China Development Industrial Bank

Decision Making Area 3:Investment Decisions * Table of Articles * Summary of Articles * Observations * Conclusion

General Foods is a large corporation organized by product lines. They are evaluating Super Project, the manufacture of a new powdered dessert. Crosby Sanberg, a financial analysis manager, must determine the value in accepting the proposal, along with J.C. Kresslin, the Corporate Controller. The Super Project will increase profit with a payback period of less than ten years. The proposed capital investment for the project is $200,000 ($80,000 for building modifications and $120,000 for machinery and equipment) and production would take place

(1) Calculate the expected return (rp), the standard deviation (p), and the coefficient of variation (CVp) for this portfolio and fill in the appropriate blanks in the table.

The executives of Davis, Michaels, and Company need help running their financial planning services. They must decide whether their assistant Janet can practice the fundamental concepts of finance efficiently enough or higher a temporary employee to help them conquer the overwhelming demand of their customers. Janet was given a variety of different DCF analysis questions to determine her skills. The main goal of every problem was to find the best investment strategy for different people that were trying to save up for an important investment in their future. In conclusion, by completing the tasks given and solved below, Janet has proved that she can handle the position

The ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles, introducing the new project to build cedar dollhouses by shingle scrap materials for reaching $3 million annual sales within the next 3 years. Explain the overall risk profile of the ABC Company based on current economic and industry issues. In order to help out the CEO I prepare reports that will contain the information regarding the project. These statements refer to the accompanying Excel spreadsheet as well as word documents. The statements are; Cash Flow statements, Product Cost, Net present value, Depreciation, Contribution Margins

3. The expected return for each firm was calculated: Expected Return = Alpha + (Beta x BSE 500 actual return).

The client wants to minimise risk subject to the requirement that the annual income from the investment be at least $60,000. According to Innis’s risk measurement system, each unit

In 2005, Zhou Xiaochuan, the Central Bank Government of China who has been in power for the past 13 years, announced that the Renminbi would switch exchange rate regimes and would begin to follow a more flexible regime that was tied to a basket of different currencies. Prior to this new change, the Chinese yuan was strictly pegged to the US dollar which helped them thrive economically in the global market. Less than a decade before the exchange rate regime was changed, the Asian financial crisis occurred and many East Asian countries were impacted. Compared to its neighboring countries, China was not impacted as badly as other countries, therefore it continued to stay afloat during this difficult period of time and continued

Investigating firm’s key statistics such as sales, ROIC, and free cash flow may not be enough to evaluate the company’s performance and future. “Macroeconomic indicators seem like excellent candidates as proxies of latent economic state variables because they influence both changes in firms’ cash flows and the risk-adjusted discount rate” (Gosnell & Nejadmalayeri, 2010). In fact, various economic indicators can strongly impact equity returns. However, it has been always difficult to establish this effect. Indeed, Chen, Roll, and Ross (1986) assessment of asset pricing is relevant today:

The remaining alternatives for this client are to invest in U.S. Rubber, a market portfolio, and a 2-stock portfolio of High Tech and Collections. The expected rates of return are 9.8% in U.S. Rubber, 10.5% in a market portfolio, and 6.7% in the 2-stock portfolio.

A company’s business model is a key factor in affecting a stock’s price especially in a recession. For example, companies that rely on consumer spending are at the mercy of their customer’s budget, which is often reduced in a recession; this translates into less on the bottom line, and therefore affects the business’s stock price. Industries such as the travel industry are heavily affected by economic downturn because consumers can relatively control how much they must travel and how much they go on vacation, and so on and so forth. In a slump, an average family of four may forgo going on vacation to the beach, but still have to buy shampoo to wash their hair. Essential products, sold by corporations, such as toilet paper, toothpaste, laundry detergent, or shampoo are not as affected by recessions because these products are always needed despite the economic climate.

With an average of 9.3% annual GDP growth, China has become the world’s largest and most powerful emerging economy (Shan, YG & Xu, L 2012, p.115). China has a bank-based economy, which signposts that the banking system in the country controls the majority of its economic resources. Before the late 1970s, the banking sector in China was controlled by a monopoly bank - the People’s Bank of China (PBC) (Sáez, L 2001, p.237). The gradual reforms in the industry since then separated several duties and functions from the PBC, which resulted in a number of industry-specific commercial banks: the Bank of China (BOC), the Industrial and Commercial Bank of China (ICBC), the China Construction Bank (CCB) and the Agricultural Bank of

As previously mentioned, the People 's Bank of China opened up the banking system and began allowing the emergence of state owned banks. The four state owned specialized banks that exist are Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), China Construction Bank (CCB), and Bank of China (BOC). The state owned banks were a success so in 1994 the Chinese government decided to open three more banks that were dedicated to specific lending purposes and policymaking. The banks include China Development Bank (CDB), Export-Import Bank of China, and Agricultural Development Bank of China.

Industrial and Commercial Bank of China (ICBC), a state-owned commercial bank, is a strong pillar of the development of basic industries in China, and its role in the financial system is and will always be irreplaceable. The most obvious function is to support the real economy. During 2015, the balance of loans extended by the bank to strategic emerging industries reached RMB369.729 billion, increasing by 11.99% over the prior year; the balance of loans to cultural industries reached RMB175.457 billion, increased by 14.36%. And it offers diversified financial products and services to over 5 million corporate customers and nearly 500 million personal customers. (source annual report)

The following report provides an analysis and evaluation of the investment proposal by Newbridge in the Shenzhen Development Bank (SDB). The method of analysis consist of an assessment of SDB’s financial performance; the bank’s asset quality, earning capability and capital adequacy are the aspects which will be considered. This report will also provide a detailed analysis into the appropriateness of Newbridge’s investment price and the disclosure of an appropriate valuation range. After a throughout assessment of SDB’s financial performance and an appropriate valuation range, it is recommended that SDB undertakes Newbridge’s investment proposal.