Minicase San Pico

San Pico is a rapidly ontogeny Latin American developing country. The country is blessed with miles of scenic beaches that pull in attracted tourists by the thousands in recent years to refreshful resort hotels financed by joint ventures of San Pico businessmen and m geniusymen from the Middle East, Japan, and the United States. Additionally, San Pico has good natural harbors that atomic cast 18 conducive for receiving imported merchandise from abroad and exporting merchandise produced in San Pico and other surrounding countries that lack access to the sea.Because of these advantages, many new businesses argon being started in San Pico. Presently, wrinkle is swapd in a cramped grammatical construction in La Cobijio, the nations capital. Admittedly, the San Pico Stock Exchange trunk is rather archaic. doubly a day an official of the exchange will call off the name of each of the 43 companies whose stock trades on the exchange. Brokers wanting to spoil or sell sh ars for th eir clients then attempt to make a trade with superstar another.This crowd traffic system has worked well for over one hundred years, but the presidential term desires to replace it with a new redbrick system that will allow greater and more frequent opportunities for trading in each company, and will allow for trading the shares of the many new start-up companies that are expected to trade in the secondary foodstuff. Additionally, the government face is rapidly privatizing many state-owned businesses in an attempt to foster their efficiency, obtain unusual exchange from the sale, and convert the country to a more capitalist economy.The government believes that it would conduct this privatization faster and perhaps at more attractive prices if it had a modern stock exchange facility where the shares of the newly privatized companies will lastly trade. You are an expert in the operation of secondary stock markets and constitute been retained as a consultant to the San Pico St ock Exchange to snap your expertise in modernizing the stock market. What would you advise? Explain. Most new and renovated stock exchanges are being established these days as either a partially or amply alter trading system.A fully automated system is especially beneficial for a small to medium surface country in which there is only moderate trading in most issues. Such a system that de lots special note is the around-the-clock National Integrated Market system of New Zealand. This system is fully computerized and does not require a physical structure. Essentially all buyers and sellers of a stock enter through their broker into the computer system the number of shares they desire to buy or sell and their required transaction price. The system is updated constantly as new purchase or sale orders are entered into system.The computer constantly searches for a match between buyer and seller, and when one is found a transaction takes place. This type of system would probably serv e San Picos needs very well. There is existing technology to implement, the bugs throw off been worked out in other countries, and it would satisfy all the demands of the demands of the San Pico government and easily accommodate growth in market activity MINI lesson SARA LEE CORP. S EUROBONDS The International Finance in Practice encase reading in the chapter discussed a three-year $100 million Eurobond issue by Sara downwind Corporation.The article also mentions other bond issues recently set(p) by various foreign divisions of Sara downwind. What thoughts do you have about Sara Lees debt financing strategy? Suggested Solution to Sara Lee Corp. s Eurobonds Sara Lee is the ideal candidate to issue Eurobonds. The company has worldwide name recognition, and it has an slight credit rating that allows it to place new bond issues easily. By publication dollar denominated Eurobonds to Swiss investors, Sara Lee can bring new issues to market much more quickly than if it sold house s ervant dollar denominated bonds.Moreover, the Eurodollar bonds likely sell at a lower yield than comparable domestic bonds. Additionally, it appears as if Sara Lee is raising funds in a anatomy of foreign currencies. Sara Lee most likely has large cash inflows in these same currencies that can be used to meet the debt service obligations on these bond issues. Thus Sara Lee is finding a use for just about of its foreign currency receipts and does not have to be relate with the exchange rate uncertainty of these part of its foreign cash inflows.