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Question:
(a)
i. Expected loss= Exposure amount* probability of default* loss given default
ii. Positive covenants= covenants that showing the direction to a company. Positive covenants are affirmative and helps the company to set the right strategy.
iii. Securitization- technique of bundling and off-loading risks that a financial institution does not want to maintain in his books.
(b) Covenants help mitigate credit risk. Covenants are terms and conditions attached to a facility. Any breach of covenant may result in the Bank recalling facilities.
Types of covenants: working capital ratios; leverage; tangible net worth; dividend and capital expenditure restrictions; cash flow covenants.
Rules: Keep it simple; Focus on the borrower; Set the appropriate covenant level; Don't underestimate term risk; Never waiver; Keep records.
Question: (a) Discuss the concept of financial gearing and its implications for share price maximisation. (b) A firm has both, a current and a target debt-equity ratio of 0.
Do mergers encourage the formation of new banks? A: Yes. The rise in the number of new banks in the second half of the 1990s coincides with a surge in merger activity in the
1) Select an organization that you are familiar with and evaluate the steps needed to transform the business plans into Balance Score Cards & Key Performance Indicators 2)
Corporate restructuring Corporate restructuring entails any fundamental change in a company's business or financial structure, developed to raise the company's value to shareho
A promissory note is an instrument in writing (not being a blank or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money onl
Calculate the cost of capital for the project? (a) Describe how the weighted cost of capital for an MNC can be calculated? (b) Assume that a foreign project has a beta of 0.
I''d like to know how much will a solution for "the Campbell corporation is a manufacture" will cost me?
You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be
Some aggregate figures concerning the available data are shown in Table 1. The sizes of both the assortment groups and the product groups vary greatly across the groups. In Season
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