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someone kindly help me with this question. thanks in advance Question 2 (a) Global financial markets have been on high alert as cash-strapped Chinese property
someone kindly help me with this question. thanks in advance
Question 2 (a) Global financial markets have been on high alert as cash-strapped Chinese property giant Evergrande faces several key tests in the coming days. The world's most indebted real estate developer is set to hit a series of deadlines for bond interest payments, totaling tens of millions of dollars. As the company struggles to meet those payments, it has started to repay some investors in its wealth management business with property. There are several reasons why Evergrande's problems are serious. Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust. There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy. The third is the potential impact on China's financial system. "The financial fallout would be far reaching. Evergrande reportedly owes money to around 171 domestic banks and 121 other financial firms," the Economist Intelligence Unit's (EIU) Mattie Bekink told the BBC. If Evergrande defaults, banks and other lenders may be forced to lend less. This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates. A credit crunch would be very bad news for the world's second largest economy, because companies that can't borrow find it difficult to grow, and in some cases are unable to continue operating. This may also unnerve foreign investors, who could see China as a less attractive place to put their money. (Sources: BBC News, on 29 September 2021) Required: Treasury's role is to advise on the best options, trade-offs, and compromises to make while making strategic financial decisions. Discuss THREE (3) financial strategic decisions and environmental forces affecting the company's treasury. (15 marks) (b) Minty company's policy is to maintain a cash balance of at least $80,000. Daily cash balances have a standard deviation of $8,000. On a daily basis, the interest rate is 0.02%. Each transaction involving the sale or purchase of securities is subject to a transaction fee of $20. Calculate the return point of the Miller-Orr model and, using your understanding, explain when this model should be implemented. Question 2 (a) Global financial markets have been on high alert as cash-strapped Chinese property giant Evergrande faces several key tests in the coming days. The world's most indebted real estate developer is set to hit a series of deadlines for bond interest payments, totaling tens of millions of dollars. As the company struggles to meet those payments, it has started to repay some investors in its wealth management business with property. There are several reasons why Evergrande's problems are serious. Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust. There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy. The third is the potential impact on China's financial system. "The financial fallout would be far reaching. Evergrande reportedly owes money to around 171 domestic banks and 121 other financial firms," the Economist Intelligence Unit's (EIU) Mattie Bekink told the BBC. If Evergrande defaults, banks and other lenders may be forced to lend less. This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates. A credit crunch would be very bad news for the world's second largest economy, because companies that can't borrow find it difficult to grow, and in some cases are unable to continue operating. This may also unnerve foreign investors, who could see China as a less attractive place to put their money. (Sources: BBC News, on 29 September 2021) Required: Treasury's role is to advise on the best options, trade-offs, and compromises to make while making strategic financial decisions. Discuss THREE (3) financial strategic decisions and environmental forces affecting the company's treasury. (15 marks) (b) Minty company's policy is to maintain a cash balance of at least $80,000. Daily cash balances have a standard deviation of $8,000. On a daily basis, the interest rate is 0.02%. Each transaction involving the sale or purchase of securities is subject to a transaction fee of $20. Calculate the return point of the Miller-Orr model and, using your understanding, explain when this model should be implementedStep by Step Solution
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