Finance Concepts Assignment Example | Topics and Well Written Essays - 1000 words

Finance Concepts - Assignment Example If the estimated life of this project is 5 years and the Required Rate of Return is 10%, then we can also calculate the NPV of this project. If the NPV is also a positive value then we can safely estimate that this project will carry a good return, and the initial investment would be covered in 5 years. (Shim & Siegel, 2000). 2. Whenever one wants to finance a business, he can go for either debt or equity financing. Debt Financing carries lots of advantages and disadvantages. The major advantage of this form of financing is that you do not lose the ownership of your company. The lender also does not have any sort of share in the future business profits. Moreover, the interest on debt is deductible on the tax’s returns, hence reducing the actual cost of loan to the company. Finally, in the case of debt financing the company is not entitled to send their annual reports to various stakeholders. However there is always another side of a coin. Debt Financing carries the disadvantag e of at being repaid at some point in time. The interest cost can be very risky for a company, especially at the times of financial crisis. Other than that the collateral the company pledges against the loan can put extra pressure on the owner of a small venture. There is a reason why companies choose to invest in stock rather than bonds. The investment in bonds carries lower returns than stocks. Even though it is less risky, the return on stocks can be much more appealing. Investors can, in certain situations lose money on bonds, if they sell a bond when the price is lower from when they purchased it. The higher inflation rates over the investment return on bonds will hurt the purchasing power of the money the investors have (Petch, n.d.). 3. In the field of finance there is an important concept of risk-return trade-off. There is a general idea that prevails, the higher the risk the greater the return would be for an investment. The balance of the risk-return trade-offs, is hence a key factor in designing a proper financial and investment plan. Let us take an example of investment in stocks. In the case of a speculative stock because of its high risk, as an investor, you will expect a higher return. The same is the case with the working capital management. If you keep a lower inventory, there is a risk of running out of stock and hence you expect a larger return out of it (Shim & Siegel, 2000). 4. In finance, a Beta measures how volatile any security is to the market average. In layman terms, it measures the return of a security in a certain time period in relation to the overall market. Let us take an example, if a company has a beta of 2.0 in due time, this would mean that if the stock market would increase by 10%, our company’s stock will increase twice fold i.e. by 20% and vice versa. If the company has a 0 beta that means it is not affected by the market. A 0.5 beta would mean the company’s stock is half as volatile as the market, while a 1 beta would show that the company is as volatile as the market (Shim & Siegel, 2000). 5. When a risk occurs due to non-probabilistic events and not by pure chance, it is classified as

Hierarchy and politics Essay Example | Topics and Well Written Essays - 750 words

Hierarchy and politics - Essay Example He is frustrated by his two daughters as a result of handing over power to them he says, â€Å"I would learn that; for by the marks of sovereignty, knowledge and reason, I should be false persuaded I had daughters† (I. 4, 755-756). In politics, hierarchy does not always provide the best alternative to leadership. The treatise written by James I, Basilikon Doran outline the true qualities of a leader. First, the king should keep track of his duties and responsibilities towards God, his roles and responsibilities while in office and lastly, he should have proper behavior regarding his day to day life (James I, 13). King Lear violates one of his roles as a king by dividing his kingdom to his three daughters other than giving it to the oldest son. â€Å"Tell me, my daughters, since now we will divest us both of rule, Interest of territory, cares of state†, (I. 1, 49-51). James I, also advised his son to be calm and watch his temper, â€Å"but I meane of that wise moderatio n, that first commaunding your selfe, shall as a Queene commaund all the affections and passions of your mind; and, as a Physician, wisely mixe all your actions according thereto† (James I, 28). The king should be slow to anger and wise in his judgment. King Lear does not apply this lesson before he dismisses his daughter Cordelia for her honesty. His daughter is open and she bluntly confesses that she loves him just as a daughter should love the father. â€Å"Unhappy that I am, I cannot heave My heart into my mouth. I love your Majesty According to my bond; no more nor less† (I. 1, 93-95). The king lets his anger control him and he disowns his honest daughter. He later makes a painful discovery that his two daughters whom he gave the kingdom were dishonest. The king violated the lesson regarding his day to day activities as a leader of the nation. Kings are expected to be in their modest behavior and are regarded as role models. They are the eye of the society; any act ivity done should be reasonable. â€Å"Remember therefore in all your actions, of the great account that yee are one daie to make: in all the daies of your life euer learning to die, and liuing euery day as it were your last† (James I, 37). The manner in which they eat, relate with their family and they sport they take. â€Å"Let me not stay a jot for dinner; go get it ready† (IV. 543). The king does not behave with authority and sanity when he decides to flee from his daughter’s house and run into the storm with his fool. It is inappropriate for the king to run away from leadership yet he is still regarded as the head of the family. He does not handle his daughters appropriately. According to James I, a king should be modest and behave in his best composure. He should rid himself off any circumstances that will destabilize his thinking in order to make clear judgment. He says,† be precise in effect, but social in shew: kythe [make known] more by your deed es then by your words the loue of vertue and hatred of vice: and delight more to bee godlie and vertuous in deede then to be thought and called so† (James I, 40). King Lear does not do this; he allows his madness to take the better part of him which makes him behave insanely. Cordelia finds out about his madness and seeks to help him. She says, â€Å"Alack, 'tis he! Why, he was met even now As mad asthe vex'd sea,