...Counter Party Credit Rating Under Basel II-A Challenge for Finance Managers 1 WELCOME Counter Party Credit Rating Under Basel IIA Challenge for Finance Managers 2 Discussion Summary 1. 2. 3. 4. Basel Vs. Risk Management BaselBasel-II Road Map and Objectives BB Guideline of Basel-II implementation BaselCounter Party Rating by ECAI in determining Capital Adequacy of Corporate 5. How to face ECAI by counter parties for good rating 6. Question and Answer 3 Basel Vs. Risk Management • Basel from the view point of Risk Management • Relating to Capital Adequacy of Banks • Reflecting Risk management in Operation of Banks/FIs 4 Risk Management in Banks- Why? © Banks are highly leveraged. © Bank Directors and Senior Management are the agent of shareholders. © International survey reveals that the the Bank Management does not adequately consider the risk management information in strategic decision making. 5 CEO and Directors of Financial Institutions are currently facing … Two Major Challenges 6 Two Challenges First v Creation of Value for the Shareholders v Need to deliver ever increasing returns as per the Expectation of the shareholders Second Keep the Capital without Erosion 7 First Challenge Senior management believes that Superior Risk Management can create value to the shareholders But not Sure - HOW. 84% of the managers believe that the risk management can improve price earning ratios and reduce cost of capital which again...
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...Market Cap Market Price (p) C H L Gross div Yield % P/E (times) Sector Index FTSE All Share Index Recommendation eg. Buy Hold Sell 1 COMPANY PROFILE Should deal with: for example (i) (ii) (iii) (iv) Principal Activities Position in Sector Competitors Relevant economic, social, political and technological factors. Note: Consult the Research Index ____________________________________________________________ _________ Divisional Analysis Turnover % Comment on Divisional Analysis Profit % Profit Margin % ROCE % Geographical Analysis Turnover Profit Profit Margin % % % Comment on Geographical Analysis (currency effects etc.) ROCE % Turnover and Profit Analysis Rate of Change In Turnover % Rate of Change in Profit Before Interest and Tax % (i) (ii) (iii) 5 years + mean 5 years + mean Comment on Rate of Change in Turnover and Rate of Change in PBIT Mention effect of acquisitions/disposals Mention prospects for turnover and profits based on activities 2 Profitability Ratios In an attempt to assess the efficiency of this company, we look at the following ratios: ROCE Margin % Activity Rate % (i) Define ROCE = 5 years+mean comparison with industry profit before interest and tax capital employed (ii) (iii) (iv) (v) Comment on ROCE Comment on Profit Margin Comment on Activity Rate Then say which, i.e. profit margin or activity rate, accounts for the trend in ROCE. What is the outlook for the profitability of...
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...The Development of Modern Finance "A Short History of Value" David Roubaud & Jean-Charles Bagneris 10/2011 The Main Steps of the Theory Building • Portfolio Selection (Markowitz, 1952) • CAPM (Sharpe, 1963) • Financing and Dividend Decisions Neutrality (Modigliani et Miller, 1958, 1961,1963) • Efficient Markets (Fama, 1965, 1970) • Options Pricing Theory (Black & Scholes, 1973, Myers, 1977) • Agency Theory (Jensen, Meckling, 1976) • Efficient Markets II (Fama, 1991) • Behavioural Finance (Kahneman & Tversky, 1979, Shiller, 1981, 2000) Portfolio Selection • Investors are rationals and risk averse • Diversification lowers specific risk • Any portfolio is a combination of the market portfolio and the riskless asset The CAPM Capital Asset Pricing Model • Systematic risk of an asset is measured by its beta coefficient • The model calibrates the risk-return relationship • Simple, elegant and linear model => big success • Low explaining power (strong assumptions) • Alternative models are difficult to use 1 The Development of Modern Finance 2 Financial Markets Efficiency "At any given point in time, assets prices on financial markets account for all available information." • Strong assumptions on: – markets organization – investors behaviour • One consequence of EMH is Random Walk Hypothesis • Assumptions are not always true: 3 forms of efficiency (strong, semi-strong, weak) The irrelevance of financing and dividends decisions In a world without taxes and with perfect financial markets...
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...Student Name: Shunde Tu Student ID: 000196745 Course: MGT 121( Financial Management II) Case Study on Toy World I. Situation Audit a) Plastic Toys Manufacturing Industry Overview i. Highly seasonal, with a majority of sale volume generated between Aug. and Nov. ii. Competitive landscape 1. Highly competitive, populated by a large number of companies 2. Fierce design and price competition, with short product lives and a relatively high rate of company failures 3. Low entry barrier resulted from low capital and technology requirements. 4. Influx of imported toys intensified competitive pressure on smaller firms. b) Company Overview The company studied in the case is Toy World, a manufacturer of plastic toys for children. More than 80% of the sale was generated between Aug to Nov. Toy World Inc.’s practice was to produce in response to customer orders. Therefore, the production was highly seasonal, and not more than 25%-30% of manufacturing capacity was used for the first seven months. c) Product Overview i. Produce a wide range of designs, colors and sizes for most of its product categories. ii. Dollar sales of a particular product had sometimes varied by 30%-35% from one year to the next. II. Problem Statement The company’s production had been scheduled to accommodate the seasonality of sales. The production manager proposed to adopt level production to reduce labor costs. The feasibility...
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...Role of Specialised Financial Institutions 20.1 Introduction In the previous lesson you have learnt that companies raise long-term and medium-term finance by issuing shares and debentures. Specialised financial institutions are also an important source of such finance. In this lesson, we shall discuss the role and functions of specialised financial institutions. 20.2 Objectives After studying this lesson, you will be able to :- l explain the need for and importance of specialised financial institutions; l identify the types of such institutions; l describe the functions and objectives of Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs); l discuss the role and objectives of Industrial Development Bank of India (IDBI); l state the functions of IDBI; l Recall the meaning of ‘investment trust’; 56 :: Business Studies l discuss the objectives and function of Unit Trust of India (U.T.I.) ; l Explain the objectives of Industrial Credit and Investment Corporation of India (ICICI) ; l describe the functions of ICICI ; 20.3 Need for and importance of Specialised Financial Institutions (SFIs) SFIs are institutions set up mainly by the government for providing medium and long-term financial assistance to industry. As these institutions provide developmental finance, that is, finance for investment in fixed assets, they are also known as ‘development banks’ or ‘development financial institutions’. These institutions receive funds...
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...Problem: MYOB software not integrated -The data was not processed and generated automatically between several modules Alternative solutions: i. Buy new software ii. Develop in-house accounting system iii. Outsourcing the system Problem: Documents are not properly pre numbered, recorded and documented -Sales invoice are manually produces and not pre-numbered -Monthly statement of account not periodically prepare Alternative solutions: i. Adopted auto pre numbered system ii. Implement manual pre numbered system Problem: Lean organization -Organization chart was drawn with simple structure -Directors makes all major decisions and monitor all activities Alternative solution: i. Adopted concept of functional structure En. Zayed CEO Pn. Hashimah COO En. Salam HR & Admin Manager Pn. Balqis Operation Manager (Vacant) Account & Finance Manager (Vacant) Admin Executive (Vacant) Project Manager Cik Amy Finance Executive Project Team (Contract basis) Problem: Timesheet are manually prepared by employees -They’re record time in & out by themselves -Wrongly calculate and paid over Alternative solutions: i. Use access card ii. Use time clock machine @ thumbprint iii. Should hire an additional employee who can monitor the attendance and timesheet iv. Use CCTV Problem: No SOP adopted by Delima Enterprise Sdn Bhd -All decision are authorized by En. Zayed and Pn. Hashimah -No reconciliation was performed for each accounts Withdrawals are made...
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...Table of contents Contents i. Introduction to Leverage 3 ii. Significance of the Issue 3 iii. What is Leverage? 4 iv. Kinds of Leverage 4 a) Financial Leverage. 4 b) Operating Leverage. 4 c) Combined Leverage 5 v. Risks of Leverage 5 vi. Conclusion 5 vii. List of references 6 i. Introduction to Leverage In finance, Leverage is considered to be any financial instrument or loaned capital used to increase the potential return of an investment. Leverage is usually used in real estate and often in the automobile industry in the form of mortgage to purchase houses or vehicles. Leverage aids both the shareholder and the firm, but it comes with great deal of risk. If an investor makes use of leverage to create an investment and it doesn’t go in his or her favor, their loss is much larger than it would've been if they hadn’t used leverage. Leverage amplifies both gains and losses. In the business world, a firm is able to make use of leverage to try to produce shareholder wealth, but if it is unsuccessful to do so, the interest expense and credit risk of damaging the shareholder's value. Leverage can be used in many branches of finance including bonds, stocks, currencies, commodities and also other investments. Leverage can either be a good or bad thing for the firm depending on the situations that arise. ii. Significance of the Issue Leverage is one of the main topics in finance, one cannot study finance without coming across words like investments, loans, mortgages...
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...Structured Finance RMBS/Greece Performance Report Analysts Aksel Etingü +44 20 7682 7135 aksel.etingu@fitchratings.com Peter Dossett +44 20 7862 4027 peter.dossett@fitcharatings.com Spyros Michas +44 20 7070 5801 spyros.michas@fitchratings.com Greek RMBS Performance Bulletin 2008 n Summary In this performance report, Fitch Ratings present an overview of the performance of Greek RMBS transactions. To date, Fitch Ratings has provided a rating to all Greek RMBS transactions that have been issued. In 2007, the number of new issuances was half of 2006; nevertheless the issuance volume was still high due to larger transaction sizes. In February 2008, EFG Eurobank launched the fifth transaction of the Themeleion series. Overall, the outstanding size of the Greek RMBS market has grown steadily, with new transactions coming to the market and no transactions having yet redeemed. Contents Summary ..........................................1 Performance Overview......................2 Greece – Market Overview................5 Appendix 1: Comparison Charts......10 Appendix 2: Credit Cover Methodology...................................11 Appendix 3: Transaction Details......12 Issuance Volume of Greek RMBS Issuance amount (LHS) Number (RHS) (EURbn) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 (No.) 5 4 3 2 1 0 2003 2004 2005 2006 2007 Related Research The following ...
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...Research Questions Literature Review Conclusion and Remarks Definition of Key Terms Financial markets: This is a market where financial instruments are traded. Emerging markets: An emerging market economy (EME) is defined as an economy with low to middle per capita income Financial policy: Criteria describing a corporation's choices regarding its debt/equity mix, currencies of denomination, maturity structure, method of financing investment projects, and hedging decisions with a goal of maximizing the value of the firm to some set of stockholders. Definition of Key Terms Capitalization: The total dollar market value of all of a company's outstanding shares. Capital structure: Refers to the way a corporation finances its assets through equity and long-term debt. Financial structure: The structure of a company's sources of financing, including shareholders' equity, long- and short-term debt, and accounts payable. Research Problem The financial markets in emerging markets have undergone considerable growth in recent times, mainly as a result of the trade and financial liberalization policies adopted by these countries over the past decade (Agarwal and Mohtadi, 2004). This development has expanded the financing options available to firms, but raises the important policy question of how financial market development affect the financial policies of these firms. Research Question How does the stock market development affect the Corporate...
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...Prac II (3) A515/A328 Federal Income Taxes (1.5) A551 Tax research (concurrent with A515) (3) A514/A424 Auditing Theory & Practice (3) A523 Business Information Systems (3) A539 Adv. Tax – Entity Issues (3) L503 Advanced Business Law ______ ____________________________ 21 hours required or to be replaced: Replacement Courses for required courses above (3) (3) (3) (3) (3) Electives (3) (3) (3) (30) TOTAL REQUIRED HOURS Required Core (21 hrs) A500 Prof. & Ethical Resp. in Acctg.* A511/A312 Fin Acctg Theory & Prac II A514/A424 Auditing Theory & Prac A515/A328 Federal Income Taxes A551/A302 Tax Research* A523 Business Information Systems† A539 Adv. Tax – Entity Issues L503 Advanced Business Law LIPE (Elective) A529 LIPE (internship/work) † counted as a business course for the CPA exam * 1.5 credit hour course Accounting Electives A508 Accounting for Non-Profit Org A516 Estate and Gift Tax A517 Financial Statement Analysis A520 Corporate Financial Reporting A522 Partnership Taxation A528 State and Local Taxation A538 Corporate Taxation A554 Tax of Estates & Trusts* A555 Taxation of S Corporations A556 Tax Acctg Periods & Methods A558 Tax of Tax Exempt Orgs* A560 Auditing Information Technology A562 Adv Financial Acctg A566 Advanced Auditing A567 Tax of Tax Exempt Orgs II* A575 Auditing & Corp Governance Nonaccounting Business Finance Courses ...
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...OF MUMBAI AS A PARTIAL REQUIREMENT FOR COMPLETING THE DEGREE OF M.COM (BANKING AND FINANCE) SEMESTER II SUBJECT: COMMERCIAL BANK MANAGEMENT SUBMITTED BY: AAKASH PAL MAINGI ROLL NO.: 60 SIES COLLEGE OF COMMERCE AND ECONOMICS, PLOT NO. 71/72, SION MATUNGA ESTATE T.V. CHIDAMBARAM MARG, SION (EAST), MUMBAI – 400022. UNDER THE GUIDANCE OF MS. AARTI KALYANARAMAN SIES COLLEGE OF COMMERCE AND ECONOMICS, PLOT NO. 71/72, SION MATUNGA ESTATE T.V. CHIDAMBARAM MARG, SION (EAST), MUMBAI – 400022. | | CERTIFICATE This is to certify that ___________________________________ __________________________________________________________ of M.Com (Banking and Finance) Semester II (academic year 2014-2015) has successfully completed the project on ______________________________________________________under the Guidance of Ms. __________________________________________. _________________ ___________________ (Project Guide) (Course Co-ordinator) ___________________ ___________________ (External Examiner) (Principal) PLACE: _____________ DATE: ___________ DECLARATION I, __________________________________________________ Student of M.Com (Banking and Finance) Semester II academic Year 2014-15 hereby declare that, I have completed the project on _______...
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...Module Title |Fundamentals of Securities and Futures Regulation | | |Module Code |BAF2407 | |Module Year |2010-2011 | |Module Value |3 | |Module Hours |Lecture | |30 | | | |Tutorial |15 | | | |TOTAL | |45 | | | | | | | | |Pre-requisites |Nil | |Co-requisites |Nil | |Module Aims |To provide students with an understanding of the rules and regulations in regulated | | |activities in Hong Kong. | |Exemption Criteria ...
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...Master in Finance Class of 2010 Placement Report www.ie.edu 2 Master in Finance 2010 Placement Report I. Facts and Trends In 2010-11, as the debt crisis hit the developed economies and lets to a subsequent contraction in the growth of the emerging markets, the job markets around the world evolved to new levels of competitiveness. Even though our Master in Finance Class of 2011 graduated in a difficult economic situation, they still commanded good positions in the Finance industry and Finance roles in other industries. We at the IE Career Management Center rose to the challenge of placing IE students globally. We are certainly proud of our achievements. Our three specialized teams consisting of the career advisors, recruitment relations managers and career education professionals, work proactively with our students in providing them the resources and opportunities to compete in the job markets. With the aim to train, advise, and assist our students and alumni in their job search, we are happy to report that we have developed a well rounded approach to career development. This is coupled by our students being well equipped with the necessary skills and know-how to undertake the functions of finance with maximum effectiveness, efficiency and professionalism and the ability to apply the functions of finance to create corporate and social value. Our efforts in designing our Finance programs are reflected in the recent rankings by Financial Times, which placed our Master...
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...In order to understand the different challenges that financial managers are faced with in today’s society, it is imperative to understand the characteristics of the market structures and the influence of the market liquidity, competition and competence on financial managers. The market structure has a great influence on financial mangers. Financial managers are faced with many issues due to the market structure however; the ones that will be discussed in this paper are the communication issues and the economy. “Markets are essential to any economic system, and evidence of markets is found in even ancient societies. Markets come in a variety of shapes and sizes.” (Byrd, Hickman, & McPherson, 2013). The structure of the market is important to comprehend how the economy is operated as well as how services are exchanged. Monopolistic Structure is the most common form of a market structure. Monopolistic market has many vendors with prices in the product vary however are very similar to each other. The cost of advertising will vary and the cost in order to enter into the market is substantially low. Bigger corporations identify with oligopoly. There are little amounts of sellers that have different products. Businesses are highly competitive when entering into the market, in addition to the competition, there is a cost when entering in a market. The sellers control the vast majority of prices, which is based on the competition. It is imperative that one understands the various...
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...Undergraduate Specialization Project / One Additional course Total Credit Hours 36 60 24 12 3 135 Undergraduate Core Courses S.NO C. CODE TITLE 1. ACT201 Principles of Accounting 2. ACT501 Financial Accounting 3. ACT301 Cost Accounting 4. FIN201 Business Finance 5. FIN505 Financial Institutions & Markets 6. FIN501 Financial Management 7. MKT201 Principles of Marketing 8. MKT507 Marketing Management 9. MGT202 Principles of Management 10. MGT502 Human Resource Management 11. MGT501 Organizational Behaviour 12. MGT507 Operations Management 13. MGT401 Entrepreneurship 14. MGT506 Business Research Methods 15. GEN501 Business Communication & Report Writing 16. ECO201 Principles of Microeconomics 17. ECO202 Principles of Macroeconomics 18. GEN303 Creative Thinking and Reasoning 19. FIN301 Islamic Banking & Finance 20. QNT501 Mathematics & Statistics for Business Sub Total Approved Scheme of Study BBA (Hons) 4 Year Program 60 GENERAL COURSES S.NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. C. CODE GEN103 GEN104 GEN110 GEN113 GEN111 GEN107 GeN108 MGT201 ITM201 GEN202 GEN301 GEN302 COURSE TITLE Arabic-I Arabic-II Islamic Perspective of Business Islamic Law of Business Transactions Pakistan Studies Functional English-I Functional English-II Oral Communication & presentation IT in Business Human Behaviour Introduction to Sociology Business, Society & Ethics Sub Total Cr 36 Undergraduate Electives of 24 Credit Hours from the following list: S.NO C. CODE TITLE 1. 2....
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