Global Finance Assignment Example | Topics and Well Written Essays - 750 words

Global Finance - Assignment Example Lastly, information provision- the market provides information for firms in various countries on market situation, which helps in decision-making (Holton, pg.139-141). Bond offered on discount is that which is offered at less than its par or face value. Due to a bond’s maturity, discount is arrived at by deducting the market price from principal amount of the bond (Holton, pg.23). Ordinary shareholders may be paid dividend or not, preference shareholders must be paid dividend. In case of liquidation, preference shareholders are paid first while ordinary holders are paid last. Preference shares have a fixed amount of dividend; ordinary shares dividends are flexible depending on the company performance. Preference shares are callable and have no voting rights while ordinary shares are non-callable and have voting rights (Holton, pg.77-79). The three components include acceptance market, which are institutions with the specialty in accepting bills of exchange as the second signatories. Secondly, we have the bill market, which are intermediaries between the buyers and sellers of the bills. They at times do the discounting of the bills on their own accounts. The third component is the collateral loan market and it works in the form of loans and cash credits (Holton, pg.198). Futures are preferred at times over Forwards because they are traded publicly unlike forwards, who are only traded between two parties who are confidants; it involves transactions of securities in the future coupled with present agreements (Holton, pg.127). It is true that options can have a positive value despite being out of the money. This is possible as have been on American options which can be traded any time, the only condition is only that they must positive time premiums for them to trade at positive prices despite being out of the money (Holton, pg.217). Default risk on the other hand is