成果e1资金来源

1Short-termfinance:Pros&-alimitisagreedwithabank,interestispaidonthedailycashbalance,subjecttoinstantrecallFlexibleformoffinance,butbecauseofinstantrecallMoresecurethananoverdraftbutlessflexible-payingrsTemptingbutriskslossofrgoodwill&discountsBusinessesoftenuseshort-termloansoroverdraftsorbothasasourceoffinance.Whichofthefollowingisabenefit,totheborrower,ofashort-termloanasopposedtoanoverdraft?OnlychargedfortheamountdrawnEasytoLowerinterestAnswerShort-termloansaresubjecttoaloanagreementgivingthebanksecurityandadefiniterepaymentschedule.Thislowerstheriskfromtheir,hencetheinterestratechargedislower.2Short-termfinance&Long-termTheshort-termfinanceisusuallycheaperthanlongtermfinancesosomecompaniesadoptan“aggressive”approachandrelymainlyonshort-termfinance.Thiscarri skbutpotentiallyresultsinhigherprofits.3Long-termfinance-DebtBankAvailableoverarangeoftimeperiods,withflexiblerepaymentIOUssold ,fixedinterestandCanoftenberedeemedearlyat ’sdiscretionCarriesacreditZerocouponZerocouponbondsareissuedatadiscounttotheirredemptionvalueanddonotpayanyinterest.Inrecentyearsastrongmarkethasbuiltupwhichallowslargecompanieswithexcellentcreditratingstoraisefinanceinaforeigncurrency.Convertiblebondscan(attheholder’soption)beconvertedintoordinarysharesatsomefuturedateinsteadofbeingheldtoConvertiblesareahybridofdebtandequityandareadebtsweetener.Thismeansthatalowerrateofinterestcanbepaidonthedebt.CleethorpeCohasa3%convertiblebondinissue,withanominalvalueof$100.Eachbondcanbeconvertedinto25ordinarysharesatanytimeoverthenextthreeyears.Thebondiscurrentlytradingat$120(exinterest),andthesharepriceiscurrently$3.80.TheconversionTheconversionTheconversionpremium,andcommentonitsEachbondcanbuy25shares,canbeexpressedas1share=$425×$3.80=Conversionpremium=marketvalueofbond–conversion$120–$95=$25or$25/$95=Thesharepricewouldhavetoriseby26.3%beforetheconversionrightsbecameattractive,ifthispremiumissettoohighthentheconvertiblebondmaynotbepopularwithinvestors.AdvantagesofConvertibleDiscussTHREEadvantagestoTufaCoofusingconvertibleloannotesasasourceoflong-termfinanceConversionratherthanIftheholdersofconvertibleloannotesjudgethatconversionintoordinaryshareswill reasetheirwealth,conversionoftheloannoteswilloccurontheconversiondateandTufaCowillnotneedtofindthecashneededtoredeemtheloannotes.Thisissometimesreferredtoas‘self-liquidation’.AttractivetoTufaComaybeabletoissueconvertibleloannotestoraiselong-termfinanceevenwheninvestorsmightnotbeattractedbyanissueofordinaryloannotes,becauseoftheattractionoftheoptiontoconvertintoordinarysharesinthefuture.LowerinterestTheoptiontoconvertintoordinaryshareshasvalueforinvestorsasordinarysharesnormallyofferahigherreturnthandebt.Investorsinconvertibleloannoteswillthereforeacceptalowerinterestratethanonordinaryloannotes,decreasingthefinancecostsfortheissuing.Comparedtoordinarysecuredloannotes,whichofthefollowingstatementsistruewhenconsideringconvertiblesecuredloannotes?LikelytobemoreexpensivetoservicebecauseoftheirequityLikelytobeles pensivetoservicebecauseoftheirequityLikelytobemoreexpensivetoservicebecauseconvertingtoequityrequirestheholderstomakeadditionalpaymentsLikelytobelespensivetoservicebecausetheymustrankafterordinarysecuredloanstock Becauseofthepotentialformakinggainsbyconversion,investorsarewillingtoacceptalowercouponrateonthedebtATheequitycomponentisnotariskimposedonBConvertibleskeepholders'optionsCAdditionalpaymentsarenotDTheydon'thavetorankafterordinarydebtandeveniftheydid,thiswouldreasetheirservicingcost.Equity1Ordinary&PreferenceOrdinaryOrdinaryshareownershavetherighttovoteondirectorsappointments,andtoreceiveashareofanydividendthatisagreedbyth.Themainofequityfinanceisthatthetimingofthedividendpaymentsisflexible.PreferencePreferenceshareholdersalsoreceivedividends(normallyatafixedrate),buttheyarepaidbeforeordinaryshareholdersandhavenovotingrights.Inrelationtopreferencesharesasasourceofcapitalfor,fillinthegapsbelowtocompletethePreferencesharesareaformof......capitalwhich riskordinaryChoosefromthefollowing:Debtfinanceingeneralhassomeattractionscomparedtoequity&venturecapital:AvoidsofAvoidsearningspershareProvidesoninterestcanberaisedby orby(discussedinthe“dividend”chapter).Theadvantageofraisingnewequitybyissuingnewsharesisthatlargeramountsofmoneycanberaised,butunlesslargeamountsofmoneyareneededthatcouldhavebeenusedtopaythedividendbecauseofthecostsinvolvedinanymethodsofraisingnew4ThreeMethodsofissuingnewMethodsofissuingnew1.RightsAlegalrightforexisting sharesasissuedatafixedpricetoinstitutionalinvestorsAlowcostmethod,appropriateforsmallissues,verycommonlyPublicoranofferforsale,atafixedAnexpensivemethodappropriateforlargeissues.Expensivebecauseunderwritten&advertised.Whichofthefollowingarehandicapsthatyoungfaceinaccessingfunds?UncertaintyandriskforFinancialstatementsarenotsufficientlySharescannotbecedprivaThefollowingstatementsrelatetosmallandmediumsizedenterprisesSMEsarerestrictedinsourcesofnewApotentialsourceoffinancingforSMEsisventureVenturecapitalcompaniesmakefundingavailabletoexistingcompanies(provenmanagement)with:

(30%Thereturnisgeneratedbyaneventualflotationorsaleofcompaniesthattheyfinance.Failuretohittargetssetbytheventurecapitalistcanleadtoextrasharesbeingtransferredtotheirownershipatnoadditionalcost.Thisiscalledan-Privateindividualsorgroupsofindividualscaninvestdirectlyintoabusiness.WhatisthisknownReverseSupplychainVentureBusinessangelRightsArightsissueraisesequityfinancebyofferingnewsharestoexistingshareholdersinproportiontothenumberofsharestheycurrentlyhold.Existingshareholdershavetherighttobeofferednewshares(thepre-emptiveright)beforetheyareofferedtonewinvestors,hencetheterm‘rightsissue’.Fantasiaplcislequityfinanced specialisinginanimatedfi ,itneedstoraise£330mandhasdecidedonarightsissueatatoitscurrentmarketprice.CurrentlyFantasiahas500msharesinissueandamarketprice£2.00/CalculatethetermsoftherightsCalculatethe(thepriceaftertherightsissueCalculatethetheoreticalvalueofarightperexistingAssesstheimpactonthewealthofashareholderwhoowns10,000sharesandcanorcannotaffordtotakeuptheirrightsSo£330m/1.65=200m isneededat(200m×£1.65)+(500m×£2.00)=£1,330mshares/700m=III.thetheoreticalvalueofarightperexistingCanaffordtotakeuptheirPrerightsissue,wealth=10,000×£2AftertheExistingshares=10,000×£1.90Newshares(4,000LesspaymentfortheseThereisnoimpactonshareholderCannotaffordtotakeuptheirPrerightsissue,wealth=10,000×£2 AftertheExistingshares=10,000×£1.90 1010000 Thereisnoimpactonshareholderwealth(ietheyarenotharmedbecausetheycanselltheirrights).FactorstobeconsideredinarightsDiscussthefactorstobeconsideredbyXX hoosingtoraisefundsviaarightsissue.Rightsissuessharesareofferedatadiscounttothemarketvalue.Itcanbedifficulttojudgewhattheamountofthediscountshouldbe.Asthenewsharesarebeingofferedtoexistingshareholders,thereisofownershipandcontrol,providingshareholderstakeuptheirrights.RelativeRightsissuesarecheaperthanothermethodsofraisingfinancebyissuingnewequity,suchasaninitialpublicoffer(IPO)ora,duetothelowertransactionscostsassociatedwithGearingandfinancial reasingtheweightingofequityfinanceinthecapitalstructureofXXcandecreaseitsgearinganditsfinancialrisk.Theshareholdersofthe mayseethisasapositivemove,dependingontheirindividualriskpreferencepositions.FrostCoisnninga1for4rightsissuewithanissuepriceata10%discounttothecurrentshareprice.TheEPSiscurrently$0.50andthesharesofFrostCoaretradingonaprice/earningsratioof20times.Themarketcapitalisationofthe is$50m.Whatisthetheoreticalexrightspricepershare(totwodecimalces)?Currentshareprice=0.5x20=$10pershareRightsissueprice=10x90/100=$9pershareNumberofsharestobeissued=(50m/10)/4=1.25msharesTERP=(10x5+(9x1.25)/6.25=$9.80pershareDrumlohas$5mof$050nominalvalueordinarysharesinissue.Itrecentlyannounceda1for4rightsissueat$6pershare.Itssharepriceontheannouncementoftherightsissuewas$8pershare.WhatisthetheoreticalvalueofarightperexistingA$160B$040C$050D$150AnswerValueofaright=(7.6–$6)/4shares=$04percprovidersmakeaprofitfromthedifferencweeninterestpaidonmoneydepositsandinterestreceivedfrommoneylenttocustomers.cfinancehasg hroughanexceptionalgrowthperiodinrecentyears.cfinancetransactionsarebasedontheconceptofsharingriskandrewardbetweentheinvestorandtheuserofMakingprofitsbylendingaloneandthechargingofinterest(Riba)isforbiddenunderSharialaw.Makingmoneywithmoneyisconsideredtobeimmoral,andwealthshouldbegeneratedviatradeorinvestments.Thecfinanceprovider’sprofitabilityisthereforecloselytiedtothatofthe Thereisatobepaid,recognitionoftheconvenienceofpayinglater,(creditanassetthatistransferred y.ThereisinterestMusharaka&2.3Aformofequitywhereapartnershipexists.Allpartnersbringashareofthecapitalaswella pertisetothebusinessorproject.Thepartnersdonothavetoprovideequalamountsofcapitalorequalamountsofexpertise.Profitsaresharedaccordingtoapre-agreedcontract.Therearenodividendspaid.Lossesaresharedaccordingtocapitalcontribution. Amudarabatransactionisapartnershiptransactioninwhichonlyoneofthepartners(therabalmal)contributescapital,andtheother(themudarib)contributesskillandexpertise.Profitsaresharedaccordingtoapre-agreedcontract.Therearenodividendspaid.LossesaresolelyattributabletotheproviderofcapitalExThelessorisstilltheowneroftheassetand theriskofownership.Thismeansthattheandinsurancelessorwillberesponsibleformajormaintenancewhichisdifferentfromaconventionallong-termlease.2.5ExThereisanunderlyingtangibleassetandtheSukukholdersharesintheriskandrewardsofownership.ThisgivestheSukukpropertiesofequityfinanceaswellasdebtfinance.有商业票据的性质，随着经济的发展，债WhichofthefollowingdescribesaAbondincfinancewherethelenderownstheunderlyingassetandsharesintherisksandrewardsofownership.Equityincfinancewhereprofitsaresharedaccordingtoapreagreedcontract–dividendsarenotpaidassuch.Tradecreditincfinancewhereapreagreedmarkupisagreedinadvancefortheconvenienceofpayinglater.Aleaseincfinancewherethelessorretainsownershipandtheriskandrewardsofownershipoftheunderlyingasset. cfinancesourceswhichTocouldconsiderasalternativestoarightsissueoraloannoteTheformsofcfinanceequivalenttoarightsissueandaloannoteissuearemudarabaandsukukrespectively.Musharakaissimilartoventurecapitalandhenceisnotseenasequivalenttoarightsissue,whichismadetoexistingshareholders.Ijara,whichissimilartoleasefinance,mightbe ternativetoaloannoteissue,dependingonthenatureofthennedbusines Amudarabacontractisbetweenacapitalpartner(rabalmal)andanexpertisepartner(mudarab)fortheundertakingofbusinessThebusinessoperationsmustbecompliantwithSharia’alawandarerunonaday-to-daybasisbythemudarab.Thecapitalpartner(rabalmal)hasnoroleinrelationtotheday-to-dayoperationsofthebusiness.Profitsfromthebusinessoperationsaresharedbetweenthepartnersinaproportionagreedinthecontract.Lossesarebornebytherabalmalalone,asproviderofthefinance,uptothelimitofthecapitalprovided.ConventionalloannotesarenotallowedunderSharia’alawbecausetheremustbealinktoanunderlyingtangibleassetandbecauseinterest(riba)isforbiddenbytheQuran.Sukukarelinkedtoanunderlyingtangibleasset,ownershipofwhichispassedtothesukukholders,anddonotpayinterest.Sethesukukholderstakeontherisksandrewardsofownership,sukukalsohasanequityaspect.Asowners,sukukholderswillbearanylossesorriskfromtheunderlyingasset.Intermsofrewards,sukukholdershavearighttoreceivethe generatedbytheunderlyingassetandhavearighttodismissthemanageroftheunderlyingasset,ifthisisfelttobenecessary.Inthisformofcfinance,thelesseeusesatangibleassetinexchangeforaregularrentalpaymenttothelessor,whoretainsownershipthroughouttheperiodoftheleasecontract.Thecontractmayallowforownershiptobetransferredfromthelessortothelesseeatoftheleaseperiod.Majormaintenanceandinsurancearetheresponsibilityofthelessor,whileminororday-to-daymaintenanceistheresponsibilityofthelessee.Thelessormaychoosetoappointthelesseeastheiragenttoundertakeallmaintenance,bothmajorandminor.Exinthenatureofacontractanddiscussbrieflyhowthisformofcfinancecouldbeusedtofinancethennedbusines pansion.(5marks)Onecentralpr ipleof cfinanceisthatmakingmoneyoutofmoneyisnotacceptable,i.e.interestisprohibited.Amudarabacontract,in cfinance,isapartnershipbetweenonepartythatbringsfinanceorcapitalintothecontractandanotherpartythatbringsbusines pertiseand effortintothecontract.Thefirstpartyiscalledtheownerofcapital,whilethesecondpartyiscallednt,whorunsormanagesthebusiness.Themudarabacontractspecifieshowprofit