公司金融英文课件Lecture 8 Coursework Briefing
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《Corporate Finance (公司金融学)》课件 (2)
Balance Sheet Analysis
• When analyzing a balance sheet, the financial manager should be aware of three concerns:
1. Accounting liquidity 2. Debt versus equity 3. Value versus cost
Sources of Information
• Annual reports • Wall Street Journal • Internet
– NYSE () – Nasdaq () – Text (/cj)
• SEC
– EDGAR – 10K & 10Q reports
Total operating revenues Cost of goods sold Selling, general, and administrative expenses Depreciation Operating income Other income Earnings before interest and taxes Interest expense Pretax income Taxes
Current: $71 Deferred: $13 Net income Retained earnings: Dividends:
$2,262 - 1,655
- 327 - 90 $190 29 $219 - 49 $170 - 84
$86 $43 $43
U.S.C.C. Income Statement
Accounting Liquidity
• Refers to the ease and quickness with which assets can be converted to cash.
公司金融课件Chap008
◦ Not so, there are many pitfalls in identifying incremental cash flow
8-6
Sunk costs are not relevant
◦ Just because “we have come this far” does not mean that we should continue to throw good money after bad.
8-3
When performing capital budgeting analysis:
◦ Always base calculations on cash flow, not income
Earnings ≠ Cash Need cash for capital spending Need cash for rewarding shareholders Therefore, capital expenditure analysis must be based on cash
8-2
Cash flows matter—not accounting earnings. Sunk costs don’t matter. Incremental cash flows matter. Opportunity costs matter. Side effects like synergy, and erosion matter. Taxes matter: we want incremental aftertax cash flows. Inflation matters.
Salvage Value
◦ The market value of an asset less the tax. ◦ Don’t forget to treat salvage value (after tax, of course) as a cash inflow at the end of the project
8-6
Sunk costs are not relevant
◦ Just because “we have come this far” does not mean that we should continue to throw good money after bad.
8-3
When performing capital budgeting analysis:
◦ Always base calculations on cash flow, not income
Earnings ≠ Cash Need cash for capital spending Need cash for rewarding shareholders Therefore, capital expenditure analysis must be based on cash
8-2
Cash flows matter—not accounting earnings. Sunk costs don’t matter. Incremental cash flows matter. Opportunity costs matter. Side effects like synergy, and erosion matter. Taxes matter: we want incremental aftertax cash flows. Inflation matters.
Salvage Value
◦ The market value of an asset less the tax. ◦ Don’t forget to treat salvage value (after tax, of course) as a cash inflow at the end of the project
--and return(公司金融英文版) ppt课件
8-8 Markowitz Portfolio Theory
% probability
Standard Deviation VS. Expected Return
Investment D
20
18
16
14
12
10
8
6
4
2
0
-50
0
50
% return
McGraw Hill/Irwin
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
McGraw Hill/Irwin
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
8-4 Markowitz Portfolio Theory
Proportion of Days
Price changes vs. Normal distribution
Expected Return (%)
McGraw Hill/Irwin
Standard Deviation
Microsoft - Daily % change 1990-2001
0.14 0.12
0.1 0.08 0.06 0.04 0.02
0
-9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9
McGraw Hill/Irwin
Daily % Change
Copyright © 2003 by The McGraw-Hill Companies, Inc. AHale Waihona Puke l rights reserved
《Corporate Finance (公司金融学)》课件 (3)
3.5 Practicing the Principle: A Lending Example
Consider an investment opportunity that costs $50,000
this year an provides a certain cash flow of $54,000
Intertemporal Consumption Opportunity Set
Consumption at t+1
$120,000 $100,000 $80,000 $60,000 $40,000 $20,000
$0 $0
A person with $95,000 who faces a 10% interest rate has the following opportunity set.
now; invest the remaining $35,000; consume $38,500 next year.
$40,000
$38,500 $35,000 (1.10)1
$20,000
$0 $0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
Consumption today
– Risk intermediation
• Financial intermediaries can tailor the risk characteristics of securities for borrowers and lenders with different degrees of risk tolerance.
• The intermediary in turn loans $30,000 to each of the 4
金融学英文课件 (8)
• Checks are legal proof of payment. • Customers wanted them back. • Starting in 2004 • Banks can transmit digital images • Substitute checks are proof of payment • Electronic mechanisms for clearing checks have lowered costs and kept checks as an attractive means of payment.
2-12
(2) Checks
• A check is an instruction to the bank to take funds from your account and transfer them to another account.
• A check is therefore not a final payment as currency is.
The more costly it is to convert an asset into money, the less liquid it is.
•
Financial institutions use:
• Market liquidity - the ability to sell assets for money. • Funding liquidity - ability to borrow money to buy securities or make loans.
2-1
Money and How We Use It
• Money is an asset that is generally accepted as payment for goods and services or repayment of debt. • Income is a flow of earnings over time, where wealth is the value of assets minus liabilities. • Money has three characteristics: 1. A means of payment 2. A unit of account, and 3. A store of value. • The first of these characteristics is the most important
公司金融英文课件Lecture 18 Financial Risk Management - Print Version(1)
Forward Contract
Benefits:ቤተ መጻሕፍቲ ባይዱ
• Eliminates downside risk But…
• Also eliminates upside risk
• Still exposed to credit risk – possibility that the counterparty will not honour the obligation
What action should GGF take to lock in the £2 price?
Suppose the price of wheat actually turns out to be £3. Evaluate GGFs gains and losses.
Suppose the price of wheat actually turns out to be £1. Evaluate GGFs gains and losses.
The Payoff Profile
Two key points: 1. Downward slope = negative relationship because higher oil prices mean lower profits 2. Steepness of the slope indicates the exposure to the risk because oil is a significant cost to the business
Interest Rate Volatility: A Historical Perspective
Exchange rate Volatility: A Historical Perspective
金融市场与金融机构英文课件 (8)
Fundamentals of Insurance
5. The insurance company must have a large number of insured so that the risk can be spread out among many different policies. 6. The loss must be quantifiable. For example, an oil company could not buy a policy on an unexplored oil field. 7. The insurance company must be able to compute the probability of the loss’s occurring.
Life Insurance
Life insurance policies come in many forms. Some of the typical policies include: • Term Life: the insured is covered while the policy is in effect, usually 10–20 years. • Whole Life: similar to term life, but allows the policyholder to borrow against the policies cash value. When the term of policy expires, the insured can get the cash value of the policy.
Life Insurance
Life insurance policies come in many forms. Some of the typical policies include: • Universal Life: includes both a term life portion and a savings portion. • Annuities: pays a benefit to the insured until death, to cover retirement years.
《Corporate Finance (公司金融学)》课件 (15)
Expansion $3,000 640 $2,360 $9.83 15% 20%
Financial Leverage and EPS
EPS
12.00
10.00
8.00
6.00
Break-even
point 4.00
2.00
0.00 (2.00)
1,000
Disadvantage to debt
Debt
EBIT rBB
rB B
Thus, the total cash flow to all stakeholde rs is
(EBIT rB B) rBB
The present value of this stream of cash flows is VL Clearly
(EBIT rBB) rBB EBIT
No Debt
Advantage to debt
2,000
3,000
EBEIBTI in dollars, no taxes
Assumptions of the Modigliani-Miller Model
• Homogeneous Expectations • Homogeneous Business Risk Classes • Perpetual Cash Flows • Perfect Capital Markets:
The Capital-Structure Question and The Pie Theory
• The value of a firm is defined to be the sum of the value of the firm’s debt and the firm’s equity.
Financial Leverage and EPS
EPS
12.00
10.00
8.00
6.00
Break-even
point 4.00
2.00
0.00 (2.00)
1,000
Disadvantage to debt
Debt
EBIT rBB
rB B
Thus, the total cash flow to all stakeholde rs is
(EBIT rB B) rBB
The present value of this stream of cash flows is VL Clearly
(EBIT rBB) rBB EBIT
No Debt
Advantage to debt
2,000
3,000
EBEIBTI in dollars, no taxes
Assumptions of the Modigliani-Miller Model
• Homogeneous Expectations • Homogeneous Business Risk Classes • Perpetual Cash Flows • Perfect Capital Markets:
The Capital-Structure Question and The Pie Theory
• The value of a firm is defined to be the sum of the value of the firm’s debt and the firm’s equity.
《Corporate Finance (公司金融学)》课件 (13)
3. Create a New Security
• Sometimes a firm can find a previously-unsatisfied clientele and issue new securities at favorable prices.
• In the long-run, this value creation is relatively small, however.
past prices
Some Common Misconceptions
• Much of the criticism of the EMH has been based on a misunderstanding of the hypothesis says and does not say.
Stock Price
Sell Sell
Buy Buy
If it were possible to make big money simply by finding “the pattern” in the stock price movements, everyone would do it and the profits would be competed away.
13.1 Can Financing Decisions Create Value? 13.2 A Description of Efficient Capital Markets 13.3 The Different Types of Efficiency 13.4 The Evidence 13.5 Implications for Corporate Finance 13.6 Summary and Conclusions
• Sometimes a firm can find a previously-unsatisfied clientele and issue new securities at favorable prices.
• In the long-run, this value creation is relatively small, however.
past prices
Some Common Misconceptions
• Much of the criticism of the EMH has been based on a misunderstanding of the hypothesis says and does not say.
Stock Price
Sell Sell
Buy Buy
If it were possible to make big money simply by finding “the pattern” in the stock price movements, everyone would do it and the profits would be competed away.
13.1 Can Financing Decisions Create Value? 13.2 A Description of Efficient Capital Markets 13.3 The Different Types of Efficiency 13.4 The Evidence 13.5 Implications for Corporate Finance 13.6 Summary and Conclusions
andreturn公司金融英文版ppt课件
Return
McGraw Hill/Irwin
B AB A
Risk
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
8- 18
Efficient Frontier
Return
McGraw Hill/Irwin
% of Portfolio
Avg Return
60%
15%
40%
21%
Standard Deviation = weighted avg = 33.6 Standard Deviation = Portfolio = 28.1 Return = weighted avg = Portfolio = 17.4%
8-6 Markowitz Portfolio Theory
% probability
Standard Deviation VS. Expected Return
Investment B
20
18
16
14
12
10
8
6
4
2
0
-50
0
50
% return
McGraw Hill/Irwin
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
Expected Return (%)
McGraw Hill/Irwin
Standard Deviation
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
manydifferentkindsofdebt公司金融英文版课件
Callable bond - a bond that may be repurchased by a the firm before maturity at a specified call price
Defeasance - a method of retiring corporate debt involving the creation of a trust funded with treasury bonds
Accrued interest - the amount of accumulated interest since the last coupon payment
Debentures - long-term unsecured issues on debt
Mortgage bonds - long-term secured debt often containing a claim against a specific building or property
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
25- 2
一是作为领导干部一定要树立正确的 权力观 和科学 的发展 观，权 力必须 为职工 群众谋 利益， 绝不能 为个 Covered
McGraw Hill/Irwin
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
25- 4
一是作为领导干部一定要树立正确的 权力观 和科学 的发展 观，权 力必须 为职工 群众谋 利益， 绝不能 为个人 或少数 人谋取 私利
Defeasance - a method of retiring corporate debt involving the creation of a trust funded with treasury bonds
Accrued interest - the amount of accumulated interest since the last coupon payment
Debentures - long-term unsecured issues on debt
Mortgage bonds - long-term secured debt often containing a claim against a specific building or property
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
25- 2
一是作为领导干部一定要树立正确的 权力观 和科学 的发展 观，权 力必须 为职工 群众谋 利益， 绝不能 为个 Covered
McGraw Hill/Irwin
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved
25- 4
一是作为领导干部一定要树立正确的 权力观 和科学 的发展 观，权 力必须 为职工 群众谋 利益， 绝不能 为个人 或少数 人谋取 私利
公司金融学课件 Topic00-公司金融概述
NWC
流动负债
流动资产
长期负债
固定资产
股东权益
12
4
（1）长期投资管理——资本预算
资本预算（Capital Budgeting） 即固定资产的投资决策过程 资本预算的典型特点 支出金额巨大；投资回收期长
13
案例分析：史玉柱与巨人集团
在没有有效的环境分析、稳健的资 金保障和完善的管理机制下，采取 激进的扩张战略结果。
微观金融学——金融经济学
以公司金融学为基础
8
公司金融的内涵
公司金融是研究企业当前或未来经 营活动所需的财务资源的取得与使 用的一种管理活动。
9
3
公司金融的外延
三大研究主题 资本预算（Capital Budgeting） 资本结构（Capital Structure） 净营运资本管理（NWC Management）
22
（3） 公司理财学的沿革
筹资管理时期（1890—1950） 侧重于研究公司如何卓有成效地筹集资本，被称为“传统理财理 论”。阿瑟•S•大明于1920年出版的《公司理财论》可以成为“传统 理财论”的代表。 资产管理时期（1950—1964） 主要任务是解决资本利用效率问题。最早研究投资财务理论的美国 人乔尔•迪恩于1958年出版了《资本预算》，对财务管理由筹资管理 向资产管理的飞跃发展起到了决定性的影响；1958年—1961年，米 勒和莫迪格利亚尼提出了著名的MM定理，奠定了现代公司财务理论 的基础。
6
2
财务管理与金融学
财务管理是研究某一经济部门当前或未来经营活 动所需的财务资源的取得与使用的一种管理活动。
财务资源——资本 （capital） 资源的取得——筹资活动（financing） 资源的使用——投资活动（investment）
演示文稿公司金融概述
（1）主体（需求者和供给者） （2）客体 （3）中介机构 （4）政府 （5）利率：利率＝纯粹利率+通货膨胀附加率+风险附加率
第十八页，共22页。
第4节 公司金融环境
一、金融环境的构成
3.税收环境 企业的资本和债务的筹集、房产和设备的购买、特定投资的抉择，联营或合并 等决策，均受税负的影响。
类别
税种
财产税类 （9）
(1)房产税；(2)城市房地产税；(3)城镇土地使用税； (4)车船税；(5)车船使用牌照税；(6)车辆购置税；(7) 契税；(8)耕地占用税；(9)遗产税(未开征)
这些税种是对纳税人拥有或使用 的财产征收的
(1)城市维护建设税；(2)印花税；(3)固定资产投资方
4
行为税类 向调节税(停征)；(4)土地增值税；(5)屠宰税(停征)； 这些税种是对特定行为或为达到 （8） (6)筵席税(停征)；(7)证券交易税(未开征)； (8)燃油 特定目的而征收的
(Corpora-tion)
个人独资企业 (Sole Proprietorship)
合伙企业
(partnership)
有限责任公司 (Liability Limited Company)
股份有限公司
(Stock Limited Company)
第五页，共22页。
第1节 公司金融概述
一、企业的组织形式
(2)只强调股东利益，而对企业其他关系人的利益重视不够。
(3)股票价格受多种因素影响，且公司不能完全控制，把不可控因素引入理财目标是 不合理的。
第十五页，共22页。
第3节 公司金融目标
一、公司金融目标
（三）企业价值最大化 采用最优的财务政策，充分考虑资金的时间价值、风险、报酬的关系，在保证企业
第十八页，共22页。
第4节 公司金融环境
一、金融环境的构成
3.税收环境 企业的资本和债务的筹集、房产和设备的购买、特定投资的抉择，联营或合并 等决策，均受税负的影响。
类别
税种
财产税类 （9）
(1)房产税；(2)城市房地产税；(3)城镇土地使用税； (4)车船税；(5)车船使用牌照税；(6)车辆购置税；(7) 契税；(8)耕地占用税；(9)遗产税(未开征)
这些税种是对纳税人拥有或使用 的财产征收的
(1)城市维护建设税；(2)印花税；(3)固定资产投资方
4
行为税类 向调节税(停征)；(4)土地增值税；(5)屠宰税(停征)； 这些税种是对特定行为或为达到 （8） (6)筵席税(停征)；(7)证券交易税(未开征)； (8)燃油 特定目的而征收的
(Corpora-tion)
个人独资企业 (Sole Proprietorship)
合伙企业
(partnership)
有限责任公司 (Liability Limited Company)
股份有限公司
(Stock Limited Company)
第五页，共22页。
第1节 公司金融概述
一、企业的组织形式
(2)只强调股东利益，而对企业其他关系人的利益重视不够。
(3)股票价格受多种因素影响，且公司不能完全控制，把不可控因素引入理财目标是 不合理的。
第十五页，共22页。
第3节 公司金融目标
一、公司金融目标
（三）企业价值最大化 采用最优的财务政策，充分考虑资金的时间价值、风险、报酬的关系，在保证企业
公司金融课件chap.ppt
required to meet sales projections
▪ Financial Requirements – the amount of financing
needed to pay for the required assets
▪ Plug Variable – determined by management deciding
Income Statement For Year Ended December
31, 2006
Revenues
2000
Less: costs
(1600)
Net Income
400
4-7
Example: Pro Forma Income
Statement
▪ Initial Assumptions
▪ Revenues will grow at 15% (2,000*1.15)
Case 1
Assets 1,150 Debt
90
Equity 1,060
Total
1,150 Total
1,150
4-9
Percent of Sales Approach
▪ Some items vary directly with sales, while others do not ▪ Income Statement
Pro Forma Income Statement
For Year Ended 2007
Revenues
2,300
Less: costs
(1,840)
Net Income
460
4-8
Example: Pro Forma Balance
金融英语听说课件unit8accounting
预防欺诈为
如果会计师发现欺诈行为，应及时向适当的管理机构或执法机构报告。
报告欺诈行为
会计师应向客户或相关方披露任何违规行为或疑似违规行为，并协助客户采取纠正措施。
披露违规行为
会计师应接受独立审查，以确保其工作符合职业道德和法律要求。
接受独立审查
Advanced Accounting
CATALOGUE
Case Studies
CATALOGUE
06
Enron是一家能源和商品交易公司，因财务造假和虚报盈利而破产，成为美国历史上最大的破产案之一。
事件概述
通过复杂的金融工具和交易结构，虚增资产和利润，隐瞒债务和亏损。
财务造假手段
导致投资者和债权人巨大损失，引发了美国和全球的会计和监管改革。
影响
经营问题
Accounting information systems (AIS) are computer-based systems designed to collect, process, store, and communicate financial and accounting information.
The equation is: Assets = Liabilities + Owner's Equity.
This equation serves as a tool for analyzing the financial position of a business and understanding the relationship between different financial components.
Purpose
The accounting equation is a fundamental concept in accounting that represents the balance of assets, liabilities, and owner's equity in a business.
如果会计师发现欺诈行为，应及时向适当的管理机构或执法机构报告。
报告欺诈行为
会计师应向客户或相关方披露任何违规行为或疑似违规行为，并协助客户采取纠正措施。
披露违规行为
会计师应接受独立审查，以确保其工作符合职业道德和法律要求。
接受独立审查
Advanced Accounting
CATALOGUE
Case Studies
CATALOGUE
06
Enron是一家能源和商品交易公司，因财务造假和虚报盈利而破产，成为美国历史上最大的破产案之一。
事件概述
通过复杂的金融工具和交易结构，虚增资产和利润，隐瞒债务和亏损。
财务造假手段
导致投资者和债权人巨大损失，引发了美国和全球的会计和监管改革。
影响
经营问题
Accounting information systems (AIS) are computer-based systems designed to collect, process, store, and communicate financial and accounting information.
The equation is: Assets = Liabilities + Owner's Equity.
This equation serves as a tool for analyzing the financial position of a business and understanding the relationship between different financial components.
Purpose
The accounting equation is a fundamental concept in accounting that represents the balance of assets, liabilities, and owner's equity in a business.
《公司金融导论》课件
借款或发行债券所需要支付的利息。
利息成本
发行股票或债券所产生的费用。
发行成本
税收成本
与筹资相关的税收支出。
违约风险
无法按时偿还借款的风险。
债务资本
公司所承担的债务总额。
要点一
要点二
权益资本
公司所发行的股票总额。
资本结构决策：确定债务和权益资本的合理比例。
债务资本成本
公司为债务融资所支付的利息率。
详细描述
应收账款管理主要关注如何通过合理的信用政策和收款策略，降低坏账风险，提高应收账款的回收率。这包括制定信用政策、评估客户信用、监控应收账款等方面。
总结词：存货管理是营运资金管理的另一个重要环节，它涉及到企业如何通过合理的库存控制和物流管理来降低库存成本和提高运营效率。
公司金融风险管理
06
总结词：操作风险是指因公司内部操作流程、人为错误或系统故障等因素导致的风险。
感谢您的观看
THANKS
《公司金融导论》ppt课件
公司金融概述财务报表与财务分析资本预算与投资决策筹资决策营运资金管理公司金融风险管理
目录
CONTENT
公司金融概述
01
成长阶段
20世纪初，随着资本市场的发展，公司金融开始关注资本结构和股利政策等问题。
创新发展阶段
近年来，随着金融市场的不断发展和企业竞争的加剧，公司金融研究领域也在不断创新和发展。
收益性原则
投资项目应控制在公司可承受的风险范围内。
风险可控原则
符合公司战略原则
资源匹配原则
01
02
04
03
投资项目应与公司的财务、技术和管理资源相匹配。
投资项目必须具有盈利潜力，预期收益率应超过资本成本。
《Corporate Finance (公司金融学)》课件 (31)
30.9 The NPV of a Merger
• Typically, a firm would use NPV analysis when making acquisitions.
• The analysis is straightforward with a cash offer, but gets complicated when the consideration is stock.
30.10 Defensive Tactics
• Target-firm managers frequently resist takeover attempts.
• It can start with press releases and mailings to shareholders that present management’s viewpoint and escalate to legal action.
30.7 A Cost to Stockholders from Reduction in Risk
• The Base Case
– If two all-equity firms merge, there is no transfer of synergies to bondholders, but if…
• Divestiture can take three forms:
– Sale of assets: usually for cash – Spinoff: parent company distributes shares of a
subsidiary to shareholders. Shareholders wind up owning shares in two firms. Sometimes this is done with a public IPO. – Issuance if tracking stock: a class of common stock whose value is connected to the performance of a particular segment of the parent company.
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To protect the bank
Source: /news
Truth and Consequences
• Following the financial crisis of 2007/8, the reputation of banks and bankers is at an all time low • The Libor scandal has further undermined trust in banks. Paul Tucker, the deputy governor of the Bank of England called the Libor market a "cesspit".
Why is it important?
• Libor is considered to be one of the most crucial interest rates in finance, upon which trillions of financial contracts rest, and the exposure of its rigging has shocked many beyond the world of finance. • Libor is used to set a range of financial transactions worth an estimated $300 trillion. $300 trillion is equivalent to approximately four and a half times global GDP
• 1,500 words • Report on current finance topic • • 30% of Module Mark Briefing in week 8
1.January 2013
• • 1 hour MCQs
•
20%
2.May 2013
• 2 hours
•
• •
50%
Three questions from six Specimen paper next semester
• Lawsuits have been launched by US municipalities, pension funds and hedge funds
Truth and Consequences – the world
• The consequences are also global.
$300,000,000,000,000
Libor in the News
How is Libor set?
• Every day a group of leading banks submit rates for 10 currencies and 15 lengths of loan ranging from overnight to 12 months. The most important is the three-month dollar Libor. The rates submitted are what the banks estimate they would pay other banks to borrow dollars for three months
• Submission on 11th March 2013 • Feedback on draft
Libor in the News
What is Libor?
• The Libor, or London Interbank Offered Rate, is a global benchmark interest rate used to set a range of financial deals. It is also a measure of trust in the financial system and the faith banks have in each other's financial health
/news/uk-18620314
So how was Libor rigged?
In two ways:
1. By traders for profit.
• • Since the rates submitted are estimates not actual transactions it's relatively easy to submit false figures. Traders at several banks conspired to influence the Libor by getting colleagues to submit rates that were either higher or lower than their actual estimate
Truth and Consequences – the money
• While those paying interest on loans would have benefited from artificially low Libor rates, savers and investors would have lost out. Because Libor is used to set a huge range of financial transactions, the potential losses are huge.
Traders for Profit “Coffees will be coming your way” “Dude. I owe you big time!...I’m opening a bottle of Bollinger” “Ask for High 6M Fix”
Reputational Damage
•2 July: Barclays chairman Marcus Agius resigns and the government launches two inquiries into Libor and banking standards
•3 July: Barclays chief executive Bob Diamond resigns
Truth and Consequences - Barclays
27 June: Barclays fined £290m by US and UK regulators for attempting to manipulate Libor rates •28 June: Barclays shares plunge 15%
So how was Libor rigged?
In two ways:
1. By traders for profit. 2. To protect the bank.
• At the height of the financial crisis in late 2007, many banks stopped lending to each other over concerns about their financial health with some banks submitting much higher rates than others.
Leeds University Business School
LUBS1035 Foundations of Finance
2012/13
John Smith
Lecture 8: Coursework Briefing
Module Objectives
Skills outcomes
On completion of this module you should be able to:
Your Coursework Assignment
You are a Financial Manager working for Barclays plc. The Bank has recently recruited a new Chairman, Sir David Walker, and he is keen to understand the implications of the recent Liborfixing scandal for Barclays Bank. You have been asked to provide a 1,500 word briefing paper on the Libor scandal for Sir David in the form of a report.
• Demonstrate problem solving, analytical and quantitative skills by applying current theory and appropriate analytical tools to simple financial problems; • Demonstrate written communication and critical thinking skills in the written parts of the summative assessment; and
•
Barclays was one of those submitting much higher rates, attracting some media attention. This prompted comment that Barclays was in trouble so Barclays began to submit much lower rates.