Obama 'outraged' at AIG bonuses

AIG is a huge American based financial institution.

It has been in the news a lot recently, because the US Government has pumped a huge amount of money into it to help it survive the current financial crisis.

First, watch this video for the story.



Next, read each short article in turn and answer all questions

1) AIG- What does this giant do? (Background on AIG)
1a) Describe briefly what AIG does, and how many people it employs.
1b) How much was Robert Willumstad paid as AIG's Chairman in 2008?
1c) How much did the US Government set aside as a AIG's rescue package in September 2008?

2) AIG failure would hurt others (Why the US Government bailed out AIG)
2a) Explain why the US Government decided to bail out AIG in 2008.
2b) What criticisms of the US Governments decision can you find in this article?

3) AIG to cut further bonuses (Why AIG wants to pay the bonuses)
3a) How much has AIG received from the US Government so far?
3b) What is the key reason given by AIG's Chairman Edward Liddy to explain why AIG must pay the bonuses to its workers?
3c) What economy of scale can you identify in this article?

4) Obama wants to block bonuses (Why Obama is mad with AIG!)
4a) What actions has the US Government taken in response to AIG’s decision to pay bonuses?
4b) What is the value of bonuses owed to AIG executives?

US car giants seek $21bn funding

The numbers keep going up!

GM and Chrysler are asking for more money from the US Government again. Read this BBC article and answer the following questions:


Level 1: Knowledge
1a) Complete this statement:
The loans that GM is asking for are classed as an __________source of finance because they will provided by stakeholders outside of the business. According to the article, they may also be classed as a __________ term source of finance, because they are expected to be paid in 8 years (2017).

1b) What is working capital? Why is it important to a business?

Level 2: Application
2a) Construct a table describing the plans outlined by both GM and Chrysler.
2b) Explain how Chryslers debt management plan will impact its working capital.

Level 3: Analysis
3) Using the information in the article , analyse the likely impact on key financial statements for either car company.

Level 4: Evaluation
Justify your choice of 1 additional source of finance for either car company.

Stuck? Click here for some ideas!

Note Level 1 – Level 4 are questions based on IB standards where

Level 1: Knowledge
Level 2: Application
Level 3: Analysis
Level 4: Evaluation

Words in bold (define, explain…) have a specific meaning in the IB Diploma Program (DP). The meanings are in Glossary of Command Terms Section of the IBO DP Business and Management Guide available at the OCC and from my website