August 17, 2016

The following are some examples of modern financial management theories formulated on principles considered as ‘a set of fundamental tenets that form the basis for financial theory and decision-making in finance’ (Emery et al.1991). An attempt would be made to relate the principles behind these concepts to small businesses’ financial management.

Agency Theory

Agency theory deals with the people who own a business enterprise and all others who have interests in it, for example managers, banks, creditors, family members, and employees. The agency theory postulates that the day to day running of a business enterprise is carried out by managers as agents who have been engaged by the owners of the business as principals who are also known as shareholders. The theory is on the notion of the principle of ‘two-sided transactions’ which holds that any financial transactions involve two parties, both acting in their own best interests, but with different expectations.

Problems usually identified with agency theory may include:

i. Information asymmetry- a situation in which agents have information on the financial circumstances and prospects of the enterprise that is not known to principals (Emery et al.1991). For example ‘The Business Roundtable’ emphasised that in planning communications with shareholders and investors, companies should consider never misleading or misinforming stockholders about the corporation’s operations or financial condition. In spite of this principle, there was lack of transparency from Enron’s management leading to its collapse;

ii. Moral hazard-a situation in which agents deliberately take advantage of information asymmetry to redistribute wealth to themselves in an unseen manner which is ultimately to the detriment of principals. A case in point is the failure of the Board of directors of Enron’s compensation committee to ask any question about the award of salaries, perks, annuities, life insurance and rewards to the executive members at a critical point in the life of Enron; with one executive on record to have received a share of ownership of a corporate jet as a reward and also a loan of $77m to the CEO even though the Sarbanes-Oxley Act in the US bans loans by companies to their executives; and

iii. Adverse selection-this concerns a situation in which agents misrepresent the skills or abilities they bring to an enterprise. As a result of that the principal’s wealth is not maximised (Emery et al.1991).

In response to the inherent risk posed by agents’ quest to make the most of their interests to the disadvantage of principals (i.e. all stakeholders), each stakeholder tries to increase the reward expected in return for participation in the enterprise. Creditors may increase the interest rates they get from the enterprise. Other responses are monitoring and bonding to improve principal’s access to reliable information and devising means to find a common ground for agents and principals respectively.

Emanating from the risks faced in agency theory, researchers on small business financial management contend that in many small enterprises the agency relationship between owners and managers may be absent because the owners are also managers; and that …

There are some people who believe that Medicare Supplement Insurance may be a waste of money. Here is why some people believe that to be true.

Original Medicare is a government-run health insurance program for people aged 65 and older and for people who receive social security disability benefits for at least 24 months.

Original Medicare, it has been argued, is the best insurance plan in the united states and among the best in the world. The premiums for Medicare Part A (hospitalization) are most likely paid for you (by the taxes you paid) and the Part B premium is only $110 per month for people newly getting Medicare in 2010.

Your share of costs for Original Medicare are also relatively low. If you go in the hospital for example, each stay in the hospital is only $1,100 total for up to 60 days. If you go to the doctor or have tests done (such as an MRI), you normally only pay 20% of the Medicare Approved amount (an amount much lower than the “regular” or “customary” amount charged by most health care providers).

In addition to low costs, you have tremendous freedom in your access to health care. You can travel anywhere in the country and find a doctor or hospital that will accept Medicare.

So the question is, if Medicare alone is such a great plan, then why in the world would anyone buy Medicare Supplement Insurance? A Medicare Supplement Plan is an insurance plan sold by a private insurance company. The purpose of these plans is to “fill in the gaps” left by Medicare. This is why these plans are often referred to as “Medigap Plans.”

Following are three reasons why “The Case Against Medicare Supplement Insurance” should be thrown out of court.

1. Guaranteed Insurability

When you first qualify for Medicare (such as when you turn 65), you are “guaranteed issue” of a Medicare Supplement Policy. In most situations, and in most states, you could be in the advanced stages of some dread disease and a Medicare Supplement company must sell you insurance at the preferred rate.

Also, once you do qualify for a Medicare Supplement Plan, you can never lose your coverage, as long as you pay your premiums.

2. Protection Against the “Big Stuff”

If you have to pay a few dollar here or there for an xray, or a co-pay at your doctor, that is probably no big deal. But if you get into trouble, meaning if you get really sick, the original Medicare protection may not be as robust as you thought. $1,100 per stay at the hospital can add up very quickly, as can your share of expensive diagnostic exams.

The fact is, most of us don’t buy insurance for the little things, such as a ding on the car. But we do want insurance for when the “just in case” happens, such as a major car accident.

3. Affordability

Medicare Supplement Plans are very affordable for most people. As …

Regardless of what many may think or say, first impressions do count and never more so than attending your first interview and especially if that interview is for a position within a professional organization such as banking or finance. So, it cannot be over emphasized that you must present a polished professional image the second you walk into the building.

It wouldn’t be the first time that I have attended an interview and the person due to interview me or a member of the HR department was already waiting for me in the company’s reception area.

Always remember that companies of the stature of which you have shown an interest are looking to hire professional people. People who care about themselves and their career so, look the part and act the part.  Dress conservatively. Preferably wear a well pressed suit and avoid wearing too much jewelry or fragrances. Accompany the suit with a clean white shirt and tie. It’s also important to remember your personal hygiene and cleanliness. Bathe or take a shower, brush your teeth, and make sure your hair is well groomed before an interview as well to present a polished professional image.

Prepare in Advance

Whether you have attended many banking or finance interviews or not, it is likely that you can predict at least some of the questions you will be asked. Take the time to practice giving your answers to these questions. Even though you are not asked that question exactly, there is a very good chance you will be asked a question similar to it. The more you practice the more confident you will be in the interview.

Prepare to give well structured answers as well as practicing the tone and method of delivery. You want to give the impression of being confident but not arrogant. Good interviewers will know that you have prepared and that is no bad thing as they will appreciate how much this opportunity means to you.

Moreover looking the part and being well prepared for the interview will definitely minimize any anxiety or nervousness that almost all interviewees suffer when they walk into an interview.

You have prepared to answer questions. You also need to prepare to ask questions. It is in your best interest to gather as much information as you can about the company and the job opportunity you are about to be interviewed for.

Impress the interviewer by doing your homework. Research the company prior to the interview and gather key information with which you can prepare interesting and intelligent questions to ask the interviewer. This knowledge will help to demonstrate that you have a genuine interest in the company and the opportunity for which you are being interviewed.

This knowledge can also give you an edge over your competitors. You can use it to prepare examples of how the skills set you possess and the experience you have are an excellent fit to meet the needs and challenges facing the organization.…