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Pages:
3 pages/≈825 words
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Level:
APA
Subject:
Literature & Language
Type:
Case Study
Language:
English (U.S.)
Document:
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Topic:

Principles of Managerial Finance (Case Study Sample)

Instructions:
I have several questions that need two pargraph length response. I will attach the question. source..
Content:

Principles of managerial finance
{Insert student’s name}
{Insert instructor’s name}
{Insert course name}
October, 6th 2011.
Principles of managerial finance
E2–1
This means that they are the intermediaries between the financials institutions and the investors. Thus, the group individual deposits money at the financial institutions, buy shares, insurance premiums and protection in addition to contributing to pension plans. Moreover these individuals provide credit facilities to financial institutions by providing loans or buying debt securities. In addition to that they are responsible for purchase of stocks that are issued by financial institutions.
If individuals reduce the supply of money to financial institutions, interest rates will increase and thus there will be lower investment opportunities in the country. In addition to that it will result into reducing the money that consumers have therefore making them to feel poorer and thus they spend less. Moreover, prices in the stock market will reduce this is because as financial firms will fail to issue debt and equity to the public.
E2–2
By raising funds through financial institution assistance and not through financial markets, the company will be in a position to raise funds through securities, debts or even equities. The process involved in the financial institutions entails applying for loans. Whereas to raise money through financial market, the company will have to sell and buy securities like bonds and stocks which may take a considerable long time. In addition to that the company will have to sell commodities by involving the financial market which will have to look for market for their commodities.
E2–3
Firms trade securities in the money market and not capital market when the firms want to buy a certain preferred stock in addition when they want to use money market as a parking point for their money. Furthermore, the firms will prefer money market when they have the need of trading different types of securities.
E2–4
Mortgage-baked securities refer to the process whereby individuals lend money to either a business or a homebuyer. Before investing in this type of securities one has to ask him or herself the following questions.
What is the process of buying or selling the securities?
What are the involved risks and objectives in this type of investment?
What are the existing strengths when one buys mortgage-backed securities?
What is the minimum investment amount that is involved when buying mortgage backed securities?
What are the major uses of mortgage-backed securities?
What are the involved government policies regarding mortgage-backed securities?
What is the difference of this type of securities with others being offered in the market?
E2–5
The dividend given by the company is calculated as: annual dividend per share/ stocks price per share. The promissory note is calculated by princi...
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