Time value of money Research Paper Example | Topics and Well Written Essays - 750 words

Time value of money - Research Paper Example One can settle for less return if he or she is certain about the offered return in a given period of time. At times, when the company is highly reputed and has never defaulted in the past in its history; investor will agree to accept slightly less return for the reason of assured returns in a given time frame. Against this, if the company’s history indicates that it does not pay in time or has defaulted in payments to its debtors then it will force us to ask for the higher return to cover up the associated risk with our capital or delayed payments. Of course, it is subjective and based on the individual judgment; nevertheless, basic framework in applying the theory about risk and returns remain the same everywhere. Besides, other prevailing parameters such as inflation, interest rates in the market do influence about our decision to settle for appropriate returns. For example, if inflation is ruling at 5 % per annum, any return less than that simply means that our money is dep reciating. In the same scenario, if the yearly return received is six percent, it means that net of inflation our real return is only 1 percent. Above concepts are being applied in answering the questions of this paper. Answer 1) Current inflation rate in U.S is about 2.25 percent and term interest rates for the deposit of one year can be taken as around 1 percent. If the bond belongs to Nvidia Corporation, the company’s financials do not pose any near term threats so far the risk factor is considered. With simple thumb rule, I will not pay more than $1850 for the bond of this company that will fetch me around $2,000 after a year from this company. (Future value, FinanceProfessor.com) Answer 2. Cash flow (maturity value) available in this case is $2,000 The time period is one year for which it is required to find the present value, which is given as PV = CF * 1/ (1+r)t PV= 1,850 CF= 2,000 t=1, putting these values in the equation, it can be solved for r (discount rate), which will give us applicable discount rate. 1+r= CF/PV 1+r=2000/1850=1.08 or r=0.08 Hence discount rate for this bond is 8 percent. (Present Value, FinanceProfessor.com) Answer 3. As competitors to Nvidia, two companies selected are Siemens and AMD. Siemens is well established and financially very sound and deals in host of products. I would consider Siemens bonds highly liquid and secured. Based on the track record of Siemens, I would agree to buy bonds from Siemens by paying slightly higher price in comparison to Nvidia. There is absolutely no chance of Siemens’ failing on the redemption payments of bonds issued. All other things remaining the same, risk factor being nil, I would agree to buy these bonds by paying more in comparison to SLP Company Nvidia. In short, I will agree to slightly less than 8 percent of return while investing with Siemens. However, the same cannot be said for AMD as performance of the company is highly fluctuating in the market quarter after quarter. A MD’s operations are in the limited field and the company certainly carries some risk of failing in its payments for the bond. To cover up my risk of losing the capital or getting the delayed payments, I would certainly look for higher returns than normal. It means that I need to buy the bonds of AMD at

European Court of Justice Turner v Grovit and Harada Essay

European Court of Justice Turner v Grovit and Harada - Essay Example Anti-suit injunction is defined as â€Å"an order of the court requiring the injunction defendant not to commence or to cease to pursue, or not to advance particular claims within, or to take steps to terminate or suspend court or arbitration proceedings in a foreign country†1. The definition of anti-suit injunction claims that under this legal framework, none of the defendants or plaintiffs can take the assistance to obtain undue advantages of a foreign legislation apart from the country wherein the dispute took place. It is usually observed in case of cross-border disputes that the litigants perceive that they can take the advantage by shifting the proceedings in their home country, with the expectation to obtain a favourable judgement to the case ruling2. In order to disregard this belief of the litigants, anti-suit injunction has been introduced3.Arguably, anti-suit injunctions are often regarded as interference to the disputes in foreign courts. Addressing this particular issue, the discussion henceforth will evaluate whether the considerable of anti-suit injunction as an act of interference by a foreign court is justifiable. Illustrative examples will also be sought from various cases, including the landmark case of Turner v Grovit (C-159/02) [2005] 1 AC 101 in order to strengthen the rationalization of the arguments in this essay. The case of Turner v Grovit, decided in April 2004, is considered one of the landmark cases in the European Court of Justice (ECJ), which apparent denotes the legislative implications of anti-suit injunctions to the principle of lis alibi pendens. This case became the basis for the explanation of anti-suit injunction as Turner, the plaintiff, was granted with anti-suit injunction, as a measure to restrict the application of the rule given in correspondence to the re-appeal of the defendant (i.e. Harald Ltd.) in the Spanish court4.