FINANCE

Assignment 2: Individual Project

Assignment 2: Individual Project

Introduction

In today's highly competitive and rapidly advancing business environment, each and every segment of the business holds an immense importance. Finance is one of the most significant areas of business that plays a vital role in its success. It is refer as the backbone of every business and thereby plays a role in company's success. Therefore, it is highly essential to understand various aspects of financials related to a business as well as an economy. This essay is focused on finance areas relevant to an economy as well as a business. Three important parts are covered in this essay, including the effect of global financial crisis on Singaporean economy, valuation of a business, and ex rights share.

Discussion

Question 1: Affect Of Recent Financial Crisis on Singapore

Overview

Recent global financial crisis has adversely affected many economies across the globe. Still, economies are recovering from financial crisis shock and trying to regain their successful market position. This global financial slump is different from previous crises because it began at the 'core' of the world economy and spread to the periphery, rather than being other way around. This economic catastrophe was a truly 'global' crisis as it led to a synchronized economic downturn, and hit both developing as well as advanced economies. This financial crisis had its genesis in imbalances that had been building up and required unwinding, i.e. current accounts and financial sector's risk premiums. The slump was triggered in the financial sector but eventually fall out pervaded to the real economy due to drop in industrial production, global trade, increased unemployment, and equity market corrections (Sharma, 2012, p.2).

(Source: Sharma, 2012, p.2)

The adverse financial crisis resulted in Singapore to experience the sharpest economic slump in over two decades, which is even sterner as compared to the experience during the Asian financial downturn. However, the effects of Asian financial downturn was felt rapidly on Singapore, the country showed delayed impact of this global financial crisis as they began to bite only in the third quarter of 2008. This crisis not hit the banking sector like Asian downturn, i.e. in this downturn the banking and financial sector is relatively unscathed, but with the exception of the stock market that fell frantically. In addition, most of the shocks are resulted from the trade sector and financial and capital flows affecting the real economy (Hui & Maru, 2010, p.9).

Affect Of Recent Financial Crisis on Singapore

Singapore represented an average growth rate of about 8 percent from 2004 to 2007, and showed a great journey towards economic growth and success. But despite tremendous economic outlook, the country became first East Asian economy that fell into a recession from the recent global financial crisis after July 2008 (Thangavelu, 2009, n.d). This makes the greater vulnerability of Singapore economy to worldwide financial shocks more apparent. This increased vulnerability of an open economy of Singapore heavily depended on trade in products in services as Asia fell into a sharp ...