Demonstrate your understanding of classical and modern, domestic and global operations of money and capital markets by:

1. Demonstrate your understanding of classical and modern, domestic and global operations of money and capital markets by:

Explaining how the Global Financial Crisis [GFC] has had a significant impact on 1) the stability and interconnectedness of international financial markets and economies and 2) the regulatory responses that have been implemented in an attempt to stabilize the financial system.

The crises first led to spillovers in the Eastern Asia countries causing stress in finances amidst the crises. There was sudden deleverage by major banks leading to negative international flows in the banks in Asia.

The capital of equity markets together with local currencies flowed out. This with an exception of Yen led to huge losses recorded (David, 2011).

There was a spillage of funding shortages in the dollar of the domestic money markets. The exports collapsed which was presided by private flow reversals. The exports contracted thirty percent in a majority of countries in Asia while in Japan its more than forty percent. In the end, this external shock into the demand is domestically giving sharp contractions to some cases consumption but more so to investment (David, 2011).

Asian economic rebound took people by surprise. Mostly the ground has been regained that was lost since 2008 crises in the month of September. Asia indeed is leading in the process of recovery globally. Production in the industry for Asia which depends on exports regained ground whereby some countries like Korea returned to the levels they were before the crisis.

For the economy to recover, there is the need for macroeconomic policies being implemented simultaneously so that demand aggregate is stimulated with measures which can aid in repairing the balance sheet of banks so that credit provision is encouraged to the economy. This will help potentially prevent a vicious circle (Alles et al., 2015).

There should be efforts in policy which is concerted in every economy more so the large economies. This will help in revitalizing the trade worldwide so that there is stabilization in the financial capital flows. This will greatly aid in supporting markets that are emerging economies and the growth globally.

Countries and different regions can pursue different strategy policies according to the size if their economy, their stimulus measures taken should not be the same because its not necessary. This is because of the difference in structure and conjectural conditions. Consistency and orientation that is similar are good to be followed.

Currently, the rebound was to a great extent driven by inventories restocking globally. The crisis peak currently there was low production against the high demand which could have been caused by interference in financing and trade. This resulted to very low inventories globally (Bumgardner, n.d).

There is the need for final demand recovery if production should stop weakening in undershooting earlier over the period of medium term.

The economy of Asia is given support by large stimulus fiscal measures. This is done locally and abroad too. Its response compared to the average G20 countries has been the larger fiscal response. The packages of fiscal stimulus from abroad and schemes for scrapping car have helped in improving the production of industries and the exports. The schemes in car crapping led to sales which could cause a reduction in sale compared to 2010. Stimulus in fiscal in advanced major economies should not go on since projections show that debt levels by 2014 were expected to rise to 115 GDP percent.

Asia depends so much on consumer demand from U.S. Intra-regional trade has risen over the years recently which reflects largely on the chain of production reorganization. The input-output tables show how since 1990s demand by Asia has barely changed from outside region but increased in a few circumstance (King, 2014).

Korea and Taiwan final demand POC from China steeply rose rivaling their exposure to the United States. There’s projection for demand for some time to remain weak in some economies, but the demand maintains its importance. Those economies that have advanced grow lower than their expected potential leading to unemployment rise by 2010.

The IMF projected output of the world to contract in 2009 by 1.1 percent which grew with above 3 percent in 2010. This is more than 5 percent recorded in 2007. Asia projected growth is 5 and 3/4 by 2010 in percentage while 9 percent for China and 6.4 for India. 3.6 percent for Korea and 1.7 percent for Japan (Rousseau, 2014).

2. While Commercial Banking was not the only sector to be affected by the GFC, clearly business continuity was threatened, and many were exposed to the very real risk of failure. Business continuity risk management may be said to incorporate a disaster recovery planning process and a disaster recovery response process.
3. A) Define business continuity risk management.

This is the framework which is used to identify risk exposure of an organization due to threats which maybe internal or external. The framework includes management of the crisis, management of emergency, planning contingency, management of incidents, disaster, and business recovery.

1. B) Identify and briefly explain the core components of a disaster recovery planning process.

This can be done by running through many past scenarios on disaster recovery noting the impact of the results on the business. The results then come in handy to determine the assets of information technology which should return to the normal way, the acceptable levels of operation for the function of business.

Set goals so that exercises of risk assessment can help in defining your business tolerance for the loss of data and downtime. The downtime for tolerance can vary in different companies size and business sector. For instance, an e-commerce store has low tolerance hence less downtime compared to a contractor locally (Cai et al., 2010).

Disaster recovery strategies and scenarios should be created. This can be easily done after running through several scenarios and therefore IT assets can be determined which are for the functionality of the business in its minimum because then the business is ready for disaster recovery scenarios and strategies creation. Identify a threat for each sector of the business and come up with a strategy of recovery, response, and prevention. These are going to form a good foundation for the business disaster recovery plan.

The roles and responsibilities should be directly defined, so that specific roles and responsibility in the occurrence of a disaster are taken by staff as defined. A first and second tier can be chosen as responders for each scenario (Cai, 2009).

1. C) Identify and briefly explain the core components of a disaster recovery response process.

A business can be interrupted by many threats such as interference of power supply, virus invading the computer software causing its malfunction or even fire. When it occurs a strong disaster recovery process makes the difference in preventing a great cost blow to the company or even interruptions in operations of the business.

Normally businesses are a series of interconnected parts, and these elements would, therefore, go into the strategy to recover the disaster.

These pieces are key and should be included for sure; secure the storage of data. This is because network failure could lead to the loss of information stored or corruption of the same. Preservation of data is crucial to any recovery process so as normal operations are restored as soon as possible (Harris, 2009).

Detecting quickly helps a-lot since interruptions in service can be in various forms and its of great importance to know what caused the problem for success in coordinating a response. Companies which have tools build for diagnosis have great help in the effort of coordination of disaster recovery since these tools help in evaluating the system.

Offsite locations such a secondary site to your main work place comes in handy so that operations can continue despite disruptions in the main especially if it bad enough to take time fixing it. The company can continue running smoothly though virtually if you have data backups offsite thus giving you time to move to another space physically (CHHAOCHHARIA, 2007).

Finally, the process needs to be given the serious attention, and this is done by creating awareness to strengthen the disaster recovery response process. This helps in minimize damage when a disaster occur because now the tendency of employees viewing a disaster as unlikely to occur.

Bottom-up analysis approach focuses on the analysis of accounting ratios and other performance measures. Discuss this approach from two perspectives.

The approach is used in accounting ratios. Accounting ratios help in the measurement of the efficiency and company profitability according to financial reports. It can also be used in putting checks on the following measures in areas such as budgeting, the setting of goals, business forecasting, security analysis among others.

1. Evans and Partners is an investment advisory firm that provides specialist investment advice to its private clients. As part of the investment decision process, the senior investment analysts at the firm apply the bottom-up approach to the fundamental analysis of share prices.
2. A) Explain why Evans and Partners would use this type of analysis.

There is the awareness of the business product and the user. The realization of benefits is in the early business phases.

It is possible to replace many processes that are manual with automation early with the implementation of manageable password for many users.

Custom adapters need not be developed in the early phases. Its in the first phase that the organize gets to broaden the skills of identity management. While introducing Tivoli Identity Manager operations are less intruded (Calomiris, 2010).

1. B) Identify and discuss six different accounting ratios that should be included in a bottom-up approach model.

Debt ratio measures company’s total liabilities as a percentage of its total assets. It is a solvency ratio. The debt ratio is calculated by dividing total liabilities by total assets.

Equity ratio is a ratio of solvency or leverage measuring the assets amount which is financed by the owner’s investment as compared to total equity for the total company’s assets. Its calculated by dividing total equity by total assets (Simkovic, 2009).

The debt to equity ratio as liquidity and financial ratio which compares the total debt of the c.omany to its total equity. It is calculated by dividing total liabilities by total equity.

The receivables turnover ratio is calculated by dividing net revenue by average receivables. It measures the speed with which company collects its bills and how efficiently it does this (Tcherneva, 2014).

Cash Flow Indicator Ratio is normally expressed as a percentage comparing operating cashflows of the company to its revenues and nets sales giving the investors an idea on the ability to turn sales into cash by a company.

Inventory turnover ratio is calculated by dividing the cost of goods sold by average inventory. When the turnover is high than the average of the industry, then inventory is selling faster (Bebchuk, 2009).

1. C) Identify and discuss three other performance measures that may be used. Setting goals are closely related to budgeting. This is done by the executive management where using the bottom-up approach every department and business unit give out their targets and plans.

Business forecasting on bottom-up approach starts with product specific projections by sales channel perhaps for either geographical sales or by the type of customer (Sidel, 2011).

A bottom-up method for securities and analysis of company builds to a total company projection for specific products, a division of business or lines of products.

2. An investor is evaluating the use of the bottom-up and the top-down approaches to fundamental analysis. The investor wants to use the approach that will best enable the structuring of a diversified share portfolio that will achieve specified income returns and capital gains.
3. A) Compare both approaches and propose a recommendation as to which approach the investor adopt – top-down or bottom-up or both? Provide sound reasoning for your argument.

Top down and bottom up approaches have the same goal in the end which is to get as much as better returns as possible though their parameters and selection criteria and evaluation are different.

The top-down approach considers variables of macroeconomics such as GDP monetary and fiscal policy and inflation to come to a decision. Based on the investor analysis after monitoring the above macroeconomic factors, investment is in the portfolio that appreciates changes results in the variables above (Calomiris, 2010).

The bottom-up approach does not emphasize on the trends in the market or economic ones but focuses on the vehicle or entity of investment targeted. The financial health is analyzed by the investor of the particular vehicle, and the most promising one is chosen. Therefore I would recommend this approach.

1. B) The top-down approach includes an analysis of the local economy in which a company is situated, plus the economies of major trading partner countries and the global economy more generally. Why would an investor be interested in forecasting changes in these economies?

An investor who has an interest in maintaining investments of portfolio outside the domestic market must put into considerations globalization effects and fiscal market international trends. For instance, after the European crisis investments credit ratings in those nations fell drastically, but because of economic powers rising such as China and India, the subcontinent of Asia indicates a big foreign investment potential.

3. Listing on a stock exchange might be highly desirable for a company, but there are some requirements, conditions, and costs associated with becoming a publicly listed corporation. For example, Freelancer Ltd is one of the newest public companies to list on the Australian Securities Exchange.
4. A) Provide a broad overview of Freelancer Ltd AND identify and discuss the rights, roles, and responsibilities of Freelancer’s shareholders, the board of directors and executive management now that it is a publicly listed company, including the specific requirements for Australian companies seeking general admission to the ASX and the ASX profit test and asset test requirements.

A corporate structure consists typically of directors, officers or executive management and the shareholders. The handling of day to day business is done by officers the director’s act as overseers of the organization’s affairs while they protect shareholders interest and shareholders want a return on their investment.

The roles of the board of directors are directing the path of the business and the affairs of the corporation. They have legal responsibility for actions of agents, employees, officers, the corporation, and its subsidiaries. They act on the company’s behalf for its best interest with loyalty to the corporation itself and the corporation’s shareholders. Regularly they participate in meetings with the duty of approving some matters and transactions such as contracts or agreements. Participate in the election of corporate officers, purchases, and sales of new assets, new policies approval or amendment of the bylaws of the company.

The corporate officers act according to the authority they are given by the stipulated law to oversee the daily operations of the business. The officers are a chief executive officer or president; signs contract and is ultimately responsible for corporations affairs, chief operating officer; day to day affairs manager, chief financial officer; deals with all corporations finance to do matters and the company secretary; maintaining records and keeping them including minutes taking during meetings.

Shareholders have ownership in the company through investment if money. They take part in annual meetings held by the company where they elect corporation directors. They can also hold meetings though rare to approve major transactions. Their rights ar well stipulated in articles of incorporation.

1. B) Explain why these rules are in place and how they contribute to an efficient stock exchange, support the interests of listed entities, maintain investor protection and impact will these have on the liquidity management of the firm and firm value?

Regulation acts as a balance between investor protection and formation of capital. It allows the flourishing of formation of capital this is because investors are given the confidence needed to invest.

Coordination is a requirement for regulation between states, and there must be a will to let go of some of your preferences so that rules are fostered consistently from one state to the other. Regulation rules and laws vary from state to state. Thus they do not look the same. There can be exemption here and there.

It’s important for regulators to promote the progress of the economy. This is through innovation in how regulation is done either through coordination, or unique exemptions innovation can be spurred and entrepreneurship. This provides a protection layer needed by investors giving them the confidence needed to invest in the things you offering them.

Securities fraud can bring devastation. That’s why today rules and regulation are still needed. That’s why regulation by the federal government of securities began after the crashing of the stock market since there was a manipulation that had spread widely on markets and insider rampant trading. Money was being hoarded by people as a result making the loss in the steam of the economic engine. President Franklin D Roosevelt had to recommend the security act 1933 so that he could bring the confidence back the confidence of the public with honesty in dealing with security.

Through innovative regulation that is smart economic development is spurred on another level. In businesses and management of corporates, compliance means the obedient by the company of all set legal laws rules and regulations. This is done regarding the way business is managed, how they treat their customers and their staff management. This concept ensures that corporations are responsible and act that way all the time(Lahart, 2009).

Compliance leads to avoiding charges that are criminal. Firms’ don’t want to have problems with the law by facing charges due to the failure of adhering to the law. Laws and regulations are available for businesses to apply to their firms. From the way staff should be managed, how the stock should be handled, advertising and rules on how to engage while buying and selling, how to negotiate with customers, employees salary including safety and the list is endless (Young, 2008).

1. C) Within the context of the ASX, explain why there are a requirement and need for continuous reporting.

Releasing on a continuous basis of financial and non-financial information based on near real time or real time is called continuous reporting. This is done to so that parties from the external side of the company can have access to information on underlying events taking place instead of waiting for reports normally compiled at the end of periods. To make it easy for the continuous release of information on continuous reporting. XBRL is adopted by companies which make information more feasible (Crawford, 2011).

On the contrary, there are those who are skeptical about the usefulness of raw information or how overloaded it is, whether its too irrelevant when it released outside the company. There are companies which fear that continuous reporting could allow access to important strategies which would reduce a company’s competitive advantage (Schich, 2013).

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