DQ 3-1
trooperwarxhw3
DQ3resp.docxDQ 3 resp
1.
An example of the use of public debt is the way public school districts have financed its capital construction in modern times. The schools financed construction projects by issuing bonds. Almost all of the larger school districts in my area have done this over the past 10 years. Has any public school district in your area built new buildings or made major renovations to their buildings without issuing bonds or incurring some other form of major debt? What is the alternative method for a school district to build a new building or to renovate an old one?
I think the real problem with debt whether private or public is the misuse of debt. Most Americans want the American dream of owning a home. For the typical hard working middle class family it is almost impossible, if not impossible, for them to generate enough savings to buy their dream home by paying completely in cash. In fact, most middle class families can't afford to buy their cars with cash. The same is true with the government. How is it possible for the federal government to finance a war with cash? I think one of the greatest stories that shows how wars are financed are the old stories of how celebrities were used to sell savings bonds to fight in World War II. I can still see in my mind pictures of the celebrities that were used.
What are your thoughts on this?
Prof Smith
onses
2.
Following is information taken from the text:
Once a government decides to borrow money, it must go to the financial market with a bond offering. The government must follow the bond disclosure rules of the Securities and Exchange Commission (SEC), which apply only to bond issues over $1 million.
Two approaches to bonding are possible: use competitive bidding or arrange a negotiated sale to a specific underwriter. Often, governments use competitive bidding to seek the lowest bidder, especially in general obligation bonds; but revenue bonds and very small general obligation bonds more frequently employ negotiated sales.
Underwriters affect issuers’ costs due to their differing profit spread and their ability and willingness to locate investors to repurchase the bonds. Competitiveness tends to encourage underwriters to lower their profit spread and try harder to locate investors."(Lynch, Smith 2004).
Do you think the use of competitive bidding should be required for all government contracts? Explain.
Prof Smith
Lynch, TD. Smith, R.W. (2004) Public Budgeting in America. Upper Saddle Rover. NJ. Pearson.
3.
The upside of open obtaining is that the administration can get to long haul obligations from its natives. The detriment of this type of obligation is that there are high loan fees that go with this type of financing (Musell, 2009). The benefit of private obtaining is that the administration can get to a lot of financing. The fundamental burden in this methodology is the high financing costs related with banks. Knowing the different types of debt is important if you want to be able to strategically pay them off. They have varying needs and qualities that you need to understand so you can deal with them specifically. Debts are characterized under two distinct characterizations. One grouping included being either an anchored or debt without collateral (Musell, 2009). The other characterization includes an obligation being revolving or non-revolving. A revolving debt does not have a settled measure of installment consistently. The progressions depend on the real equalization of the advance. An ideal model is a charge card obligation. You could be paying more during the current month than the past one particularly in the event that you utilized your card for a buy. The equivalent is valid for the calculation of the loan cost. It is subject to the aggregate remarkable equalization of the bill. This debt can likewise be utilized over and again without the requirement for another application each time you choose to utilize it. Then again, a non-revolving debt is a kind of credit that has a settled installment. Despite how high the loan fee list goes, your installment will continue as before (Musell, 2009). An ideal model is a home loan credit. Except if you have taken a credit that includes swell installment or something comparative, your month to month amortization and the financing cost related with it continues as before. Likewise, this kind of obligation must be utilized once. On the off chance that you require more monetary guide, you have to apply for another one and sit tight for endorsement. A revolving debt is in reality more perilous than a non-spinning one since it has the more potential to develop. For example, if a charge card client pays just for the base installment necessity while persistently utilizing the card could get them somewhere down under water. In the event that you have a rotating obligation, you have to pay for it in higher augmentations to dispose of the obligation promptly.
Unsecured debt
-credit card debt
-student loans
-medical bills
-payday loans
Secured debt
-mortgages
- Home equity credit
-car & title loans
-pawn shop loans
Musell, R. M. (2009). Understanding government budgets: a practical guide. New York, NY: Routledge.
DQ 3 resp
1.
An
example
of
the
use
of
public
debt
is
the
way
public
school
districts
have
financed
its
capital
construction
in
modern
times.
The
schools
financed
construction
projects
by
issuing
bonds.
Almost
all
of
the
larger
school
districts
in
my
area
have
done
this
over
the
past
10
years.
Has
any
public
school
district
in
your
area
built
new
buildings
or
made
major
renovations
to
their
buildings
without
issuing
bonds
or
incurring
some
other
form
of
major
debt?
What
is
the
alternative
method
for
a
school
district
to
build
a
new
building
or
to
renovate
an
old
one
?
I
think
the
real
problem
with
debt
whether
private
or
public
is
the
misuse
of
debt.
Most
Americans
want
the
American
dream
of
owning
a
home.
For
the
typical
hard
working
middle
class
family
it
is
almost
imp
ossible,
if
not
impossible,
for
them
to
generate
enough
savings
to
buy
their
dream
home
by
paying
completely
in
cash.
In
fact,
most
middle
class
families
can't
afford
to
buy
their
cars
with
cash.
The
same
is
true
with
the
government.
How
is
it
possible
for
the
federal
government
to
finance
a
war
with
cash?
I
think
one
of
the
greatest
stories
that
shows
how
wars
are
financed
are
the
old
stories
of
how
celebrities
were
used
to
sell
savings
bonds
to
fight
in
World
War
II.
I
can
still
see
in
my
mind
pictures
of
the
celebrities
that
were
used
.
What
are
your
thoughts
on
this
?
Prof
Smit
h
onses
2
.
Following
is
information
taken
from
the
text
:
Once
a
government
decides
to
borrow
mon
ey,
it
must
go
to
the
financial
market
with
a
bond
offering.
The
government
must
follow
the
bond
disclosure
rules
of
the
Securities
and
Exchange
Commission
(SEC),
which
apply
only
to
bond
issues
over
$1
million
.
Two
approaches
to
bonding
are
possible:
use
competitive
bidding
or
arrange
a
negotiated
sale
to
a
specific
underwriter.
Often,
governments
use
competitive
bidding
to
seek
the
lowest
bidder,
especially
in
general
obligation
bonds;
but
revenue
bonds
and
very
small
general
obligation
bonds
more
frequen
tly
employ
negotiated
sales
.
Underwriters
affect
issuers’
costs
due
to
their
differing
profit
spread
and
their
ability
and
willingness
to
locate
investors
to
repurchase
the
bonds.
Competitiveness
tends
to
encourage
underwriters
to
lower
their
profit
spread
and
try
harder
to
locate
investors."(Lynch,
Smith
2004)
.
Do
you
think
the
use
of
competitive
bidding
should
be
required
for
all
government
contracts?
Explain
.
DQ 3 resp
1.
An example of the use of public debt is the way public school districts have financed
its capital construction in modern times. The schools financed construction projects by
issuing bonds. Almost all of the larger school districts in my area have done this over
the past 10 years. Has any public school district in your area built new buildings or
made major renovations to their buildings without issuing bonds or incurring some
other form of major debt? What is the alternative method for a school district to build
a new building or to renovate an old one?
I think the real problem with debt whether private or public is the misuse of debt.
Most Americans want the American dream of owning a home. For the typical hard
working middle class family it is almost impossible, if not impossible, for them to
generate enough savings to buy their dream home by paying completely in cash. In
fact, most middle class families can't afford to buy their cars with cash. The same is
true with the government. How is it possible for the federal government to finance a
war with cash? I think one of the greatest stories that shows how wars are financed are
the old stories of how celebrities were used to sell savings bonds to fight in World
War II. I can still see in my mind pictures of the celebrities that were used.
What are your thoughts on this?
Prof Smith
onses
2.
Following is information taken from the text:
Once a government decides to borrow money, it must go to the financial market with
a bond offering. The government must follow the bond disclosure rules of the
Securities and Exchange Commission (SEC), which apply only to bond issues over $1
million.
Two approaches to bonding are possible: use competitive bidding or arrange a
negotiated sale to a specific underwriter. Often, governments use competitive bidding
to seek the lowest bidder, especially in general obligation bonds; but revenue bonds
and very small general obligation bonds more frequently employ negotiated sales.
Underwriters affect issuers’ costs due to their differing profit spread and their ability
and willingness to locate investors to repurchase the bonds. Competitiveness tends to
encourage underwriters to lower their profit spread and try harder to locate
investors."(Lynch, Smith 2004).
Do you think the use of competitive bidding should be required for all government
contracts? Explain.
