Popular in Financial Institutions
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This 4 page Class Notes was uploaded by Sylvia Notetaker on Friday September 11, 2015. The Class Notes belongs to FNAN 321 at George Mason University taught by Mike Anderson in Spring 2015. Since its upload, it has received 30 views. For similar materials see Financial Institutions in Finance at George Mason University.
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Date Created: 09/11/15
FNAN 321 Week 3 Class 3 Finance companies and insurance companies Slide4 What is a nance company GMAC general corporations make lots of loans for general corporations Slide5 They are banks the nancial companies They are proportional between the 3 similar services and they do not rely on depos s Commercial paper is a bond short term and high liquid Because they do not rely on deposit they will not be charged on reserve requirement or FDIC They do not have less risky assets on their balance sheet Slide6 GE capital why they need money to buy products because they went through great depression Slide7 Sales nance When you go for ford dealer and they offer you a loan they get it from ford motor credit you do not get the loan but it s a deal They have these contracts with the dealers to quick nance Personal nance Provide installments loans and give it to borrowers AG personal nance specializing in giving loans They provide risky loans to borrowers The advantage high interest payments on the loan you can predict your losses Slide8 Focus on providing nancing from small to large nancing business Buying accounts receivables the bad ones because they can go after the people to make good pro t Slide9 Consumer loans motor vehicle loans usually to riskier borrowers Sales nance will make consumer credits Real estate because they are not subject to the same regulation as Dls they can make riskier loans subprime and charge a higher rate include all loans secured by liens on any type of real estate or as a securitized mortgage Business loans Business business Real estate personal nance Consumer credit is the highest Commercial paper is the main source of their nancing but why it is small in because its very hard to excess For smaller nance companies if they want to issue in commercial paper they let parent company to issue it on behalf of them Repurchases agreements sale of buying back at a higher price and this process is called repos Slidell Roll over risk risk that you wont be able to re nance Money mutual market funds funding people who comes from commercial papers You pay higher rate because deposit is low Finance companies how make pro t by charging more money and higher interest rate Slide14 Will go to individual investment and when they pay mutual fund they will get shares and they will give you a claim and then go to the market and from the market they will buy the portfolio Firm speci c risk is diversi ed or eliminate if not then you going to pay for it Slide15 If you want to go and buy the close end funds you will go to the secondary market as NASDAQ Slide16 MMMF usually cost 1 and you sell the share with 105 shares they act as banks if you 100 they give you 110 Buck because they are less than 1 They break the buck and then all sell their shares but the good funds will repos them too Only one goes below the buck less than 1 with reserve funds The most that got hurt the personal nance Junk bonds and Passive is the benchmark as they have the same as SampPSOO Active they have benchmark and they want to beat the benchmark as the SampP 500 and seeking alpha so alpha is what left over have more fees and as an investor you pay for it after paying you do not make more Which is better Passive Slide18 NAV the liquidation of the fund the price is the amount it is trade with Why NAV is greater or higher than the price market price is higher than the evaluation value fees When it is negative discount the NAV will be less than the price because there is a demand for it Municipal funds are usually negative and they are tax free Slide23 Front when you buy and back when you sell it and the 12b1 commission fees The no load fund zero Slide25 Services that brokers have now that you can move for free Then the mutual fund will be paying because it make their funds easier to be traded The broker got paid by the mutual funds Slide 33 The effective of late trader is 4 cents The late trader took the present shareholder s money Slide 39 Hedge funds basically mutual funds but for really rich people They are risky funds they gives you huge returns Hedge funds are safe investments when they exploit haga but they have leverage investment Borrow or options With options call option buy at a certain point or time but it s a small amount but have control for many shares Low cost but control of 2000 stocks Downsizing the leverage why its bad because it not your money you are losing your money and you have to pay back For options you can lose your premium and you will have a zero return