International Research Journal of Applied Finance (IRJAF)

(ISSN 2229-6891)Since 2010

Linear Programing in Investment Portfolio Creation
Kenneth George* (California Baptist University, Riverside, USA) and Randi George
This study explores the decision procedures of investing client’s money in a portfolio using linear programming to help maximize their profits. The case has many different constraints that a fund manager must address in the portfolio creation. Once the linear program has been developed, it creates a useful tool to help managers to manage client’s portfolios based on each of the different goals and needs of each client.   The hypothetical scenario provides an opportunity to understand how linear programming can be a tool for portfolio creation using forecasted returns and risk assessments to increase profits. Lastly, it provides a tool for managers to show clients how their risk tolerance impacts returns on their portfolio.

Lease or Buy Decision Analysis: Apollo Manufacturing Corporation Case Study
Ronald Richter    and Arthur S. Guarino* (Rutgers University, USA)
Leasing allows a business flexibility in different ways. Whether it means lower transaction costs for leasing equipment as opposed to purchasing, reducing uncertainty regarding an asset’s residual value, or having fewer restrictive covenants than borrowing. However, there are also potential problems involved in leasing such as higher overall costs, not owning the asset, and maintenance costs the lessee incurs in case the asset breaks down. This case study examines the quantitative analysis a company’s managers must perform in order to best determine whether an asset should be purchased or leased given certain financial considerations and factors.

Volvo India Pvt. Ltd.: Navigating through the Roads Ahead
Sapna Rakesh, IMS-Ghaziabad, Ghaziabad, India;    Kiran S Nair*Abu Dhabi School of Management, Abu Dhabi, United Arab Emirates

The Indian bus industry grew at the rate of 3% in 2012 whereas Volvo India Pvt Ltd.  grew at 10 percent, to a volume of more than 700 buses. In 2012 it also doubled its manufacturing capacity to 1800 buses. The company planned to increase bus manufacturing capacity to 2500 buses by the year 2014. The company targeted to reach $ 5400 revenue from India by FY 2015, which appeared difficult at this stage. December 2013, while looking at the goal sheet for the Volvo bus India, Volvo management wondered if the targets set were correct for the company? Has the company failed in understanding and planning for the Indian market?

Indexed Annuity Case Study: An Analysis of Growth and Income Return
Kim W. Ng and Arthur S. Guarino* (Rutgers University, USA)
This case study deals with the comparison of the return of an indexed annuity versus that of an index exchange traded fund (ETF). The case study takes into consideration the unique features of the indexed annuity such as a cap on monthly returns, a floor of annual returns, historical monthly prices, and dividend payments for the ETF. The case study also deals with a quantitative analysis of such aspects as the monthly returns, participation rate, average monthly return for the ETF as well as average annual return, compounded return, and examining the various alternative investment options available to the client.

Reconciling Growth and Sustainability in the Telecommunication Sector: Case of ETISALAT
Noora Obaid, Hind Al Ketbi, May Al Marri, Fatima Al Ameri, Jocelyn Grira*
Etisalat was established in 1976 and is now the largest telecom provider in the UAE. The company had a monopoly on the local market until 2006 when Du telecom was established. The headquarters of the company is located in Abu Dhabi and the company serves more than 143 million subscribers in its 16 countries of operation. The company employs 39,508 employees with reported net income of AED 8.4 bn in 2017. Etisalat’s current market cap is AED 152 bn and it’s 60% owned by Emirates Investment Authority a sovereign wealth fund of the federal government of the UAE and 40% is floated on Abu Dhabi exchange market (ADX). It scored a credit rating of AA-/A+/Aa3 indicating that it has a high investment grade making it quite attractive to investors.

Dark Side of Distribution Policies: Venezuelan Hyperinflation Crisis
Hoje Jo, Lauren Tauriac, and Loren Fan, Santa Clara University, USA

Venezuela, once used to be one of the richest nations in South America, is now under the brink of total economic collapse and potential country moratorium. The purpose of this paper is to examine the basic causes and consequences of Venezuela’s socialist distribution policies, and how they have affected the countries outstanding excessive debt, extreme hyperinflation, currency crisis, deteriorated productivity, and high unemployment rate over the course of the last few decades. We maintain that without initiating sustainable innovation, inventiveness, and risk-taking for economic development and growth, socialist distribution policies coupled with authoritarian and government corruptions are destined to fail, leading to economic crisis. Consistent with this assertion, Venezuela’s socialist-driven distribution policies not only leads to excessive hyperinflation and substantial economic downturn, but also more serious humanitarian crisis including climbing hunger, disease, crime, death rates, and massive emigration from the country.