Notesale: Turn your study into money

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INES KIRANE
HULT BBA - Y1 - SEM 2

FIN200
1 - OUTLINE
LECT 1/2

9
...
1
...
1
...
Retail and wholesale banking
Retail banks

- Small deposit from the public repackaged and lent to

-

businesses and households
...
Clearing
a check means processing it
so that funds are deducted
from the payer's account
and put into the payee's
account
...

Eg Northern Rock

The distinction between retail and wholesale banks has become blurred over reconnect
years as the large institutions have diversified their operations
...
1
...
Investment banks

- Investment banks ➔ concentrate on dealing with other large Org°, corporations,
institutional investors and Gvts
...

- US
- Swiss
- UK
- German
- 5 main areas of activity:
(1) Raising external finance for companies
- Provide advice
- Arrange finance for corporate clients
- Sometimes, Provide loans
- Often, assist the setting up of a bank syndicate to make a joint loans
or make arrangement with other institutions
...

- Market-making arms
- Trade on the market on their won accounts
- Assist companies with export finance
...

- Corporate disposal programmes
(5) Assisting Risk management using derivatives

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FIN200
1 - OUTLINE
LECT 1/2

INES KIRANE
HULT BBA - Y1 - SEM 2

- Hedging strategies: Futures — Options — Swaps — the like
9
...
3
...


- Eurocurrency banking ➔ Transactions in a currency outside the
jurisdiction of the country of the currency
- The major part of international banking these days is lending/
borrowing money in foreign currencies
...
➔ Main focus nowadays is in the Eurocurrency market
and international securities trading (shares, bonds, …)

9
...
4
...

Collect funds from millions of savers (interest-bearing accounts) [ST]
⇓ Deposited money
Lent to people wishing to buy a home ➔ Mortgage [LT]

- Savings Banks ➔ do not have outside shareholders, but are
mutually owned by their members (customers)
- Like Savings and Loans
- Like Cooperative banks

9
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5
...


- HP (Hire Purchase) agreement ➔ made enough payments, become
the owner
...

- Factoring services ➔ providing cash to firms in return for the right to
receive income from the firms debtors when they pay up
...


9
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Long-term saving institutions
9
...
1
...
+
employing organization pays money into the scheme => when
someone retires, the university pays money into the scheme
...


9
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2
...
2
...
1
...


9
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2
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Life insurance

- Term assurance ➔ life assured for a specified period
...

- Endowment policies ➔ savings vehicle + cover against death
...

- Millions of UK house buyers purchase with an endowment mortgage
...
➔ after 25 years or so the value of the accumulated funds
with equal or be greater than the initial value of the loan
...


9
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The risk spreaders
9
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1
...

The buying and selling prices of the units are determined by the value of the fund
...

The units are usually quoted at 2 prices depending on whether you are buying
(higher) or selling (lower)
...

OEICs = Open ended Investment companies
...


9
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2
...

- Attractive to individual investors because they offer investment diversification and
professional funs management
...

- Investors can choose the type of investment they prefer, the type of capital
growth, income, etc, … And they have the security of knowing that their
investment portfolios are safely sorted with a custodian usually a bank
...
3
...
Investment trusts (investment companies)

- Investment trusts ≠ unit trusts ➔ Issue share and other securities rather than
units
...

- = Close-ended funds ➔ the company itself is closed to new investors
...
3
...
Open-ended investment companies

- Open-ended investment companies ➔ hybrid risk-spreading instruments which
allow an investment in a open-ended fund
...

- OEICs have just one price
...


9
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The risk traders
9
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1
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- Young Firms on a rapid growth trajectory
- occasionally well established companies
- Activities:
- buy shares in companies
- occasionally supply debt finance
- Funded by other FI° (group pension funds)

9
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2
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- Investors:
- Wealthy individuals
- Institutions: pensions funds, insurance funds, banks
...

- To Hedge ➔ Investors would though a combination of investments, including
derivatives, try to hedge (lower/eliminate) the risk while seeking a high absolute
return (rather than the return relative to an index)
...


Extra:
exodus = [exode]
outshone < outshine = [eclipser]
Advent = [arrivée]
Fledging = [Oisillon/naissant/jeune]
buffer = [tampon]
bundles = [ballot/balluchon/packet}
to stem from = [provenir de]
to continue apace = [continuer rapidement]
sprung = [à ressorts]
myriad = [adj

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