Essay Mt480 Corporate Finance Unit 9 Project

In the world of finance and financial services, banking has been around longer than any other segment of that world. For more than two millenniums, bankers have served as “money changers” who aided people in exchanging foreign for local currencies. As this practice grew and many began to throw their funds into the banking system, the services that banks performed multiplied. Loans were granted and bankers collected interest. Most of

a. You need produce an informative leaflet which includes an explanation of the role of advertising agencies. It should explain the role that Adam & Eve DDB played in at least one of Marmite’s successful promotional campaigns eg Marmite’s Election Campaign, Marmite’s Neglect Campaign. Your leaflet should include the following:

Instructions: Read chapter 3 in your textbook and review the lecture notes and study resources provided by your instructor. Type your answer in the answer block provided for each question. Answer blocks should expand as you type. If you experience difficulty typing in the provided answer blocks, you may type your answers in a new document. Save a copy of the completed activity to your computer for your records. Although this activity is not graded, your instructor reserves the right to require students to submit their completed work at any time throughout the semester.

Market power in banking, for example, may, to a degree, be beneficial for access to financing. With too much competition, banks may be less inclined to invest in relationship lending .At the same time, because of hold-up problems, too little competition may tie borrowers too much to an individual institution, making the borrower less willing to enter a relationship (Claessens, 2009). More competition can then, even with relationship lending, lead to more access. Financial managers must be aware of its firm's competition and ensure a proper balance for financial

As noted in Wikipedia Oracle is headquartered in Redwood, California. It was founded in 1977 and is the world's third largest soft wear developer in sales. According to Yahoo Finance Oracle is a multi-faceted operation. Oracle provides a vast amount of services for the internet and computer. It provides cloud applications, IT consulting services, licenses middleware software which includes database and database management. It has 115,000 full time employees and is run by co-founder, CEO Larry Ellison who has been the only CEO of the company since it's inception. Also noted in Wikipedia he is the top paid CEO in the world. In 2013 Oracle

Financial intermediaries are financial institutions such as bank, insurance company, credit union, stock exchange, and so on who works as a middleman

1. A financial intermediary is a corporation that takes funds from investors and then provides those funds to those who need capital. A bank that takes in demand deposits and then uses that money to make long-term mortgage loans is one example of a financial intermediary.

(i) If bad debts for 2007 are estimated to be 2% of credit sales, prepare the adjusting

1. You must answer ALL questions in the test booklet. No separate booklet will be

Financial Institutions like Bank Solutions Inc. are required to meet the standards regulated by the government to avoid mismanagement of sensitive information. These regulations are solely purposed to mandate financial institutions to protect confidentiality, availability and integrity of individuals, information systems and processes. Some of the applicable regulations and standards are elaborated below:

Asymmetry in the credit markets result in a wedge between the costs of external funds (i.e. from banks and other lenders) to the public, and the cost of internal funds. Thus, internal funds, bank loans and other sources of financing are imperfect substitutes for firms. These imperfections related to credit market frictions causes monetary policy changes to affect both the bank-lending channel and the balance sheet channel \citep{Gertler1995}.

Shadow banking can be seen as a form of regulatory arbitrage that provides important financial intermediation functions distinct from those preformed by banks and capital banks [Claessens et al (2012)]. Some of these functions include securitization and collateral intermediation both of which we have partially discussed. One thing that should be pointed out is that, contrary to its name; shadow banking is not completely unrelated to conventional banking. For instance, shadow-banking complements traditional banking by expanding access to credit or by supporting market liquidity, maturity transformation and risk sharing [Nico Valckx et al]. The only major difference between the two banking systems is that shadow banking is not regulated.

Bolton and Scharfstein (1996) found that borrowing from multiple lenders may be advantageous, especially for the less risky firms, they also show that when firms default as they either cannot pay back the debt or their managers want to transfer cash for themselves. Although borrowing from a single bank can eliminate the information disclosure that occurs when the firm borrows from multiple banks, it results in the firm’s competitors to infer that the firm is hiding information and react accordingly (Yosha, 1995). Detragiache et al (2000) provide a basic principle for a firm to look for multiple lenders by considering the cost incurred when it is denied credit by its bank for reasons. As an illustration, a temporary liquidity shortage leads the bank to be forced to deny credit even to its loyal borrowers. Hence, given these possibility and risk of not being able to raise funding from an alternative bank for the first time, it may be worth to initiate and maintain multiple lending relationships despite the costs is needed.

7. Some other examples of financial intermediaries are insurance companies, mutual funds, and investment banks.

Financial intermediaries provide a number of functions. The first of which is known as size transformation. A financial intermediary is able to borrow to an economic agent with a deficit of funds the amount they require without the need to find a lender that is willing to invest the exact amount required by the borrower. Without financial intermediaries, it would be extremely difficult for a borrower to raise capital as lenders would have to pool their funds together in order to lend the borrower the amount they require. Another function of financial intermediaries is maturity transformation. Economic agents with surplus funds usually prefer investing their money in short-term projects, whereas borrowers require more long-term financing. Financial intermediaries offer an optimal solution, without which borrowers and lenders would be in disagreement over the terms of the transfer of funds. Financial intermediaries also provide risk transformation. Economic agents with surplus funds are usually very risk conscious when it comes to investment, but borrowers however may require the finance for a more risky project, that may be more profitable. Financial intermediaries are willing to take risks that borrowers usually would not. However, there is usually a compensation agreement so as to avoid