Question

may i get a paragraph summary of this answer nice and nearly.

What are some of the challenges -especially those relating to global financial markets -facing both the CFO of GE and top management at the Federal Reserve?

Answer 1

Today' companies are operating in the global market and because of globalization of product and services across the world, the competition has increased.Today's global top 10 companies are not necessarily going to be in the top 10 a decade later. General electric was one of the giant conglomerate but in recent years it's performance has been severly Impacted. The challenges related to financial market can be significant, be it in terms of it's falling share price, cost of raising money further from equity or from debt and unstable dividend policy. The share price of GE has fallen drastically and is hovering around $11.The shareholder return has been significantly Impacted because of falling earning and unstable dividend policy. If the projects being undertaken by GE are not generating significant return then the further cost of borrowing goes up. If this situation continues beyond a certain point then raising money from debt or equity will become difficult.

Due to consistently evoving nature of global financial market, there has been significant innovation in the financial products being offered to the retail customer. The nature of these products are not always clear to the regulators. Because of the continous Innovation in the products in the financial markets, the top management at the Federal reserve has to keep pace with that innovation. The federal reserve wants to make sure that there is sufficient liquidity in the system, customer deposits are safe, the products being offered to retail customer are not to dupe them, the risk in the system is being managed sufficiently. Federal reserve has to come up new regulation every now and then to make sure that the financial system is being regulated properly and the general public cam trust on the financial institution.