Corporate Finance Assignment Help on Firms Raising Money Current state of the economy and financial markets

 

In the second quarter of the 2008 fiscal year, the US economy had become a slowing economy. There was a large increase in unemployment rates in the economy of the US. To promote the economic growth, Federal Reserve Bank and Treasury are reducing interest rates, raise taxes, and raise the money supply through fiscal policy and monetary policy. The current state of the economy can officially be considered as in a recession, but it is definitely slowing which has its negative effects. On the other hand our business assignment help experts says that, the share market of the US is not providing the benefits to the investors.

 

Investors are not getting the profits and desired returns on their investment. So, IPO (Initial Public Offering) will not be beneficial for the corporation to raise the money in the US market due to slow GDP. It means raise the money through equity will not be effective and beneficial for the company. In contrast, in the US, organization should raise the money through the debt, because debt financing allows organization to control of their own destiny regarding business and the loan will be tax-deductible. This is because currently the investors have become risk averse and won’t take much interest in equity. Hence, business firm should raise the money through the debt.

 

Debt and Equity In order to expand, corporations almost always need more funds and capital in order to keep running the business, so not raising funds is not an option. It is necessary for business owners to tap financial resources. The financial market of US is facing the problem of unemployment, interest rates and slow economic growth. So, US market is facing several types of financial problem due to the low economic growth. In addition, the prices of share in the US financial market are decreasing due to low GDP & low employment rate. Hence, firms can utilize a variety of financing resources such as debt and equity. Organization should use the debt, because raising debt capital is less complicated because the company is not required to comply with state and federal securities laws and regulations. In addition, interest on the debt can be deducted on the company’s tax return, lowering the actual cost of the loan to the company. So, debt will be important for the organization in the US economic market.

 

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