What Is Returns to Scale Economics

New Orleans A Controversial Theory Of The Politics Of...

While New Orleans may be a city marked with sin and French flirtation (a legacy of Storyville), the rest of the state very much rejects such behavior. If one drives too far from the heart of the Crescent City, the attitudes of the people they encounter will most likely change and quite quickly at that. For while Nola’s residents may celebrate debauchery and a slightly freer form of love, the rest of the state demands Christian morals and conservative views. Therefore when a sex scandal comes forward, Louisiana is far from the most forgiving state in the Union- a disappointing realization for Senator David Vitter, who just unsuccessfully ran for governor of the Bayou State. Marked with three prostitute scandals, he was unable to win the trust of Louisiana. But why is it that a sexual scandal can leave such political destruction in its path? Gayle Rubin offers an answer in their text, â€Å"Thinking Sex: Notes for a Radical Theory of the Politics of Sexuality. Due to Vi tter s position of political power, he was societally expected to strictly follow sexual conduct. By failing to do so, he lost the trust of Louisiana residents. Rubin’s theory on sexuality completely transformed the way feminists in that period thought about the intersection of gender and sexuality. By declaring the necessity that sex must be its own category with its own theory, Rubin would forever change the face of sexual theory. They start out by examining the consequences of Victorian morality onShow MoreRelated Mumbo Jumbo by Ishmael Reed Essay3625 Words   |  15 Pagesaspects of a postmodern book. If we are to understand why this book has an important place in the American literature we have to study this novel through these aspects: Its style, and more important, the all familiar themes which are taken up through a new vision successfully by Reed. The first aspect that makes Mumbo Jumbo a postmodern novel is its style. First of all Mumbo Jumbo is an experimental novel that actually employs more textbook than novelistic conventions. It contains illustrations, footnotesRead MoreReading Mumbo Jumbo3739 Words   |  15 Pagesaspects of a postmodern book. If we are to understand why this book has an important place in the American literature we have to study this novel through these aspects: Its style, and more important, the all familiar themes which are taken up through a new vision successfully by Reed. The first aspect that makes Mumbo Jumbo a postmodern novel is its style. First of all Mumbo Jumbo is an experimental novel that actually employs more textbook than novelistic conventions. It contains illustrations, footnotesRead MoreLogical Reasoning189930 Words   |  760 PagesExplanation ................................................................................................ 438 Induction from the General to the Specific ................................................................................. 438 How New Information Affects an Argument’s Strength ............................................................. 439 Statistics and Probability ...............................................................................................................

Component of Financial Statement Free Essays

16th January 2012 34 Mansion road Granchestor meadows Oxford Ox1 6ds Dear Mr Han , I am writing this letter to explain to you the component of your financial statement, this includes the Balance sheet at 31st of March 2011 and the profit and loss account for the year ended in 31st of March 2011 , hope you have a b etter understanding after reading my letter. The Profit and Loss account shows whether your business has made profit or loss , over your financial year. This also shows how much sales you’ve made and how much loss, it helps you make decisions in the future and improve on your business. We will write a custom essay sample on Component of Financial Statement or any similar topic only for you Order Now You may also view whether you made Profit or loss weekly, monthly but usually it is shows yearly. Revenue Expenditure is the money you spend on items on a day to day basis. This may vary depending on the Business type. Some examples of what may be included is, Premises costs, staff costs, purchase stock. These are the Revenue expenditure from your account. Rents and Rates – ? 6,000 Wages and salaries – ? 3,920 Advertising – ? 1,500 Telephone and postage – ? 190 Revenue income is the money coming into the business from performing its daily tasks; these also vary on the type of business owned. Some of the examples of revenue income within a business are sales, commission received and also rent received. The revenue incomes from your account are Sales at a cost of ? 63,850. Balance sheet this is a businesses’ net worth at a particular point. Balance sheet also shows the value of a business as it states what the business owns also known as assets and also known as liabilities. Capital Income is the money that is invested into the business by its owners and all other investors. The money is usually to set up the business, have equipment. It is usually equipment that will stay and be used in the business for a longer period of time an example may be Premises. The capital income of your account is a capital of ? 16,000. Capital expenditure – These are used to buy capital assets that stay in the business for a long period of time some examples may be , Buildings, Machinery ,Office , Furniture and fittings. Here is the capital expenditure from your Accounts . Equipment ? 13,175 Motor Vehicles ? 2,400 The profit and loss account calculates the amount of profit that is left after the cost of producing goods and service it is then deducted from the amount of sales revenue, this is calculated by sales revenue take away costs of goods that have been sold. Cost of sales is the value of stock that is used to generate the sales, the calculation for costs of goods sold is Opening stock plus purchases take away closing stock. Net profit is the money left after all the other expenses have been deducted from the gross profit and also any other income that has been added on, this is calculated by adding the Gross Profit to expenses. Fixed assets are the items that a business owns and that will stay for a long period of time , you may see this on a business balance sheet that will include Buildings, Machinery ,Office , Furniture and fittings. These assets lose their value over a period of time, meaning that after every year the value in the balance sheet is reduced to give affair value of the asset. The fixed assets from your account are Equipment and also Motor Vehicles. Current assets ,are the items of value that are owned by a business whose value is likely to rise and fall irregularly in number or amount on a regular basis ,this also occurs every time the business makes a transaction. Current assets include Stock – ? 7,400 Debtors – ? 150 Cash in the bank – ? 560 Cash in hand – ? 250 Current liabilities –Is what is owned by a business and it should be paid back in less than one year of time the examples are creditors and also overdrafts. The current liabilities from your account are Creditors at ? -1610. Net assets – This shows the total value of the entire assets take away the value of the liabilities. Net assets are calculated by Current assets plus fixed assets take away (current liabilities long term liabilities) the total of your net assets are ? 12,325. Capital employed –This represents the capital investment necessary for a business to function. Consequently, it is not a measure of assets, but of capital investment: stock or shares and long-term liabilities. It’s the initial capital invested in the business calculated by profit and opening capital being added minus drawings. Capital employed and net assets always have the same /equal answers. After the explanation of showing the purpose of Profit and loss account, explaining and giving calculations and examples I hope it helped you understand, if any questions please contact Yours sincerely. How to cite Component of Financial Statement, Papers

Financial Management Macroeconomic Condition and Composition

Question: Describe about the Financial Management for Macroeconomic Condition and Composition. Answer: Part-A Q1 (i) factors influencing the expected return on a portfolio The rate on a portfolio depends on many factors like macroeconomic conditions and portfolio composition and we have to see that to what extent it meets the financial objectives of the investors. Mix In portfolio investment the assets which we are mixing determines the return. There is always a risk return tradeoff in each asset when the risk is higher the higher the volatility and the return potential. We can take an example shares are more risky and volatile than bonds, the expected rate of return on shares can exceed than bonds over long term period. Fundamentals The strategic and operational fundamentals of the businesses affect the expected rate of returns. The company should be in a position to take the advantage of the opportunities and it can respond to the competitive threats effectively. Economy The macroeconomic conditions affect the expected rates of return .when the economy is growing economy that means more people have jobs and they spend more. For the businesses there is increase in sales, profits and the business now make the investment in new employees and equipment. Other factors The fiscal policy, political stability and regulations also affects on the expected rate of return .when the fiscal deficits are large it reduce the flexibility of government which results the borrowing cost of business become higher (Basu, 2011). Q1 (ii) Distinguish between Selection and Allocation in the Context of Portfolio Management Allocation means the ability by which we can allocate the assets to various sectors or groups. It measures our ability how effectively we can allocate the assets to different sectors. It measures that when the stock is overweighting or when it is underweighting of sectors and it is relative to a benchmark whether it contributes either positive or it may be negative to the accounts overall return (Interactive brokers, N.D). Selection means the ability by which securities are selected from a sector which is relative to a benchmark. It is a part of managers skills and performance attributable when he is selecting securities. When the managers choice of security is bullish, benchmark will be under weight on choosing security. On the other hand, if a managers choice on a security is bearish, then the benchmark will be over weight on the choosing security (Rau, 2013). Part B QB1) market efficiency and 3 notions of market efficiency This concept is taken from the market hypothesis, and it suggests that the price of the security reflects all the news about the security. The important point to consider is that if the market is efficient the security price is not affected by any information which is expected by the investors. Only that information will impact the price that is not fully expected by the investors. The 3 notions of market efficiency are as follows. The weak form states that the present stock price of the stock show all the data of past market. So the stock price will be reflected by the past data and the trader cannot guess the prices of stocks in future based on past stock price. Semi strong form states that the present stocks prices show the information which is publically available and it also includes the past information. This form also encompasses the weak-form. So any investor does not use the information which is publically available to identify the mispriced securities. The strong form states that stocks prices will include all the information whether it is public or private .So, if a market seems to be efficient, then the traders who have insider information of market cannot take benefit to make abnormal profits (Maverick, 2015). QB2) (A).The Capital Asset Pricing Model According to CAPM, theexpected return from a security is equal to the rate on risk free security adding a risk premium with it. After that, assets systematic risk can be multiplied by it (Wagner, 2016). In financial Management, risk is a part of return on security i.e.when risk is more or when risk is taken the return would be higher and lesser will be the chances of loss (Harvey, 2011). The model depends upon certain assumptions. There are 9 assumptions. The original assumptions were: Investors are those persons who want to maximize their wealth and for this purpose, they select the investments which give them expected return and standard deviation. Investors have unlimited amounts that can be borrowed or lend at rate which is free form risk. Short sales own no barriers. The investors have same expectation which is related with market. Financial assets are sold at market value and are divisible. Absence of Cost of transaction. Tax free. The acts which the investor perform have no influence on market price. All financial assets quantities are given and it is fixed (Eugene and Kenneth, 2004). QB2) (b) Arbitrage pricing theory (APT) It is a process to determine the price of anyasset. The main assumption of this theory is that various factors like macroeconomic, market and security-specific factors influence the return on assets. The model is based on pricing of asset and on the idea that the returns on asset can be determined by studying the association between that assets and risk factors involved. Stephen Ross evolved this theory in 1976. It explains the connection of the returns of a portfolio with return of a single asset which consist the combination of independent macro-economic variables. It is a one-period model with the assumption that the stochastic property of returns of capital assets is reliable with a structure factor. The author argue that if price of symmetry offer no opportunity over still portfolios of the property, then the expected returns on the property are just about closely connected to the factor loadings (Huber man and Wang, 2005). QB3) (A) In the past thirty years the founders have found out a various cross sectional patterns related to return on equity are called effect. For Example effect of volume, price effect related to cash flow and influential effect and liquidity effect. The similar study has revealed the CAPM model of Sharpe, linter and black but it cannot explain in equity returns. So these effects are termed as anomalies, because they are not consistent with the combined theory of market competence and the properly specific asset pricing model. According to Fama, to test the market efficiency a combined test of the asset pricing model and market efficiencys have been conducted but these anomalies do not show the proof of inefficacy prevailing in market but it shows that the asset pricing method is not clearly specified. They propose 3-factor model to make clear the equity returns that is called FamaFrench model. The factor has argument that CAPM model contains two more factors. It covers the return premium of little firms above huge firm and of high B/M firms in excess of short b/m firms. Fama and French (1993, 1996) explained that the 2 extra factor which is connected to dimension and B/M that detain the danger is orthogonal to market factor and, so their model is a multifactor danger based model (Ghaghara, Lee And Veeraraghavan, 2009) (B) According to the studies made by Fama and French mainly their 1993 and 1996 studies it display that their model is performing well in USA .The adjustedr2s from their regressions are around 8090 percent. And furthermore their model explain a number of CAPM anomaly as a consequence of their work and like study made by additional researchers the FamaFrench model have turn into fairly.. There is a restraint in Australian investigation is that the asset pricing models are experienced on a big number of portfolio , and B/M portfolios are used as the test portfolios next Fama and French .the market of Australia is very small than the US market and the market comprise of only few stock. So we can say that it is not appropriate to test the model on a huge number of portfolio. The main cause is that the normal divergence of the portfolio income is too high as the no of stocks in the portfolio is very little this will prejudice the analysis that the model is rejected. So we have to examine the model on lesser number of portfolios. In this study, model can be tested on a much lesser number of portfolios. Main objective behind their work is that if the model gives good description about equity returns then it is able to explain the returns of the test portfolio created by sorts on which is recognized CAPM anomaly. The model become accepted because it explain the returns on many sets of test portfolios in the USA and the Australian research has not tested the FamaFrench model on the groups of portfolios which is formed by sorting on a broad variety of firm feature. So the second motivator to test the model on portfolio which is created by sorts the characteristics which is known to give details the cross-sectional difference in equity returns in order to inspect whether the model explain any experiential belongings. Finally, in 2007 Gharghori find a feeble proof of a leverage effect and various studies of Australia have examined the volume, B/M and liquidity effects and the majority of the findings are consistent with the determining Australian text. Hence it is less proof about the E/P and leverage effect in Australia and according to information, print work on the C/P effect. So an inspiration of the current study is to reinstate whether the size, B/M, E/P, C/P, leverage and liquidity effects subsist in Australia (Gharghor, Lee and Veeraraghavan, 2009). Part C QC.1.a Motives behind mergers and takeovers We split the motive behind merger and takeover into 3 main groups: Strategic motives These motives are easily justified and the transactions are mostly significant and essential. success will not be guaranteed only if there is a strong intentional motive The management of process of integration may be poor, wrong target may be chosen or price paid is of higher value. Financial Goals Financial Goal is a key element in all takeovers and mergers all are intended to attain a acceptable rate of return for the investment and danger been taken, however, there may be situation when the reason behind the transaction is monetary rather than planned. The financial returns are very important and it derives the deal. Managerial motives When any MA fails we can trace it back and called them as managerial motives. It is a not a good news for a shareholder of a business who is in takeover business, this transaction of merger and takeover destroys the amount of shareholder value (Riley, 2012). QC.1.b Corporate control means the right to appoint, fires and set the payment is set for the managers who holds top position. When the bidding company takeoff the firm; the controlling privileges of the firm which is acquired are transfer to the acquiring firm BOD. The controlling rights are retained by the corporate boards and they hand over the privileges to supervise the corporate wealth to the managers. So the resources of the target are managed by acquiring firm top management. Takeover can be done by 3 methods like tender offer, merger, through proxy contest, and most of the time all the 3 elements are present. In merger the company who is bidding offer to the company to buy common stock at a value which is surplus of the target firm earlier MV. And when we talk about mergers they are manage with the target managers directly it is approved by the BOD of the target company before the vote of shareholders approval. Tender offer means directly buy the shares of shareholders who make a decision on their own whether they wanted to give their shares for sale. Proxy contests take place when a dissatisfied group mostly led by an unhappy manager or by large stockholder and they attempt to increase the seats on the BOD of the target firm (Jensen and Ruback, 1983). An overview of the issues and evidence Mannes article initiate an interest in how controlling market attracts big corporation, and in a lot of cases the information about many facets of the market for corporate control has enlarged significantly. This body of technical information about the business conquest market provide the answer of the question stated below: How large the shareholders of both the firms of gains? Due to opposition of the bids by the manager of target firms it diminish the shareholder prosperity? Does antitrust resistance to takeovers compel costs on merger firms? Whether proxy contests exaggerated shareholder wealth? voting rights of the corporate are precious? Short evidences provide a supportive guide to the more in depth conversation that follow. Many studies guess that what are the effects of mergers on the stock prices the participate companies. There are 2 tables 1, 2 and they present a prcis of changes in the prices of stocks for both winning and failed takeover in the study. The returns in the tables represent our mixture of the evidence. Discussion of the details of the studies and the issues that lie behind the estimates in the tables is contained in section 2, the prosperity effects of takeover activities. Table 1 Abnormal percentage stock price change linked With winning company takeovers takeover technique target % bidder % Tender offer 30 4 Merger 20 0 Proxy contests 8 N.A Abnormal percentage stock price changes associated With failed company takeover bids takeover technique target % bidder % Tender offer -3 -1 Merger -3 -5 Proxy contests 8 N.A Table 1 depicts that target firms has a winning takeovers experience statistically important and the prices are changed twenty percent in mergers and thirty percent in abnormal tender offers. The firm which is acquiring realize a major abnormal profit of four percent of in tender offers and 0 in mergers. And the second tabledepicts that together the companies that is bidders and targets suffers a little negative abnormal stock cost change in failed merger and tender offer takeovers, even though only the -5% return for failed bidders in mergers is considerably dissimilar as of 0. Stockholders holding proxy contests in the corporation earn normal abnormal returns of about eight percent . It was astonished that these returns are not significantly lesser when the insurgent group lose the competition. The difference between the large stock price increase for winning target firms and the irrelevant stock price changes for failed targets indicate that the profit of mergers are realize only when power of the target firms assets is transfer to a acquiring firm. It suggest that the target firm stockholders have harmed when the managers of the target oppose the takeover bid and take additional measures that decrease the chances of winning acquisition. Moreover, the target managers have change when, the takeover loose control, reputation and the value of organization human capital, they can resist the takeover bid still. They take advantage significantly from the acquisition. When management resist to a bid it will gain stockholders when it lead to a superior takeover cost or else the prices of stock greater than before. When the management resist it effects on share shareholder prosperity and it is an experiential substance. Now we see the result of corporate network on the takeover. And we see that the companies which are better connected are more lively bidders. Both the companies have 1 or 2 directors common, there are always a chances that the transaction will be completed fruitfully without arguments and the time taken in the negotiation is very short a bidder and a target have 1 or more directors in general, the probability that the takeover transaction will be successfully completed augments, and the length of the discussions is shorter. The associated targets often accept offers that occupy equity. The worth of the information of the directors network consist of directors ability how they collect the information which is non public about the target or bidder and the synergies in an MA. corporations who have superior information can access (through networks) are and they discover precious targets and can start more takeovers. The 1st question that is asked is that the takeovers occur between the firms having familiar directors? It may be possible that the firms, who want to take over another firm, offer a directorship to any director of a potential target or bidder, respectively. One of the significant issues of negotiation is the payment method it may be in money, equity or both. So it all depends on market conditions, the acquiring company policy which he adopts against the target company that the takeovers increase the value of the target, or the bidder company, or its aggregate market value (Renneboog and Zhao, 2014). References Basu.C, Studio (2011) factors influence the rates of return on an investment, accessed on 16 august 2016 from https://finance.zacks.com/factors-influence-rates-return-investment-1420.html Rau.R (2013) asset allocation vs. Stock selection: evidence from a simulation exercise, pages 1-15 https://deutscheam.com/assetdownload/de/43dcef382b2a412880243e21edd63093/asset-allocation-vs.-stock-selection_-evidence-from-a-simulation-exercise.pdf Interactive brokers (N.D.), performance attribution white paper, Pages 1-5, accessed on 16 august 2016 from file:///c:/users/guest/downloads/performance_attribution_white_paper.pdf Maverick.J.B. (2015), what are the differences between weak, strong and semi-strong versions of the efficient market hypothesis? , accessed on 16 august 2016 from https://www.investopedia.com/ask/answers/032615/what-are-differences-between-weak-strong-and-semistrong-versions-efficient-market-hypothesis.asp Foundations of finance: Market Efficiency, lecture notes 17, pages 1-14, accessed on 16 august 2016 from https://people.stern.nyu.edu/ashapiro/courses/b01.231103/ffl17.pdf Finance train, market efficiency and its three forms, accessed on 16 august 2016 from https://financetrain.com/market-efficiency-and-its-three-forms/ Campbell r. Harvey, (2011) professor of finance, Fuqua School of business at Duke University Nasdaq,.com, capital asset pricing model (CAPM ) accessed on 16 august 2016 from https://www.nasdaq.com/investing/glossary/c/capital-asset-pricing-model Eugene F. Fama and Kenneth. R (2004), the Capital Asset Pricing Model: theory and evidence, journal of economic perspectives, volume 18, Number 3summer, pages 2546 https://www.maths.usyd.edu.au/u/ug/im/math2070/r/famafrench_jep2004.pdf Wagner. J (2016), capital asset pricing model (CAPM): Definition, Formula, Advantages Example accessed on 16 august 2016 fromhttps://study.com/academy/lesson/capital-asset-pricing-model-capm-definition-formula-advantages-example.html Huberman. G and Wang. Z, (2005) arbitrage pricing theory, Federal Reserve Bank of New York staff reports no. 216, jel classification: g12, pg 1-20 accessed on 16 august 2016 from https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr216.pdf Riley. J (2012), the main motives behind takeovers andmergers, accessed on 16 august 2016 from https://www.tutor2u.net/business/blog/the-main-motives-behind-takeovers-and-mergers Renneboog and Zhao, (2014) Director Networks and takeovers, Journal of Corporate Finance, Vol. 28: 218234. Jensen and Ruback (1983) The Market for Corporate Control, Journal of Financial Economics, Vol. 11(April): 5-50 Gharghor, P., Lee Roland and Veeraraghavan, M. (2009) anomalies and stock returns: Australian evidence, accounting and finance, vol. 49 pp 555 576..