Generation of Capital INTRODUCTION This research concerns the

The generation of capital is one of the most pressing problems facing any enterprise. A great variety of capital sources exist, along with an equally great variety of methods by which these sources may be tapped by an enterprise. For many firms, however, access to both capital sources and methods by which capital may be obtained from these sources is often restricted by a variety of diverse factors. The problem facing a firm in this context is to obtain the capital required, in the amount required, and under conditions which enable the firm to continue to fulfill its corporate objectives.

The purpose of this current research project is to compare two approaches to the generation of capital for a lease finance company. These two approaches are the issuance of debt instruments, and asset securitization.

The research performed considers capital generation generally, as well as the issuance of debt instruments and asset securitization more specifically. Additionally, the issuance of debt instruments, and asset securitization, as methods of capital generation, are compared in the context of advantages and disadvantages for a lease finance company.

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ers, 1988). Systematic risk is that which may not be diversified away, while unsystematic risk may be diversified away (BenHorim, & Levy, 1980). Systematic risk is a measure of the covariance between the market portfolio, and an individual security (Reilly, 1990). 10 A relatively recent and controversial capital generation approach involving the issuance of debt instruments is the junk bond. Junk bond is the term used to describe an (1) original issue, (2) highyield, (3) lowgrade, (4) corporate bond (Weinstein, 1987). In the context of high and lowgrade, this definition is generally applied so that the lowest ranked bond which would be included in the highgrade classification would be Moody's Baa. Junk bonds, thus, are, generally speaking, those original issue corporate bonds which are below investmentgrade. Investmentgrade bonds are typically considered to be bonds included in the highgrade classification. Lowgrade bonds are generally associated with higher risk levels than those which characterized highgrade, or investmentgrade, bonds. Thus, while junk bonds offer a higher potential return on investment, the risk that the investment will be lost through default is correspondingly higher (Worthy, 1987
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Some common words found in the essay are:
Efficient Frontier, Joehnk Pinches, McGuigan Kretlow, Bettis Hall, SECURITIZATION Asset, Lott Myers, Nemmers Gruenwald, Brealey Myers, COMPANY Special, Comparing Approaches, lease finance, lease finance company, finance company, debt instruments, efficient frontier, junk bonds, asset securitization, capital generation, junk bond, portfolio combinations, issuance debt, junk bond market, issuance debt instruments, issuance unsecured debt, unsecured debt instruments,
Approximate Word count = 5248
Approximate Pages = 21 (250 words per page)

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