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    Financing Corporate Growth, Dividend Policy and Agency Costs

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    1. Compare and contrast plain growth, pure proposition of sales, economies-of-scale, industry-based and disaggregated forecasts. Provide some examples from your work setting for some or all of these types of forecasts.
    2. Is there any evidence that there is an agency conflict between shareholders and managers when it comes to the payment of dividends? Justify your response.
    3. Compare and contrast debt-hybrid, seasoned equity, and initial public offerings. Provide one example of each type of offering.
    4. Managerial temptations can take many forms. Describe in depth an illegal financial temptation. Can corporate governance and business ethics reduce these managerial temptations? Why, or why not?

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    Solution Preview

    1. Plain growth is the basic and measurable increase in an economy's ability to produce services and goods. The economic growth that is displayed by many countries around the world provides a vivid example of plain growth, especially when this growth is stable and consistent over a specified period of time.

    Pure proposition of sales describes the clearly defined aspects of the goods and/or services that are offered by an individual or organization to another individual or organization. Pure proposition of sales distinctly spells out the terms of the given offer a proposition as well. An example of pure proposition of sales would be a car salesman selling a car based upon the specifics of the sales agreement.

    Economies of scale spell out the advantages that are obtained by an organization in respect to costs, when this organization grows in scale and scope.(Welch,I.) An example of economy of scale would be the advantages obtained by China in respect to the cost of its products as the nation and its economy grows in scale and scope.

    Industry-based forecasts provide information on the probable profits that would be obtained within a given industry during a specified period of time. An example of industry-based forecasts would be the forecast of the probable probability of the auto industry within the next year.

    Aggregated forecasts forecast the projected profitability of a given industry, as well as the effect of supplementary economic factors on this increased profitability.
    (Welch, I. (2009). ...