Economic Impact of the Olympics
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Questions and Answers

What problem do debentures pose to a company when profits are low?

  • They provide a guaranteed rate of return
  • They have to pay out the fixed interest (correct)
  • They are a less risky investment option
  • They benefit from higher dividends when the company is growing
  • What advantage do debenture holders have over shareholders?

  • They are paid before shareholders (correct)
  • They have a higher rate of return
  • They have a say in the company's decision-making process
  • They have the opportunity to benefit from higher dividends
  • What is the primary reason why a fixed interest rate is attractive to a company when profits are high?

  • The company has to pay out the fixed interest regardless of profits
  • The company retains more of its profits (correct)
  • The company has the opportunity to benefit from higher dividends
  • The company has a less risky investment option
  • What was the purpose of the rights issue in 1994 for Eurotunnel?

    <p>To raise £850 million, priced at a 26 per cent discount and entirely underwritten</p> Signup and view all the answers

    What was the total amount of equity funding raised by Eurotunnel in 1987?

    <p>£770 million from public offer in the UK and France</p> Signup and view all the answers

    What was the amount of the loan facility agreed with syndicate banks in 1987?

    <p>£5 billion</p> Signup and view all the answers

    What was the amount of additional debt raised by Eurotunnel in 1990?

    <p>£1.8 billion</p> Signup and view all the answers

    What was the purpose of the £650 million rights issue in 1990?

    <p>To raise £650 million</p> Signup and view all the answers

    What was the amount of seed corn equity raised by Eurotunnel in 1986?

    <p>£46 million</p> Signup and view all the answers

    What was the amount of loan raised by Eurotunnel from the European Investment Bank in 1990?

    <p>£300 million</p> Signup and view all the answers

    Study Notes

    Economic Impact of the Olympics

    • A study on the 2004 Athens Olympics showed an economic impact of US$15.9 million and an employment impact of 445,000 jobs.
    • To conduct an economic impact assessment (EIA) of the Olympics, it is necessary to calculate spending, aggregate the data, and construct a model to calculate the impact on income and employment.

    Techniques for Economic Impact Assessment

    • The two main techniques for EIA are input-output (I-O) analysis and computable general equilibrium (CGE) modelling.
    • These techniques are used to estimate the economic impact of the Olympics on a region or country.

    Time Scales of Olympic Impacts

    • The impacts of the Olympics occur on different time scales, including:
      • Pre-Games impacts: construction phase, other pre-Games costs, and visitor impacts in the run-up to the Games.
      • During-Games impacts: revenues from staging the Games, visitor impacts, and costs of staging the Games.
      • Post-Games impacts: legacy visitor impacts and legacy infrastructural impacts.

    London 2012 Olympics

    • The London 2012 Olympics had an overall positive effect on the UK and London economies.
    • The Olympics led to an increase in GDP of £1,936 million and an additional 8,164 full-time equivalent jobs created for the UK over the 2005-2016 period.

    Economic Models

    • Economic models are built to describe relationships between economic variables and predict the effects of changing these variables.
    • Models are simplified abstractions of the real world and have two key components: assumptions and implications or outcomes.
    • The term ceteris paribus is used in economic analysis to mean "all other things remaining unchanged".

    Financing Eurotunnel

    • The financing of Eurotunnel, a rail tunnel built between England and France in the 1990s, involved several stages, including:
      • Seed corn equity raised in 1986
      • Share placing with institutions in 1986
      • Loan facility agreed with 200 syndicate banks in 1987
      • Equity funding from public offer in the UK and France in 1987
      • Additional debt and rights issues in 1990 and 1994
    • The financing of Eurotunnel illustrates several aspects of financing, including debt and equity funding.

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    Description

    This quiz assesses the economic impact of the Olympics, including the calculation of spending, aggregation, and modeling. It also discusses the employment impact of the Games.

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