Financial Themes analysis

Today, I have watched the movie  Arbitrage  and it seemed interesting to me to make an analysis of it. I will first analyse its financial aspects, before comparing them with real situations that reflect a certain gap between fiction and reality, regarding to financial audit. The movie therefore features Roger Miller (on the picture on the left), the manager of a company that will face several management difficulties. First of all, Miller manages an alternative fund, which is an investment fund that operates in many areas: speculation in the currency market, investment in promising start-ups, purchase of under-listed shares, etc. These are risky activities that can lead to large profits or losses. At the beginning of the movie, we learn that Miller is about to sell his fund to an investor at a good price, but the investor wants to get the opinion of an audit firm before making the purchase. The problem is that Miller tampered with the company's figures and removed a huge...

Shareholder remuneration is sometimes an issue as it is left to the discretion of companies (within the legal framework). Indeed, they have several means, several strategies to remunerate shareholders and in the best case attract new investors and increase the value of its shares. The questions that arise are therefore the following: how to remunerate shareholders who have “sacrificed" capital to invest in your company? What strategy should be put in place to remunerate them at the fair value of their investment? When and how often should dividends be distributed? We will first look at what the law allows in terms of dividend distribution, before discussing the different strategies and the advantages and disadvantages of each. We will focus here on the legal framework for dividend distribution, which can sometimes be modified to allow companies some more flexibility. To be able to distribute dividend, a company must first be profitable. From the moment it makes a profit, it h...

« It is always more difficult to raise funds than you think. And it always takes longer than expected. Therefore, you need to plan this. », Richard Harroch, investor and Managing Director of VantagePoint Capital Partners. This quote shows us how complicated it can be to find financing for a company and delay entrepreneurs in their projects. Today we will examine the means available for companies to finance themselves, how to choose the right financing method and the problems associated with it.  First of all, it is quite well known that companies can finance themselves through the bank by taking on debt, thus increasing the company's liabilities. Here, the cost of capital is therefore planned in advance, and is equal to the interest rate paid on loans by the company to the bank. The bank is a debt supplier here. However, one of the main problems with bank financing is that the bank must be able to validate the project and ensure that the credit is repaid by the compa...

If the 2008 crisis is a subject that has already been discussed very widely, I will now try to approach it from a different angle. After watching the documentary "The Love of Money, The Age of Risk" (2009), I asked myself about the "golden period" that preceded the crisis, and why the consideration of risk was strongly reconsidered over this period. In this documentary, it seems that part of the reason for the crisis comes from excessive capitalism, deregulation and the disinterest of the state in the economy. First of all, I found it interesting to link the crisis with the political event at the end of the 20th century: the fall of the Berlin Wall and with it the fall of Soviet communism. However, this event was not only political, but had an unprecedented economic impact. With this triumph of capitalism, deregulation has intensified, and a real systemic risk has emerged (i. e. a risk that threatens the survival of the financial system). Indeed, the distrust...

I recently had the opportunity to take an interest in Eugène Fama's work on the theory of market efficiency. It is a theory where markets are categorized into three types: the weak form efficiency, the semi-strong form efficiency and the strong form efficiency. A week form efficiency market represents a market where share prices reflect all the information contained in the price history, so it will be impossible to obtain abnormal returns by building strategies based on the price history. A semi-strong efficiency market reveals that share prices reflect only public information and not "internal information". Finally, a "perfect market" or a market of strong form efficiency is a market where share prices reflect all available information, both public and private. In this last form of efficiency, it therefore becomes impossible to make profits other than by chance since it is impossible to predict future prices. However, after reading this theory, I wondered whet...

Dragon's Den : Look After My Bills I recently watched the Sunday, August 21 episode of the English show « Dragon’s Den » which is a show where entrepreneurs present their solutions to « dragons », experienced investors to convince them to invest money in their projects, in exchange for shares in their companies. I then became interested in a particularly sensitive and decisive subject for a large proportion of households in England: the cost of energy. Indeed, it seems that the cost of gas, oil, water and coil has risen sharply, particularly since the beginning of the millennium (for instance, gas price was multiplied by 3 between 2004 and 2012), representing an increasingly large part of households budgets (source:  https://www.energyinst.org) . To respond to this substantial increase, two investors (Will Hudson and Henry de Zoete) propose a solution, Look After My Bills, which seems to be beneficial for the daily household budget: the project is to enco...