In the case of individuals, first of all, their demand of money depends on the opportunity cost holding money instead of other assets with less liquidity. Holding money or even keeping it as bank deposit brings little interest rate for holders, while they can benefit more if investing in other less liquid forms of wealth such as government bond, large time deposit, real estate. From this we can conclude that the higher the interest rate is, the more it is likely for money demand to fall. Second, the main benefit of holding money is its liquidity. For individuals, holding money make it easier and more convenient for them to finance their everyday purchases.
• Trade credit the company can contact its actual suppliers and take a credit and pay for them later based on their previous invoices. This will be suitable for them because they already have a pass with those suppliers and therefore have a good relationship (trust) so it will be easier. • Overdraft the money of the overdraft will help to buy other essential assets that the company may not have existing suppliers trading with them. Long-term bank loans and equity are not suitable because too costly, dilution of control for ordinary shareholders may occur they will want to and it is too risky for additional assets. f) Other day-to-day expenses.
2.1.4. Power of customers; This specifically deals with the ability customers have to drive prices down. It is affected by how many buyers, or customers, a company has, how significant each customer is and how much it would cost a customer to switch from one company to another. The smaller and more powerful a client base, the more power it holds. Some corporate individuals do have large deposits in Sampath, and exercise strong bargaining power to receive special rates from the bank.
Bond funds are involved to buy undervalued bonds in order to sell them at a profit. These bonds are likely to pay more return than certificate deposit, and money market instruments, but bond funds aren’t without risk because these are mainly depend on where they invest. For example, a fund invested in high yield Junk bond is more risky than a fund invests in government securities. Furthermore nearly all bonds are subject to interest risk, which means if the risks go up the value of the fund goes down. Balanced Funds: The main objective of the balanced funds is to provide a balanced mixture of safety, income and capital appreciation.
This scenario is more risky in terms of loan repayment. Customer is more likely to take time to pay back the loans. 4.4.1 Scenario 1: Bank customers jumping to a new employer who pays more than the present job The customers have different options given by banks in case they wish to pay back the amount before the tenure period. From the survey, the banks do allow the customers to pay back and allow
This cashback credit cards suit for those consumers who are paying big credit card bill every month and are looking for uncapped cashback promotions. However, based on my opinion, I think that there are some methods Hong Leong Wise Gold can be improved to ensure that it outperforms similar products offered by other competing banks. Firstly, HLB should not charge annual fee for this Hong Leong Wise Gold Card. This Hong Leong Wise Gold annual fee is higher as compared to other cash back cards. One of the competing banks, CIMB Bank introduces their customers the CIMB Cash Rebate Platinum MasterCard.
Retail Banking Features: (Rao, 2014) Explains the main feature of retail banking which is centered around reducing the risk through distribution risk to the largest number of individuals rather than focusing the risk on a few companies. With this feature in Retail Banking, banks need to have high efficiency to manage this large portfolio of financial and banking services. 2.2.4. Types of Borrowers According to (APOSTOLIK, DONOHUE, & WENT, 2009) the main borrowers types in the banks include Retail borrowers, Corporate borrowers, Sovereign Borrowers and Public borrowers. For our research we will focus on the retail borrowers (individuals).
Disintermediation "unbundles" risks on the part of the fund providers. Funding risk used to be borne by banks as a single entity, however, going through securities, the risk is now spread across several individuals and funding entities. Disintermediation has implication for economics of scale with respect to pooling resources towards funding. This is because the scope to attract funding is now considered to be larger. Resource Utilisation is increased with disintermediation.
It is indicated that when the service is higher in price, the quantity of surcharge paying foreign customers who use the service will lower. In addition, switching customer’s deposit account can be done by raising ATM surcharge, especially to them that most likely to use bank ATM network who would have to pay more if they remained as a foreign customer. If these network is improved, switching of a bank are more likely since customers are attracted by the convenience of better network and avoiding to pay the surcharge for the network. Another great impact is, it the promotion of marketing banking services is immensely contributed. This has meant that large numbers of many people have reaped tremendous financial benefits of this device.
The lower the interest coverage ratio indicates that PPB might face problem to pay the interest payment due to its low earnings before interest and tax.. 3.3 Liquidity Liquidity is defined as the degree to which an asset or security can be traded in the market without affecting the security’s price. Liquidity is often related to high level of trading activity. Liquid assets are assets or securities which can be easily bought and sold in the market such as blue chip stock and money market securities. Liquidity is often measured by using current ratio and quick ratio. Various liquidity ratios are used to measure the financial position of Petronas Dagangan Berhad, Perdana Petroleum Berhad and Gas Malaysia Berhad in the short term.