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Regulatory Environment Post 2008 On Business Plan

53% (3.53% inflation + 2% GDP growth). V = 0.010 * (1.055) / (.1280-.0553)

V = $145

Rate of return

Rate of return = [Dt + (Pt - Pt-1) / Pt-1], where'd denotes dividends while P. is for the stock price. The value (Pt - Pt-1) is denotes the capital gain on the stock.

If we consider the performance of Cathay from 12/01/2008 up to 12/01/2011 with the Starting price/share of $16.16 and Ending price/share of $13.60, We find that

The rate of Return is = 0.105 +(13.60-16.6)/16.6

= -47.33

Conclusion

It is not worth buying the common stock as a result of the relative low rate of return. Cathay Bank's strong market position among the Japanese and Japanese-American population positions should be used to its advantage in expanding its business portfolio so that it may become profitable. A review...

The bank should therefore be ready to abide by the new regulations governing the financial sector for it to become profitable
References

Cathay general Corp (2011). CATHAY GENERAL BANCORP - FORM 10-K

http://www.faqs.org/sec-filings/110228/CATHAY-GENERAL-BANCORP_10-K/

Irtani, Evelyn (2007-03-28). "California bank goes after China." Los Angeles Times.

Miller, D (1995). Commercial bank valuation

Otker-Robe, I et al. (2010)Impact of Regulatory Reforms on Large and Complex Financial Institutions.

http://www.imf.org/external/pubs/ft/spn/2010/spn1016.pdf

SEC (2011). Dodd-Frank Wall Street Reform and Consumer Protection Act

http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf

Sources used in this document:
References

Cathay general Corp (2011). CATHAY GENERAL BANCORP - FORM 10-K

http://www.faqs.org/sec-filings/110228/CATHAY-GENERAL-BANCORP_10-K/

Irtani, Evelyn (2007-03-28). "California bank goes after China." Los Angeles Times.

Miller, D (1995). Commercial bank valuation
http://www.imf.org/external/pubs/ft/spn/2010/spn1016.pdf
http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf
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