Certificates of deposit
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The document discusses Certificates of Deposit (CDs) and how they work. CDs are financial instruments issued by banks at higher interest rates than fixed deposits to attract funds from corporations. This allows banks to borrow money when they do not have enough funds to provide loans. For example, when a bank wants to provide a loan but only has enough funds for part of it, it can issue CDs to corporations to access more funds. It then uses these funds to provide the full loan amount to the borrower. CDs generally mature within one month to five years.
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Certificates of Deposit
The document explains what certificates of deposit (CDs) are through an example. CDs are financial instruments that banks issue to corporations to raise funds that can then be used to provide loans. In the example, a bank needs more funds to fully fund a loan for a business owner, so it issues CDs to corporations in order to access more capital and then provides the full loan amount. CDs pay a higher interest rate than regular deposits to incentivize corporations to invest funds with the bank. They have a fixed maturity date and interest rate and can be issued in various denominations.
Certificates of Deposits
Certificates of Deposits We Learn - A Continuous Learning Forum from Welingkar's Distance Learning Program.
Certificates of Deposit (CD) are money market instruments issued by banks and financial institutions. CDs can be issued in dematerialized or physical form, have a minimum value of Rs. 1 lakh, and must be held for a period between 7 days to 1 year. They are available to corporations, companies, individuals, trusts, associations, and funds. CDs pay interest at a fixed or floating rate and can be transferred or replaced if lost, with proper documentation.Fmi
Commercial papers and certificates of deposit are short-term unsecured money market instruments issued by corporations and banks respectively. Commercial papers are issued in the form of promissory notes by highly rated corporates and financial institutions with a maturity period between 7 days to 1 year. Certificates of deposit are issued by banks for fixed terms like 3 months, 6 months or 1-5 years with fixed interest rates and penalties for early withdrawal. Both instruments provide low-risk investment options for investors.
Certificate of deposite
A certificate of deposit is a time deposit offered by banks that pays interest over a specified period of time, ranging from 1 month to 5 years. It is issued to individuals, corporations, and other entities for a minimum of 100,000 rupees and up in multiples of 100,000 rupees. A certificate of deposit has a defined maturity date, interest rate, and denomination. However, it cannot be extended at maturity and funds can only be withdrawn via crossed cheque.
Certificate of deposits and Commercial Papers
This document discusses Certificate of Deposits (CDs) and Commercial Paper (CP). It defines them as short-term debt instruments issued by banks (CDs) and corporations (CP) respectively. CDs pay higher interest than bank deposits but less than CPs due to higher risk. Both allow qualified issuers to diversify funding sources. Key requirements for issuing each are a minimum credit rating and company net worth for CPs.
Commercial papers
Commercial paper is a short term unsecured promissory note issued by companies to raise debt. It is issued at a discounted price and has a fixed maturity date. While the issuer promises to pay a fixed amount at maturity, they pledge no assets. Commercial paper can be issued directly to investors or through banks and is a simpler and more flexible source of short term financing for companies compared to bank loans.
Commercial papers
Commercial paper (CP) is an unsecured, short-term debt instrument issued by corporations to meet short-term liabilities. CP was introduced in India in 1990 to provide highly rated corporations an alternative to bank borrowing. Only reputable corporations with good credit ratings can issue CPs to borrow at lower interest rates than banks and save on financing costs. CPs can be issued for periods between 15 days to one year, making them suitable for meeting working capital or current asset needs.
CPs vs CDs
Provides significant differences between Commercial paper vs Certificate of Deposits.
For a detailed study go to 'Financial Markets' section under FAQs on rbi.org.in
Recommended
Certificates of Deposit
The document explains what certificates of deposit (CDs) are through an example. CDs are financial instruments that banks issue to corporations to raise funds that can then be used to provide loans. In the example, a bank needs more funds to fully fund a loan for a business owner, so it issues CDs to corporations in order to access more capital and then provides the full loan amount. CDs pay a higher interest rate than regular deposits to incentivize corporations to invest funds with the bank. They have a fixed maturity date and interest rate and can be issued in various denominations.
Certificates of Deposits
Certificates of Deposits We Learn - A Continuous Learning Forum from Welingkar's Distance Learning Program.
Certificates of Deposit (CD) are money market instruments issued by banks and financial institutions. CDs can be issued in dematerialized or physical form, have a minimum value of Rs. 1 lakh, and must be held for a period between 7 days to 1 year. They are available to corporations, companies, individuals, trusts, associations, and funds. CDs pay interest at a fixed or floating rate and can be transferred or replaced if lost, with proper documentation.Fmi
Commercial papers and certificates of deposit are short-term unsecured money market instruments issued by corporations and banks respectively. Commercial papers are issued in the form of promissory notes by highly rated corporates and financial institutions with a maturity period between 7 days to 1 year. Certificates of deposit are issued by banks for fixed terms like 3 months, 6 months or 1-5 years with fixed interest rates and penalties for early withdrawal. Both instruments provide low-risk investment options for investors.
Certificate of deposite
A certificate of deposit is a time deposit offered by banks that pays interest over a specified period of time, ranging from 1 month to 5 years. It is issued to individuals, corporations, and other entities for a minimum of 100,000 rupees and up in multiples of 100,000 rupees. A certificate of deposit has a defined maturity date, interest rate, and denomination. However, it cannot be extended at maturity and funds can only be withdrawn via crossed cheque.
Certificate of deposits and Commercial Papers
This document discusses Certificate of Deposits (CDs) and Commercial Paper (CP). It defines them as short-term debt instruments issued by banks (CDs) and corporations (CP) respectively. CDs pay higher interest than bank deposits but less than CPs due to higher risk. Both allow qualified issuers to diversify funding sources. Key requirements for issuing each are a minimum credit rating and company net worth for CPs.
Commercial papers
Commercial paper is a short term unsecured promissory note issued by companies to raise debt. It is issued at a discounted price and has a fixed maturity date. While the issuer promises to pay a fixed amount at maturity, they pledge no assets. Commercial paper can be issued directly to investors or through banks and is a simpler and more flexible source of short term financing for companies compared to bank loans.
Commercial papers
Commercial paper (CP) is an unsecured, short-term debt instrument issued by corporations to meet short-term liabilities. CP was introduced in India in 1990 to provide highly rated corporations an alternative to bank borrowing. Only reputable corporations with good credit ratings can issue CPs to borrow at lower interest rates than banks and save on financing costs. CPs can be issued for periods between 15 days to one year, making them suitable for meeting working capital or current asset needs.
CPs vs CDs
Provides significant differences between Commercial paper vs Certificate of Deposits.
For a detailed study go to 'Financial Markets' section under FAQs on rbi.org.in
Commercial Papers and Certificate of Deposits
This presentation talks about the mechanism, advantages and disadvantages of Commercial Papers and Certificate of Deposits
Commercial papers
Commercial papers Meaning, Features, Types, Advantages, Disadvantages, Issuing and Redemption process.
Commercial Paper ppt
Commercial paper is a short-term, unsecured promissory note issued by large, financially strong companies to fulfill short-term credit needs. It is considered a money market instrument that large banks, corporations, and foreign governments commonly use to finance operations. There are two types of commercial paper: direct paper issued directly by finance companies and dealer paper issued by security dealers on behalf of corporate clients.
Commercial paper
The document discusses commercial paper, which are short-term unsecured promissory notes issued by financially strong companies to raise funds for a period of up to one year. It explains what commercial paper is, who issues and invests in it, how it works, and provides an example of a company issuing commercial paper worth 50 crores. Commercial paper provides short-term funding to companies at lower interest rates than bank loans.
Commercial paper
1) A commercial paper is a short-term unsecured debt instrument issued by corporations to raise funds for meeting short-term liabilities.
2) Commercial papers were introduced in India in 1990 to provide highly rated corporations an alternative to bank borrowing and allow them to directly borrow at lower interest rates from the open market.
3) Only reputable corporations with high credit ratings can issue commercial papers, as they are a lower-cost alternative to bank loans that bypass intermediaries and offer direct market borrowing.
COMMERCIAL PAPERS
Commercial paper is a short-term unsecured promissory note issued by highly rated corporations, primary dealers, and financial institutions to raise funds. It was introduced in India in 1990 to provide corporate borrowers and investors an additional short-term borrowing and investment instrument. Commercial paper can be issued for a minimum of 7 days to a maximum of one year. Eligible issuers include corporates, primary dealers, and financial institutions, while eligible investors include individuals, banks, corporations, NRIs, and FIIs.
Fixed Deposit Accounts
Fixed Deposit AccountsWe Learn - A Continuous Learning Forum from Welingkar's Distance Learning Program.
Fixed deposit (FD) is a type of deposit which can be withdrawn only after a pre-defined tenure and attracts a higher interest rate when compared to savings account. The minimum period for placing these deposit is 7 days while the maximum period is 120 months. A recent study indicates that banks are now free to determine the rate of interest to be offered on FDs. Banks may offer deposits on a floating rate, interest shall be paid on quarterly or longer rests and interest is calculated on daily balance. Further, scheduled banks with a total deposit of less than Rs 25 crores are permitted to give an additional ½% interest. When the amount paid to the individual is in excess of Rs 10,000 bank has to deduct tax at source if the depositor has not submitted Form 15H or 15G or certificate u/s197(1) of the Income Tax Act 1961. Banks have the discretion to disallow premature withdrawal of large deposits other than individuals and Hindu Undivided Family (HUF). On maturity if the bank does not receive any intimation from the depositor then such deposits are recorded as overdue deposits in the books of the bank. Banks can grant loans by taking FD as a security. However, there are certain prohibitions to raising Fixed Deposits: banks cannot launch deposits with freebies such as free lunch and trips, for example. Bank Account Types
This document discusses various types of bank accounts including current accounts, savings accounts, fixed/term deposit accounts, and special purpose accounts. It provides details on the key features and characteristics of each type of account, how they are treated in financial statements, eligibility requirements, and debit and credit rules. Special purpose accounts are established to pool funds for specific public welfare projects and are exempt from certain taxes.
Different Types of Loans Offered by Commercial Banks
The Different Types of Loans offered by Commercial Banks and Explain how Trade Credit & Equipment Loans can Provide Initial Capital Funding. Banks in Zimbabwe
Inter corporate deposits
Kingfisher Airlines owes Rs 260 crore to Airports Authority of India for airport infrastructure usage. KFA will pay through an inter-corporate deposit from UB Group. [ICDs are short-term loans between corporations, often at higher interest rates than banks due to risk. They lack collateral but help cash-strapped firms access funds.] Kingfisher will receive an ICD from UB Group to pay its debt to AAI. ICDs are an unsecured source of short-term funds for companies in need, bearing higher interest than bank loans. They are an alternative to bank loans, especially for less creditworthy companies. However, their reliance on corporate relationships limits their availability compared to formal bank financing.
A study on loans & advances and its impact on sbm
The document provides information about a study titled "A study on Loans and advances & Its Impact on State Bank of Mysore". It discusses the objectives of studying the relationship between loans/advances and the bank's income, current assets, net profit, and impact of loans on different sectors. It analyzes data from annual reports between 2007-2011 and finds that loans/advances and interest earned have increased annually. It also finds that total assets and current assets have risen due to higher loans. Suggestions include promoting auto loans and offering insurance and special rates during festivals.
Ch 4 DEPOSITS IN COMMERCIAL BANKS
Bank deposits provide a key source of low-cost funds for banks and come in several types:
Demand deposits like savings accounts that allow withdrawals on demand and earn interest; term deposits for fixed periods that pay higher interest but may charge penalties for early withdrawal; and hybrid/flexi deposits that automatically shift surplus funds into term deposits. Deposits serve various purposes for account holders and banks aim to lend deposits at higher returns to earn a profit. Accounts also exist for non-residents in foreign currencies or rupees.
Money market Instruments
This document provides information about money market instruments presented by Bhushan Vijay Phirke. It defines the money market as a market for trading short-term debt instruments with maturities of one year or less between participants that need to borrow or lend cash for short periods. Common money market instruments discussed include treasury bills, commercial paper, certificates of deposit, and banker's acceptances. Treasury bills are short-term government debt, commercial paper is issued by corporations for financing, certificates of deposit are bank-issued promissory notes, and banker's acceptances involve bills of exchange guaranteed by banks. The presentation concludes that individual investors can access money market instruments through money market funds or bank accounts rather than directly.
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Banks provide various types of loans to customers. Short-term loans are usually provided against a customer's general credit standing or with collateral and are often for working capital needs. Medium and long-term loans typically require collateral. The Federal Reserve aims to stimulate the economy through lowering interest rates, buying mortgage and other assets, and committing to maintain low rates for a prolonged period. Quantitative easing can still impact the economy when rates are near zero through portfolio substitutions, altered policy expectations, and expansionary fiscal policy.
Forms of lending
The document discusses various forms of lending provided by banks. It describes cash finance/cash credit, overdrafts, loans, purchase and discounting of bills, and hire-purchase/leasing finance. Cash finance allows borrowing up to a limit as needed, while overdrafts provide temporary adjustments. Loans involve lump sums paid for a period at interest. Purchase and discounting of bills advances money by deducting discount from bill values. Hire-purchase/leasing finance allows purchasing goods through installments. The principles of lending like safety, liquidity, security and diversification of risk are also outlined.
Principles of lending and Types of Financing
This document discusses principles of lending in banking. It provides details about group members working on the project, principles of lending including safety, liquidity, security and remuneration. It describes factors considered for lending including character, capacity, capital, conditions and cash flow. It also discusses types of fund based and non-fund based finances and their features. Key characteristics of individual and corporate borrowers are outlined.
Deposit schemes
This document contains guidelines from the Reserve Bank of India (RBI) regarding know-your-customer (KYC) procedures and monitoring of cash transactions for banks in India. It outlines requirements for banks to establish customer identity and monitor suspicious transactions. Key points include obtaining proper identification for new accounts, completing KYC procedures for existing accounts, issuing demand drafts and money transfers over Rs. 50,000 only by debit to accounts, monitoring cash withdrawals and deposits over Rs. 10 lakhs, and reporting such cash transactions and suspicious activity to controlling offices. The guidelines aim to prevent money laundering and terrorist financing through strict KYC norms and monitoring of large cash transactions.
Debt instruments
This document discusses various types of debt instruments. It defines a debt instrument as a paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender according to contractual terms. Debt instruments can be either short-term obligations maturing within one year, or long-term obligations maturing in over one year. Some common types of debt instruments discussed include bonds, certificates of deposit, commercial papers, debentures, government securities (G-secs), and national savings certificates. Each type has its own defining characteristics around interest rates, collateral, issuers, and terms.
Credit Facilities Extended By Bank (Iipm)
There are two main forms of bank lending:
1) Fund based lending includes facilities like term loans, cash credits, and overdrafts where money is immediately paid out to the borrower and appears on the bank's balance sheet.
2) Non-fund based lending includes guarantees, letters of credit, and co-acceptances where there is no immediate outflow of funds but the bank is committed to future payment which appears as a contingent liability.
Cash credit presnetation
The complete analysis of Cash Credit given by Bank. The ppt covers topics like definition, objectives,advantages, disadvantages,Drawing Power, calculation of Interest and Drawing power
Certificate of deposit
Certificates of deposit (CDs) are short-term deposit instruments issued by banks and financial institutions to raise large amounts of money. CDs can be issued with maturities between 7 days to 12 months and allow banks to mobilize bulk deposits at competitive interest rates. While CDs are freely transferable, banks cannot grant loans against them or buy them back before maturity. CDs have helped banks and companies raise funds but lack a secondary market and have remained confined to a few large institutions.
Certificate of deposit (cd)
Certificates of deposit (CDs) are short-term deposit instruments issued by banks and financial institutions to raise large amounts of money. CDs can be issued with maturities ranging from 7 days to 12 months by banks and 1 to 3 years by financial institutions. They must be purchased in amounts of at least Rs. 1 lakh. Banks and corporations use CDs to mobilize funds when needed, such as providing loans. CDs provide liquidity to banks while offering depositors higher returns than regular fixed deposits. However, the CD market in India has yet to be fully developed due to the lack of a secondary market and low usage despite being available for some time.
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Commercial paper is a short-term, unsecured promissory note issued by large, financially strong companies to fulfill short-term credit needs. It is considered a money market instrument that large banks, corporations, and foreign governments commonly use to finance operations. There are two types of commercial paper: direct paper issued directly by finance companies and dealer paper issued by security dealers on behalf of corporate clients.
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The document discusses commercial paper, which are short-term unsecured promissory notes issued by financially strong companies to raise funds for a period of up to one year. It explains what commercial paper is, who issues and invests in it, how it works, and provides an example of a company issuing commercial paper worth 50 crores. Commercial paper provides short-term funding to companies at lower interest rates than bank loans.
Commercial paper
1) A commercial paper is a short-term unsecured debt instrument issued by corporations to raise funds for meeting short-term liabilities.
2) Commercial papers were introduced in India in 1990 to provide highly rated corporations an alternative to bank borrowing and allow them to directly borrow at lower interest rates from the open market.
3) Only reputable corporations with high credit ratings can issue commercial papers, as they are a lower-cost alternative to bank loans that bypass intermediaries and offer direct market borrowing.
COMMERCIAL PAPERS
Commercial paper is a short-term unsecured promissory note issued by highly rated corporations, primary dealers, and financial institutions to raise funds. It was introduced in India in 1990 to provide corporate borrowers and investors an additional short-term borrowing and investment instrument. Commercial paper can be issued for a minimum of 7 days to a maximum of one year. Eligible issuers include corporates, primary dealers, and financial institutions, while eligible investors include individuals, banks, corporations, NRIs, and FIIs.
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Fixed Deposit AccountsWe Learn - A Continuous Learning Forum from Welingkar's Distance Learning Program.
Fixed deposit (FD) is a type of deposit which can be withdrawn only after a pre-defined tenure and attracts a higher interest rate when compared to savings account. The minimum period for placing these deposit is 7 days while the maximum period is 120 months. A recent study indicates that banks are now free to determine the rate of interest to be offered on FDs. Banks may offer deposits on a floating rate, interest shall be paid on quarterly or longer rests and interest is calculated on daily balance. Further, scheduled banks with a total deposit of less than Rs 25 crores are permitted to give an additional ½% interest. When the amount paid to the individual is in excess of Rs 10,000 bank has to deduct tax at source if the depositor has not submitted Form 15H or 15G or certificate u/s197(1) of the Income Tax Act 1961. Banks have the discretion to disallow premature withdrawal of large deposits other than individuals and Hindu Undivided Family (HUF). On maturity if the bank does not receive any intimation from the depositor then such deposits are recorded as overdue deposits in the books of the bank. Banks can grant loans by taking FD as a security. However, there are certain prohibitions to raising Fixed Deposits: banks cannot launch deposits with freebies such as free lunch and trips, for example. Bank Account Types
This document discusses various types of bank accounts including current accounts, savings accounts, fixed/term deposit accounts, and special purpose accounts. It provides details on the key features and characteristics of each type of account, how they are treated in financial statements, eligibility requirements, and debit and credit rules. Special purpose accounts are established to pool funds for specific public welfare projects and are exempt from certain taxes.
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The document provides information about a study titled "A study on Loans and advances & Its Impact on State Bank of Mysore". It discusses the objectives of studying the relationship between loans/advances and the bank's income, current assets, net profit, and impact of loans on different sectors. It analyzes data from annual reports between 2007-2011 and finds that loans/advances and interest earned have increased annually. It also finds that total assets and current assets have risen due to higher loans. Suggestions include promoting auto loans and offering insurance and special rates during festivals.
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Bank deposits provide a key source of low-cost funds for banks and come in several types:
Demand deposits like savings accounts that allow withdrawals on demand and earn interest; term deposits for fixed periods that pay higher interest but may charge penalties for early withdrawal; and hybrid/flexi deposits that automatically shift surplus funds into term deposits. Deposits serve various purposes for account holders and banks aim to lend deposits at higher returns to earn a profit. Accounts also exist for non-residents in foreign currencies or rupees.
Money market Instruments
This document provides information about money market instruments presented by Bhushan Vijay Phirke. It defines the money market as a market for trading short-term debt instruments with maturities of one year or less between participants that need to borrow or lend cash for short periods. Common money market instruments discussed include treasury bills, commercial paper, certificates of deposit, and banker's acceptances. Treasury bills are short-term government debt, commercial paper is issued by corporations for financing, certificates of deposit are bank-issued promissory notes, and banker's acceptances involve bills of exchange guaranteed by banks. The presentation concludes that individual investors can access money market instruments through money market funds or bank accounts rather than directly.
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Forms of lending
The document discusses various forms of lending provided by banks. It describes cash finance/cash credit, overdrafts, loans, purchase and discounting of bills, and hire-purchase/leasing finance. Cash finance allows borrowing up to a limit as needed, while overdrafts provide temporary adjustments. Loans involve lump sums paid for a period at interest. Purchase and discounting of bills advances money by deducting discount from bill values. Hire-purchase/leasing finance allows purchasing goods through installments. The principles of lending like safety, liquidity, security and diversification of risk are also outlined.
Principles of lending and Types of Financing
This document discusses principles of lending in banking. It provides details about group members working on the project, principles of lending including safety, liquidity, security and remuneration. It describes factors considered for lending including character, capacity, capital, conditions and cash flow. It also discusses types of fund based and non-fund based finances and their features. Key characteristics of individual and corporate borrowers are outlined.
Deposit schemes
This document contains guidelines from the Reserve Bank of India (RBI) regarding know-your-customer (KYC) procedures and monitoring of cash transactions for banks in India. It outlines requirements for banks to establish customer identity and monitor suspicious transactions. Key points include obtaining proper identification for new accounts, completing KYC procedures for existing accounts, issuing demand drafts and money transfers over Rs. 50,000 only by debit to accounts, monitoring cash withdrawals and deposits over Rs. 10 lakhs, and reporting such cash transactions and suspicious activity to controlling offices. The guidelines aim to prevent money laundering and terrorist financing through strict KYC norms and monitoring of large cash transactions.
Debt instruments
This document discusses various types of debt instruments. It defines a debt instrument as a paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender according to contractual terms. Debt instruments can be either short-term obligations maturing within one year, or long-term obligations maturing in over one year. Some common types of debt instruments discussed include bonds, certificates of deposit, commercial papers, debentures, government securities (G-secs), and national savings certificates. Each type has its own defining characteristics around interest rates, collateral, issuers, and terms.
Credit Facilities Extended By Bank (Iipm)
There are two main forms of bank lending:
1) Fund based lending includes facilities like term loans, cash credits, and overdrafts where money is immediately paid out to the borrower and appears on the bank's balance sheet.
2) Non-fund based lending includes guarantees, letters of credit, and co-acceptances where there is no immediate outflow of funds but the bank is committed to future payment which appears as a contingent liability.
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Overview, Objectives and Readings Page 1 of 1OverviewT.docx
Overview, Objectives and Readings Page 1 of 1
Overview
This week we will further explore working capital management by focusing on various sources of short-term financing. These
sources can include trade credit, bank loans, commercial paper, the use of accounts receivable and inventory as collateral
and hedging interest rate risk.
Practice Problems: Please see the syllabus for assigned homework/practice problems.
Objectives Readings
_ _ _ __ .._
Learning objectives: Week 5 lecture materials
1. Trade credit from suppliers is normally the most Project instructions
available form of short-term financing.
2. Bank loans are usually short-term in nature and should Chapter 8
be paid off from funds from the normal operations of the
firm.
3. Commercial paper represents ashort-term, unsecured
promissory note issued by the firm.
4. By using accounts receivable and inventory as collateral
for a loan, the firm may be able to borrow larger
amounts.
5. Hedging may be used to offset the risk of interest rates
rising.
O Walsh College, Al! rights reserved
https://ool-content.walshcollege.edu/CourseFiles/FIN/FIN315/jesdale/Week05/OOR/Obj... 10/30/2017
Page 1 of 3
Financing Working Capital
Content Author: Louise August, CPA, PhD
i n the lectures on Working Capital (WC) we talked about the dollar amounts tied up in assets like Accounts Receivable (AR)
and Inventory. Because these accounts often represent substantial balances, we may need to think about how the firm can
finance its investment in WC Assets.
The first concept to consider is "Maturity Matching." That means that short-term needs should be financed with short-term
debt and vice-versa. You wouldn't finance a building with a 90-day note. So if we're thinking about how to finance the
investment in short-term assets like Receivables and Inventory short-term financing is probably the way to go.
~7~t~,tt'I~~/ ~c3~C~'tlt'1 :
Supplying the investment in WC assts with ST sources of Financing
Accounts r~e~eiva~le ~ Accruals
Inver►tory Accounts payable
5T bank loans
There are a number of sources of short-term capital available to the firm and we'll look at each of these in turn:
1. Accruals
2. Accounts Payable
3. Commercial Paper (not available to all firms, so not listed in the graphic above)
4. Short-Term Bank Loans
Accruals
This balance sheet line item usually represents unpaid wages and taxes. These
accounts represent the time periods between when a benefit is received and the
payment for it is made. An example is payroll (Accrued Wages): an employee works
today but the wages earned aren't paid until payday. Accrual accounting requires that
the firm recognize the benefit it received from the employee's efforts and the obligation it
has to pay the wages. Similarly with taxes, the firm earns a portion of its profits
throughout the year but only makes tax payments each quarter.
Not financing in the classic sense, but these accounts do represent a period of time during which payment i.
Syndication & funding
Need capital to start, grow and manage your business, we provide loans in the form of short term loans and long term loans, check your ability to get a loan by bank loan rating and credit score check. Get complete information about the Syndication & Funding right from Term Loans to Unsecured Loans and the Process.
Basic terms of business and commerce
The document provides definitions and explanations of basic business and commerce terms including:
- Unit Linked Investment Plans (ULIPs) and mutual funds
- Equity vs. debt and zero coupon bonds
- Regional Rural Banks (RRBs), lead bank schemes, clearing, and cheque types
- ATMs, debit vs. credit cards, drafts, and money transfers
- Asset Liability Management (ALM), cartels, ombudsmen, and banking organizations
- Statutory Liquidity Ratio (SLR), Cash Reserve Ratio (CRR), bank rate, prime lending rate (PLR), and interest rates
- Inflation types, deficit financing, fiscal policy, and expenditure types
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Finance
THE CLASSIFICATION OF DEBT INSTRUMENTS IN INDIA
Debt Instruments are obligation of issuer of such instrument as regards certain future cash flow representing Interest & Principal, which the issuer would pay to the legal owner of the Instrument. Types of Debt Instruments are of different types like Bonds, Debentures, Commercial Papers, Certificates of Deposit, Government Securities (G - Secs) etc. The Government Securities (G-Secs) market is the oldest and the largest element of the Indian debt market in terms of market capitalization, trading volumes and outstanding securities. The G-Secs market plays a very important role in the Indian economy as it provides the benchmark for determining the level of interest rates in the country through the yields on the government securities which are treated as the risk-free rate of return in any economy.
The reserve Bank of India has allowed Primary Dealers, Banks and Financial Institutions in India to do transactions in debt instruments among themselves or with non-bank clients. Debt instruments provide fixed return known as coupon rate. Retail investors would have a natural preference for fixed income returns and especially so in the present situation of increasing volatility in the financial markets. Now, retail investors are also showing keen interest in Debt Instruments particularly in the Central Government Securities (G-secs).For an individual investor G-secs are one of the best investment options as there is zero default risk and lower volatility.
Seminar on loan and fund raising
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Fast Company 2 intro seminar 8 Dec 2010
This document provides an agenda and overview for the Fast Company 2 Introduction Seminar. The agenda includes presentations on debt and equity funding as well as an overview of the Fast Company 2 program. The seminar will explain different sources of funding such as bank loans, venture capital, and business angels. It will also cover the key differences between debt and equity funding. The goal is to help business owners prepare for growth financing and expand their networks to find potential lenders and investors.
Sources of Finance
This document provides information on various sources of finance including venture capital, retained earnings, equity shares, preference shares, deep discount bonds, certificates of deposit, trade credit, debentures, and commercial paper. It defines each type of financing, describes their key features and terms, and notes some advantages and disadvantages. Venture capital finances startups and risky businesses. Retained earnings come from profits not paid as dividends. Equity and preference shares represent different types of company ownership. Deep discount bonds pay no interest until maturity.
News letter 4A july 2014
The newsletter provides updates on the news, activities, and events of Emirates Chartered Accountants Group. It thanks readers for their support in successfully completing the group's first year of circulating the newsletter. The current volume reaches readers during Ramadan.
One article discusses the challenges small and medium enterprises (SMEs) in the UAE face in obtaining bank financing, with banks lending only 4% of total lending to SMEs compared to double digits in developed countries. Another article describes the increasing bilateral trade relationship between India and the UAE.
Debt financing or equity financing
Businesses may prefer debt financing over equity financing for several reasons:
1) Debt financing allows businesses to maintain full ownership over their company and avoid giving up partial ownership to investors.
2) Debt financing provides tax benefits as principal and interest payments are tax deductible business expenses.
3) After accounting for tax deductions, the effective interest rate of debt financing can be lower than the stated interest rate from lenders.
4) Debt financing is more accessible than equity financing, with over 99% of businesses using debt in the form of loans and lines of credit to obtain capital.
Pros and cons of corporate bonds
Corporate bonds popularly referred to as coupons are given to investors by corporations as cash
investment. The investor gets the corporate bonds with the promise that the value will increase.
With the increase of interest rates, the investor draws in income which he can enjoy once the
period set elapses.
With the volatile global business environment, the corporate bonds became a very secure way to
save up money. Many people consider corporate bonds a more secure option for saving up for
retirement in comparison to other ways. However, corporate bonds have their advantages and
disadvantages.
Advantages of debt financing
Access to capital is one among the most important barriers little businesses face once wanting to implement growth ways. That’s why it’s vital to know each the benefits and downsides of debt finance. A convincing truth in business is that it takes cash to create cash; however it takes inexpensive cash to last. However wherever can that cash come back from? There square measure scores of choices. Don’t let the word “debt” scare you. Primarily, debt finance is that the act of raising capital by borrowing cash from a loaner or a bank. Reciprocally for a loan, creditors are then owed interest on the cash borrowed. Debt may be cost-efficient, providing little businesses with the funds to top off on inventory, rent further workers, and buy property or much-needed instrumentation.
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Overview, Objectives and Readings Page 1 of 1OverviewT.docx
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Commodity hedging
The document discusses commodity hedging, which involves taking an opposite position in the futures market to reduce risk from volatile commodity prices. It provides an example of a wheat farmer who sells wheat futures at current prices before harvest to protect against falling prices. If prices do decline, the loss from selling the physical crop is offset by gains in the futures market. The document also gives a detailed example of a corn farmer who hedges by selling corn futures at a higher price before prices drop, allowing him to offset losses and effectively secure a higher selling price than if he had not hedged.
Cheque truncation system (cts)
The Reserve Bank of India introduced the Cheque Truncation System (CTS) to facilitate faster clearing of cheques. Under CTS, cheque images and details are captured electronically at the collecting bank and transmitted instead of physically moving the cheques. This eliminates the need to transport physical cheques, reducing clearing time from an average of 3 days to 1 day and lowering costs. CTS benefits banks by saving time, money and resources spent on physical cheque movement and clearing while reducing the possibility of cheque fraud and loss.
Cash reserve ratio
The Cash Reserve Ratio (CRR) sets the minimum reserves banks must hold as a percentage of customer deposits and notes. Higher CRR requirements mean banks can lend less, thus restricting money supply and economic activity. For example, with a 10% CRR, a Rs. 100 deposit allows Rs. 90 in loans creating Rs. 1000 in money supply. At 20% CRR, the same deposit allows Rs. 80 in loans and Rs. 500 total money supply. Central banks raise CRR to reduce inflation from excess spending, and lower it to stimulate growth by allowing more bank lending and money creation. CRR thus controls money supply and economic conditions through its impact on bank lending activity.
Carry trade
The document discusses the concept of "carry trade", which involves borrowing in a market with lower interest rates and investing in a market with higher interest rates to gain from the interest rate differential. However, carry trade also exposes investors to currency risk if exchange rates between the two currencies fluctuate during the investment period. An example is provided where an investor borrows $100 at 2% interest in the US and invests the equivalent in Indian rupees at 7% interest, but could lose money if the rupee weakens against the dollar. The document emphasizes that both gains and losses from carry trade can be magnified by currency movements.
Bottom fishing
Raj observed ragpickers searching through garbage for valuable items, reminding him of "bottom fishing" in investing. Bottom fishing refers to identifying stocks that are undervalued when markets decline due to negative macroeconomic news, creating pessimism. These undervalued stocks can yield high returns when conditions improve. The document explains bottom fishing is finding good companies with prices below intrinsic value when markets hit bottom periods of low prices.
Bonus shares vs. stock split.pptx
The document compares and contrasts bonus shares and stock splits. Bonus shares involve a company issuing new shares from reserves to existing shareholders, which increases the number of shares but keeps the total market capitalization the same. A stock split reduces the price per share by dividing existing shares into more shares, without changing the total market capitalization, to increase liquidity for investors. Both are seen positively by the market as they can indicate a company's growth and profitability.
Bonus shares vs. stock split
The document compares and contrasts bonus shares and stock splits. Bonus shares involve a company issuing new shares from reserves to existing shareholders, which increases the number of shares but keeps the total market capitalization the same. A stock split reduces the price per share by dividing existing shares into more shares, without changing the total market capitalization, in order to increase liquidity for investors. Both are positive for the market as they indicate a company's growth and profitability.
Bond prices yields
The document summarizes the inverse relationship between bond prices and yields. It explains that when bond prices go down, bond yields go up, and vice versa. This is illustrated with an example where a bondholder Ravi needs cash and sells his Rs. 100 bond to John for Rs. 90. While Ravi was earning 10% returns, John earns 22.2% returns due to the lower price he paid. Therefore, a decrease in bond price results in a higher yield for the buyer. In conclusion, the document states that a bond's yield rises when its price falls, and yield falls when the price rises.
Bond laddering
Bond laddering is an investment strategy that helps minimize reinvestment risk. It involves creating a bond portfolio with bonds of the same face value but different maturity dates spaced regularly over time. This results in a portfolio where parts of the holdings mature each year, generating steady cash flow that can be reinvested. It also ensures the portfolio is not entirely exposed to interest rate movements at one time, as would be with a portfolio where all bonds mature on the same date.
Bitcoin
This document provides an overview of Bitcoin, including:
- Bitcoin is a form of digital currency that exists online and allows users to send and receive payments instantly worldwide.
- The value of Bitcoin is determined purely by supply and demand as there is no central authority, so its value fluctuates significantly relative to traditional currencies.
- Users can obtain Bitcoin by selling goods/services for Bitcoin, buying/selling Bitcoin on exchanges, or exchanging traditional currencies for Bitcoin through their Bitcoin wallet.
Beta
Beta is a measure of the volatility, or systematic risk, of a security or portfolio compared to the market as a whole. A beta of 1 means that the security's price will move with the market. A beta of less than 1 means the security will be less volatile than the market, while a beta greater than 1 indicates that the security will be more volatile than the market. For example, a stock with a beta of 1.2 is theoretically 20% more volatile than the overall market. Understanding a stock's beta helps provide context for its expected performance compared to the broader financial market.
Base effect
The document discusses the concept of base effect as it relates to inflation rates. It provides an example showing that even if prices do not change from one period to the next, reported inflation can be higher due simply to a lower base rate of inflation in the previous year. Specifically, if the inflation rate was 5% last year but 10% the year before, the inflation rate this year could be reported as higher than 5% even with no price changes, due to the lower base of the earlier year. In other words, base effect refers to how inflation in the corresponding period of the previous year can impact reported inflation figures today.
Balanced funds
This document discusses balanced funds, which invest in a mix of equity and debt assets. Balanced funds aim to provide growth potential through equity exposure while also offering stability from fixed-income debt holdings. They seek to achieve a better risk-return tradeoff than pure equity or debt funds by diversifying across these two asset classes. The balanced funds allocation is typically 65-75% equity and 25-35% debt, capturing upside from stocks while reducing volatility through bonds.
Balance of payments
This document provides an overview of a country's Balance of Payments (BoP) account. It discusses that just like individuals, countries must also account for all financial transactions with other countries. A BoP account is divided into a current account and a capital account. The current account tracks exports/imports of goods and services, as well as transfers like remittances. The capital account covers long-term investments and short-term flows like stock purchases. Surpluses or deficits in these accounts provide insight into a country's economic strengths and weaknesses. An overall BoP surplus or deficit is most important, as it indicates a nation's financial position globally.
Bailout package
The document discusses bailout packages for companies that default on their debt. It explains that a bailout package creates a fund, usually with government help, to provide money to the debt-ridden company. This allows the company time to reform its processes and manage its debt obligations, essentially taking out a new loan to pay an old one. If a bailout does not occur, the company risks defaulting which can hurt investors and the company's ability to raise resources. The goal of a bailout is to give the company time to restructure its business plan to lower costs, increase profits, and eventually repay its debts.
What Is Mutual fund ?
A mutual fund is a pool of money managed by professionals to invest in securities like stocks and bonds. Investors purchase units of the fund. Benefits include professional management, diversification, liquidity, and flexibility. Fees can be front-end loads or back-end loads. Funds invest in major asset classes like money market, bonds, balanced, dividend, equity, and specialty funds. Performance is measured using models like Treynor, Sharpe, Jensen, and Fama that consider risk-adjusted returns. Mutual funds have grown significantly in India in recent years as more savings are channeled into the sector.
Bailout package
Wealthhunterindia.com is one of the leading financial services provider in India offering range solutions that meet various customer needs through various financial products like Mutual Fund, Insurance, Fixed Deposit, and Loans.
Started in the year 2003, Wealthhunterindia.com is today an established name in the financial service provider market of India.
American depository receipts
Wealthhunterindia.com is one of the leading financial services provider in India offering range solutions that meet various customer needs through various financial products like Mutual Fund, Insurance, Fixed Deposit, and Loans.
Started in the year 2003, Wealthhunterindia.com is today an established name in the financial service provider market of India.
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Chapter wise All Notes of First year Basic Civil Engineering.pptx
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Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
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Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
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Chapter 6
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Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
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Certificates of deposit
- 1. FED TAPERINGCERTIFICATES OF DEPOSIT
- 2. CDs or Certificates of Deposit are financial instruments.
- 3. But what do CDs actually mean? Who issues them?? Who subscribes to them??? Let me explain this to you with an example. CERTIFICATES OF DEPOSIT
- 4. CERTIFICATES OF DEPOSIT http://simplysimple.in/ Amar wishes to borrow Rs. 30 Lakhs for his new business venture. He goes to his bank to ask for a loan. But though the bank agrees to provide a loan, it realizes that it has only Rs. 20 lacs at present. Now the bank does not wish to lose him to another bank. So the bank asks him to come back later to collect the loan amount.
- 5. So how does the bank provide the additional Rs.10 lakhs? CERTIFICATES OF DEPOSIT
- 6. The bank has corporate relationships from whom they can borrow. In order to borrow, they issue ‘Certificates of Deposit’ to these corporate relationships. Obviously the rate of interest offered by the bank to the corporate institutions would be higher than regular fixed deposits. Thus money comes into the bank and is in turn offered to Amar. CERTIFICATES OF DEPOSIT
- 7. CDs, thus, become the financial instrument issued by banks at a higher interest rate than Fixed Deposits to entice corporates to park money with them in order to meet a lending need. A CD bears: - a maturity date, - a specified interest rate, and - can be issued in any denomination. CDs are generally issued by commercial banks. The term of a CD usually ranges from one month to five years. CERTIFICATES OF DEPOSIT
- 8. CERTIFICATES OF DEPOSIT How CDs Work! Borrower Approaches Bank Bank Lends Money
- 9. To Sum Up CERTIFICATES OF DEPOSIT What: A Certificate of Deposit or CD is a time deposit or a financial product commonly offered to consumers by banks. Why: Sometimes, a bank may not have enough funds so it takes the help of CDs to provide a higher rate of interest to corporates. When: The term of a CD generally ranges from one month to five years.
- 10. What is the difference between a CD, a CP and a T-Bill ? CERTIFICATES OF DEPOSIT
- 11. CERTIFICATES OF DEPOSIT CD: Money raised by the bank from the market to service an outstanding loan. CP: Money raised by a reputed corporate directly from the market by-passing the bank, for meeting working capital requirement (short term borrowing). T-Bill : Same as CP but issued by the government to meet working capital needs.
- 12. CERTIFICATES OF DEPOSIT Hope you have now understood the concept of Certificate of Deposits
- 13. In case of any query, please e-mail professor@tataamc.com
- 14. DISCLAIMER The views expressed in this lesson are for information purposes only and do not construe to be any investment, legal or taxation advice. The lesson is a conceptual representation and may not include several nuances that are associated and vital. The purpose of this lesson is to clarify the basics of the concept so that readers at large can relate and thereby take more interest in the product / concept. In a nutshell, Professor Simply Simple lessons should be seen from the perspective of it being a primer on financial concepts. The contents are topical in nature and held true at the time of creation of the lesson. This is not indicative of future market trends, nor is Tata Asset Management Ltd. attempting to predict the same. Reprinting any part of this material will be at your own risk. Tata Asset Management Ltd. will not be liable for the consequences of such action. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.