Background. Royal Dutch Shell Group is one of the world’s largest oil corporations and one of the largest companies in Europe. The company was created as a result of a merge between Netherlands’ Royal Dutch and UK’s Shell Corporation. The case looks at the issue of price differentials between several equity listings in different markets from the perspective of investors seeking an arbitrage opportunity. Royal Dutch trades more actively in the Netherlands and U.S. markets, whereas Shell trades more actively in the United States. The result is that the Royal Dutch/Shell relative price moves positively with the Netherlands and U.S. markets and negatively with the U.K. market. Structure. The Royal Dutch and Shell Group’s structure …show more content…
For a private investor there would be no difference in the tax treatment between the two investment opportunities. However, pension funds have different tax treatments in each jurisdiction depending on whether the investor bought Royal Dutch or Shell. In Exhibit 8 of the case study, Royal Dutch was trading for $141.368 in Europe and $141.375 in New York (a 7 cent differential). Shell was trading for $124.222 in Europe and $126.554 in New York (a $2.332 differential). These price differences exist due to market inefficiencies; however, these differences are small. As shown in the last column of Exhibit 11, these calculations render small estimates of the impact of these discrepancies. The percentage would be approximately 1% of the company valuation. The impact of these differences is calculated with the following formula: Avg. dividend for the group x Difference in tax treatment for the two entities. Arbitrage. In economics and finance, arbitrage is the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices. In this case, there is an opportunity for arbitrage. One arbitrage transaction that could be utilized would be a buy / sell transaction. An investor could liquidate his holdings of Royal Dutch and
The Hudson Bay Company was created in the late 17th century, decades before Canada became a country ("Our History"). Despite the success of the Hudson Bay Company, French and American interests did not back them ("Our History"). The main operations of the HBC was centred on trading with the Natives ("Our History"). The Natives brought furs to the forts and posts of the Hudson Bay Company, located around the shores of James and Hudson Bays, to barter for manufactured goods like knives, kettles, beads, needles, and blankets ("Our History"). These posts and forts along the west of Canada influenced where modern, major cities would grow ("Our History").
The following report will further examine the RBC Royal Bank brand, critically examining two promotional examples and how it uses IMC tools and channels to achieve their positioning. RBC Banking has successfully positioned itself as a friendly, approachable bank successfully reaching out to people who are in a more established stage in their life. This older demographic consists of people or couples who are ready to buy a house or attain a mortgage, going to make a large investment or looking to invest. Despite a more older generation as their primary target audience, they have made significant efforts to appeal to Millennials with targeted advertisements and promotions. As previously in the Positioning Analysis, the connection between
* Corporations incur taxes at the corporate level at marginal rates; while, distributions to shareholders are taxed at dividend rate
The five events are correlated and occurring over approximate five months from 18th August 2010 to 13th December 2010.
AGENDA 1. 2. 3. 4. 5. Announcements Financial Markets and Net Present Value Survey Results Optional Material (e.g. Cases, Practical
10. Buying and selling in more than one market to make a riskless profit is called
The TJX Companies Inc. is the leading off-price retailer of apparel and home fashions in the United States, and even worldwide. The company ranks #108 in recent fortune 500 listings, which is an impressive feat. As of 2013, TJX has earned 27.4 billion dollars in revenue. The company has more than 3,200 stores in 6 different countries, 3 e-commerce sites, and approximately 191,000 Associates on a global scale.
The Kroger Co. (NYSE:KR) is a grocery retailer and is recognized as one of the largest in the world. As it states in the History of Kroger published by the Kroger Company Mr. Barney Kroger, a son of a merchant invested his life savings of 372.00 in 1883 to open a grocery store.
This document is authorized for use only by Yen Ting Chen in FInancial Markets and Institutions taught by Nawal Ahmed Boston University from September 2014 to December 2014.
Company reduces tax paying by splitting the income through imputing dividends: Hobart Bridge Co Ltd v FCT .
Arbitrage opportunities exist in both Royal Dutch and Shell. To exploit the price differentials for Royal Dutch, one would buy shares in the European market (for $141.368) and sell them in the market in New York (for $141.375). To exploit the price differentials for Shell, one would buy shares in the European market (for $124.222) and sell them in the market in New York for ($126.554).
Over the past year both Tesla and BMW have taken severe losses to their share prices. overall Tesla has reported a lower loss percentage in its share price, -25% compared to BMW’s reported loss of -33%. However since October 2015 BMW has reported an over loss percentage than Tesla. The six month report of the two groups shows that BMW has traded at a higher price and therefore reports a lower loss percentage of -21% compared to Tesla’s -29%. Even more recently BMW’s share prices have increased by 1% whereas Tesla’s share prices have dropped by -11%. By reporting this gain it shows that BMW stock is in greater demand meaning that investors have
In a world without uncertainty the rational approach would be (1) to maximize profits and (2) to maximize market value. When uncertainty arises, these statements vanish and change into a utility maximization. The goal is to get more insight in the effect of financial structure on market valuations.
The London Stock Exchange lists the FTSE 100 which is a share index of stocks of 100 companies showing the highest market capitalisation. This will be completed by discussing the movement of the company’s share during the time period. The companies will also be compared to the movement of the shares against each other, against FTSE 100 and against its industry sector. The records and comparisons will be all in context of Stock Market Efficiency. Stock Market allows a company to be aware of the trade with shares and finance which is at an agreeable price. Two of the companies chosen to
Ever since Ross (1976) proposed the Arbitrage Pricing Theory (APT) as an alternative to the capital pricing model, many economists and investors have applied APT across different markets. Whereas the traditional capital pricing model explained asset returns with one beta, sensitivity to the market return, APT decomposes the return with a multiple number of factors. This idea became particularly popular for investors who aim to gain systematic risk other than market risk. However, the model specification aspect has been challenging to many practitioners as the theory does not require any specific sets of variables to be used (Azeez 2006).