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The new minimum wage may mean higher prices for consumers as companies pay for higher payroll costs.

Source: CNNMoney – video report

Date: 7/24/2009

Keys: Budgeting, cash flow, expenses, working capital

Link: http://money.cnn.com

Questions for discussion:

  • How might management of the food store respond to the rise in the minimum wage? Rank your choices starting with the best one.
  • As the financial manager responsible, what would you do to adjust to this increase cost to your operations?
  • Which financial documents would be affected by this particular cost change?

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A weak economy and frozen financing markets could spell trouble for regional banks with big commercial loan portfolios.

Source: CNNMoney.com

Date: 7/27/2009

Keys: Finance, economy, investing

Link:  http://money.cnn.com

Questions for discussion:

  • Banks reflect the economic conditions that exist through the state of their loans to businesses and consumers.  Summarize the reasons given for concern over the banks mentioned in this article?
  • What does this article suggest about investments in these banks and the businesses they serve?

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Charles Schumer, the third-ranking Democrat in the U.S. Senate, asked the Securities and Exchange Commission to ban so-called flash orders for stocks, saying they give high-speed traders an unfair advantage.

Source: Bloomberg.com

Date: 7/25/2009

Keys: Stock market, valuation, trading, environment

Link:  http://www.bloomberg.com

Questions for discussion:

  • Do you think these new technologies should be regulated by the SEC? Explain your reasons.
  • Do you think these technological changes to the trading environment will affect large investors’ perception of risk or their decisions?
  • How about small investors?

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Ericsson AB, the world’s largest maker of wireless phone networks, will buy the wireless equipment unit of insolvent Nortel Networks Corp. for $1.13 billion after beating bids from Nokia Siemens Networks and MatlinPatterson Global Advisers LLC.

Source: Bloomberg. com

Date: 7/25/2009

Keys: Asset acquisition, bankruptcy, valuation, planning

Link: http://www.bloomberg.com

Questions for discussion:

  • Why would Ericsson buy these assets from Nortel’s bankruptcy auction instead of developing them on their own?
  • At what point in the business cycle should firms anticipate bargain sales of assets? Explain why this is the case.
  • How should financial managers plan for this phase of the business cycle?