Iraqi Dinar Discussion Board

[nid4u]

IMF Executive Board Completes Third and Fourth Reviews under Iraq's Stand-By Arrangement, Approves Six-Month Extension of Arrangement to September 2007

Press Release No. 07/48
March 13, 2007


"...The Ministry of Finance is strongly encouraged to RECAPITALIZE the CBI as soon as possible."


http://www.imf.org/external/np/sec/pr/2007/pr0748.htm

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Question:

What exactly does it mean for the CBI to "recapitalize?"

And

What does it mean for our investment?

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This much I found, BUT...what does it mean?

How does it apply to the CBI??



re·cap·i·tal·ize

To change the capital structure of (a corporation).


And


Capital structure:

Capital Structure refers to the way a corporation finances itself through some combination of equity sales, equity options, bonds, and loans. Optimal capital structure refers to the particular combination that minimizes the cost of capital while maximizing the stock price.

Is there an optimal capital structure, one that allows a corporation to get the most bang for its bucks? If so, what is that structure and on what factors does it depend? These are important questions for the discipline of financial economics.

Attention has to be given to risk, as an excessive leverage can put the business in danger of unsolvency in case things turn bad. This in its turn can affect negatively the stock price that would suffer a high risk premium.
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Your thoughts?

Interesting statement, recapitalize? just have to wait and see.

from iif