Financial Markets and Institutions Essay Example | Topics and Well Written Essays - 500 words - 1

Financial Markets and Institutions - Essay Example The interest can either be fixed or variable. Fixed-rate pays interest irrespective of the institution making enough money to pay, but variable rates can vary depending on the market conditions prevailing. The bonds which interest rate are expected to reduce can either be attractive or not depending on the view of the investor. A reducing rate bond will earn less hence unattractive, but on the other side it can be a tax haven vehicle as corporate bonds are subject to federal taxes in mark up. Low-rate bond will either be tax exempt or attract low taxes hence it can be attractive from this viewpoint. To a firm a reducing rate bond is attractive as it will cost less to issue and service the bond. Conversely, a firm expecting the rates to increase has to consider other cheaper sources of financing like bank loan if it has less interest rate than what they will pay on bonds (Zacks ETF Research,2012). 14. Bond Downgrade. . Explain how the downgrading of bonds for a particular corporation affects the prices of those bonds, the return to investors that currently hold these bonds, and the potential return to other investors who may invest in the bonds in the near future. Downgrading a bond would mean that the price of the bond will reduce significantly to market equilibrium set by sentiment about the company’s ability to service the bond. Downgrading arises from the ability of the company to service the bond which can be observed from the financial status of the company. If the company is facing financial difficulties, it might be able to pay the bonds when they mature or service current interest rates. Current investor will lose the value of their investment hence can offload the bond which can further reduce the price because of the low demand. When the price will have fallen to the least possible, it can be attractive to new investors who think that the price will rise in future. 15. Junk Bonds. Merrito Inc. is a

SWOT analysis for Gymboree Essay Example | Topics and Well Written Essays - 500 words

SWOT analysis for Gymboree - Essay Example 1) Size of the Company: Gymboree Corporation runs more than 900 retail stores. This gives the firms an edge over its competitors and allows the company to operate on a large scale enjoying the economies of scale. 2) Multinational Operations: The firm is found to be present in more than one country. This means that the firm does not have all its eggs in one basket and it can weather the storm by offsetting a plummeting demand effect in one country against booming demand in another. 3) Not dependent on one large supplier: The firm’s supplies come from India, China, Indonesia and other countries. This saves the firm from relying heavily on one large supplier and hence suppliers cannot put unnecessary stress on the company. (Daft, 1994) 1) Heavy Dependence on One Major Buying Agent: One buying agent of the company manages 90% of the firm’s inventory purchases. This means that if some goes wrong with this buying agent, the entire business will suffer 2) Computer Dependence: The firm’s operations are highly mechanized. The firm is characterized by extensive use of computer. However, any computer failure can cost the firm dearly as the entire firm’s processes are dependent on computerized instructions. Improvement in Communication and Transportation Facilities: In the last few years, the improvement in the infrastructural facilities has helped the company to receive its supplies on time and instructions to the suppliers can now be made quickly due to ever improving communication facilities. E-Commerce: Improvement in information technology has helped the company to sell online. This is reflected in the company’s financial statements which now show increase in the profits as compare to the last few years. It has helped the company to sell in countries where it is not physically present. (Chrystal and Lipsey, 2003) Economic