Financing Expenditures, Majority
Shareholders & Attractive Bonds
1. Discuss the advantages and
disadvantages of financing capital expenditures through the use of internally
generated cash. Cite cases where it is more effective and efficient to fund
through internal funds and external funding sources; why would a financial
manager choose one method over the other?
2. Find two publicly traded
companies of your choosing. Look on the Internet for their financial
information to see who the majority shareholders are for the corporation. Are
they individual shareholders? Are they institutional shareholders (like mutual
funds or pension fund organizations)? What are the implications of each type of
majority shareholder with respect to the decision making that goes on at the
firm?
3. If you were the CFO of a firm,
what ways could you employ to make the issuance of your company’s bonds more
attractive in the market? In answering this question, research the current
prices and bond yields of a few companies. Compare and contrast these yields
with respect to what you perceive of the value of those companies.
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