risk–free rate + β * (risk premium) re = 4.58 + 0.97 * (7.43) re= 11.79%
C) Cost of debt and corporate tax rates:
The cost of debt for Marriott Corporation is calculated

RSM332 Problem Set 2 Solutions
UNIVERSITY OF TORONTO
Joseph L. Rotman School of Management
RSM332
PROBLEM SET #2
SOLUTIONS
1. (a) Expected returns are:
E[RA ] = 0.3 × 0.07 + 0.4 × 0.06 + 0.3 × (−0.08) = 0.021 = 2.1%,
E[RB ] = 0.3 × 0.14 + 0.4 × (−0.04) + 0.3 × 0.08 = 0.05 = 5%.
Variances are:
2
σA = 0.3 × (0.07)2 + 0.4 × (0.06)2 + 0.3 × (0.08)2 − (0.021)2 = 0.004389,
2
σB = 0.3 × (0.14)2 + 0.4 × (0.04)2 + 0.3 × (0.08)2 − (0.05)2 = 0.00594.
Standard deviations are:
√
0.004389 = 6.625%, σA =
√
0.00594 = 7.707%. σB =
Covariance is: σAB = 0.3 × 0.07 × 0.14 + 0.4 × 0.06 × (−0.04) + 0.3 × (−0.08) × 0.08 − 0.021 × 0.05
= −0.00099.
Correlation is: ρAB =
σAB
−0.00099
=
= −0.19389. σA σB
0.06625 × 0.07707
(b) We can use the following ... Show more content on Helpwriting.net ...
The second one is eﬃcient, so the investor should invest $369.35 in asset A and the remaining $630.65 in
asset B. The expected return of this portfolio is
E[Rp ] = 0.36935 × 0.021 + 0.63065 × 0.05 = 3.93%.
For the third investor, we let wTb to be the weight of his portfolio that is invested in
Tb , we have σp = wTb σTb ⇒ wTb =

σp
7
= 1.1735.
=
σTb
5.964
b
Therefore, the third investor should invest wTb × wA = 1.1735 × 0.2118 = 0.24855, or b $248.55 in asset A,
wTb × wB = 1.1735 × 0.7882 = 0.92495, or $924.95 in asset B.
In addition, he needs to borrow $173.5 at the risk–free borrowing rate of RF,b . The expected return of the
portfolio is
E[Rp ] = (1 − wTb )RF,b + wTb E[RTb ] = (1 − 1.1735) × 0.02 + 1.1735 × 0.04386 = 4.80%.
2. (a) B and D are not minimum variance efficient portfolios. D is not efficient because
A offers same mean for less variance. As long as A and C are not perfectly correlated,
B will also not be minimum–variance efficient. This is because some combination of
A and C will offer the same mean return yet less variance than B. This is pictured below. 3
0.25
Minimum Variance Efficient Portfolio
C
Expected Return
0.2
B
0.15
ρAC = 1
0.1
A
D ρAC = 0.5
0.05
0.1
0.15
0.2
0.25
Standard Deviation of Return

0.3
0.35
(b) False, the higher is a security's beta (and not its variance), the higher is its expected return. A security's
variance is made up of two components: (i) market

Engro Foods Financial Statement 2013
Pakistan is a country with 182.1 million population at the moment. In the whole world, there are only few
countries with huge population. There was a big opportunity to get into the food market, as to cater a
growing population, more resources are needed. Not ignoring the fact that we are an agro based economy.
Besides that, in our country people love to spend money on food. Engro gets raw material locally.
Introduction
Engro Foods (EFOODS) is among one of the top FMCG organizations in Pakistan. It is one the fastest and
growing company. Engro Foods comes under the umbrella of its parent company Engro Corporation in 2005.
Engro Foods is a public limited company, and is listed at Karachi Stock Exchange. It trades in an open
market. Mainly the ... Show more content on Helpwriting.net ...
The full Board meets at least four times a year for approval of quarterly accounts and for long term planning.
We will do an analysis on financial statement of 2013, to clarify the position of Engro Foods and to discuss
some points related to Engro Foods.
Analysis of financial Statement 2013
Engro Foods got capital injections from the Engro Corporations, its parent company. The share capital
increased by 4.2 billion, from 4.3 billion in 2008, to 8.5 billion in 2013. Previously Engro foods incurred
heavy losses, however in 2013 the company's overall equity position strengthened. The dairy and beverages
sections reported a topline of Rs. 40 billion recording a 14% growth over previous year. Segment backed Rs.
1711 million company's profitability this year recording an increase of 9%.
Long–term Finances
The company continued to fulfill the capital needs by raising long term loans. Therefore, the long–term loans
have significantly increased over the years. Comparatively, from 2008 till now the long term loans to equity
ratio has decreased. From 51:49 in 2008 to 40:60 in 2013. The Company has been able to reduce this ratio
due to its higher cash generation

Telstra Corporation Limited Analysis And Cost Of Capital...
Telstra Corporation Limited (ASX:TLS), founded in 1901, is a company listed on ASX that is a large
Australian company and telecommunications and media provider.
With the use of technology rampantly increasing in society, Telstra is a company that appeals to a vast range
of people, providing consumers with mobile and media connectivity, businesses with necessary software and
network applications, and the sick and elderly with ehealth solutions.
This report addresses Telstra Corporation Ltd, its shareholders, risk–return analysis and cost of capital
review. 1.0 Shareholder Analysis
Telstra's 2015 annual report, and the Chairman's message outlines Telstra's 2015 achievements. Some of
which include increased return for shareholders, expanding coverage, increasing international connectivity
through foreign investments opportunities and improved energy efficiency by reducing.
Telstra is growing their telecommunication services in Asia by investing in Pacnet ltd, increasing the scale of
their operational capability, expanding their reach across the region and widening their customer base. These
achievements are likely to encourage potential investors who are well diversified to invest in Telstra, as they
appear to be devoted to projects that promote recognition of Telstra and broaden their customer base, which
in the long run result in increased profits.
Furthermore, Telstra is striving to reduce their environmental impacts, even working with their customers to
do

The Rules Of Finance : An Optimal Enterprise Solutions...
The Rules of Finance
The goal of finance is to find the optimal enterprise solutions that balance expected return and expected risk.
We can find and implement the optimal solutions by using financial information, tools, and models. In
finance we want to reduce expected risk and increase expected return, but since getting rid of risk entirely is
impossible we look for the best combination of the two. Even though a riskless venture is not possible, Harry
Markowitz, a talented economist, brought forth (to our delight) the efficient frontier theory. The purpose of
Markowitz theory is simply to find the obtainable enterprises that have the highest expected return for any
given risk. This set of enterprises creates an optimal portfolio.
What does return mean? It is the expected future cash flow from an investment. Why? Because the sole
reason we invest is because we want that cash! If we really want cash, then why can't we just focus on that?
You might ask. Well, that is when risk comes into the equation. Risk, is the always present deviation that we
expect from those good–looking future cash flows.
The Tools of Finance In order to determine the appropriate amount of expected return, given any level of
risk, we must use the most important and widely used tool of finance: Discounted Cash Flows. The projected
cash flows are our measure of value, and the discount rate that we use on these cash flows takes care of the
expected risk. The result is a number that tells us everything

Zeus Asset Management
Business and Economics Technical Content Go8 Business and Economics Funds Management
Performance (BKM Ch 24) Introduction § Investment Performance is a complicated subject §
Theoretically correct measures are difficult to construct § Different statistics or measures are appropriate
for different types of investment decisions or portfolios § Many industry and academic measures are
different § The nature of active management leads to measurement problems Introduction § Two
common ways to measure average portfolio return: 1. Time–weighted returns 2. Dollar–weighted returns §
Returns must be adjusted for risk. AFF5300 Case Studies in Finance 4 Dollar– and Time–Weighted
Returns ... Show more content on Helpwriting.net ...
AFF5300 Case Studies in Finance 17 2 standard deviation = 30% Figure 24.2 M of Portfolio P 2 AFF5300
Case Studies in Finance 18 Which Measure is Appropriate? It depends on investment assumptions 1) If the
portfolio represents the entire risky investment , then use the Sharpe measure. 2) If the portfolio is one of
many combined into a larger investment fund, use the Jensen α or the Treynor measure. The Treynor
measure is appealing because it weighs excess returns against systematic risk. AFF5300 Case Studies in
Finance 19 Portfolio Performance Is Q better than P? AFF5300 Case Studies in Finance 20 Treynor's
Measure AFF5300 Case Studies in Finance 21 Performance Statistics AFF5300 Case Studies in Finance 22
Interpretation of Table 24.3 § If P or Q represents the entire investment, Q is better because of its higher
Sharpe measure and better M2. § If P and Q are competing for a role as one of a number of subportfolios,
Q also dominates because its Treynor measure is higher. § If we seek an active portfolio to mix with an
index portfolio, P is better due to its higher information ratio. AFF5300 Case Studies in Finance 23
Performance Measurement for Hedge Funds § When the hedge fund is optimally combined with the
baseline portfolio, the improvement in the Sharpe measure will be determined by its information ratio: ⎡ α
H ⎤ S = S + ⎢ ⎥ ⎣ α (eH ) ⎦ 2 P 2 M 2 AFF5300

Billabong International Ltd
Risk Management Policy
Billabongs' activities are exposed to a variety of financial risks, these include; market risk (including foreign
exchange risk and cash flowinterest rate risk), credit risk and liquidity risk. To minimize potential adverse
effects on the financial performance of Billabong, the overall risk management program focuses on
theunpredictability of financial markets (Billabong Annual Report, 2011).
The framework is based around the following risk activities: * Risk Identification: Identify all significant
foreseeable risks associated with business activities in a timely andconsistent manner; * Risk Evaluation:
Evaluate risks using an agreed risk assessment criteria; * Risk Treatment/Mitigation: Develop ... Show more
content on Helpwriting.net ...
The analysis of this information determines that the company may predict the share value to increase.
The reinstatement of the DRP may be considered for future dividends beyond the final dividend for theyear
ended 30 June 2011.Directors have recommended the payment of an unfranked interim dividend of 3.0 cents
per fully paid ordinary share(Billabong, 2012). Billabongs' dividend history is shown in Appendix 1.
The table below shows Billabongs'historical DPS (A$) and the payout ratio over the last 6 years. Due to
Billabongs' high payout ratio, we can determine that the firm is returning cash to the shareholder in the form
of dividends, rather than re–investing the profits in the company.
–––––––––––––––––––––––––––––––––––––––––––––––––
Y/ E 30 June 05/ 06 06/ 07 07/ 08

Risk Analysis Of Global Finance Incorporated Inc.
GFI Risk Assessment Celida M. Bruss CMIT 425 8 July, 2015 Executive Summary The following risk
analysis of Global Finance Incorporated (Inc.) addresses the weaknesses discovered not only in the physical
and logical infrastructure, but in the corporate climate that dictates security and technology operations for
GFI Inc. GFI leadership must compromise on how to manage its assets by dividing what it can among
internal IT staff and outsourcing less critical functions to a commercial cloud provider. Additional findings
from the Risk Analysis reinforce the need for a new and updated architecture.
The recommendations contained in this Risk Analysis propose an enterprise re–configuration in which GFI
Inc.'s corporate functions are outsourced to a cloud provider and critical internal operations regarding the
handling and storage of sensitive customer data is maintained within the GFI Information Technology
Division. GFI Inc.'s risk analysis also facilitates implementation of newer, more secure technologies and
security practices that previously allowed sensitive customer information to be breached and confidence in
GFI's ability to secure its most valuable assets to be compromised.
While damage to a reputation can never be undone, the implementation of secure authentication and access
technologies as well as an updated enterprise architecture bring GFI's operating environment on par with its
strategic goals.
Table of Contents Executive Summary 1 Purpose 3 Information

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