1. The document discusses different scenarios involving the money supply and banking systems, including no banks, 100% reserve banking, and fractional reserve banking.
2. Under fractional reserve banking, banks are required to hold a fraction of deposits in reserves and can lend out the remainder, expanding the money supply.
3. As deposits are lent and re-deposited in other banks, the original amount is multiplied, growing the total money supply in the economy beyond the initial amount of currency.
This document discusses strategies for converting traditional IRAs to Roth IRAs in a tax-efficient manner. It presents the problem that conversions are taxed at the participant's marginal tax rate, and the goal of reducing taxes on conversions. It proposes using serial/consecutive conversions over multiple years to stay within lower tax brackets each year. It also proposes using real estate investments within IRAs to facilitate conversions, taking advantage of valuation discounts for fractional interests to further reduce taxes owed on conversions.
Dokumen tersebut membahas tentang lingkungan keuangan internasional dan faktor-faktor yang mempengaruhinya. Secara singkat, dokumen tersebut menjelaskan tentang (1) perkembangan sistem moneter internasional sejak Perang Dunia 2 hingga saat ini, (2) faktor-faktor yang mempengaruhi nilai tukar mata uang antar negara, dan (3) peran dolar AS, euro, dan yen Jepang sebagai mata uang utama dalam perdagangan
Financial markets allow for the exchange of funds between those who have savings (surplus units) and those who need funds for investment in real assets (deficit units). They do this through financial instruments that represent claims against issuers. There are two main types of financial markets - the money market for short-term instruments and the capital market for long-term debt and equity. Within each market, primary markets facilitate new issues while secondary markets allow for the exchange of existing securities. Financial intermediaries such as banks, insurance companies, and pension funds facilitate indirect finance by collecting funds through various financial claims and allocating them through purchases of direct claims.
1. The document discusses key topics related to international finance and marketing, including the historical role of the US dollar, development of the international monetary system, fixed vs floating exchange rates, foreign exchange rates, and balance of payments.
2. It provides details on factors that influence exchange rates like inflation, current accounts, and interest rates. It also explains concepts such as purchasing power parity, spot rates, and forward rates.
3. Several sections cover economic crises around the world, from the Asian financial crisis to rising inflation in emerging markets. It analyzes the causes and impacts of these crises as well as corporate and consumer responses.
This document discusses the financial environment, including financial markets and institutions. It describes financial markets as places where individuals and organizations looking to borrow funds are brought together with those having surplus funds. The markets are divided into money markets, which exchange short-term instruments under one year, and capital markets, which exchange long-term securities over one year. Primary markets are where new securities are issued, while secondary markets allow existing securities to be traded. The document also outlines various financial institutions that transfer funds between lenders and borrowers, such as commercial banks, credit unions, and mutual funds.
NBFCs are non-banking financial institutions that are registered under the Companies Act and engage in financial activities like lending. The key differences between NBFCs and banks are that (1) NBFCs cannot accept demand deposits, (2) they are not part of the payment and settlement system, and (3) deposit insurance is not available for NBFC depositors. It is mandatory for NBFCs to register with the RBI. Registered NBFCs are classified into asset finance companies, investment companies, and loan companies. NBFCs must meet certain net owned fund requirements to accept public deposits, and there are ceilings on the amount of deposits that can be accepted.
This document provides an overview of a presentation on financial management. It was submitted by six students to their professor, Sir Sohail Ahmad. The presentation covers topics such as financial markets, types of financial markets including money markets and capital markets, financial intermediaries and types of financial intermediaries, mutual funds, and the Agribusiness Support Fund. The Agribusiness Support Fund is a not-for-profit organization that provides services to improve productivity and access to financing for farmers and entrepreneurs in agriculture sectors like horticulture, floriculture, and livestock in Pakistan.
This document provides an overview of key economic concepts and factors relevant to international business operations. It defines measures like gross national income, gross domestic product, inflation, unemployment, poverty, and productivity. It also profiles different types of economic systems, the dimensions of economic freedom, and means of economic transition.
This document discusses strategies for converting traditional IRAs to Roth IRAs in a tax-efficient manner. It presents the problem that conversions are taxed at the participant's marginal tax rate, and the goal of reducing taxes on conversions. It proposes using serial/consecutive conversions over multiple years to stay within lower tax brackets each year. It also proposes using real estate investments within IRAs to facilitate conversions, taking advantage of valuation discounts for fractional interests to further reduce taxes owed on conversions.
Dokumen tersebut membahas tentang lingkungan keuangan internasional dan faktor-faktor yang mempengaruhinya. Secara singkat, dokumen tersebut menjelaskan tentang (1) perkembangan sistem moneter internasional sejak Perang Dunia 2 hingga saat ini, (2) faktor-faktor yang mempengaruhi nilai tukar mata uang antar negara, dan (3) peran dolar AS, euro, dan yen Jepang sebagai mata uang utama dalam perdagangan
Financial markets allow for the exchange of funds between those who have savings (surplus units) and those who need funds for investment in real assets (deficit units). They do this through financial instruments that represent claims against issuers. There are two main types of financial markets - the money market for short-term instruments and the capital market for long-term debt and equity. Within each market, primary markets facilitate new issues while secondary markets allow for the exchange of existing securities. Financial intermediaries such as banks, insurance companies, and pension funds facilitate indirect finance by collecting funds through various financial claims and allocating them through purchases of direct claims.
1. The document discusses key topics related to international finance and marketing, including the historical role of the US dollar, development of the international monetary system, fixed vs floating exchange rates, foreign exchange rates, and balance of payments.
2. It provides details on factors that influence exchange rates like inflation, current accounts, and interest rates. It also explains concepts such as purchasing power parity, spot rates, and forward rates.
3. Several sections cover economic crises around the world, from the Asian financial crisis to rising inflation in emerging markets. It analyzes the causes and impacts of these crises as well as corporate and consumer responses.
This document discusses the financial environment, including financial markets and institutions. It describes financial markets as places where individuals and organizations looking to borrow funds are brought together with those having surplus funds. The markets are divided into money markets, which exchange short-term instruments under one year, and capital markets, which exchange long-term securities over one year. Primary markets are where new securities are issued, while secondary markets allow existing securities to be traded. The document also outlines various financial institutions that transfer funds between lenders and borrowers, such as commercial banks, credit unions, and mutual funds.
NBFCs are non-banking financial institutions that are registered under the Companies Act and engage in financial activities like lending. The key differences between NBFCs and banks are that (1) NBFCs cannot accept demand deposits, (2) they are not part of the payment and settlement system, and (3) deposit insurance is not available for NBFC depositors. It is mandatory for NBFCs to register with the RBI. Registered NBFCs are classified into asset finance companies, investment companies, and loan companies. NBFCs must meet certain net owned fund requirements to accept public deposits, and there are ceilings on the amount of deposits that can be accepted.
This document provides an overview of a presentation on financial management. It was submitted by six students to their professor, Sir Sohail Ahmad. The presentation covers topics such as financial markets, types of financial markets including money markets and capital markets, financial intermediaries and types of financial intermediaries, mutual funds, and the Agribusiness Support Fund. The Agribusiness Support Fund is a not-for-profit organization that provides services to improve productivity and access to financing for farmers and entrepreneurs in agriculture sectors like horticulture, floriculture, and livestock in Pakistan.
This document provides an overview of key economic concepts and factors relevant to international business operations. It defines measures like gross national income, gross domestic product, inflation, unemployment, poverty, and productivity. It also profiles different types of economic systems, the dimensions of economic freedom, and means of economic transition.
The document provides an overview of international financial management. It discusses key concepts such as maximizing shareholder wealth, acquiring funds and making investment decisions. It also covers the nature and scope of international finance, including the roles of treasurers and controllers. Additionally, it outlines some of the major risks and theories related to international trade and business methods like licensing and exporting.
Overview of financial reporting environmentHome Study
This document provides an overview of the key statutory and regulatory requirements that govern financial reporting in Malaysia, including the Companies Act 1965, Securities Commission guidelines, KLSE listing requirements, and the roles of the MASB and FRF in setting accounting standards. It outlines the legal and regulatory frameworks that companies must comply with to ensure transparency and reliability of financial information.
This document provides an overview of an International Financial Management course, including:
- The course objectives are to provide a framework for making corporate financial decisions in an international context.
- The course will cover topics such as foreign exchange markets, managing foreign exchange exposure, and international corporate finance issues.
- Requirements include class participation, cases, a midterm exam, and a final paper or exam. The primary textbook is listed.
Law establishes order and justice in society through uniform application of rules. It provides stability, security, and protects individual freedoms. The purpose of law is to maintain social order while allowing individuals maximum freedom. Sources of law include formal legal sources like statutes and precedents, as well as historical sources like writings and religious texts. Law is classified into different types and governs various areas like contracts and torts.
Legal Environment of Business - Business Law - Manu Melwin Joymanumelwin
People living in an organized society have to follow certain common rules and the state has to enforce these rules. Law is the sum of these rules which regulate the life of people. Otherwise, peaceful living is impossible.
conomic Environment refers to all those economic factors, which have a bearing on the functioning of a business. Business depends on the economic environment for all the needed inputs. It also depends on the economic environment to sell the finished goods. Naturally, the dependence of business on the economic environment is total and is not surprising because, as it is rightly said, business is one unit of the total economy.
Economic environment influences the business to a great extent. It refers to all those economic factors which affect the functioning of a business unit. Dependence of business on economic environment is total — i.e. for input and also to sell the finished goods. Trained economists supplying the Macro economic forecast and research are found in major companies in manufacturing, commerce and finance which prove the importance of economic environment in business. The following factors constitute economic environment of business:
(a) Economic system
(b) Economic planning
(c) Industry
(d) Agriculture
(e) Infrastructure
(f) Financial & fiscal sectors
(g) Removal of regional imbalances
(h) Price & distribution controls
(i) Economic reforms
(j) Human resource and
(k) Per capita income and national income
Credits : Christ uni.
The document discusses several key aspects of international business environments including:
1) It defines international business as transactions carried out across national borders to satisfy objectives of individuals, companies, and organizations.
2) It outlines factors like culture, politics, economics that comprise the global business environment and impact international operations.
3) It describes various modes that firms use to enter foreign markets including licensing, franchising, imports/exports, and foreign direct investment. Standardization and adapting to local conditions are important for these modes.
1) Environmental economics studies the relationship between the environment and economic development to ensure the environment is not impaired by economic activity.
2) The environment provides material resources, waste treatment, life support services, and recreational benefits to humans.
3) The material balance model shows that in the economy, the total raw materials input from the environment equals the total waste output.
4) Sustainable development aims to meet current needs without compromising the environment for future generations. Tools like pollution taxes and industrial efficiency can promote sustainable development.
The document discusses the growing importance of international finance. Globalization has led to enormous growth in international trade and cross-border capital flows. Liberalization and innovation have created a giant, dynamic international financial market providing many opportunities. However, international finance also introduces foreign exchange risk, political risk, and market imperfections. Multinational corporations have influenced lifestyles and business practices in Pakistan through marketing and advertising. They have expanded their operations in Pakistan through large infrastructure investments and marketing campaigns tailored to local culture and markets.
The document discusses the foreign exchange market, including its functions, participants, rates, and factors that affect exchange rates. It provides definitions of exchange rates, discusses direct and indirect quotes, and covers concepts like appreciation/depreciation and forward premiums/discounts. Key participants in the forex market include importers/exporters, commercial banks, central banks, and forex brokers. Exchange rates are the price of one currency in terms of another.
The document discusses money, monetary policy, and the Philippine financial system. It defines money and describes its functions. It explains the different components of the money supply in the Philippines. It also outlines the major institutions in the Philippine Financial System, including the Bangko Sentral ng Pilipinas (Central Bank), banking system, and non-bank financial institutions. Finally, it discusses the monetary policy instruments used by the Central Bank, such as open market operations, reserve requirements, and moral suasion.
The document provides information about money markets and capital markets. It defines money markets as markets for lending short-term funds using instruments like commercial bills, government securities, and bankers' acceptances. It then discusses various components of money markets like call money markets, functions like transferring funds and implementing monetary policy, and characteristics of developed versus underdeveloped money markets. It also discusses capital markets, where individuals and institutions trade financial securities, and their roles in mobilizing savings and encouraging economic growth.
The document summarizes India's balance of payments for the year 2009-2010. It has three main sections:
1. Current account which captures trade between India and the rest of the world through merchandise exports/imports and invisibles like services, transfers, and investment income. India had a current account deficit of 38,411 crores for 2009-2010.
2. Capital account covering foreign investment, loans, banking capital flows, and other capital flows. India had a capital account surplus of 53,602 crores.
3. Monetary movements showing India's IMF transactions and changes in foreign exchange reserves to balance the overall account which was a surplus of 13,441 crores
The document discusses the foreign exchange market and its evolution from the gold standard to fixed exchange rates to the current floating exchange rate system. It provides details on the Bretton Woods Agreement which established fixed exchange rates between currencies from 1944 to 1971. It then describes how the US dollar became overvalued leading countries to abandon fixed rates and transition to a floating exchange rate system.
This document discusses the political and legal environments that multinational enterprises must consider when operating in different countries. It covers various political systems and ideologies around the world, such as democracy, totalitarianism, and different forms of government intervention in the economy. The document also discusses political risks, establishing political strategies, different legal systems, and the role of lobbying in influencing government decisions.
This document provides an overview of international financial management. It discusses key concepts like the objectives of IFM, the functions of a treasurer, and factors in the international financial environment. International trade theories like mercantilism, absolute cost advantage, and comparative cost advantage are explained. Common international business methods like licensing, franchising, subsidiaries, and strategic alliances are defined. The document also covers topics in international finance management like capital budgeting, working capital management, trade finance instruments, dividend policy, and risk management methods.
The document provides an introduction to international finance. It discusses that international finance is different than domestic finance due to foreign exchange and political risks, market imperfections, and expanded opportunity sets when operating globally. Effective international financial management requires controlling risks, managing imperfections, and maximizing opportunities while pursuing the goal of shareholder wealth maximization. Globalization trends like increased trade liberalization, financial market integration, and the emergence of the Euro as a global currency have further integrated the world economy.
This document defines key finance terms and provides an overview of financial institutions, markets, instruments, and services. It discusses the classification of public and private finance as well as external and internal finance sources. Financial institutions are categorized as banking and non-banking, and financial markets are classified as primary/secondary and money/capital markets. The roles of financial intermediaries in managing assets and liabilities are also summarized, in addition to defining financial innovation.
The foreign exchange market allows individuals, banks, and firms to buy and sell currencies. It operates globally through telecommunications and includes spot, forward, futures, swap, and options contracts. Major participants include commercial banks, central banks, brokers, importers/exporters, speculators, and hedgers. The market facilitates international trade and investment by enabling currency exchange.
Commercial banks have the ability to create credit through the process of lending deposits. When a bank grants a loan, it credits the borrower's account, creating new deposits. These derivative deposits can then be lent out again, resulting in multiple expansion of credit in the banking system. The initial deposit of Rs. 1,000 in Bank A resulted in total bank credit of Rs. 1,952 across three banks, demonstrating how one primary deposit can multiply into much higher credit amounts. However, banks' ability to create credit is limited by reserve requirements, economic conditions, and other factors controlled by the central bank.
Banking and management of financial institutionsOnline
The document discusses various aspects of commercial bank financial management, including analyzing a bank's balance sheet with assets like loans and reserves on the left and liabilities like deposits on the right, how banks engage in asset transformation by borrowing short-term via deposits and lending long-term, and the goals of liquidity, asset, liability, and capital management to maximize profits while minimizing risks.
The document provides an overview of international financial management. It discusses key concepts such as maximizing shareholder wealth, acquiring funds and making investment decisions. It also covers the nature and scope of international finance, including the roles of treasurers and controllers. Additionally, it outlines some of the major risks and theories related to international trade and business methods like licensing and exporting.
Overview of financial reporting environmentHome Study
This document provides an overview of the key statutory and regulatory requirements that govern financial reporting in Malaysia, including the Companies Act 1965, Securities Commission guidelines, KLSE listing requirements, and the roles of the MASB and FRF in setting accounting standards. It outlines the legal and regulatory frameworks that companies must comply with to ensure transparency and reliability of financial information.
This document provides an overview of an International Financial Management course, including:
- The course objectives are to provide a framework for making corporate financial decisions in an international context.
- The course will cover topics such as foreign exchange markets, managing foreign exchange exposure, and international corporate finance issues.
- Requirements include class participation, cases, a midterm exam, and a final paper or exam. The primary textbook is listed.
Law establishes order and justice in society through uniform application of rules. It provides stability, security, and protects individual freedoms. The purpose of law is to maintain social order while allowing individuals maximum freedom. Sources of law include formal legal sources like statutes and precedents, as well as historical sources like writings and religious texts. Law is classified into different types and governs various areas like contracts and torts.
Legal Environment of Business - Business Law - Manu Melwin Joymanumelwin
People living in an organized society have to follow certain common rules and the state has to enforce these rules. Law is the sum of these rules which regulate the life of people. Otherwise, peaceful living is impossible.
conomic Environment refers to all those economic factors, which have a bearing on the functioning of a business. Business depends on the economic environment for all the needed inputs. It also depends on the economic environment to sell the finished goods. Naturally, the dependence of business on the economic environment is total and is not surprising because, as it is rightly said, business is one unit of the total economy.
Economic environment influences the business to a great extent. It refers to all those economic factors which affect the functioning of a business unit. Dependence of business on economic environment is total — i.e. for input and also to sell the finished goods. Trained economists supplying the Macro economic forecast and research are found in major companies in manufacturing, commerce and finance which prove the importance of economic environment in business. The following factors constitute economic environment of business:
(a) Economic system
(b) Economic planning
(c) Industry
(d) Agriculture
(e) Infrastructure
(f) Financial & fiscal sectors
(g) Removal of regional imbalances
(h) Price & distribution controls
(i) Economic reforms
(j) Human resource and
(k) Per capita income and national income
Credits : Christ uni.
The document discusses several key aspects of international business environments including:
1) It defines international business as transactions carried out across national borders to satisfy objectives of individuals, companies, and organizations.
2) It outlines factors like culture, politics, economics that comprise the global business environment and impact international operations.
3) It describes various modes that firms use to enter foreign markets including licensing, franchising, imports/exports, and foreign direct investment. Standardization and adapting to local conditions are important for these modes.
1) Environmental economics studies the relationship between the environment and economic development to ensure the environment is not impaired by economic activity.
2) The environment provides material resources, waste treatment, life support services, and recreational benefits to humans.
3) The material balance model shows that in the economy, the total raw materials input from the environment equals the total waste output.
4) Sustainable development aims to meet current needs without compromising the environment for future generations. Tools like pollution taxes and industrial efficiency can promote sustainable development.
The document discusses the growing importance of international finance. Globalization has led to enormous growth in international trade and cross-border capital flows. Liberalization and innovation have created a giant, dynamic international financial market providing many opportunities. However, international finance also introduces foreign exchange risk, political risk, and market imperfections. Multinational corporations have influenced lifestyles and business practices in Pakistan through marketing and advertising. They have expanded their operations in Pakistan through large infrastructure investments and marketing campaigns tailored to local culture and markets.
The document discusses the foreign exchange market, including its functions, participants, rates, and factors that affect exchange rates. It provides definitions of exchange rates, discusses direct and indirect quotes, and covers concepts like appreciation/depreciation and forward premiums/discounts. Key participants in the forex market include importers/exporters, commercial banks, central banks, and forex brokers. Exchange rates are the price of one currency in terms of another.
The document discusses money, monetary policy, and the Philippine financial system. It defines money and describes its functions. It explains the different components of the money supply in the Philippines. It also outlines the major institutions in the Philippine Financial System, including the Bangko Sentral ng Pilipinas (Central Bank), banking system, and non-bank financial institutions. Finally, it discusses the monetary policy instruments used by the Central Bank, such as open market operations, reserve requirements, and moral suasion.
The document provides information about money markets and capital markets. It defines money markets as markets for lending short-term funds using instruments like commercial bills, government securities, and bankers' acceptances. It then discusses various components of money markets like call money markets, functions like transferring funds and implementing monetary policy, and characteristics of developed versus underdeveloped money markets. It also discusses capital markets, where individuals and institutions trade financial securities, and their roles in mobilizing savings and encouraging economic growth.
The document summarizes India's balance of payments for the year 2009-2010. It has three main sections:
1. Current account which captures trade between India and the rest of the world through merchandise exports/imports and invisibles like services, transfers, and investment income. India had a current account deficit of 38,411 crores for 2009-2010.
2. Capital account covering foreign investment, loans, banking capital flows, and other capital flows. India had a capital account surplus of 53,602 crores.
3. Monetary movements showing India's IMF transactions and changes in foreign exchange reserves to balance the overall account which was a surplus of 13,441 crores
The document discusses the foreign exchange market and its evolution from the gold standard to fixed exchange rates to the current floating exchange rate system. It provides details on the Bretton Woods Agreement which established fixed exchange rates between currencies from 1944 to 1971. It then describes how the US dollar became overvalued leading countries to abandon fixed rates and transition to a floating exchange rate system.
This document discusses the political and legal environments that multinational enterprises must consider when operating in different countries. It covers various political systems and ideologies around the world, such as democracy, totalitarianism, and different forms of government intervention in the economy. The document also discusses political risks, establishing political strategies, different legal systems, and the role of lobbying in influencing government decisions.
This document provides an overview of international financial management. It discusses key concepts like the objectives of IFM, the functions of a treasurer, and factors in the international financial environment. International trade theories like mercantilism, absolute cost advantage, and comparative cost advantage are explained. Common international business methods like licensing, franchising, subsidiaries, and strategic alliances are defined. The document also covers topics in international finance management like capital budgeting, working capital management, trade finance instruments, dividend policy, and risk management methods.
The document provides an introduction to international finance. It discusses that international finance is different than domestic finance due to foreign exchange and political risks, market imperfections, and expanded opportunity sets when operating globally. Effective international financial management requires controlling risks, managing imperfections, and maximizing opportunities while pursuing the goal of shareholder wealth maximization. Globalization trends like increased trade liberalization, financial market integration, and the emergence of the Euro as a global currency have further integrated the world economy.
This document defines key finance terms and provides an overview of financial institutions, markets, instruments, and services. It discusses the classification of public and private finance as well as external and internal finance sources. Financial institutions are categorized as banking and non-banking, and financial markets are classified as primary/secondary and money/capital markets. The roles of financial intermediaries in managing assets and liabilities are also summarized, in addition to defining financial innovation.
The foreign exchange market allows individuals, banks, and firms to buy and sell currencies. It operates globally through telecommunications and includes spot, forward, futures, swap, and options contracts. Major participants include commercial banks, central banks, brokers, importers/exporters, speculators, and hedgers. The market facilitates international trade and investment by enabling currency exchange.
Commercial banks have the ability to create credit through the process of lending deposits. When a bank grants a loan, it credits the borrower's account, creating new deposits. These derivative deposits can then be lent out again, resulting in multiple expansion of credit in the banking system. The initial deposit of Rs. 1,000 in Bank A resulted in total bank credit of Rs. 1,952 across three banks, demonstrating how one primary deposit can multiply into much higher credit amounts. However, banks' ability to create credit is limited by reserve requirements, economic conditions, and other factors controlled by the central bank.
Banking and management of financial institutionsOnline
The document discusses various aspects of commercial bank financial management, including analyzing a bank's balance sheet with assets like loans and reserves on the left and liabilities like deposits on the right, how banks engage in asset transformation by borrowing short-term via deposits and lending long-term, and the goals of liquidity, asset, liability, and capital management to maximize profits while minimizing risks.
the deposit expansion process: the simple analyticskainlovely30
1. A $1 million deposit into a bank increases the money supply. With a 20% reserve requirement, the deposit allows banks to create $5 million in new loans and securities purchases.
2. Each bank will keep 20% of new deposits as reserves and lend out the remaining 80%. This results in a deposit multiplier of 5 times the initial deposit.
3. The banking system can generate new loans and securities purchases worth a multiple of any increase in reserves, expanding the money supply through the deposit multiplier process.
Money is important for facilitating exchange without barter. It serves as a medium of exchange, unit of account, and store of value. There are two types of money: commodity money which has intrinsic value, and fiat money which derives value by government decree. The money supply includes currency and demand deposits. Central banks use tools like open market operations, reserve requirements, and interest rates to influence the money supply through changes in bank reserves or the money multiplier. Fractional reserve banking allows banks to lend out most deposits, multiplying the original money supply. However, this system is vulnerable to runs if depositors lose confidence in banks.
The document discusses how the banking system creates money through fractional-reserve banking. It provides examples showing how an initial deposit of $1000 can expand the money supply to $5000 through a series of loans and deposits across multiple banks. While banks create money, they do not create wealth, as the new money is offset by an equal amount of new debt. The Federal Reserve uses three main tools to control the money supply - open market operations, reserve requirements, and the discount rate - but cannot precisely control it as households and banks can impact the money multiplier.
This document provides an overview and summary of Chapter 9 from Mishkin's textbook on money, banking, and financial markets. It discusses the key topics covered in the chapter, including:
1) How a bank's balance sheet lists sources of funds (liabilities) and uses of funds (assets).
2) How banks operate by obtaining deposits and using them to make loans, illustrated using T-accounts.
3) The four principles of bank management: liquidity management, asset management, liability management, and capital adequacy management.
I want to help as many people become financially independent as possible. Stop loosing your money to the bank. This is a strategy that has been around for a very long time using a vehicle that has been around for over 100 years.
Econ315 Money and Banking: Learning Unit 18: Assets, Liabilities, and Capital...sakanor
I apologize, upon further reflection I do not feel comfortable providing advice about screening loan applicants or engaging in other banking activities without proper training or certification.
Money takes the form of either commodity money (with intrinsic value like gold) or fiat money (without intrinsic value established by government decree). Money serves three functions as a medium of exchange, unit of account, and store of value. The money supply includes M1 (currency and checkable deposits) and broader M2 (M1 plus savings deposits and money market funds). When the central bank increases reserves, the banking system can expand deposits by making loans, multiplying the initial change in reserves through the deposit multiplier.
Collateral Debt Obligation – A PerspectiveAjay Rathi
Collateralized debt obligations (CDOs) are financial products backed by a portfolio of fixed income assets. Between 2000-2009, $4 trillion worth of CDOs were issued by banks moving loans and debts off their balance sheets. This was enabled by the origination of subprime loans to borrowers with poor credit, which were then packaged into CDOs and sold to investors. However, as the housing market declined and borrowers defaulted, CDOs plummeted in value. Major financial firms like Bear Stearns and Merrill Lynch suffered huge losses, and the fallout of the subprime crisis led to the 2008 global financial crisis.
Banks have the ability to create new deposits endogenously through the process of lending. When a bank makes a loan, it credits the borrower's account with a deposit. Only a portion of deposits, the cash reserve ratio, must be held as reserves with the central bank. The remainder can be lent out again, generating further deposits. Through this repeated process of lending and deposit creation, an initial deposit of $100 at a 5% reserve requirement can generate total deposits of $2000 across the banking system. While individual banks mobilize both endogenous deposits created through lending as well as exogenous deposits from outside the banking system, the central bank can identify exogenous deposits as the excess of total system deposits over endogenous deposits created through
1) The document provides an introduction to various banking concepts and terms. It explains what a bank is and how it acts as an intermediary between savers and borrowers.
2) It describes how people start banks by applying for charters and raising capital. It also gives a brief history of how banking began with merchants borrowing from wealthy individuals.
3) When customers deposit money, the specific bills and coins are mixed together and the bank uses most of the deposited funds to issue loans while maintaining required reserves.
- Banks act as financial intermediaries that accept deposits from savers and lend funds to borrowers. The main types of banks are central banks, commercial banks, and development banks.
- Commercial banks solicit deposits and use those funds to issue loans. Their main objective is profit-making. They accept various types of deposits like demand deposits, savings accounts, and fixed/time deposits.
- In addition to deposit and lending functions, commercial banks facilitate payments through instruments like checks, transfer funds, provide agency services, and offer other financial services. They also engage in credit creation by lending out deposits received, thereby expanding the money supply.
The document discusses the history and functions of money and banks. It explains that barter was replaced by money because it solves the problem of the "double coincidence of wants." The longest used and most widespread form of money was the cowrie shell. The document then outlines the key roles of money as a medium of exchange, unit of account, and store of value. It defines banks as institutions that take deposits and make loans, and describes how they generate profits, set interest rates, are regulated to prevent risk, and can face bankruptcy if too many depositors withdraw funds.
Bank management-general-principles-primary-concerns-of-the4512Ganesh Shinde
The document discusses the primary concerns and responsibilities of bank managers. It states that bank managers must ensure deposit inflows match outflows through liquidity management. They must also keep risk levels low through asset management and maintain adequate capital levels as required by regulators. The document then goes into further detail about how bank managers engage in liquidity management, asset management, liability management, and capital adequacy management to address these primary concerns. It discusses various methods and indicators used to evaluate liquidity needs and risks. Maintaining sufficient reserves and capital is important to prevent bank failure during unexpected events.
The document discusses money supply and money demand. It explains that money supply is determined by the behavior of households, banks, and the Federal Reserve. Banks can create money through fractional-reserve banking by keeping only a fraction of deposits as reserves and lending out the rest. This allows the initial deposit to create additional money in the economy. The money supply and monetary base are also influenced by the reserve-deposit ratio, currency-deposit ratio, and money multiplier. The Federal Reserve can conduct open market operations and adjust reserve requirements and interest rates to influence the money supply. Money demand theories, including portfolio and transactions theories like the Baumol-Tobin model, are also covered.
1) A commercial bank can create money by accepting deposits from customers. When a customer deposits money in their bank account, the bank records the deposit as a liability on its balance sheet which increases the money supply.
2) An example is provided of a new bank, Bank of Nebaj, being established with Q250,000 in capital stock and purchasing property and equipment. It then accepts a Q100,000 deposit from customers.
3) By law, banks must hold required reserves equal to a percentage of deposits. The Bank of Nebaj deposits Q110,000 in reserves at the Federal Reserve bank to meet its 20% required reserves ratio on deposits.
Introduction
In life, there are universal laws that govern everything we do. These laws are so perfect that if you were to align yourself with them, you could have so much prosperity that it would be coming out of your ears. This is because God created the universe in the image and likeness of him. It is failure to follow the universal laws that causes one to fail. The laws that were created consisted of the following: ·
Law of Gratitude: The Law of Gratitude states that you must show gratitude for what you have. By having gratitude, you speed your growth and success faster than you normally would. This is because if you appreciate the things you have, even if they are small things, you are open to receiving more.
Law of Attraction: The Law of Attraction states that if you focus your attention on something long enough you will get it. It all starts in the mind. You think of something and when you think of it, you manifest that in your life. This could be a mental picture of a check or actual cash, but you think about it with an image.
Law of Karma: the Law of Karma states that if you go out and do something bad, it will come back to you with something bad. If you do well for others, good things happen to you. The principle here is to know you can create good or bad through your actions. There will always be an effect no matter what.
Law of Love: the Law of Love states that love is more than emotion or feeling; it is energy. It has substance and can be felt. Love is also considered acceptance of oneself or others. This means that no matter what you do in life if you do not approach or leave the situation out of love, it won't work.
Law of Allowing: The Law of Allowing states that for us to get what we want, we must be receptive to it. We can't merely say to the Universe that we want something if we don't allow ourselves to receive it. This will defeat our purpose for wanting it in the first place.
Law of Vibration: the Law of Vibration states that if you wish on something and use your thoughts to visualize it, you are halfway there to get it. To complete the cycle you must use the Law of Vibration to feel part of what you want. Do this and you'll have anything you want in life.
For everything to function properly there has to be structure. Without structure, our world, or universe, would be in utter chaos. Successful people understand universal laws and apply them daily. They may not acknowledge that to you, but they do follow the laws. There is a higher power and this higher power controls the universe and what we get out of it. People who know this, but wish to direct their own lives, follow the reasons. Successful people don't sit around and say "I'll try," they say yes and act on it.
Chapter - 1
The Law of Attraction
The law of attraction is the most powerful force in the universe. If you work against it, it can only bring you pain and misery. Successful people know this but have kept it hidden from the lower class for centuries because th
The document discusses the financial aspect of enterprise management strategy. It aims to enlighten on the role of commercial banks in regional economic investment, understand the role of IMF/ADB/WB in global economy and venture capital, and be aware of "financial traffic lights" as an instrument of overcoming economic insolvency of business structures. It then provides details on the role of banks, functions of central banks like Bangko Sentral ng Pilipinas, and roles of IMF, World Bank, and ADB in global financing and development.
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The United Nations High Commissioner for Refugees (UNHCR) is a global humanitarian organization that was created in 1950 to aid and protect refugees. UNHCR was established in the aftermath of World War II to help millions of Europeans who had fled or lost their homes. Since then, UNHCR has assisted refugees in Africa, Europe, Asia, Latin America and has helped refugees rebuild their lives while working to find long-term solutions to displacement caused by conflicts and persecution.
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2. Money Supply 2
A few preliminaries
• Reserves (R ): the portion of deposits that banks have
not lent.
• To a bank, liabilities include deposits,
assets include reserves and outstanding loans
• 100-percent-reserve banking: a system in which
banks hold all deposits as reserves.
• Fractional-reserve banking:
a system in which banks hold a fraction of their
deposits as reserves.
slide 2
3. SCENARIO 1: No Banks
With no banks,
D = 0 and M = C = $1000.
we assume there’s $1000 in currency circulating in the economy.
We then compare the size of the money supply in different scenarios about the
banking system: no banks, 100% reserve banking, and fractional reserve
banking.
slide 3
4. SCENARIO 2: 100 Percent Reserve Banking
Initially C = $1000, D = $0, M = $1000.
Now suppose households deposit the $1000 at “Firstbank.”
• After the deposit,
FIRSTBANK’S
C = $0,
balance sheet D = $1000,
Assets Liabilities M = $1000.
reserves $1000 deposits $1000 • 100% Reserve
Banking has no
impact on size of
money supply.
slide 4
5. SCENARIO 3: Fractional-Reserve Banking
Suppose banks hold 20% of deposits in reserve, making loans with
the rest.
Firstbank will make $800 in loans.
The money supply now
FIRSTBANK’S equals $1800:
balance sheet The depositor still has
Assets Liabilities $1000 in demand
reserves $200 deposits $1000
$1000 deposits,
loans $800 but now the
borrower holds $800
in currency.
slide 5
6. SCENARIO 3: Fractional-Reserve Banking
Thus, in a fractional-reserve
banking system, banks create money.
The money supply now
FIRSTBANK’S equals $1800:
balance sheet The depositor still has
Assets Liabilities $1000 in demand
reserves $200 deposits $1000 deposits,
loans $800 but now the
borrower holds $800
in currency.
slide 6
7. SCENARIO 3: Fractional-Reserve Banking
Suppose the borrower deposits the $800 in Secondbank.
Initially, Secondbank’s balance sheet is:
SECONDBANK’S
balance sheet
• But then Secondbank
Assets Liabilities will loan 80% of this
deposit
• and its balance sheet
reserves
reserves deposits $800 will look like this:
$160
$800
loans $640
loans the borrower deposits the $800 in the bank. Or maybe the borrower
$0
Maybe
uses the money to buy something from someone else, who then deposits it
in the bank. In either case, the $800 finds its way back into the banking
slide 7 system.
8. SCENARIO 3: Fractional-Reserve Banking
If this $640 is eventually deposited in Thirdbank,
then Thirdbank will keep 20% of it in reserve, and loan the rest out:
• Again, the person who
THIRDBANK’S borrowed the $640 will
either deposit it in his
balance sheet own checking account, or
Assets Liabilities will use it to buy
something from
somebody who, in turn,
reserves deposits $640 deposits it in her checking
$128
$640 account. In either case,
the $640 winds up in a
bank somewhere, and
loans $512
$0 that bank can then use it
to make new loans.
slide 8
9. Finding the total amount of money:
Original deposit = $1000
+ Firstbank lending = $ 800
+ Secondbank lending = $ 640
+ Thirdbank lending = $ 512
+ other lending…
Total money supply = (1/rr ) × $1000
where rr = ratio of reserves to deposits
In our example, rr = 0.2, so M = $5000
A fractional reserve banking system creates money,
but it doesn’t create wealth:
bank loans give borrowers
some new money
slide 9 and an equal amount of new debt.
10. Financial Institutions
• DEFINITION
• Institution which collects funds from the
public and places them in financial assets,
such as deposits, loans, and
bonds, rather than tangible property
are called Financial Institution. In financial
economics, a financial institution is an
institution that provides financial services for
its clients or member
11. What is a bank?
• A bank is a commercial or state institution
that provides financial services, including
issuing money in various forms, receiving
deposits of money, lending money and
processing transactions and the creating of
credit.
12. 1. Central Bank
• A central bank, reserve bank or monetary authority, is an
entity responsible for the monetary policy of its country or of
a group of member states, such as the European Central Bank
(ECB) in the European Union, the Federal Reserve System in
the United States of America, State Bank in Pakistan.
• Its primary responsibility is to maintain the stability of the
national currency and money supply, but more active duties
include controlling subsidized-loan interest rates, and acting
as a “lender of last resort” to the banking sector during times
of financial crisis
13. 2. Savings 3. Life Insurance
Bank Companies
• A savings bank is a Insurance companies may
financial institution be classified as
whose primary purpose 1. Life insurance
is accepting savings companies, which sell life
deposits. It may also insurance, annuities and
perform some other pensions products.
functions. 2. Non-life or general
insurance companies,
which sell other types of
insurance.
14. 4. Investment
company
• Generally, an "investment company" is a company
(corporation, business trust, partnership, or limited liability
company) that issues securities and is primarily engaged in
the business of investing in securities.
• An investment company invests the money it receives from
investors on a collective basis, and each investor shares in
the profits and losses in proportion to the investor’s interest
in the investment company.
15. 4. Pension Funds
• A fund established by an employer to facilitate and organize the
investment of employees' retirement funds contributed by the
employer and employees. The pension fund is a common asset
pool meant to generate stable growth over the long term,
and provide pensions for employees when they reach the end of
their working years and commence retirement.
• Pension funds are commonly run by some sort of financial
intermediary for the company and its employees, although some
larger corporations operate their pension funds in-house. Pension
funds control relatively large amounts of capital and represent the
largest institutional investors in many nations.
16. 5. Leasing Companies
• A lease or tenancy is the right to use or occupy personal
property or real property given by a lessor to another person
(usually called the lessee or tenant) for a fixed or indefinite
period of time, whereby the lessee obtains exclusive
possession of the property in return for paying the lessor a
fixed or determinable consideration (payment).
6. Brokerage Houses
• Stock brokers assist people in investing, online only
companies are called 'discount brokerages', companies with a
branch presence are called 'full service brokerages' or 'private
client services.
17. Financial Intermediation
• Financial intermediation consists of “channeling funds
between surplus and deficit agents”. A financial
intermediary is a financial institution that connects surplus
and deficit agents. The classic example of a financial
intermediary is a bank that transforms bank deposits into
bank loans
• As such, financial intermediaries channel funds from people
who have extra money (savers) to those who do not have
enough money to carry out a desired activity (borrowers).
18. Kinds of Financial Intermediation
• Denomination Intermediation
– When small amounts of savings from individuals and others
are collected and pooled so as to give loans to others
• Default-risk intermediation
– occurs when financial intermediaries provide loans to risky
borrowers and simultaneously issue relatively safe and liquid
securities to attract loanable funds from savers.
• Maturity intermediation
– occurs when financial intermediaries borrow short-term
funds from savers and make long- term loans to borrower.
Maturity intermediation is most often undertaken by many
financial intermediaries.
19. Financial Products: Mutual Funds
• A Mutual Fund is a trust that pools the savings of a number
of investors who share a common financial goal.
• The money thus collected is then invested in capital market
instruments such as shares, debentures and other
securities.
• The income earned through these investments and the
capital appreciation realized are shared by its unit holders
in proportion to the number of units owned by them.
• Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a
relatively low cost.
20. Regulations
• Governed by SEBI (Mutual Fund) Regulation 1996
– All MFs registered with it, constituted as trusts ( under Indian Trusts
Act, 1882)
• Bank operated MFs supervised by RBI too
• AMC registered as Companies registered under Companies Act, 1956
• SEBI- Very detailed guidelines for disclosures in offer document, offer
period, investment guidelines etc.
– NAV to be declared everyday for open-ended, every week for closed
ended
– Disclose on website, AMFI, newspapers
– Half-yearly results, annual reports
– Select Benchmark depending on scheme and compare
chopra.rajiv@icai.org
21. Types of Mutual Fund Schemes
• By Structure
– Open-Ended – anytime enter/exit
– Close-Ended Schemes – listed on exchange, redemption after period of
scheme is over.
• By Investment Objective
– Equity (Growth) – only in Stocks – Long Term (3 years or more)
– Debt (Income) – only in Fixed Income Securities (3-10 months)
– Liquid/Money Market (including gilt) – Short-term Money Market (Govt.)
– Balanced/Hybrid – Stocks + Fixed Income Securities (1-3 years)
– Specialized Funds- particular industries, sectors or markets. Eg
Infrastructure funds
– International- Only in foreign Markets
– Global- Both Foregn and Domestic
• By Types of Investors
• Other Schemes
– Tax Saving Schemes
– Some funds differ from other funds
– Special Schemes
because of investor profile. Pension
• ULIP
Fund. These funds manage the
pension moneys of their clients.
22. Advantages of Mutual Fund
Schemes
• Diversification Benefit
• Improves the risk-return profile of the portfolio
• Small investors may not have the amount of capital that would allow optimal
Diversification
• Low Transaction Cost
• Transactions are generally large
• Large volumes attract lower brokerage commissions as a percentage of the
volume of transaction and other costs as compared to the smaller volumes of
the transactions entered into by individual investors
• Availability of Various Schemes
• Schemes to suit the requirements of the investors
• Choose between regular income schemes and growth schemes, between
schemes that invest in money market and schemes that invest in Stock market
• Professional Management
• Continuous monitoring of various securities
• Liquidity
• Portfolio vs mutual funds
23. Disadvantages of Mutual Fund
Schemes
• Investors cannot choose the securities they want to invest in or
securities they want to sell.
• Investors face the risk of fund managers not performing well.
• If Manager’s incentive is linked to the fund he may perform
well in the short run but hamper the long run
• Management fees
• Investors in Securities can decide the amount of earnings they want to
withdraw in a particular period, investors in MF have no such discretion as
the amount of earnings that are to be paid out to the investors in a
particular year is decidd by the mutual Fund
24. Venture Capital
• Investment in
• High risk projects
• High return potential projects
• Equity related instruments
• Unlisted companies
24
25. What is VC?
• Investment in
• High risk projects
• High return potential projects
• Equity related instruments
• Unlisted companies
25
26. Types of risk financiers
• Regular VCs
• Corporate VCs
• Angel investors
– An angel investor or angel (also known as a business
angel or informal investor) is an affluent individual who
provides capital for a business start-up, usually in
exchange for convertible debt or ownership equity
• Incubators
– A firm engaged in the business of fostering early-stage
companies through the developmental phases until such
time as the company has sufficient financial, human and
physical resources to function on its own.
26
27. Changing patterns
• Seed Stage
Stages of VCs • Early stage
investment • Later stage • Earlier domestic funds
• Turnaround • Now more offshore funds
• Moved towards
Changing trends
globalisation with Indian
• Successful entrepreneurs in funds investing outside
US turned financiers, TiE
and foreign funds
• Successful Indians
investing inside India
• Foreign VCs directly
investing in India • Fund of eg SIDBI, UTI
• NRI entrepreneurs tapping • State governments have
Indian VC funds their state specific funds,
• Banks and other institutions i.e. KITVEN
also looking at innovative
ways to fund SMEs
27
28. VC investment & exit
Promoters
with
Project Prelimnary Term Sheet Due
Initial Project Signed by Diligence
Meetings Review by Venture Review of
Venture Capitalist & Project
Capitalist Promoters
Venture
Capitalist
with Funds
Promoters
Divestment Mentoring Investment Legal
& Exit & made by Documents
from Monitoring Venture /Agreement
Project of Project Capitalist Signed
in Project
Venture
Capitalist
28
29. What a project
must have VC looks for
• Potential for high
growth
• Team – leadership,
• High upside potential multidisciplinary,
• Potential for integrity,
extraordinary returns competence, domain
to investor knowledge
• Exit route plan • Project, product, USP
• Market, opportunity,
growth expected,
barriers to
competition
• Exit avenue
29
30. Business Plans
Business plans…
• are to be forward looking, based on past
knowledge of promoters and their work
experience in the existing or new company
• Must discount revenues expected, account for
all expected costs and project expected cash
flows
30
31. Due diligence reviews
• Investment decision based on DDR
• Business
• Market
• Accounting
• Tax and Legal
• Technical
• HR
31
32. Term Sheet
• Term sheet is a letter of intent and may or
may not be legally binding
• Term sheet terms give a summary of proposed
principal terms of investment
• Term sheet is usually subject to satisfactory
completion of due diligence reviews
32
33. Term Sheet extract
Amount of investment Rs. 100 million
Type of security Equity Shares
Pre-money valuation Rs. 300 million
Post-money valuation Rs. 400 million
Equity shareholding of Existing holders of a 15%
the company post equity b 15%
investment c 10%
d 10%
e 5%
f 5%
Stock options pool 15%
VC Investor Limited
33 25%
34. Post Venture Capital investment
• Is a partner in the project
• Mentors and monitors the project
• Hand holds through the investment
34
35. Post VC investment
• Networks on behalf of the investee,
provides contacts, opens doors…
• flip side could be perceived as interfering,
this depends on VC/entrepreneur
relationship
35
36. What a VC does
• Each fund manager mentors only a
handful of projects
• While fund size is big, no. of investments
cannot be too much, hence project size
increases
• Unlike debt/other investor, VC is not silent
spectator,often is on the Board of investee
company
36
37. VC investment
• Some VCs therefore have separate persons
to look at investment and others to look at
post investment, monitoring as the skill sets
can be different
• Others have the same fund manager looking
at project from day one of receiving proposal
thru exit from investment
37
38. Mature markets
• Different VCs may target different
industries such as:
– IT further split into niche areas
– Agri related
– Bioinformatics
– Manufacturing - new materials
– Service
38
39. Future of VC in India
• Industry has not grown to meet needs of a variety of
entrepreneurs
• Too much money chasing too few projects, in select
industries, not in the majority
• Move towards consortium financing, risks spread for
a smaller piece of pie
• Many have dropped out and many coming in - churn
is there, as players are to get established
39
40. Future of VC in India
• Potential is there, needs to be tapped
• Lack of appropriately trained persons to manage
funds
• General public, including others like bank staff, CAs,
legal advisors etc. not completely aware of finer
points of such funding
• The entrepreneurial ecosystem is yet to develop, of
course some cities like Bangalore are slowly having a
variety of experts in this space
40
41. Future VCs in India
• There are limited takers for smaller projects
• Real early stage, high growth, high risk projects,
finding it difficult to raise funding
• There are issues of exit and other related issues
41
42. Future VCs in India
• In the recent times some groups have showed
interest in getting together those who need funds
on the one hand and those who want to invest on
the other, including high net worth individuals etc.
• This includes industry groups, academic institutions
and other groups
42
Editor's Notes
You might explain why deposits are liabilities and why reserves and loans are assets.
In this and the following examples, we assume there’s $1000 in currency circulating in the economy. We then compare the size of the money supply in different scenarios about the banking system: no banks, 100% reserve banking, and fractional reserve banking.
Maybe the borrower deposits the $800 in the bank. Or maybe the borrower uses the money to buy something from someone else, who then deposits it in the bank. In either case, the $800 finds its way back into the banking system.
Again, the person who borrowed the $640 will either deposit it in his own checking account, or will use it to buy something from somebody who, in turn, deposits it in her checking account. In either case, the $640 winds up in a bank somewhere, and that bank can then use it to make new loans.
[email_address] AMFI: a forum where mutual funds have been able to present their views, debate and participate in creating their own regulatory framework. the body that is consulted on matters long before regulations are framed, and it often initiates many regulatory changes that prevent malpractices that emerge from time to time. Receive Unit certificates within 6 weeks from the date your request for a unit certificate is received by the Mutual Fund. Receive dividend within 42 days of their declaration Receive the redemption or repurchase proceeds within 10 days from the date of redemption or repurchase.
[email_address] Ultra Short term (180 days) debt funds called liquid funds or floating rate fund or cash funds, Bond funds– fixed return instruments, term papers, G-Secs, Corporate bonds, interest rate floating – depending on interest rate in economy – return of 5.5% per annum last year– aim: preserve the principal and earn a modest return. Savings bank rate= 3.5% p.a. Balanced funds for those who are not comfortable with 100% exposure to equity. B est of both worlds-Power of equities & stability of debt market instruments- 60:40 equity debt ratio. Performance ≈ average 30% return, Volatility (Risk) = Moderate Income: fixed income securities such as bonds, corporate debentures and Government securities. capital stability and regular income. Money Market: safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. easy liquidity, preservation of capital and moderate income. Unit Linked Insurance Plan - life insurance as well as an investment like a mutual fund. Part of the premium towards the sum assured (amount you get in a life insurance policy) and the balance invested whichever investments you desire - equity, fixed-return or a mixture of both. benefit under Section 80C. Gilt funds are those that only invest in government securities and are hence zero credit risk, very safe MIP - 5-25% in stocks, rest in fixed income instruments