Bachelor's Thesis Questions

Characterize the four basic market structures

The four basic market structures are perfect competition, monopolistic competition, oligopoly, and monopoly. Perfect competition features many small firms selling identical products with no market power. Monopolistic competition involves many sellers offering differentiated products, giving them some control over prices. Oligopoly is characterised by a few large firms whose decisions are interdependent, often leading to strategic behaviour. A monopoly exists when a single firm controls the entire market, usually setting prices and facing no direct competition.

Currency regimes and their impact on investment decisions

Currency regimes determine how exchange rates are managed—commonly as fixed, floating, or pegged systems. A fixed regime stabilises exchange rates but limits monetary flexibility, while a floating regime allows market-driven rates and exposes investors to volatility. Pegged systems combine aspects of both, linking a currency to another but with some flexibility. Investors assess these regimes for currency risk and potential returns. A regime’s stability often influences capital flows and investment attractiveness.

Tools of strategic analysis of an enterprise

Strategic analysis involves tools that assess internal capabilities and external environments. SWOT analysis identifies strengths, weaknesses, opportunities, and threats, while PESTEL evaluates macro-environmental factors. Porter’s Five Forces analyses competitive industry dynamics, and value chain analysis explores internal efficiency and sources of value. These tools support informed strategic decision-making. They help firms align resources with market opportunities.

The types and role of accounting in financial management

Accounting is divided into financial, managerial, and tax accounting. Financial accounting provides standardised reports for external users like investors and regulators. Managerial accounting focuses on internal decision-making, such as budgeting and performance evaluation. Tax accounting ensures compliance with fiscal regulations. Collectively, these functions support financial control and strategic planning.

The role, content and users of financial statements

Financial statements provide structured information about a company’s financial position and performance. Core statements include the balance sheet, income statement, cash flow statement, and statement of changes in equity. These documents inform decisions by investors, creditors, management, and regulators. They support transparency, accountability, and performance assessment. Reliable financial reporting is essential for market confidence.

The role of ESG factors and non-financial reporting in economic analysis

ESG factors—environmental, social, and governance—offer insights into a firm’s sustainability and ethical conduct. Non-financial reporting complements financial statements by highlighting long-term risks and social impact. ESG integration is increasingly important in investment analysis and risk assessment. It affects firm valuation, access to capital, and regulatory compliance. Companies with strong ESG performance may gain competitive advantages.

The role of internal and external financial audit and their procedures

Internal audit reviews a firm’s internal controls, risk management, and compliance, aiming to improve processes. External audit, conducted by independent auditors, assures that financial statements are accurate and conform to accounting standards. Both audits enhance reliability, transparency, and stakeholder trust. Audit procedures include planning, evidence collection, testing, and reporting. These functions strengthen corporate governance and investor confidence.

The development and importance of accounting standards for financial markets

Accounting standards, such as IFRS and US GAAP, provide consistency and comparability in financial reporting. They emerged to address cross-border investment and regulatory demands. Uniform standards increase transparency and reduce information asymmetry in capital markets. Investors rely on these for informed decision-making. Their continuous development reflects changes in economic practices and global integration.

Financial statement analysis – objectives and methods

Financial statement analysis evaluates a firm’s performance, financial health, and prospects. The main objectives are to support investment, credit, and management decisions. Common methods include ratio analysis, trend analysis, and cash flow analysis. These techniques reveal profitability, liquidity, solvency, and operational efficiency. Interpretation depends on industry norms and time-series comparisons.

The types, role and key features of taxes and the tax system

Taxes are classified as direct (e.g., income tax) and indirect (e.g., VAT, excise duties). A tax system funds public expenditure, redistributes income, and influences economic behaviour. Key features include equity, efficiency, neutrality, and simplicity. Effective tax systems balance revenue needs with minimal distortion. They play a critical role in economic development and fiscal policy.

The state budget and the stages of the annual budget cycle

The state budget outlines expected revenues and expenditures for a fiscal year. Its preparation involves planning by government bodies, parliamentary approval, execution by public institutions, and post-execution auditing. The process ensures accountability, efficient resource allocation, and implementation of public policies. Budgeting reflects fiscal priorities and macroeconomic goals. Each stage is regulated to ensure transparency and public control.

Classifications of financial markets

Financial markets are classified by the nature and maturity of instruments. Capital markets deal with long-term securities, while money markets handle short-term instruments. Primary markets involve the issuance of new securities, whereas secondary markets enable trading of existing ones. Organised exchanges and OTC (over-the-counter) markets differ in structure and regulation. These classifications help analyse liquidity, risk, and investor access.

Technical analysis – objectives and tools

Technical analysis seeks to predict future price movements based on historical data. It assumes that all relevant information is reflected in market prices. Tools include trend lines, moving averages, candlestick patterns, and momentum indicators like RSI. Traders use these to identify entry and exit points. Unlike fundamental analysis, it focuses purely on price action.

The concept of market efficiency and its impact on investment strategies

Market efficiency means that asset prices fully reflect all available information. According to the Efficient Market Hypothesis, this reduces the potential for consistent excess returns. In efficient markets, passive investment strategies are favoured over active management. Market anomalies challenge this theory, creating arbitrage opportunities. The level of efficiency affects how investors interpret news and price movements.

Portfolio analysis – objectives and tools

Portfolio analysis aims to maximise returns while minimising risk through diversification. Tools include the efficient frontier, correlation analysis, and risk-adjusted performance measures like the Sharpe ratio. Modern Portfolio Theory underlies these methods, emphasising the benefits of asset combination. Asset allocation decisions stem from risk preferences and expected returns. Portfolio optimisation supports strategic investment planning.

Main asset classes and their investment characteristics

The main asset classes include equities, bonds, cash equivalents, real estate, and commodities. Equities offer high return potential but carry greater volatility, while bonds provide fixed income and lower risk. Cash and equivalents ensure liquidity and capital preservation. Real estate and commodities serve as inflation hedges and diversification tools. Each class has a unique risk-return profile.

Equity valuation methods and their advantages and disadvantages

Equity valuation can be approached through discounted cash flow (DCF), relative valuation, or asset-based methods. DCF provides intrinsic value but is sensitive to forecasts. Relative valuation uses market multiples and is simpler but less precise. Asset-based valuation suits firms with significant tangible assets. The choice of method depends on the firm's characteristics and data availability.

Risk and its classifications

Risk refers to the uncertainty of outcomes, particularly regarding returns or losses. It is broadly classified into systematic (market-related) and unsystematic (firm-specific) risks. Other categories include credit, operational, liquidity, and currency risk. Systematic risk cannot be diversified, while unsystematic risk can be reduced through portfolio diversification. Understanding risk types is key to financial decision-making.

Basic risk management tools used by corporations

Corporations use tools such as insurance, derivatives (futures, options, swaps), and internal controls to manage risk. Diversification across markets and operations reduces exposure to specific threats. Hedging strategies are commonly applied to currency, interest rate, or commodity price risks. Risk identification, assessment, and monitoring are central to effective risk management. These practices ensure business continuity and financial stability.

Corporate governance and its mechanisms

Corporate governance involves the systems and processes by which companies are directed and controlled. Key mechanisms include the board of directors, audit committees, transparency policies, and shareholder rights. Good governance aligns management actions with stakeholder interests. It reduces agency conflicts and promotes accountability. Effective governance enhances firm value and investor trust.

Various models of corporate governance – similarities and differences

Corporate governance models differ across jurisdictions. The Anglo-American model prioritises shareholder value and market discipline, while the Continental European model emphasises stakeholder interests and bank financing. The Japanese model integrates company networks and long-term employment. All models aim to ensure oversight and ethical conduct. Differences arise from legal systems, ownership structures, and cultural norms.

The impact of capital structure on firm value

Capital structure refers to the mix of debt and equity used to finance operations. According to capital structure theories, an optimal mix can lower the cost of capital and enhance firm value. Debt offers tax benefits but increases financial risk. Excessive leverage may lead to bankruptcy or loss of flexibility. Firms must balance these factors when making financing decisions.

The concept of leverage and its use in financial management

Leverage involves using borrowed funds to increase investment capacity and returns. Financial leverage amplifies both profits and losses by introducing fixed interest costs. It affects return on equity and earnings volatility. Managers use leverage to improve performance, but must monitor debt levels. High leverage requires careful risk assessment and liquidity planning.

Liquidity management and its main tools

Liquidity management ensures a firm can meet its short-term obligations without disruption. Tools include cash flow forecasting, credit lines, working capital optimisation, and liquidity ratios. Efficient liquidity management supports operational stability and financial flexibility. Firms must balance holding sufficient cash with the opportunity cost of idle funds. It is crucial during economic uncertainty.

The definition and types of derivative instruments and their potential applications

Derivatives are financial contracts whose value is derived from an underlying asset, such as stocks, interest rates, or commodities. Common types include forwards, futures, options, and swaps. They are used for hedging risk, speculating on price movements, or arbitrage opportunities. Derivatives enhance portfolio performance and protect against market volatility. Their complexity requires sound understanding and risk management.

The tools used in capital budgeting decisions

Capital budgeting tools evaluate the profitability and feasibility of long-term investments. Key methods include Net Present Value (NPV), Internal Rate of Return (IRR), Payback Period, and Profitability Index. NPV and IRR consider the time value of money and cash flow projections. These tools help prioritise projects that maximise shareholder value. Decision-makers must also consider strategic and risk factors.

The purpose of corporate communication with stakeholders and the main tools used in this process

Corporate communication ensures that stakeholders are informed and engaged with a company's goals and performance. It builds trust, manages reputation, and aligns interests. Common tools include financial reports, press releases, investor presentations, and ESG disclosures. Effective communication supports transparency and stakeholder confidence. It is especially important in times of crisis or strategic change.

Interest rates – their components and impact on financial decisions

Interest rates consist of the real rate, inflation expectations, and risk premium. They influence borrowing costs, investment returns, and monetary policy. Rising rates typically discourage borrowing and lower asset valuations. Conversely, low rates stimulate investment but may signal economic weakness. Understanding interest rate dynamics is essential for financial planning.

The role of economic policy, its tools and impact on investment strategies

Economic policy shapes the macroeconomic environment through fiscal and monetary instruments. Fiscal policy uses government spending and taxation to influence demand, while monetary policy adjusts interest rates and money supply. These tools affect inflation, employment, and investment incentives. Investors respond by adjusting portfolios to policy trends. Effective policies promote stability and sustainable growth.

The role of ethics and professional standards in financial markets

Ethics and professional standards guide behaviour and decision-making in financial markets. They promote integrity, fairness, and accountability among professionals. Adherence prevents fraud, protects investors, and sustains market efficiency. Organisations like the CFA Institute or the IFAC set standards for ethical conduct. Upholding these norms is vital for long-term trust and market credibility.