Economics Assignment Help Of Rate of interest: Corporate governance principles and Rate of Interest
Question??
1) What is the current Australian unemployment rate: inflation rate: RBA cash rate; a major bank’s mortgage interest rate?
Ans) The unemployment rate last reported in Australia in June 2012 was 5.2%.As reported by the Australian Bureau of Statistics the male unemployment rate was at 4.9% and the female unemployment rate was at 5.5%.
The inflation rate as reported by its July 2012 is 1.2 %( RBA Website).
The RBA cash rate is at 3.20%
Major Bank’s Mortgage Interest Rate: We have taken the example of Common Wealth Bank of Australia. It offers both fixed and variable mortgage interest rate. It varies in the range of 6.2% to around 6.29%
2) What are the benefits and costs of the Australian economy of a high Australian dollar? Explain with examples.
An) The benefits would accrue in the form of lower cost of imported items like petrol, imported goods and overseas travel being cheaper.
The costs would hit the parts of the economy that is exposed to export. Car manufacturers like Holden who have an international export market will be hurt.
3) What is monetary policy and what are the objectives of monetary policy for the RBA?
An) Monetary policy of a country is the process by which the monetary authority of a country controls the supply of money by often targeting interest rates to promote economic growth and stability. The aim of sounds monetary policy is to have low unemployment rates and relatively stable prices.
The objectives of the Monetary Policy of RBA are set out in the Reserve Bank Act of 1959.They are as follows:
- Maintaining stability of the currency of Australia
- Maintaining full employment in Australia
- Economic welfare and prosperity of the people of Australia
4) What is the RBA target inflation rate? How does the RBA attempt to achieve this rate? Is the current inflation rate below or above the RBA target?
An) According to the Governor and the treasurer the appropriate target inflation rate for Australian is about 2-3 per cent, on average over the cycle.
The RBA attempts to maintain this rate by controlling the money supply.
This is regulated by changing the interest rates and by changing the cash reserve ratio with banks.
5) In recent time four major banks have not followed exactly the RBA’s adjustment to interest rates. Do you believe this may undermine monetary policy? Discuss
An) We believe this seriously undermines the monetary policy. The money supply in the system is controlled by the RBA.Any move that is independent of the decision taken by the RBA would seriously impact the economic policies of the government
Q1) Define corporate governance and its importance in modern times?
An) Corporate governance broadly refers to the processes, rules, or laws through which businesses are operated, controlled and regulated.
It is very important tool to regulate the practices of corporation so that it leads to deliver good results to all the stakeholders involved.
Q2) what were the circumstances surrounding the collapse of Enron and HIH Insurance
An) One of the major reasons for the fall on Enron was due to the breakdown of the corporate governance process, due to supply of false information by the company and its auditors.
Failure of HHI was also a case of weak corporate governance due to poor monitoring processes. It is also alleged by some directors that it did not have significant representation of independent directors and that the directors were misled about the true financial position of the organisation.
Q3) what are the Australian Stock Exchange Corporate Governance Council’s corporate governance principles and recommendations?
An) Principles:
Principle 1: To lay solid foundations for management and oversight
Principle 2: To Structure the board to add value
Principle 3: Promotion of ethical and responsible decision making process
Principle 4: Safeguarding the integrity of financial reporting
Principle 5: Making timely and balanced disclosure of information
Principle 6: Respecting the rights of shareholders
Principle 7: Recongnising and managing risk
Principle 8: Renumerating fairly and responsibly
Q4) Brief explanation of principle 7 and one the principles of your choice?
The principle 7 can be best explained as developing a culture of Risk management in terms of initiating processes to identify, asses, monitor and manage risk as also to identify material changes to a company’s risk profile
Principle 6 can be explained as empowering shareholders by communicating effectively with them, giving them access to information and making it easy for them to participate in company general meetings
Topic 3
Q1) what is carbon tax?
An) It is a tax levied on the carbon content of fuels especially those used by motor vehicles to reduce the emission of carbon dioxide.
Q2) has the carbon tax passed through parliament?
An) The carbon tax was issued in the Australia Parliament on July 1, 20120(http://www.bbc.co.uk/news/world-asia-18662560)
Q3) what are some of the details surrounding the carbon tax in Australia?
According to the carbon tax in Australia some 300 of its worst polluting firms will be made to pay $24 for every tonne of green house gas emitted by them. Australia is the highest emitter-per head of green house gases in the developed world. The carbon tax also dubiously referred to as toxic tax as a part of Clean Energy Act will go a step further in helping Australia meet its climate-change obligations. The tax according to the Prime Minister will cut carbon emission by 5% from the 2000 levels by the year 2020.
Q4) what is your opinion of the general public’s consensus regarding the carbon tax (i.e. is the general public in favour of it)?
There has been a lot of debate regarding the carbon tax in Australia. Some also claim that it is a loss tax which will lead to loss in jobs and employment. The law will force around 300 odd firms to pay $24 per tonne of green house gas emitted by them. There also has been debate that present for of tax will lead to increase in the cost of living among the Australian citizens. The mining firms, steel making firms and airlines are said to be the ones who would be strongly hit by the tax.Enviromentalists have applauded the efforts taken by the Prime Minister and have said this will go a step further to fulfil Australia’s climate change obligations. The tax does not seem to being well received by the industry and the voters. As a result of which the Prime Minister has embarked on an election campaign style promotional drive
Topic 4)
Q1) what is Corporate Social Responsibility?
An) CSR functions as a mechanism through which a business monitors and ensures its active compliance to the spirit of the law, ethical norms and international norms. The ultimate goal of CSR is thus to embrace responsibility for the company’s actions and encourage a positive impact through its activities on all the stakeholders involved with the organisation.
Q2) Legitimacy theory explain of a social contract between organisations and the society in which it exists .Explain the relationship?
According to the legitimacy theory there exists an inherent relationship between organisations and the society which they operate. The firms are in fact bound by a social contract in which they have to perform socially desirable action, which will lead to approval of its objectives by the society and will thus lead to its continued existence. It is becoming increasingly important in area of social and environment accounting. The organisations are directly responsible for all the stakeholders involved, and in the present context society forms a major stakeholder. Thus it is imperative for organisations to be directly involved in developing the society in which they operate .Development of societal standard will in fact lead to better opportunities for organisation. A simple example to be seen is that a better evolved society will provide the organisation with better workforce thus the training costs of the organisation will reduce.
Q3) Explain the link between legitimacy theory and an organisation’s voluntary disclosure of sustainability reports?
An) Central to the legitimacy theory is the role of corporate disclosure. On the basis of this theory we find voluntary disclosures made by the corporate in their annual reports or standalone sustainability reports published by the corporations. Thus the organisations take steps to make sure that it fits into organisational expectations.
Topic 5
Five issues with meetings and five solutions to them.
Ans) from the perspective of facilitators
Issue 1:The discussions is meeting start to meander away from the main topic of the convened meeting .This then goes to consume disproportionate time scheduled for the meeting and finally we reach a point where we reach to no conclusion
Solution 1: The facilitator should makes sure by timely intervention that what the meeting is meant for and how the present scope of discussion is well beyond the scope of the meeting.
Issue 2: Meetings at some point also lead to severe ego clashed between participating member’s .Thus some members start speaking just for the sake of speaking and making their presence felt. This leads to unnecessary chaos and the meeting turns into a chronic conundrum
Soultion 2: The facilitator should allot speaking time for each of the participating member .This will make sure each of the members is duly represented by his presence in the meeting
Issue 3: Most of the times the participating members attend a meeting just for the sake of attending. They are either completely unaware of the details to be discussed or ill prepared to contribute into the meeting.
Solution 3: In order to solve the given issue memoirs should be sent to the members much before the start of the meeting. They should be also made aware much before the meeting the issues in hand and the expectation out of the meeting
Issue 4: All the agendas in the meeting are not completely discussed as a result of which the efficiency of the entire meeting process suffers.
Solution 4: This happens because the facilitator at times becomes too much optimistic about the results to be expected out of the meeting. He puts on a lot of matter to discuss in the meeting and finally overstretches. Thus the facilitator should be very careful in chalking out the agendas
Issue 5: At times it also happens that the secrecy related to the meetings is never maintained. Thus information that should strictly remain within the participating members is disclosed to the press. This leads to breach of trust confidence.
Solution 5: This can be avoided by making the participating members sign a non-disclosure agreement .This will make sure that the members take the confidentiality of the discussion seriously
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