# Collection system

A collection system moves payment from payers to available deposits in the banking system as efficiently as possible. There are five major ele m e nts in this system: -

a. The num ber of collection points b. Location of the collection points c. Internal or external operation of the collection points d. Assignm e nt of individual players to collection points e. Capture and movement of information about the paym ents

Types of collection systems:1. over-the counter collection system Basic com p onents System design:a. Field office location b. Type of payment accepted c. Selection of deposit banks d. Information gathering 2 . Mailed paym e nts collection system Basic com p onents System design:a. Collection point location b. In-house versus external operation c. Payer a ssignment d. Typ e of p aye r

Other collection system:a. Preauthorized paym e nts b. Lockbox system

Portfolio of 2 Securities Case/ 3 Security Case In this section we shall analyze the risk & return in the case of 2 securities portfolio. we have 2 stocks X & Y. if they are positively correlate then +1 & if negatively correlated then -1. Let. We can observe that portfolio risk is affected by: The proportion of funds devoted to each stock The SD of each stock The covariance between the each stock If the stocks are independent to each other then co variance will be zero. By changing the proportion of assets we can get a better portfolio. Portfolio Risk can be calculated by σp= [x21 σ21 + x22 σ22 +2 x1 x2 (r12 σ1σ2) ]1/2 Where σp is portfolio standard deviation x1 is % of total portfolio value in stock 1 x2 is % of total portfolio value in stock 2 σ1 is SD of stock 1 σ2 is SD of stock 2 thus now we have SD of 2 portfolio securities. It will give an introduction about the impact of combination of two securities. X Expected return SD 9 2 Y 9 4 .

. In the similar way w can set the equation for the 3 securities case.0 So we can see that portfolio risk can be brought down to zero by skillfully balancing it. Now by changing proportion of X & Y X 100 80 66 20 0 Y 0 20 34 80 100 Portfolio SD 2 0.Covariance is -8 & coefficient of correlation is -1.8 4.0 2.8 0. σ2p= x21 σ21 + x22 σ22+x23 σ23 + 2 x1 x2 r12 σ1σ2 +2 x2 x3 r23 σ2σ3+2 x1 x3 r13 σ1σ3 Similarly we can extend it to the n security case.

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