For this WSJ Article (available through LIRN https://proxy.l
For this WSJ Article (available through LIRN https://proxy.lirn.net/CAInstOfAdvMgmt#tabId_alphabetical-view) discussion, you are required to choose a ‘unique’ article related to the core finance concepts from the week. The term “unique” means that you may not post a discussion about an article that another student has already discussed. WSJ articles are first come first served, which should encourage you to reserve your article and post your discussion early.The objective of the discussion assignment is to apply the core finance concepts from the week. You are free to use outside sources any article/source(article). The key component of your discussion grade will come from your ability to connect the article to one or more of the learning outcomes from this week. The stronger the connection, the better the discussion grade. Students also need to include a brief summary of the article within their write up and remember to properly cite (APA) the article at the bottom of your discussion post.reply#1While most stocks are being negatively impacted, Zoro is one of the stock prices that are generally increasing with the impacts of corona-virus. Zoro specializes in providing video conferencing services (Gallagher, 2020). It enables its users to combine video conferencing, online meetings, chat, and mobile collaboration using its software. This allows companies to become more efficient and productive with diverse collaborations. According to its most recent financial information release, it showed revenue surging 78% year over year to $188.3 million. Its revenue of nearly $623 million increased 10 times from what the company generated just three years ago. Zoom is also one of those very rare cloud software making real profits without needing accounting adjustments. Due to the concerns regarding the spread of corona-virus, a great number of companies in mainland China have started allowing employees to work from home. Likewise, Twitter told its employees to stay home and work remotely. In order to make sure that businesses can operate normally with remote working mode, video conferencing very important for companies to use so that they can still maximize their employee utilization. Accordingly, Zoom is able to have increasing trend for its stock price because its primary service is to provide video conferencing services. reply#2Brexit stands for ‘British exit’. The term refers to the UK leaving the European Union. Starting on January 31st, 2020, the UK stopped being a member of the European Union. Brexit will have an impact on the capital market in Europe. According to the article written by Nina Trentmann, “small and medium-sized firms in Europe are bracing for a post-Brexit hit from their banks.” Apart from that, banks operating in the U.K. could face extra expenses, such as restructuring expenses, and extra capital requirements. And the analysts point out that some of these costs incurred by the Brexit could be fallen on companies. This is extremely harmful to small and medium-sized enterprises as they are likely to be exposed to higher charges, compared to large enterprises. The reason is that SMEs often rely on a single bank and they usually don’t have contingency plans for Brexit. The author also argues in the article that as the investment is starting to slow down, businesses in Europe will carry the burden of higher financing costs. On the side of debt, the cost of debt would probably increase for European SMEs, especially British ones. Per Foerster (2015), the cost of debt is the interest rate on the debt instrument. The cost of debt would increase for British SMEs since “loans and other funding provided by the European Investment Bank and other EU-bodies will no longer be available to them.” And since Brexit will bring more risks to British SMEs, banks will have to assess the exposure of those SMEs to Brexit-risks. As a result, under this circumstance of higher debt costs, SMEs may need to seek alternatives to bank finance, for example, preferred stock or equity. But equity is usually more expensive than debts and equity may not be an easy choice for SMEs. A study conducted by Beedles (1992) shows that size effect does work in the equity market – “small firms pay more for equity capital than large firms.” (p. 57)
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