Thursday, October 29th, 2009
One approach to identify relative value between the above-mentioned asset classes is to compare risk premia. For corporate bonds this is equivalent to the spread over government bonds. The comparison versus equities requires the estimation of the equity risk premium, that is the difference between the expected rate of return on the stock market and a risk-free interest rate, usually long-term government bond yields. While there are differences in the sector structure of the equity and corporate bond markets, for example with respect to technology exposure, the equity credit premium may nevertheless provide valuable insights into the relative valuation of both markets. This is because risk factors such as economic growth, risk aversion and implied equity volatility influence both markets in a similar manner.
Tags: business competition, business objectives, cash reserves, CEO, loans guide, merger, money guide, pricing policy, shareholders, shares
Posted in banking, business patterns, campaigns, credit cards, developers, equity, finances, financial risks | Comments Off
Wednesday, October 28th, 2009
The rapid growth of the European corporate bond market since 1997 has promoted the acceptance of corporate bonds as a separate asset class. Therefore, identifying relative value not only between equities and government bonds, but also relative to corporate bonds, has become a central task of asset allocators. But, of course, this analysis is also relevant from the perspective of a pure fixed income investor. Not only does it help to assess the outlook for credit spreads in general, but also to decide on the beta or, in other words, the aggressiveness of a pure corporate bond portfolio relative to its benchmark. Although it has been common use to compare equities and government bonds, it is far less common to compare equities and corporate bonds.
Tags: credit score, get out of debt, income, international markets, making money, merger, money issues, money tips, personal finances, revenue, shares
Posted in accounting, attitude, banking, equity, expenses, finances, merchandise, money spending, negotiationg | Comments Off
Friday, October 23rd, 2009
Phase 3 is characterized by high growth and rising leverage, as during the years 1997 to mid-2000. In this period M&A activity was rapidly accelerating, driven by a major focus on the creation of shareholder value. While earnings grew in this period, aggregate measures of corporate profitability like the ratio of after-tax profits of the nonfinancial corporate sector to GDP already declined. Deteriorating free cash flow measures also signaled heightened risk in the corporate sector. As one would generally expect in the expansion phase, equities performed well while credit spreads widened. In general, the high level of debt accumulated during the expansion makes companies vulnerable to economic downturns. Low growth and rising leverage increase the risk of defaults and rating downgrades, and are generally negative for credit as well as equity markets. The years 2000–02 are a typical example for this phase.
Tags: inheritace, insurance, Interest, joit, last will, Market, market cycle, market cycles, rate, tenancy
Posted in companies, credit cards, customer demand, developers, employee, equity, expenses | Comments Off
Monday, August 3rd, 2009
A business plan helps you achieve your goals. It also helps discipline the way you think about what you’re doing. But business plans have another important purpose.
Companies need business plans to apply for loans, grants, or other forms of funding to start or expand the business. Lenders and financial managers like to see something in writing that shows a firm is committed to its objectives and knows how it’s going to accomplish those objectives. Without a plan, serious outside funding—or any funding, for that matter— might not be available. After all, if you were in the business of investing money, how would you select the companies that would be the best risks?
But that means you need to write your business plan in different ways for different financial participants:
Plans used to attract equity investors—financial partners who will prosper as the business prospers—must be written to show how investors will gain from the company’s success. Investors expect a high rate of return, so they will be looking at growth and profit projections. Plans that project a successful profile are what equity investors are seeking.
Plans designed to appeal to lenders must demonstrate methodologies for repaying loans. At the risk of being simplistic, lenders have little financial stake in the success or failure of the company. They’re interested in how the company plans to repay the principle and its interest. And lenders are more likely than equity investors to be
concerned about cash flow. Your business plan should provide a timetable with repayment amounts the lenders believe your company will be able to make.
Tags: benchmark, business plans, marketing schedule, methodology, sales
Posted in developers, equity, expenses, innovative marketing, loans, online bank | Comments Off