A common feature of all the financial crises is that the financial instability and a highly leveraged private sector created a financial boom which finally led to the bubble and subsequently to the bust. 1. Financial instability In EU crisis and US financial crisis cases the banking sector was hit hardest and accelerated the crisis through a credit crunch and credit crisis. Whereas in the US this process was driven by a real estate boom and the issuance of complex securities (as bad assets)‚ in
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Your Life Did you know that the average credit-card holder in this country has ten cards‚ and the average family owes over $7‚500? That’s a record. And did you know that one dollar of every three in consumer debt is in credit cards? The fact is‚ credit card debt is rising faster than Americans’ income‚ and more folks are falling behind in their payments. So today I’m going to look at: why credit cards are a problem‚ and what you can do to make sure it’s not a
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Choice Between Debt and Equity Contracts • How Moral Hazard Influences Financial Structure in Debt Markets 1 Basic Facts About Financial Structure Throughout the World • The chart on the next slide shows how non-financial business get external funding in the U.S.‚ Germany‚ Japan‚ and Canada. • Notice that‚ although many aspects of these countries are quite different‚ the sources of financing are somewhat consistent‚ with the U.S. being different in its focus on debt. Sources of
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When people went to buy houses sometime mortgage-back securities were used‚ and these were sometimes held by banks overseas. When there was a great mass of people who could not pay back the debt‚ the banks holding these securities lost the money too. The banks depended on the debt to be paid back‚ but when it wasn’t banks failed. This occurred both in the United States and around the World. When the United State is in a recession‚ it is quite possible that other countries are in one
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29 2.3.1. Advantage and achievement in business lending activity 29 2.3.2. Current difficulties and reasons 30 CHAPTER III: SOLUTIONS AND PETITIONS ABOUT PROBLEM OF BUSINESS LENDING 35 I. Solutions 35 1. Handling with bad debt problem in 2012 35 2. Handling with problem of increasing the number business depositors and borrowers in capital mobilization 40 3. Handling with problem of advertising for lending activity of the bank 41 4. Handling with some other
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Chapter 21 - Leasing PowerPoint Notes * 21.1 Types of Leases * The Basics * A lease is a contractual agreement between a lessee and lessor. * The lessor owns the asset and for a fee allows the lessee to use the asset. * Buying versus Leasing * Operating Leases * Usually not fully amortized * Usually require the lessor to maintain and insure the asset * Lessee enjoys a cancellation option * Financial Leases
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Management at the company’s bank must revise Padgett’s debt structure in a mutually satisfactory manner that will minimize lender risk while increasing company value. The current situation is the bank is now in bad situation because of over extended. Lending exceeds reasonable levels and is not collateralized. A credit line of USD 8 million is not normal for the bank. Furthermore the Companies management does not appear to understand the unrealistic debt situation and has unrealistic expectations and a
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Winston and Yvonne‚ we concluded that Winston and Yvonne are in stage 2: the savings stage of the financial life cycle phase. This stage of the life cycle is usually characterized by the increase of assets‚ net worth and the decline in the use of debts‚ as by this stage Winston and Yvonne have already accumulated more assets over the years and would seek to protect their wealth and priorities and at the same time seek to be more risk adverse than before. People in this stage are usually concerned
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| Week Two: Becoming Debt-Free |Objective |What to Study | |Differentiate between secured and unsecured |Define secured and unsecured debt | |debt and strategies to address each. |Define good and bad debt
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1 Answers to exam January 15‚ 2012‚ Theory of Corporate Finance Question 1 a) v (investors are better positioned to manage systematic risk themselves) b) i‚ iii‚ iv‚ v c) v d) ii e) ii (diversification reduces risk‚ thereby shifting risk from creditors to owners) Question 2 ai) True. Closely held firms typically suffer less from agency problems‚ so don’t need the dividend constraints to the same extent. aii) True. If FDA were to approve the drug‚ the firm’ stock would rise in value and
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