Equity flex or flux? why equity-flex options may not be a better mousetrap for stock buybacks

Article Abstract:

Transparency in the equity-flex transactions, options for customizing strike price and cost-savings are some of the advantages of equity-flex options in corporate financial management. Financial officers using the technique admit that an average of 30 cents to 40 cents can be gained for every share using the option. But a big disadvantage of equity-flex is its relative infancy as a financial management instrument and the limits imposed on the system by the Securities and Exchange Commission, which limits contracts issued to only 100,000 at one time. Another disadvantage is the need for margin, which may take up as much as 30% of the value of the underlying stock.

Financial Management, Innovations, Securities, Investments

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An upstart index gains

Article Abstract:

An upstart indicator called the Future Inflation Gauge (FIG) is described as an improvement upon the Leading Inflation Index (LII). Although the LII remains a good index, the FIG offers an effective average lead time of one month longer and smaller variability. The new index is also believed to be more reliable as it places less emphasis on manufacturing input prices and introduces additional employment figures. However, the greatest improvement with the FIG is the selection of four components that have daily or weekly availability as opposed to LII's monthly and even quarterly availability.

Standards, Evaluation, Inflation (Finance), Index numbers (Economics), Inflation (Economics)

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Dividends on the ropes

Article Abstract:

A growing trend in the financial management circles is the reduction of dividend payments and stock buy-back, which helps investors get better returns on their investments. A number of utilities have used the strategy to increase stock prices and reduce taxable earnings from investments. The strategy is part of the 'economic value-added' concept where the emphasis is on allowing earnings growth to outpace dividend growth. Such a strategy should only be used to when a company's cash flow is unhindered, otherwise the company's stock prices would drop.

Investor Relations, Management, Finance, Dividends, Public utilities

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