In the event where there is a fall in the spot price, any financial gains from a hedging program may be seen as speculative returns. Typically there is no perfect hedging in reality as it is difficult to have three features of a futures contract matches with the asset to be hedge. When there is an imperfect hedge, the loss in the spot market may not be covered by the gain in the futures. The importance to realize that hedging using futures contracts can result in a decrease or an increase in profits relative to its position with no hedging. If the price of oil drop, the futures position leads to an offsetting gain.
This discrepancy is small enough that it may be explained by the probability that the proposal is rejected and that SFI does not receive the equity, however, if this were the case it would be unlikely that the SFO debt would trade at par value. Therefore, by purchasing the SFI debt at a discount H Partners could increase their returns, with a very low chance that proposal is
Explain. Not necessarily because Johnson strategy was not conducive to JCP business model. Johnson ignored the market signals adequate market research was not conducted on consumer behavior with respect to how they would respond to the new price structure. What Johnson failed to realize was that JCP customer was driven by the perceived value that they received from using coupons and regular markdowns sales. JCP drove its sales by using a high low pricing strategy.
This much ease is not available with the equity capital. The equity capital cannot ordinarily be redeemed or reduced in the ordinary course The interest payable to the debenture holders is a charge on profit and hence tax liability on the Inter Akea group’s profits is reduced, which result in the debentures as a source of finance at cheaper cost compared to the cost of equity capital and preference
If the variable factor of production is increased (e.g. labour), there comes a point where it will turn out to be less profitable and therefore there will eventually be a decreasing marginal and then average product. This is because, if the capital is stable, additional employees will eventually get in each other’s way as they are trying to increase production. Marginal cost of production must increase if the marginal product of a variable resources is decreasing because the law of diminishing returns states that it refers to a rise in some inputs relatively to other fixed inputs will in a
Demand Pull Inflation: This sort of inflation occurs when aggregate demand is more than the aggregate supply leading to decrease in unemployment (as per the Phillips curve). This theory can be summarized as "large sum of money purchasing few goods". In other words, the growth in demand is much faster than growth in supply and price rise is continuous. This is usually a scenario observed
Dilution:- Although diversification reduces the amount of risk involved in investing in a mutual fund, it can also be an disadvantage due to the dilutions. For example, if a single security held by a mutual fund doubles in value. By holding a large number of different investments, Mutual funds tends to do neither the exceptionally well nor exceptionally poorly. The mutual fund itself would not double in value because that security is only one small part of the fund 's
Braggion and Giannetti (2012) also suggest that, non voting shares consider particularly suitable for retail investors as non voting shares is trading at a considerable discount. However, researcher is unable to find any study which evaluate more beneficial equity share for investors. Therefore, this study is attempted to examine, which is more beneficial equity share whether non-voting shares or the voting shares in terms of their returns. There is no straightforward empirical evidence addressing this issue appropriately and this is the