...with the ability to sell securities to raise cash Use of Economic transactions by FIs • Provide a center where savers meet borrowers • Provide economies of scale • Issue financial claims that are more attractive to the household savers than the claims directly issued by corporations, asset transformation o FIs purchase primary securities issued by finance corporations, they finance these purchases by selling secondary securities to household investors and other sectors in the form of deposits and insurance • FIs monitor the corporations keeping agency costs to a minimum • Liquidity risk: FI securities have better liquidity than corporate securities Functions of FIs • Provide a brokerage function along with asset transformation function o Asset transformation: issuing deposits to buy primary securities • Provide transaction services and information specialists • Enact monetary policy Primary Vs secondary securities • Primary o Financial claims issued by commercial corporations are invested in real assets • Secondary- FIs buy primary securities with money from savers o Savers indirectly buy the primary securities o The information and evaluation (ex-ante), monitoring, liquidity costs and price risk are reduced through the FI FIs as delegated monitors • Depositors delegate an...
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...1. Financial System of Bangladesh: Financial system is a Set of institutional arrangement through which financial surpluses will be mobilized from the surplus units and will be transferred to the deficit units. It is a framework for describing set of markets, organisations, and individuals that engage in the transaction of financial instruments (securities), as well as regulatory institutions. The basic role of Financial System is essentially channelling of funds within the different units of the economy – from surplus units to deficit units for productive purposes. 1.1 COMPONENTS OF FINANCIAL SYSTEM: There are mainly three components of financial system. These are: I. Financial Market II. Financial Intermediaries III. Financial Instrument I. FINANCIAL MARKET Financial markets are a mechanism enabling participants to deal in financial claims. The markets also provide a facility in which their demands and requirements interact to set a price for such claims. Financial markets perform the essential function of channeling funds from economic players that have saved surplus funds to those that have a shortage of funds. At any point in time in an economy, there are individuals or organizations with excess amounts of funds, and others with a lack of funds they need for example to consume or to invest. Exchange between these two groups of agents is settled in financial markets. The first group is commonly referred to as lenders...
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...Limited liability * Ease of raising capital * Disadvantages: * Double taxation * Cost of set-up and report filing Maximizing value * Limited liability- the lower the risk the higher the value, all else equal * Growth opportunities: corporations can raise capital easier to take advantage of these opportunities. * Liquidity: an asset value also depends on how easy it is to sell it. Management’s primary goal Our focus: profit, publicity held companies Management’s goal: maximize shareholder wealth, which translates into maximizing the stock price. Maximizing shareholder value: A company’s shareholder wealth is equal to the number of shrares outstanding times market value per share. * We need to know what factors affect the stock price. * The value of a share of stock is the present value of the cash flows an “average investor” expects to receive in the future id he or she bought the stock. * Long-term view important. Market price VS intrinsic value Stock’s market price: actual market price of the share of stock. Value based on perceived returns and risk. (could be wrong) Intrinsic value: what a fully informed analyst would estimate as the “true” value of a stock...
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...UnitedHealth Group is a diversified health care company, and a worldwide leader in helping people live healthier lives and taking the necessary steps in making the health system work better for everyone. The UnitedHealth group serves more than 85 million individuals worldwide with health benefits and services. In 2012, they produced revenues of $110.6 billion and were ranked number 17 in the Fortune 500. The economic and political segments would rank the highest in influencing the UnitedHealth Group. The economic segment includes factors such as interest rates, inflation, trade factors, personal, and business savings. These factors affect the income received by individuals, business, and the company in question in this discussion. Inflation is a very critical factor in the operation of UnitedHealth Group organization because inflation rates affect the level of premiums that are determined by the company’s underwriters. When the inflation rate is high, the decision to raise the insurance premiums may be affected as the general prices of goods and service are also high. The economic segment also influences the profitability of the corporation at the great extent. When the economic conditions are favorable, the corporation may attract large customer base. Taxes imposed on a company, is another factor to consider when looking at the economic segment. When there is a budget deficit, the government has to tax the corporation more to fill the deficit. This will affect the corporation...
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...A REPORT ON INTERNATIONAL TRADE FINANCE (PROCEDURE, DOCUMENTATION, FOREX AND RISK) - With Reference to KOTAK MAHINDRA BANK The project report is submitted to the Department of International Business in partial fulfillment of course curriculum for the degree of MASTER OF BUSINESS ADMINISTRATION (INTERNATIONAL BUSINESS) Submitted by DURGA ANAND SANIPILLI REG NO: 1105616 Under the guidance of DR.MOHAN K PILLAI, & MR. M RAVI CHANDRA HOD, Department of international business, Associate vice president and BM Pondicherry University. Kotak Mahindra bank Hyderabad. DEPARTMENT OF INTERNATIONAL BUSINESS SCHOOL OF MANAGEMENT PONDICHERRY UNIVERSITY...
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...Difference Between Investment Banking and Merchant Banking Investment vs. Merchant Banking Bank is an organization that provides a range of financial and some non financial services to its customers. The main source of income, that makes the bank survive is the interest charged from those to whom the bank has given loan. A bank accepts deposits from its customers and pay interest to that deposited money, while it lends money to those who need finance and charge interest from them. The interest rate chargeable from the borrowers is higher than the interest rate payable to depositors. This is how a bank, which is traditionally known to normal people, earns revenue. Banks can be broadly categorized as retail banks and investment banks. The above mentioned revenue generating procedure is more applicable to a retail bank. The revenue models of investment and merchant banks are different, which we will discuss in this article. Investment Banking An investment bank is a financial institution that engages in the issuance of securities on behalf of its client. Investment banks are the banks, which facilitate both the investor, who is in search for good investment opportunity and the investee, who is searching for capital to invest in viable projects. Unlike other types of banks, investment banks are not accepting deposits from customers; that is, investment banks do not provide regular banking services to the general public. The main Investment banking activities are issuance...
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...financial institutions? For most people, it is going to be a bank which is the most common type of financial institution. What about financial markets? A financial market is where buyers and sellers trade. An example of a well-known financial market is the New York Stock Exchange. This establishment trades trillions of dollars on a daily basis. Both financial markets and financial institution play a vital role within any economy. There are also primary and secondary markets as well as money markets and capital markets. We will take a look at the differences and what role they play in the economy. Let’s start with financial institutions and the example I gave earlier was a bank. A bank is the most common financial institution and is pretty straight forward. You give the bank money and they hold it for you. Then, you ask, how does a bank make money? A bank also lends out money to individuals that are looking to make a large purchase, such as a house. The bank uses the money people deposit to loan out to others and interest is paid on the loan. A bank allows consumers to take out loans for purchases, then with a set time frame, pay back the money loaned with interest. That is one reason the recession of 2008 hit so hard. The bank loaned many people money but then many of those people were not able to pay the money back. Another financial institution is an insurance company. You pay the insurance company a monthly payment and they cover damages done to your home...
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...Journal of Financial Reporting and Accounting Insurance vs Takaful: identical sides of a coin? Hairul Suhaimi Nahar Downloaded by ZHONGNAN UNIVERSITY OF ECONOMICS AND LAW At 10:31 08 December 2015 (PT) Article information: To cite this document: Hairul Suhaimi Nahar , (2015),"Insurance vs Takaful: identical sides of a coin?", Journal of Financial Reporting and Accounting, Vol. 13 Iss 2 pp. 247 - 266 Permanent link to this document: http://dx.doi.org/10.1108/JFRA-02-2015-0029 Downloaded on: 08 December 2015, At: 10:31 (PT) References: this document contains references to 66 other documents. To copy this document: permissions@emeraldinsight.com The fulltext of this document has been downloaded 248 times since 2015* Users who downloaded this article also downloaded: Mohamed Sherif, Nor Azlina Shaairi, (2013),"Determinants of demand on family Takaful in Malaysia", Journal of Islamic Accounting and Business Research, Vol. 4 Iss 1 pp. 26-50 http:// dx.doi.org/10.1108/17590811311314276 Khalid Al-Amri, (2015),"Takaful insurance efficiency in the GCC countries", Humanomics, Vol. 31 Iss 3 pp. 344-353 http://dx.doi.org/10.1108/H-05-2014-0039 Nor Aziah Abu Kasim, (2012),"Disclosure of Shariah compliance by Malaysian takaful companies", Journal of Islamic Accounting and Business Research, Vol. 3 Iss 1 pp. 20-38 http:// dx.doi.org/10.1108/17590811211216041 Access to this document was granted through an Emerald subscription provided by emeraldsrm:509129 [] For...
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...Overview: Commercial Bank Management Chapter 1 How large is the financial services industry (commercial banks, investment banking, insurance) as a proportion of the US Economy’s corporate assets? 10%? 20%? 50%? More? ~70% Why study commercial banks separate from other types of firms (Retail / Manufacturing)? Because commercial banks have some fundamental differences from non-financial firms: 1) Commercial banks have primarily financial assets; non-financial firms have primarily real assets 2) Because of the above, commercial banks are exposed to different types of risk than non-financials (some of which are related to banks’ financial assets, like interest rate risk and default risk.) 3) Commercial banks market products from BOTH sides of the balance sheet making it more difficult to balance their sources of funds (i.e., deposits) and uses of funds (new loans). Non-financials determine how much capital is necessary to purchase new assets and then (assuming the project is +NPV) determine how to fund the purchase. Big picture: How to non-financial firms earn profits? How to commercial banks earn profits? Commercial banks earn profits from generating higher levels of interest income and fee income than they incur in interest expense (paid on deposits and other liabilities) and operating costs. Non-financials earn net revenues generated from positive NPV investments, primarily in real assets Current Topics in the News… Bank Regulation and the Presidential...
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...Internship repot 0 Department of Management University of Rajshahi Rajshahi- 6205 Chapter objectives To be acquainted with the Background of JBL. To know about the Role and Function of JBL as a Commercial Bank. To be acquainted with different Branches of JBL at Rajshahi. To be acquainted with the Background of JBL, Kadirgonj Branch; Rajshahi. MBA; Internship repot 1 Department of Management University of Rajshahi Rajshahi- 6205 Theoretical discussion Janata Bank Limited, one of the state owned commercial banks in Bangladesh, has an authorized capital of Tk. 20000 million (approx. US$ 289.85 million), paid up capital of Tk. 5000.00 million, reserve of Tk.8202.00 million and retained surplus Tk. 2737.00 million. The Bank has a total asset of Tk. 282423.00 million as on 30th November 2009. Immediately after the emergence of Bangladesh in 1971, the erstwhile United Bank Limited and Union Bank Limited were renamed as Janata Bank. On 15th November, 2007 the bank has been corporatised and renamed as Janata Bank Limited. Janata Bank Limited operates through 851 branches including 5 overseas branches at United Arab Emirates. It is linked with 1202 foreign correspondents all over the world. The Bank employs more than 13(Thirteen) thousand persons. The mission of the bank is to actively participate in the socio- economic development of the nation by operating a commercially sound...
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...organizational values. Discuss. Leaders who commit to organizational values, often, articulate beliefs, missions, goals of the company during meetings and set policies and regulations to practice the culture in everyday life: i.e. Tigerspike: the company stresses on individual engagement, thus employees are required to attend meetings that discuss the vision and goal of the company, shares are provided to those who contribute most etc. The commitment of leaders can help reiterate espoused culture, but may not totally control the culture-in-practice. Culture is a broad concept and includes various typologies. Role culture and task culture are mostly shaped by leader’s management styles and organizational structures. But other aspects of the organizational culture, such as the working habits and office environment, are the product of the entire team. I.e. work-hard-play-hard culture is more likely to be accepted by a group of energetic youth who embrace work-life-balance than a group of middle-aged people who care most about secure positions, high remuneration and decent social status. In addition, the type of organizational cultures is, by and large, determined by the type of business that the organization is in as well as the nature of the business environment. In business that possess low risk and slow feedback, i.e. banks and insurance company, the companies focus more on retaining current status rather than exploring new systems and markets. As a result, the workers experience...
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...tax-deductibility of the Interest component of the Hire charges. • Instalment Sale: – The legal ownership passes as soon as the 1st instalment is paid. The balance amount is treated as a secured loan and Interest portion is Tax-deductible Leasing 3 Basic Types of Lease • On the basis of the extent to which the risks and rewards incidental to the ownership of the leased assets lie with the Lessor or the Lessee, lease can be classified as: Finance Lease Operating Lease Leasing 4 Finance (or Capital) Lease • Non-cancellable for a specified period called the PRIMARY LEASE Period- usually 5-8 years. • Leased Asset is fully amortised over the Primary Lease period subsequently the Lessor Charges nominal lease rentals • Lessee is responsible for insurance & maintenance. • Risk of Obsolescence is shifted from the Lessor to the Lessee. • E.g.: Leasing of Plant & Machinery Financial lease transfers a major portion of the risks assigned with ownership to the Lessee. Leasing 5 Operating Lease • Short-term...
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...BLSC- A Executive Summary This report was commissioned to examine Bright Lights and Services Company diversification and business development strategy. Bright Lights and Services Company is a diversified company in Brightland located about 2500 miles southeast of Boston. BLSC was formed as a diversified company and evolved out of Biego in 1915 to provide electricity to the Brightland island residents. BLSC is the sole provider for all of the Brightland residents electrical needs. However, due to the decline in tourism, net income from electric revenues have remained flat despite price increases. In order to supplement BLSC’s revenue stream the company decided to diversify it's portfolio in 2007. Today BLSC, runs several businesses: shipping company (BOATS), insurance company (PICO), banking operations (MM), as well as an electric company (BIEGO) which all operate in Brightland. Market Analysis The island economy of Brightland has a population of 350,000 and its main source of revenue comes from tourism and agriculture. The target market for our 4 businesses will include residents, tourists, and students. BIEGO electricity sales have been flat due the decline in tourism and new efficient appliances, which have reduced the consumption. Residents have made it clear that they would like the island of Small Bright to remain in pristine condition and for the company to become more energy efficient. Biego will need to switch from fuel oil to gas to maintain the company’s corporate...
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...#2 Diversify across asset class variants. Within each asset class, you can practice further diversification. For instance, equities have many representations in the mutual fund world. Variants or subclasses refer to more granular characteristics of the asset class. Here are some examples: Equities can vary according to: * the size of companies represented in a “basket” (e.g. large vs medium vs small cap stocks) * the way the stocks’ prices move as the stocks chart their growth (e.g. growth vs value stocks) * the geographical market in which the stock moves (e.g. domestic vs international) Bonds can vary according to: * their maturity dates (e.g. short term vs long term bonds) * their level of risk (e.g. junk bonds, anyone?) * who issues the bond (e.g. government vs corporate) * how they pay out Cash vehicles vary mostly according to rates of return and level of security offered, which are usually characteristics that are inversely proportional to each other. Generally, within the investment world, the higher the rate of return, the less stable the fund value is expected to be. Tip: You can find additional diversification down to the class variant level from mutual fund institutitions, Treasury Direct, or online stock brokers who can assist with giving you more information. Try Morningstar as well to help you with more details on this topic. Note though that most of the time, you don’t really need to seek this kind...
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...Unit 11 1. Insurance is determined based on the risk of the environment and is estimated to anticipate losses that could financially damage the insurers future. Because of the unanticipated risk involved I highly recommend that the law imposes a duty to insurance agent to become “liable for failure to advise a client of every possible insurance option, and the insured would be relieved of any burden to take care of his or her own financial needs and expectations.” (Jentz,2010,Pg1003) Unfortunate losses such as in the case of John L. Jones vs. Debra Kennedy explains a situation where the “insured claimed that the agent was liable for failing to produce underinsured motorist coverage in response to the insured’s request for “full coverage” on his vehicle.” (Jones v. Kennedy,2006) 2. Intestacy laws give spouses, children, grandchildren, or other family members authority to inherit property of the deceased family member. If no heirs exist, the government takes over the property. Since this law makes it clear that children receive authority to property after parent’s death, I believe posthumously conceived children have inheritance rights. Unfortunately only “four states have held that posthumously conceived children are heirs who are entitled to benefits under the social security act.”(Jentz,2010,Pg1004) Those estates being Arizona, Massachusetts, New Jersey, and New York. And other states such as Colorado, Delaware, Texas, Virginia, and Washington have “amended their intestacy...
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