Essays on The Market for Corporate Control Assignment

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The paper "The Market for Corporate Control" Is a perfect example of a Macro and Microeconomics Assignment. The market for corporate control is defined as a market where the pressure is existent on the managers of the companies to perform better and generate growth and profits for the shares of the public limited companies as they are bought and sold in the stock exchange. As a result, there is a constant risk of the firm being taken over. 8-1 How would leveraged buyouts be viewed by the shareholder wealth maximization model compared to the corporate wealth maximization model? In the shareholder wealth maximization model, the firm has to maximize profits and earnings for the shareholder and minimize risk as there is a change of a buyout.

However, compared to the shareholder wealth maximization model the corporate wealth maximization model seeks to maximize the wealth for the corporation as a whole. As a result, the leverage bought is acceptable to the shareholder's wealth model but is not acceptable by the corporate wealth maximization model. 9-1 How would a high degree of leverage (debt/assets) be viewed by the shareholder wealth maximization model compared to the corporate wealth maximization model? The high level and degree of leverage with debt financing for assets would seem as favorable for the risk averting shareholders as it would reduce the risk for them as the returns on a diversified portfolio would increase.

However, it would not be favorable for corporate wealth. 1-3 The measurement of all international economic transactions between the residents of a country and foreign residents is called the balance of payments (BOP). What institution provides the primary source of similar statistics for the balance of payments and economic performance worldwide? The main sources for the compilation of any country’ s Balance of Payments are the statistics that are taken from the trade of goods accounts and various economic sectors in which the country operates.

The institution that is responsible for providing this information is the central state bank of the government. 3-3 What are the main two types of economic activity measured by a country’ s BOP? The main two types of economic activity measured by a country’ s balance of payments are the incoming revenue from the trade of the country's goods and services to other countries and the outgoing payments made for importing goods and services into the country from other countries. 4-3 Why does the BOP always “ balance” ? Similar to all financial accounts the account for the balance of payments should also balance in the end resulting in a zero being carried forward this is because for the economic activity of the company the current account of the country and capital account and the official reserve account should always be equal to zero when added together.

The reason for this is that the country cannot use or utilize the goods and services that it does not have 11-3 What are the main summary statements of the balance of payments accounts and what do they measure? The summary statement for the balance of payment accounts states the Balance of the Current Account, the Current Account Surplus which is the balance above the payments in the current account, the Capital Outflow, the Net Foreign Investment which is the total investment taking place in the country, the Capital Account Deficit, the Balance on Capital Account, the Capital Inflow the Current Account Deficit, and the Capital Account Surplus.

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