Educational Resources for All
Bond covenants might include: (i) An asset covenant. This would govern the company‟s acquisition, use and disposal of assets. This could be for specified types of assets, or assets in general. (ii) Financing covenant. This covenant often defines the type Read more
The range of stakeholders may include: shareholders, directors/managers, lenders, employees, suppliers and customers. These groups are likely to share in the wealth and risk generated by a company in different ways and thus conflicts of interest are likely to exist. Read more
Timing of investment at Stock Exchange The ideal way of making profits at the stock exchange is to buy at the bottom of the market (lowest MPS) and sell at the top of the market (highest MPS). The greatest problem Read more
Advantages of Investing in Shares 1. Income in form of dividends When you have shares of a company you become a part-owner of that company and therefore you will be entitled to get a share of the profit of the Read more
Advantages/functions/case for development financial institutions 1. They provide venture capital 2. They provide facilities for large lending 3. They provide technical expertise and support emerging projects transferable from other sectors of development economies. 4. They are risk capital providers in Read more
(a) Development banks and specialized financial institutions: – There are some sectors in the economy that may not secure adequate funds from commercial banks for various reasons. (a) May take a long time to realize returns (b) High risk associated Read more
A rights issue is a method of raising new share capital by means of an offer to existing shareholders, inviting them to subscribe cash for new shares in proportion to their existing holding. It is by far the most important Read more
As an alternative to direct investment in a project, the company may be able to consider a licensing or franchising agreement with another enterprise, under which the licensor/franchisor company would receive royalties. It may be possible to contract out parts Read more
Capital rationing: a situation in which a company has a limited amount of capital toinvest in potential projects, such that the different possible investments need to be compared with one another in order to allocate the capital available most effectively. Read more
– The tax treatment of capital purchases can affect an investment decision because where tax relief is available, the tax benefits serve to reduce the effective cost of an investment. For example, suppose that a company estimates the net present Read more