...institutions •Insurance companies •Investment banks •Pension funds •Unit trusts and OEICs •Investment trusts Principal liabilities are not deposits FINANCIAL SERVICES Financial intermediation provided by all financial institutions Insurance and pensions provided by insurance companies and pension funds Payments provided by banks and building societies Portfolio adjustment provided by unit trusts, open-ended investment companies (OEICs) and investment trusts FINANCIAL MARKETS Definition: Financial markets are markets in which funds are transferred from those who have excess funds (savers, lenders) to those who have a shortage (investors, borrowers). Structure: Debt and Stock Markets Primary and Secondary Markets Money and Capital Markets 2 4/12/2012 DEBT AND STOCK MARKETS Debt market: the market for trading debt instruments Debt instruments: • A paper or an electronic obligation that enables an issuer to raise funds by promising to repay a lender in accordance with terms of a contract. • Short-term, intermediate-term, long-term debt instruments • E.g.: bonds, notes, certificates,… Stock market: The market in which shares/equities are issued and traded either through exchanges or over-the-counter...
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...TMA 2 – Part A: Question 1: 1. 1700x12=£20400 16827/12=£1402.25 1700/100=17x2=34+1700=£1734 1734x12=£20808 17104/12=£1425.33 1402.25x6=£8413.50 1425.33x6=£8551.98+£8413.50=£16965.48/12=£1413.79. Piper’s average net monthly income over one year would be £1413.79. 2. Net income Average month £ per month. Earnings: 1413.79 Total net income: 1413.79 Rent 700.00 Council tax 91.67 Utility bills 73.34 Food 433.34 Leisure and gifts 70.00 Transport 86.67 Total Expenditure: 1455.02 Surplus/deficit: -41.23 Currently she wouldn’t be able to purchase her laptop as she has a deficit of £41.23 per month. 91.67+73.34+86.67+700...
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...Introduction to Finance - 1 Instructor: Kevin Higgins Class Discussion Week 1 1-12-2015 Now that the basics of the financial planning process are clear, you are ready to learn the basic principles of the time value of money. Creating a financial plan is essential for proper financial planning. The following exercises will assist you in understanding the concept of time value of money. Download and complete this worksheet for problem 2 below which is taken from the Do the Math exercises on pages 30-31 of your textbook. Do the Math Problem #2: Present and Future Values. Rachael Berry, a freshman horticulture major at the University of Minnesota, has some financial questions for the next three years of school and beyond. (a) If Rachael’s tuition, fees, and expenditures for books this year total $12,000, what will they be during her senior year (three years from now), assuming costs rise 4 percent annually? Use Appendix A-1 on page A-4 of your textbook. (b) Rachael is applying for a scholarship currently valued at $5000. If she is awarded it at the end of the next year, how much is the scholarship worth in today's dollars, assuming inflation of 3 percent? Use Appendix A-2 on page A-6 of your textbook. (c) Rachael is already looking ahead to graduation and a job, and she wants to buy a new car not long after her graduation. If after graduation she begins an investment program of $2,400 per year in an investment yielding 6 percent, what will be the value of the...
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...What is meant by cash flow? Cash is a liquid asset, meaning that i can be spent on goods and services any time. Many business experience cash flow problems, meaning that they do not have enough cash to do what they want to do. Cash flow means "the flow of money in and out of a business". These are ways cash flow can occur: Cash inflows: * Sale of goods for cash. * Payment from debtors. * Borrowing from a source (but will inevitably lead to cash outflow in the future). * Sale of unwanted assets. * Investment from investors: shareholders and owners Cash outflows: * Purchasing goods for cash. * Payment of wages, salaries and others in cash. * Purchasing fixed assets. * Repaying loans. * Repaying creditors. Cash flow cycle A cash flow cycle explains the stages that are involved in the process of cash out and finally into the business. This is what happens: The longer it takes for cash to get back to the business, the more they will needworking capital to pay off their short-term debts. This cycle also helps us understand the importance of cash flow planning. This is what happens when a company is short on cash: * Not enough to pay for materials, therefore sales will fall. * The company will want to insist customers on paying in cash, but they might lose them to competitors who let them pay in credit. * There could be a liquidity crisis when it does not have enough cash to pay for overheads (bills, rent, etc.) and the...
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...statement help you organize your finances? 2. What was the most interesting thing you learned about completing this worksheet? 3. Did this worksheet provide you with any ideas about how you may want to change your budget (how much you are spending, saving, or reducing your debt)? The cash flow statement can help me organize my finances by being able to see how much money I am spending, and what I am spending it on. The statement breaks down everything from house related payments all the way to leisure activities like video games and movies. Being able to see what I spent my money on will allow me to make changes for the better or, help me to save money by seeing what I could go without and save that money. There have been plenty of times where I go out and spend more than I planned on spending whether it is on food or at the movies. I can use this chart to set up a budget for these sort of activities and not take any more money than what I budget myself spending. The most interesting thing I learned about this worksheet is, it is not just another assignment, but it can be used in everyday life. I like the idea of going to my computer and checking my monthly chart to see how much I have spent that month. Or I could use the chart to see how much money I have left to spend in a month. The cash flow chart is something that can be used in multiple ways to fit different needs. I do a good job at keeping track of my finances, but I can see myself using...
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...Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance This is a bittersweet time on campus. Seniors are beginning to find jobs, and while their enthusiasm is infectious, some of their choices give me pause. Many of the best students are not going to research cancer, teach and inspire the next generation, or embark on careers in public service. Instead, large numbers are becoming traders, brokers and bankers. At Harvard in 2014, nearly one in five students who took a job went to finance. For economics majors, the number was closer to one in two. I can’t help wondering: Is this the best use of talent? Of course, these are intensely personal choices as young people chase their aspirations and dreams. But if a favorite student of mine comes up to me and says, “I just got an offer at this investment bank and I’m going to take it,” I want to know how should I feel about it. I will be happy for her individually, but still I wonder: Is this a good decision for society as a whole? As an economist, I look at it this way: Every profession produces both private returns — the fruits of labor that a person enjoys — and social returns — those that society enjoys. If I set up a shop on Etsy selling photographs, my private returns may be defined as the revenue I generate. The social returns are the pleasure that my photographs provide to my customers. A scene from “It’s a Wonderful Life” that presents two types of bankers. Mr. Potter, seated, played by Lionel...
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...Terms Comparison Paper HCS/552 December 16, 2013 Dr. Vernita Davis Terms Comparison Paper According to Getzen (2007), " money drives the health care system just as it does many other activities in a modern industrial society" (p. 2). Economy is driven by money. There will exchange of money for services rendered and the purchase of goods. In this day and age, you no longer are able to get goods or services by offering the seller a type of service or some other type of goods in exchange. Those equal barter trade is a thing of the past. In this paper, we will identify three terms usually used in economics and health care. We will compare these three terms and differentiate what it may mean in health care and economics. The three terms used for this purpose are trade, finance, and funds. Three Terms Trade As Getzen (2007) noted all people are involved in some kind of barter or trade, which could be goods, services, money, time, favors, and information for the purpose of being better. Both parties must benefit of the trade. Trading is exchanging. The term trading in economics, it is the exchange of goods between a buyer and a seller. The seller will offer particular goods for the exchange of money from the buyer. The seller will gain a profit from the trade which boost economy. Trade in terms of health care, though the same as exchanging goods, health care more so offer services and medical care. When a provider is offering services to a patient like seeing in...
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...P4 – describe sources of internal and external finance for a selected business Caledonia is a small takeaway outlet shop that sells chicken burgers, chips and drinks. It is located in Harlesden, near the estates. This is so that they can get a lot of customers coming in and out of there shop. There are two ways that Caledonia can get financial resources: * From within the business (internal sources) * From outside the business (external sources) Internal sources Caledonia can get financial resources internally from the business owner’s saving or from the profit that Caledonia makes. Owner’s savings The sole trader of Caledonia will have to use his own savings to start the business. This is because sometimes a bank may not want to invest in the business, because they don’t want to take the risk. Capital from profits Source | Details | Benefits | Drawbacks | Banks | Banks are able to offer loans, business accounts, commercial mortgages and overdraft facilities based on the business plan. Interest is payable based on the predicted risk. Some security will need to be provided, for example, assets such as a house. | * Quick and simple to start up * Various amounts of money can be loaned * Controlled repayment term | * Interest is allocated to the loan * Business can go bankrupt or get a poor credit rating if payments aren’t on schedule | Building societies | Building societies are also able to offer loans, business accounts, commercial mortgages and...
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...1. Where and how would you borrow for a car or home mortgage? Complete a credit application from a bank, credit union or other lending institution. For "walking around" money? Open up a checking account at a bank and use the debit card to get cash from an ATM or apply for a credit card and use it to get a cash advance or borrow from my Mom. 2. Where and how would a farmer borrow to finance a new crop? Buy more land? Buy machinery? To finance all three a farmer can complete an application at a bank or can apply for a loan from the Farm Service Agency (FSA). FSA is an agency of the U.S. Department of Agriculture (USDA). 3. Where and how would a Large Company borrow to finance inventory? To build a new factory? To buy another company. Companies can borrow from banks or sell stock and issue bonds to raise money. 4. Where and how would a city borrow to build a new baseball stadium? New schools? Replace a sewer system? Cities can issue municipal bonds where to raise money for such new projects. 5. Where an how would the Federal Government borrow to finance the Federal Debt of over $17 trillion? The Federal government issues debt by selling treasury securites suchas bonds notes, savings bonds. Compose a document and attach the file in Microsoft Word (.doc, .docx) or Rich Text (.rtf) format. If I can't open your attachment you will receive a zero. If you have any questions about how to format your work contact ANGEL...
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...Leveraging Philanthropy Monetary Waqf for Micro Finance[1] By Dr. Muhammad Anas Zarka [2] Paper Presented to a Symposium Towards an Islamic Micro-Finance April 14, 2007 ISLAMIC FINANCE PROJECT Islamic Legal Studies Program HARVARD LAW SCHOOL ABSTRACT The paper proposes a Monetary Waqf ( MW ) of a variable size, whose major assets are monetary, to provide micro finance to the productive poor. MW depends, as usual in any waqf, on initial permanent donations whose expected income covers the administrative and maintenance needs of MW. A novel feature in the proposed waqf is the mobilization of temporary funds extended to MW as interest-free loans, on call or for a fixed term. MW guarantees repayment to providers of funds, and uses the funds to provide micro-finance to the productive poor in various Shariah Compliant modes, at terms that sustain the waqf but are most favorable to recipients. To strengthen its guarantee, MW must have two tiers of philanthropic guarantors: Guarantors of liquidity, and Guarantors of Losses . Guarantors of Losses help insulate fund providers from risk of default by microfinance recipients. This helps to attract to MW temporary funds many times larger than the guarantee commitments. Payments to make up the losses can be counted by these Guarantors towards their annual zakat obligations. Monetary Waqf in the context of Islam’s economic goals Islamic Shari'ah...
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...Money Management There are times when individuals feel that all of their money goes to paying off debts. We have credit card payments, car payments, and mortgage payments. Having too many debts can sometimes be overwhelming. While some bills are unavoidable, such as mortgage payments, most bills can be avoided by utilizing better money management skills. Poor money management is the third leading cause of debt (Bucci, 2005). Developing a monthly spending plan is one of the most important steps a person can take when managing his or her money. A monthly spending plan can be useful to track what our expenses are on a monthly basis. In order to track our expenses, we need to write down everything that needs to be paid making sure that we do not forget anything. We then need to evaluate the importance of each expense to see if it is a necessary expense or one we can eliminate. One way to do this is to list those expenses in the order of their importance. One example would be the mortgage on your home. This should be the most important expense on your list. When making your list you need to make sure to write down how much money is needed for each of the expenses. Your monthly expenses should not exceed your monthly income. An example; if your mortgage payment is more than half of your monthly salary, you would not want the remaining expenses to equal more than the remaining 50% of your salary. People whose expenses are greater than their income can become extremely stressed...
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...MBA/MFM 253 TVM Practice Problems 2 Fall 2011 1. You are considering buying a new car. The current price of the car is $25,000. The dealer has offered you a special nominal interest rate of 3% each year for the next 3 years if you finance through the dealership. a) What is your monthly car payment? PV = 25,000 I = 0.25 N = 36 FV = 0 PMT =? = $727.03 25,000 = PMT (1-(1/(1.0025)36))/.0025 b) You are considering putting a $5,000 down payment on the car, what would your payment be if you did this assuming you could still get the special interest rate? $581.62 c) In either case what is the effective rate of interest you paid on the car? 1.002512=1.030416 3.0416% 2. A given rate is quoted at an effective annual rate of 12.55%. If you know that the interest compounds quarterly, what is the nominal annual rate? 12% Need to find the rate that when compounded four periods will equal .1255 solve for r in the following equation (1+(r/4))4=1.125 3. What is the PV of an annuity that pays 10,000 a year at the end of each of the next 15 years assuming a 5% return? $103,796.58PMT = 10,000 N=15 I = 5 FV = ) PV = ? What is the PV of an annuity that pays 10,000 a year at the beginning of each of the next 12 years assuming a rate of 7%? $84,986.743 3. PV and FV problems that are a little harder ( you need to figure out the pieces, the final answers are there – but you need to figure out how it set it up – the set up is usually the trickier part and the...
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...Why have they for so long been an integral part of our economy? Why, as in the financial crisis that commenced in 2007, do banks every so often get into trouble and create serious problems for the country? Banks have two important economic functions. First, they operate a payments system, and a modern economy cannot function well without an efficient payments system. We make most of our payments by writing checks, swiping credit cards issued by banks or tied to them, and by paying bills via online banking. Most of the money stock of the country is in fact bank money; the rest of the currency is “legal tender” issued by the government, namely Federal Reserve Notes and coins. We have confidence in bank money because we can exchange it at the bank or an ATM for legal tender. Banks are obligated to hold reserves of legal tender to make these exchanges when we request them. The second key function of banks is financial intermediation, lending or investing the money we deposit with them or credit they themselves create to business enterprises, households, and governments. This is the business side of banking. Most banks are profit-seeking corporations with stockholders who provide the equity capital needed to start and maintain a banking business....
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...Review of Short answer questions Ch 1 Q Why Do Foreigners Hold U.S. Currency? The dollar is preferred to many other currencies because it is a relatively stable source of purchasing power and widely accepted. It also tends to be the international pricing currency for products traded on a global market, and commodities such as oil, gold, etc The US dollar is one of the primary reserve currencies used worldwide. A reserve currency, also called an anchor currency, is a currency that is held in significant quantities by numerous governments and central banks as part of their foreign exchange reserves. These currencies are used to transact global business, and are the pricing currency for global trade. The amount of foreign exchange reserves that a country can claim is used as an indicator of the ability to repay foreign debt, and is used in sovereign credit ratings. Reserves are also used for currency defense—to halt downward or upward pressure on a currency against a benchmark currency The dollar is also very popular in Eastern Europe, especially in the former Soviet Union, where inflation, declining exchange rates, and currency recalls have made the ruble a poor store of value. China’s policy of intervening in currency markets to limit the appreciation of its currency against the dollar (and other currencies) has made it the world’s largest and fastest growing holder of foreign exchange reserves, especially U.S. dollars. China has invested a large share of these...
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...restaurants- estimates including two out of three restaurants close in the first year, or three out of four close in the first two years, and so on and so on. A major problem why \ new restaurants don’t make it past a few years is that owners and managers don’t know how to handle the day-to-day finances. Knowing how to manage cash flow, understanding a restaurant’s daily business review and keeping payroll and inventory under control are all essential parts of managing the day-to-day finances of any restaurant. The following are the rules that Cafe Mamias is engaging in order to manage their finances 1. Restaurant Daily Business Review The ytrack food and beverage sales on a daily basis. It can help analyze sales trends, payroll costs, customer counts and predict future sales. For example, when thinking about Christmas promotions, staffing and menu specials, the cafe can review the daily sales from the previous year, looking for trends to help them plan for this year. 2. Understanding Restaurant Cash Flow Cash flow is the amount of cash coming in versus the amount of cash going out of your business on a daily, weekly and monthly basis. If you don’t understand this basic concept of restaurant finances, you put yourself at great financial risk. The Cafe properly budgets for upcoming expenses such as utilities and food orders. They don't rely on credit for more than a week from suppliers to buy food. This will help prevent them from over buying food and spending more cash than they need...
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