...Position Limits and Rules In practice, many financial institutions included our selected bank have faced with certain risk. How banks manage risk, through what? In my suggestion, the management of the banking firm relies on a position limits and rules to implement a risk management system. On the whole, these tools are established to limit individual positions to acceptable levels, measure exposure, encourage decision makers, and define procedures to manage these exposures to manage risk in a pattern that is constant with the firm's objectives and goals. The use of position limits and rules for internal control of active management in minimum standards for participation. In the latter, those banks' counterparties or assets that once pass some prespecified quality standard just can take the domain of risk. There some limits are imposed to cover exposures to overall position concentrations, counterparties, and credits that relative to different types of risks, even that are eligible for those investments. As a whole organization and any one individual can be assumed their imposition restricts the risk, although the limits are expensive to administer and establish. The general case, each portfolio managers, lenders, and traders must have well-defined limit in commit capital. For example, Volcker Rule. What is Volcker Rule? In the wake of the financial crisis of 2008, Dodd-Frank is a key part to reform its rule and this Volcker Rule was named by former Fed Chairmen Paul Volcker...
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...__________________________ (Name of the Institution) __________________________ (Address) TO WHOM IT MAY CONCERN : We, the senior students of Finance & Treasury Management (FTM) under the College of Management and Entrepreneurship of Pamantasan Ng Lungsod Ng Maynila hereby respectfully request for the conduct of research / study about the following topics that concern your prestigious company, to wit: 1. Vision, Mission, Objectives, and Philosophy 2. Nature of Business 3. Corporate size 4. Rank in the industry as to profitability, liquidity, and solvency 5. Finance organizational structure and composition 6. Treasury department’s role, function, and delimitation of authority 7. Set qualification standards in the appointment or designation of a treasury manager 8. Treasury manager’s duties and responsibilities 9. Usual management practices that a corporate treasurer undertakes to ensure the company’s profitability 10. How does the treasury manager contribute towards the company’s growth 11. What are the common problems that the treasury manager encounters and how he resolves them? As such, the data and information that you may possibly disclose to us will be utilized in compliance with the terminal requirement of our currently being undertaken subject entitled TREASURY MANAGEMENT. Rest assured that all of your response to the aforesaid queries and other concerns will be used for academic purposes only, and shall be treated...
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...CHAPTER 11 Corporations: Organization, Share Transactions, Dividends, and Retained Earnings ASSIGNMENT CLASSIFICATION TABLE Brief Exercises Do It! Exercises 1, 2, 3, 4, 5, 6 1 1, 2 1, 2 Record the issuance of ordinary shares. 7, 8, 9, 10, 11 2, 3, 4 3 *3. Explain the accounting for treasury shares. 12, 13, 14 5 4 *4. Differentiate preference shares from ordinary shares. 15 6 *5. Prepare the entries for cash dividends and share dividends. 17, 18, 19, 20, 21, 22 7, 8, 9 *6. Identify the items that are reported in a retained earnings statement. 16, 23, 24 Questions *1. Identify the major characteristics of a corporation. *2. 7. Prepare and analyze a comprehensive equity section. *8. Compute book value per share. B Problems 2, 3, 4, 7, 8, 11, 12 1A, 3A, 6A 1B, 3B 5, 7, 9 11, 12 2A, 3A, 6A 2B, 3B 6, 7, 10, 11, 12, 24 1A, 3A, 6A 1B, 3B 5, 6 13, 14, 15, 16, 25 4A, 5A, 7A 4B, 6B 10, 11 7 17, 18 5A 5B, 6B 8 10, 11, 19, 20, 21, 22, 23, 25 1A, 2A, 3A, 4A, 5A, 6A, 7A, 8A 1B, 2B, 3B, 4B, 5B, 6B, 7B Describe the use and content of the statement of changes in equity. *9 A Problems 12 Study Objectives 9A 25, 26 13 23, 24, 25 3A, 8A 3B, 7B *Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to the chapter...
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...CHAPTER 15 Debt and Equity Capital Review Questions 15–1 A trust indenture is drawn to protect the position of bondholders by imposing restrictions upon the borrowing corporation. One of the most common of these restrictions is that the company must not declare dividends that would cause the working capital to fall below a specified amount. An overly generous dividend policy could leave the company so short of cash as to endanger the position of bondholders. 15–2 Restrictions commonly imposed on a borrowing company by long-term creditors relate to (a) dividend payments, (b) acquisition of property and equipment, (c) increases in managerial compensation and (d) acquisition of additional debt. Such actions are usually permitted only if they will not reduce the current ratio and amount of working capital below specified levels, or increase the debt to equity ratio above a specified level. Creation of a sinking fund is another common requirement designed to assure that cash will be available to pay the long-term debt at maturity. 15–3 The trustee protects the interests of the bondholders by accounting for the issuance and redemption of bond certificates, determining that provisions of the borrowing agreement are observed by the corporation, and reporting periodically on the amount of the liability and of any related sinking fund. This work by the trustee leaves little opportunity for either error or fraud in the issuance, servicing, or redemption of bonds...
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...Preferred Stock, ($100 par value, 5% noncumulative, 50,000 shares authorized, 10,000 shares issued and outstanding) $1,000,000 Common Stock ($10 par value, 200,000 shares authorized, 100,000 shares issued and outstanding) $1,000,000 Paid-in Capital in Excess of par, Common 150,000 Retained Earnings 700,000 The following events occurred during 2014 and were not recorded: a. On January 1, Frick declared a 5% stock dividend on its common stock when the market value of the common stock was $15 per share. Stock dividends were distributed on January 31 to shareholders as of January 25. b. On February 15, Frick reacquired 1,000 shares of common stock for $20 each. c. On March 31, Frick reissued 250 shares of treasury stock for $25 each. d. On July 1, Frick reissued 500 shares of treasury stock for $16 each. e. On October 1, Frick declared full year dividends for preferred stock and $1.50 cash dividends for outstanding shares and paid shareholders on October 15. f. One December 15, Frick split common stock 2 shares for 1. g. Net Income for 2014 was $275,000. Requirements: a. Prepare journal entries for the transactions listed above. b. Prepare a Stockholders’ section of a classified balance sheet as of December 31, 2014. Common Stock 100,000.00 Stock Dividend 5% Stock Dividend 5,000.00 Total No of common Stock 105,000.00 Preferred Stock 10,000.00 Par Value 100.00 Divivdend Rate 5% Preference Dividend 50,000.00 Cash Dividends on Common Stock @1.5(105,000*1.5) 157,500.00 ...
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...outstanding..................$2,600,000 c)= 0.60 x 360,000 = 216,000 $ d) It is likely that the company has repurchased its shares and retired them. 8.10 a. Annual dividend per share= $3.25 b. Preferred dividends= $3,900 Common dividends= $4,500 Total dividends received= $8,400 Exercise 8.18 a. 800 shares after the stock split b. Dividend income before the stock split= $3,600 $4.50 per share c. 33 1/3% stock dividend would accomplish the same Problem 8.22 a. Dr. Treasury stock- 330,000 Cr. Cash 330,000 b. Shares outstanding at beginning of year 574,600 shares purchased for treasury in first quarter (4,400) Shares outstanding during second quarter 570,200 Cash dividend per share *1.20 Dividend paid at the end of second quarter $684,240 c. assets=liabilities+owners equity<-net income=revenues-expenses cash Treasury stock +117,000 +105,000 additional paid in capital +12,600 d shares outstanding second quarter 570,200 treasury shares sold in third quarter 1,400 shares outstanding in fourth quarter 571,600 cash dividend per share *1.20 dividend paid at the end of fourth quarter 685,920 e...
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...Case Study: Wrigley Jr. Company – Capital Structure Case Problem: The managing partner of Aurora Borealis LLC, a hedge fund that strategized to focus on distressed companies, asked an associate to initiate the research for a potential investment in Wrigley. Aurora specialized in finding opportunities for corporate restructures, to invest significantly in the stock of the target firm and then persuade management to restructure. They noted that Wrigley had about $13.1 billion in common equity and did not have any debt on their balance sheet. Chandler was asked to perform an analysis to support the assumption that Wrigley can borrow $3 billion at a credit rating of BB to B, to yield 13%. Over the last few years, Wrigley has had revenue growth at an annual compound rate of 10% (earnings at 9%) which reflected the introduction of new products and foreign expansion. The firm has always been conservatively financed and had stock that was outperforming the S&P 500 composite index. The proposed leverage recapitalization would have Wrigley borrow $3 billion and use it to pay an equivalent dividend or repurchase an equivalent value of shares. This could increase the value of the firm by shielding the cash flows from taxes. An additional assumption is the debt rating for Wrigley, after they assume the debt would they be able to manage the interest payments. How does Chandler know that a rating of BB/B would be likely. Additionally, Chandler knew that the maximum value...
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...wrote a book titled Too Big To Fail. This book focus on the collapse of the investment bank Lehman Brothers, Merrill Lynch was sold by Bank of American, Freddie Mac and Fannie Mae was nationalized, and the government took 80 percent of AIG that took place on the weekend of September, 15, 2012. Significantly, he examined the financial markets reactions to the bankruptcy of Lehman Brothers. It starts with the failure of Bear Stern, one of the biggest banks in American. Bear Stern found the bank having too many toxic assets and could not cover its liabilities. The United States implement their own economy in the history of the largest and deepest government intervention. In May of 2008, the Federal Reserve did sale support to the fail Bear Stern to JP Morgan. Something similar happened to Lehman Brothers in September 2008, Lehman was one of the American five original investment banks. The author discusses that because of bad investment in the subprime mortgage market, insolvency, and shattered investor confidence led to the inevitable downfall of Lehman. At the beginning, Lehman was looking for 30 to 50 billion dollars in financial support by Warren Buffett. Moreover, Lehman tried to seek the financial assistance of the Korea Development Bank. The bank also wanted the government to provide financial assistance. But the results have failed. On September 12, 2008, many different banks including bank of America, JP Morgan, Goldman Sachs, Merrill Lynch, and Barclays met at the Federal...
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...T.R-6 TRIPLICATE BANK COPY CENTRAL DUPLICATE (Treasury Rule 29) Treasury/Sub-Treasury Chalan of cash paid in to the Chalan No. (Treasury Rule 29) Treasury/Sub-Treasury Chalan of cash paid in to the QUADRUPLICATE CANDIDATE COPY T.R-6 CENTRAL Chalan No. (Treasury Rule 29) National Bank of Pakistan State Bank of Pakistan National Bank of Pakistan State Bank of Pakistan CENTRAL Chalan No. T.R-6 CENTRAL T.R-6 (Treasury Rule 29) Chalan No. ORIGINAL FPSE COPY Treasury/Sub-Treasury Treasury/Sub-Treasury Chalan of cash paid in to the National Bank of Pakistan Chalan of cash paid in to the National Bank of Pakistan State Bank of Pakistan State Bank of Pakistan To be filled in by the remitter Amount Amount To be filled in by the Departmental Officer or the Treasury To be filled in by the remitter By whom tendered Name / designation & Address on whose behalf money is paid To be filled in by the Departmental Officer or the Treasury To be filled in by the remitter By whom tendered Particulars of the remittance & authority Name / designation & Address on whose behalf money is paid To be filled in by the Departmental Officer or the Treasury To be filled in by the remitter Particulars of the remittance & authority To be filled in by the Departmental Officer or the Treasury Amount By whom tendered Name / designation & Address on whose behalf money is paid By whom tendered Particulars...
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...Corporate Treasury Insights 2015 As the Dust Settles . . . The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-forprofit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 82 offices in 46 countries. For more information, please visit bcg.com. BNP Paribas has a presence in 75 countries and has more than 185,000 employees, including 145,000 in Europe. It ranks highly in its two core activities: Retail Banking & Services (comprised of Domestic Markets and International Financial Services) and Corporate & Institutional Banking. In Europe, BNP Paribas has four domestic markets (Belgium, France, Italy, and Luxembourg) and BNP Paribas Personal Finance is the leader in consumer lending. BNP Paribas is rolling out its integrated retail banking model across the Mediterranean region, in Turkey, in Eastern Europe, and throughout a large network in the western part of the United States. In its Corporate ...
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...Assignment: Chemical Banks – Allocation of Profits Submitted By: G.K. Shyam Arya, PGXPM - 11 Date: 12-Mar-2015, Thursday Assignment Questions & Solutions: 1. Describe the due bill controversy and how do you resolve it? Proposed Solution: a. Due Bills controversy: Introduction: Due Bills controversy is an example of intra department priorities that dilutes the focus away from organizational goals. Chemical Bank was the 6th largest U.S. commercial bank in 1983. Chemical Bank was organized into three main profit centres: Personal and Banking Services World Banking Group Treasury Group The Due Bill was an acknowledgement (transactional evidence) that The bank had sold securities to a customer His/her’s account has been charged If requested, securities would be delivered when they become available Upon maturity, Chemical bank would pay principal plus interest at a specified rate Due Bills Lifecycle at Chemical Bank is described below: Due Bill was a product designed, marketed and sold by the Treasury group, which was responsible for generating continual funding of $25 Billion for Chemical Bank at the lowest possible costs highly profitable product for Chemical Bank sold in majority by the Metro division of Personal & Banking Group that processed Due Bill requests on demand from the customers Processed and administered by Trust & Investment division of Personal & Banking Group. Events that lead to decline of profits earned due to Due Bills: Introduction...
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...INTRODUCTION: International Finance Investment and Commerce Bank Limited (IFIC Bank) is banking company incorporated in the People’s Republic of Bangladesh with limited liability. It was set up at the instance of the Government in 1976 as a joint venture between the Government of Bangladesh and sponsors in the private sector with the objective of working as a finance company within the country and setting up joint venture banks/financial institutions aboard. In 1983 when the Government allowed banks in the private sector, IFIC was converted into a full-fledged commercial bank. The Government of the People’s Republic of Bangladesh now holds 32.75% of the share capital of the Bank. Directors and Sponsors having vast experience in the field of trade and commerce own 8.62% of the share capital and the rest is held by the general public. Mission: Our Mission is to provide service to our clients with the help of a skilled and dedicated workforce whose creative talents, innovative actions and competitive edge make our position unique in giving quality service to all institutions and individuals that we care for. We are committed to the welfare and economic prosperity of the people and the community, for we derive from them our inspiration and drive for onward progress to prosperity. We want to be the leader among banks in Bangladesh and make our indelible mark as an active partner in regional banking operating beyond the national boundary. In an intensely competitive and...
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...Transaction Account), and • Agency Bank transactions (transactions reported by the Treasuries). These three accounts are affected daily and the cash balance for each day is calculated. However, the balances in each of these accounts are transferred after designated intervals to the PGDA and PGDA is updated only periodically. A monthly closing cash balance for the PGDA is calculated, although with a lag. • The PAD transactions are transferred to PGDA Account by CAS,RBI Nagpur on the last day of each month, including for the month of March each year.. • Inter Governmental Transaction Account balances (IGTA) and Agency Bank transactions are closed and balances transferred to PGDA on 11th of succeeding month. For the month of March, these are transferred on 15th/16 April of the succeeding year. • The monthly closing cash balance in PGDA will be calculated only by the 11th of the succeeding month. In case of March, it is by the 15th/16th of April of the next year. A. 2) DETERMINATION OF DAILY CASH BALANCE The calculation of the daily cash balance (for determination of whether minimum cash balance as prescribed is maintained or not and WMA/OD is needed) will include the following transactions • The opening balance of the day which is the cash balance retained on the previous day • Only For 1st -10th /11th of the month # : IGTA and Agency Bank...
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...global economy. The financial system in Sri Lanka comprises the major financial institutions, namely the Central Bank of Sri Lanka, Licensed Commercial Banks (LCBs), Licensed Specialized Banks (LSBs), Licensed Finance Companies (LFCs), Specialized Leasing Companies (SLCs), Primary Dealers (PDs), Pension and Provident Funds, Insurance Companies, Rural Banks, Stock Brokers, Securities Market Intermediaries, Unit Trusts and Thrift and Credit Co-operative Societies; the major financial markets, such as the Foreign Exchange Market, Money Market, Capital Market and the informal financial market; and the financial infrastructure which is the legal framework related to the financial system and the payment and settlement. The nature of the financial institutions The banking sector in Sri Lanka, which comprises LCBs and LSBs, dominates the financial system and accounted for 58 per cent of the total assets of the financial system as at end December 2013. Banks play a central role within the financial system, as they have the capacity to provide liquidity to the entire economy. Banks are also responsible for providing payment services, thereby facilitating all entities to carry out their financial transactions. On the other hand, banks can create vulnerabilities of systemic nature, partly due to a mismatch in maturity of assets and liabilities. Therefore, the soundness of banks is...
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