Then, the fault scenarios leading to the occurrence of top event are identified by constructing the FT structure. The hybrid uncertainty analysis is performed through combination of Monte Carlo simulation and fuzzy set theory which is explained in detail in section 3 of this paper. The probability of occurrence of top event is now calculated using the proposed fault tree based hybrid uncertainty analysis method. Finally, by calculating the importance measure of each fault scenario, the response strategies can be adopted by manager for
Pratt and Grabowski (2008) also state that WACC has two sides: pretax and after tax. The valuation of the assets is different before and after the tax rate. Tax can be attached only to the debt financing part or loans taken from the bank. Since interest paid on debt reduces Net Income of the company, it also reduces the tax payments for the firm. The formula for calculation of WACC is: WACC = rD (1- Tc )*( D / V )+ rE *( E / V ) Where: Rd is the interest paid on debt 1-Tc is the after tax rate D represents the portion of money borrowed from
If hedge funds managers borrow money from bank, it may lead bank lost a lot of money. However, financial institutions bulid up a system which is Counterparty Credit Risk Management, so this system become the first line defense between unregulated hedge funds and regulated financial institutions (Kambhu 2007). As Kambhu (2007) said ‘In general, a financial institution may be willing to extend credit to the hedge fund against the posting of specific collateral that is valued at no less than the amount of the exposure. This reduction in settlement risk in leveraged trading increases confidence and thereby promotes active financing of leveraged trading’. As a result, this CCRM system could reduce some risks, make hedge funds safer and attract more
Lower the ratio, more the company is burdened by debt expenses. When a company’s interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable. Return on Assets measures how efficient firm assets in generating profit. It is expressed in percentage. Higher the ROA, more money the company is earning on its assets.
Although J.C. Penney Corporation has a negative profit margin, the company is heavily using their financial leverage. Although they are borrowing high amount of money to magnify profit potential, its? profit per share is -$1.68. To summarize, the company is using too much leverage, and if they continue, company could go into
The other classification, reinvestment risk means “the returns on funds to be reinvested will fall below the cost of funds” (Cornett, Lange & Saunders 2013). As discussed above about expansion to the investment banking business, Wellfleet can orchestrate syndicated loans and leveraged loans through its investment banking businesses, so that several banks together have the ability to take larger loans for profits with more currency than that of only one financial institution. But interests of the loans are possible to be lower than the funds reborrowed by Wellfleet, in which condition would lose money and this operation would be failed. Proposal Assumptions: • Counterparty: Gatwick Gold Corporation (GGC) – a large gold producer • The counterparty is rated 5B by Wellfleet’s internal rating model and credit committee. This translates to (Probability of Default) PD = 0.39% • Product Type: syndication.
A research proposal is a document which explains the case, that undertaken for research and present our plans for carrying out the research. It describes what to occur in each part of the research process. It also includes estimated cost and time. APA format consist of rules and guidelines that a publisher observes to ensure clear and consistent presentation of
(2011) divided macroprudential tools into three main categories – credit-related tools, liquidity-related tools and capital-related tools. 1.1 CREDIT-RELATED TOOLS These tools are mainly used to target individual problematic sectors within an economy. For example, if real estate prices are booming due to cheap credit, a loan-to-value ratio limit can be imposed, which restricts the amount that can be borrowed relative to the underlying collateral. A similar measure is the loan-to-income ratio which shows the relative size of the loan in comparison to the borrower’s income. (Grace, Hallissey & Woods,