Tirstrup Biomechanics (Denmark) Raising Dollar Debt

Tirstrup Biomechanics (Denmark) Raising Dollar Debt: Case Study Student: Professor: Course title: Date: An international organization’s marginal cost of capital is invariable for a wide range of its budget capital. This may not however apply to Tirstrup since it doesn’t access national equity or debt market. Maturity and currency has been counted as being among the sources of financial instability not only for Tirstrup but also in many emerging economies. There has been a tendency of financial organizations to hold back their liabilities and assets that have been in the long run mismatched with regard to currency and maturity. The double mismatches in Tirstrup are just an example of the systematic risk in across sectional perspective which many other organizations experience. In the case when banks and other financial hold the low liquidity and long term loans. These may be denominated in both reserve and domestic and funded through borrowing from both external funding organs and local organs (Shafer, 1982). Firms expose themselves to the solvency crisis and liquidity in the situation when the market liquidity in both reserve currencies and local currencies evaporate suddenly. If Tirstrup could commit similar mismatches of currency and maturity across the board, the sudden external shock including the flow of capital could post risk to the safety of the entire financial system. With disregard to its nationality, Tirstrup appears to be open to mismatch owing to its various features of intermediation. One such feature is the transformation of the debt maturity which they are currently engaged in. The currency maturity mismatch indicates the underlying structure of an organization where the management has a preference for liquidity but the profitable opportunities take along time to gain value (Allen and Gale 2007: 59). In order to reduce this risk, Turner (2004) points out that regulation such as imposing limitations on the position of...