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2 years ago

Explain the following factors that influence the choice of funding: risk

1 answer:

6 0

Risk is the major factor to consider when deciding the funding, when funds are provided it is a risk that whether the funds will be received or not.

Risk is the threat of being unable to receive the funds back, this is the highest level of risk, there are many small risks too, but the highest level is losing the money.

There could be a small portion of loss of money or sometimes the debtor completely defaults so not a single penny is retrieved.

Funding is a choice and the debtor should be chose according to the risk appetite of the investor or lender on money.

There are investors who are risk averse are not willing to take the risk and fine with the less amount of returns and there are risk takers, who want high returns in return of high risk of defaulting.

Learn more about Risk at brainly.com/question/27331968#SPJ1

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"Budget deficits should be avoided, even if the economy is below potential, because they reduce saving and lead to lower growth.

bixtya [17]

Answer:

the long-run framework directs one to avoid deficits; in the short-run framework deficits are useful if the economy is significantly below potential.

Explanation:

"Budget deficits should be avoided, even if the economy is below potential, because they reduce saving and lead to lower growth." This policy directive follow the long-run framework directs one to avoid deficits; in the short-run framework deficits are useful if the economy is significantly below potential.

The reason is that in the short-run, deficits offer economic solutions by being an antidote to recessions, hence they could be a strategy of recession management in the short run

However in the long-run, deficits are not advisable as they could lead to debts because the major way to manage such deficits is by external borrowings.

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3 years ago

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3 years ago

Read 2 more answers

What are two tasks (out of several) commonly performed by operating systems?

Ludmilka [50]

There are various tasks that are performed by most common operating systems, and are universal across differing computers and other devices. Two important tasks are: managing communication between the software and a system's hardware abd deciding how a computer's memory and storage will be determained.

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4 years ago

Tobin Supplies Company expects sales next year to be $520,000. Inventory and accounts receivable will increase $90,000 to accomm

elena-s [515]

Answer:

$17,200

Explanation:

Calculation to determine How much external financing will Tobin Supplies Company have to seek

Net Income=[$520,000 x 20%]

Net Income = $104,000

Dividend Pay-out= [$104,000 x 30%]

Dividend Pay-out = $31,200

Additions to Retained Earnings = [$104,00 - $31,200]

Additions to Retained Earnings=$72,800

Now let determine the The External Financing Needed using this formula

The External Financing Needed = Increase in Assets – Additions to retained earnings

Let plug in the formula

The External Financing Needed= $90,000 - $72,800

The External Financing Needed= $17,200

Therefore The External Financing Needed is $17,200

7 0

3 years ago

A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) shows the following results: U.S. LDC Sal

Eva8 [605]

Answer:

The partial labor and capital productivity figures for the parent and subsidiary is 5.03 units per hour, 1.37 units per hour and, 1.68 units per hour, 4.20 units per hour

Explanation:

The computation of the partial labor for the parent and subsidiary is calculated by applying the formula which is shown below:

= Sales ÷ Labor (hours)

For U.S = 100,080 units ÷ 19,880 hours = 5.03 units per hour

For LDC = 20,500 units ÷ 14,880 hours = 1.37 units per hour

The computation of the capital productivity for the parent and subsidiary is calculated by applying the formula which is shown below:

= Sales ÷ Capital equipment (hours)

For U.S = 100,080 units ÷ 59,400 hours = 1.68 units per hour

For LDC = 20,500 units ÷ 4,880 hours = 4.20 units per hour

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3 years ago