And when these shares are transferred from one trader to another, these shares will become secondary stocks. IPO is one good example of passive income opportunity. In the stock market, rumors about an IPO stimulate risk appetite. During economic slowdown, IPO is hardly heard unless the industry it belongs to is resilient. So, a passive income opportunity begins when the economy has continuously been growing especially if the main recipient is the company
A lower debt ratio signifies that the firm depends less on borrowing as compared to equity for financing its assets. Usually, the lower the debt ratio, the lesser is the risk. However, the acceptable levels are different across industries. (AAII, 2010) mentioned that the interest coverage ratio assesses the firm’s ability to pay interest on its outstanding debt. A high number signifies a healthy firm; whereas a ratio below 1 means that the firm is unable to pay its interest obligations due to insufficient earnings.
The study concluded that the signaling effect, bird in the hand effect, and catering effect dominated the major changes in stock prices and that investors are interested in firms who are paying dividend continuously. Jatmiko (2016) aimed at finding the effect of tax rate and dividend policy on the stock price, and the effect of tax rate on the dividend policy in Indonesia. The results indicated that the tax rate and dividend policy had positive and significant effect on the stock price. In addition the tax rate was also found to have a positive and significant effect on dividend policy; thus concluded that a positive relationship exists between tax rate, dividend policy and stock price. Pani (2008) provides evidence from India to support the clientele effect of dividend policy on stock prices.
It affects most economies of the south East Asian Nation. But the main focus is the big crisis that deeply affected the Indonesian economy and political system. The main problem that emerged in Indonesia was the drastic fall in their currency exchange rates. The national currency, the Rupiah, fell by 12% in the beginning of August, the rapid depreciation created a strong panic among people, companies, and particularly among international investors. These investors feared that the trend of exchange rate of the Rupiah to US dollar might continue depreciate leading to a fall of their value of their assets.
The use of derivative instruments in corporate risk management has grown rapidly in recent years, caused partly by financial deregulation and partly by the success of the financial industry in designing a great variety of OTC and exchange-traded contracts. Derivatives enable their users to separate, value and transfer market risks. The use of derivatives, enhances the possibilities for active corporate risk management, which is likely to have an impact on profitability of the firm. What is Hedging? Hedging is a risk management strategy used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities.
IMPACT OF FINANCIAL CRISES ON ECONOMIC GROWTH BY: UNSA JABEEN RESEARCH PROPOSAL INTRODUCTION: The word “Financial Crises” is a mixture of lose worth of financial organization and assets. It began in 2007-2008 in US and West European affect many developing countries. That’s why this period (2007-2008) is known as global financial crises and considered by many Economists to have been the worst financial crises since the great depression of 1930’s. In this situation countries faces many crashes such as stock market crash, increase in inflation rate, currency devaluation, increase the amount of foreign debts, decreasing foreign reserves and growth rate is very slow. At present Pakistan faces financial crises due to political instability, high
Application of Protectionism in Global Finance Kashyap Pd. Marahatta BUS 630 International Business Professor: Prachanda Man Shrestha Westcliff University 02/05/2017 Abstract This paper will try to analyze the case ‘The Global Financial Crisis and Protectionism’. While doing so, this paper will try to point out why calls for protectionism are greater during sharp economic contractions. It will then try to put light on why the increase in protectionist measure even during the sharp contraction of 2008-2009 was fairly modest. This paper will then finally conclude by providing insights on why international trade/ business is essential for the development and prosperity of a country.
Equity market timing is one of the most important factors that influence corporate financing decisions. Several evidences show that the firms prefer to use equity capital when their market values are high, relative to the book values, and to repurchase equity at the time when their market values are relatively low. With the publication of Baker and Wurgler’s research on the capital structure of U.S. non-financial firms, the market timing theory challenges the traditional capital structure theories and brings out a new explanation of the observed capital structure of non-financial firms. They suggest that “the capital structure is the cumulative outcome of past attempts to time the equity markets.”[ See Baker and Wurgler (2002), p. 1] The question
ROLE OF STOCK MARKET IN ECONOMY DEVELOPMENT ABSTRACT Stock Market is one of the most vigorous sector which plays an important role in contributing to the wealth of an economy. Growth rate of stock market signify growth percentage rise in economy. There is a strong positive relationship between stock market development and economic growth & help to efficiently direct the flow of savings and investment in the economy in ways that make possible the stockpiling of capital. It fulfills a central function in the economy which bring together savers and investors (providers of capital) & with companies and the state (borrowers) on the other. The main objective is to analyze the link between stock market performance & economic development.