Answer To: *** You can also choose your own topic, please let me know in Week 1, what MNC you like to research....
Sarabjeet answered on Nov 13 2020
Impact of 2007 financial crisis
Impact of 2007 financial crisis
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Contents
Effects of the 2007-2008 global credit crises on the company’s ability to raise capital required to support its expansion and operations 3
Role of international financial markets and institutions in global environments in evaluating their impact on the company’s risk management strategies 3
Impacts of exchange rate exposures on the company’s performance for determining if a loss occurred because of fluctuations or devaluations of foreign currencies 5
Methods the company used to hedge foreign exchange exposure 8
Apple strategies after 2007-2008 crisis for determining possible reasons for the company’s current financial performance, providing examples to support claims 10
References 13
Effects of the 2007-2008 global credit crises on the company’s ability to raise capital required to support its expansion and operations
Apple outperformed the broader market in 2007, up 1.5%, and the S&P 500 index fell more than 2%. However, the stock is still expected to record its worst performance within six years. In 2008, Apple's share price fell more than 50%. Since then, stocks have been rising by 5% or more. After the two analysts cut the "target" price of the $60 (£34) stock, the fact that consumers are about to consume is behind the sudden fall in Apple's stock price: RBC Capital's Mike Abramsky has dropped from $200 to $140, in addition, Morgan. Stanley's Kathryn Huberty is from $178 to $115. (Apple's stock price is about $110, which lost around 15percent of the value on Nasdaq-listed stock's Monday sell-off (Eran Dilger, 2017). After the crash (the stock price fell about 40% but the price-earnings ratio premium fell 100%), it rebounded slightly, and then the valuation fell sharply (Aliouche, 2014). During the economic downturn, Standard & Poor's earnings from Q308 to Q309 fell to zero or below. Due to the collapse of Standard & Poor's earnings, the Standard & Poor's P/E astronomical figures rose (E is close to zero and the P/E ratio is close to infinity). Apple's earnings also declined, but remained positive during this period, growing 37% (!) in the fourth quarter. As a result, Apple's P/E ratio fell to 11, while the market was well above 100 (122.41 peaks). Apple's price-earnings ratio is 80%: Apple's valuation is basically worthless (3 times cash) (Arner, 2009).
Role of international financial markets and institutions in global environments in evaluating their impact on the company’s risk management strategies
Credit rating agencies play animportant role in the financial markets by supporting to decrease information asymmetry amid companies and national credentials between investorsand lendersand between issuers. With the globalization of finance, the role of CRA has expanded, and Basel II has received an additional push to include CRA ratings in the rules for setting credit risk weights. Ratings incline to be a sticky, lagging in the market, and overreacting when they modify. This overreaction might exacerbate the recent financial crisis, leading to financial instability and the spread of transnational crises. In recent times, Basel Committee on Banking Supervision (BCBS) revised the bank capital standards and finally got their role. The logic of CRA exists to solve the problem of information asymmetry amid the borrowerand lender regarding the latter's reputation. Issuers with inferior credit ratings disburse higher interest rates, and their risk premiums are higher than those with higher ratings (Liu, Uchida & Yang, 2012). In addition, due to national regulations that limit speculative bond investment, ratings determine the eligibility of certain institutional investor portfolio debt and other financial instruments. Investors have discussed in detail the balance sheet of apple, and it is one of the main reasons why the company is considered to be the next AAA rating (Avgouleas, 2008). The advantage of Apple's portfolio is quite dependent on the iPhone. Since the company gets motivated by more diversified and services driven, the credit prospects of the Apple will greatly improve.
Apple is high-quality Company with several low-risk features of a reputable company. The tech giant has solid free cash flow, a loyal customer base, and most remarkable balance sheets I've seen. Though, AAA credit ratings are well known and difficult to achieve. This means that the Apple is contemplated to be more reputable than US federal government, with the exception of 15 states. Each of these sovereign entities has the ability to tax their citizens.This article will discuss the possibility of getting the next AAA credit rating from the standard and the poor.
Apple has rarely introduced most of the investors. This big tech company is known for its popular iPhone, iPad, Mac, Apple Watch and iTunes Store. Due to the popularity of its products, Apple has become the largest company with a market capitalization of approximately $ 735 billion in the United States.
Institutional investors in the developed and developing countries are heavily dependent on rating agencies for investment decisions. This is because credit ratings are basically a perception of credit risk. Rating provides insights into the quality of credit for personal loan issues and relative probability that the issuer can be the default. Fund managers often have very little knowledge of the risks associated with those parties in which they are interested. Credit rating agencies provide advice on credit quality of borrowers such as governments, corporations, financial institutions and their related debt instruments (e.g. Bond) ("The 2007-2009 Financial Crisis on Emerging Markets: Quantitative Identification of Crisis in Continent-based Regions", 2014).
International financial institutions are institutions which give financial support as well as professional guidance for socialand economicdevelopment activities in the developing nations and encourage international economic stabilityandcooperation. The word international financial institutions generallyrefer to International Monetary Fund (IMF) and 5 multilateral development banks (MDBs): World Bank Group, African Development Bank, Asian Development Bank, Inter-American Development Bank and European Reconstruction and Development Bank. The last four of these are concentrated in one world region and are therefore often referred to as regional development banks. In contrast, the scope of International Monetary Fund and World Bank is worldwide; they are likewiseexpert agencies of United Nations...