SUMMARY FINANCIAL SERVICES TREASURY MANAGEMENT

By: Lucky Astri Fitriana 1106148340

MAGISTER MANAJEMEN FAKULTAS EKONOMI UNIVERSITAS INDONESIA

Saving institutions comprise two different groups of FI: saving associations and saving banks. and these funds were lent only to other members. By accepting premiums. commercial. They usually are grouped together because they not only provide important mortgage and/or lending services to households but also are important recipients of household savings. Savings Institutions Saving institutions is depository institutions that specialize in residential mortgages mostly backed by short-term deposits and other fund. 3.Chapter 2 Financial Service: Dispository Institution Financial Institutions (FI) perform the essential function of channeling funds from those with surplus funds (supplier of funds) to those with shortage of funds (user of funds). Commercial bank liabilities usually include several type of nondeposit source of funds. . including consumer. Members were expected to deposit their saving in CU. Commercial banks activity is also regulated separately from the activities of saving institutions and credit unions. Member paid an entrance fee and invested fund to purchase at lease one deposit share in the CU. Commercial banks have operated as more diversified institutions. This chapter begin by describing three major FI groups. having a large concentrations of residential mortgage assets but holding commercial loans. Chapter 3 Financial Services: Insurance Insurance services offered by FI protect individuals and corporations (policy-holders) from adverse events. Credit Unions Credit unions are nonprofit depository institutions mutually organized and owned by their member ( depositors) with a common bond. which are also called despository institutions because a significant proportion of their funds comes from customer deposit. and corporate stock as well. Commercial Banks A bank that accept deposits and make consumer. while their loans are broader in range. With the premiums collected. 1. corporate bonds. and real estate loans. commercial. and real estate loans. FI that offer insurance services promise policyholders compensation if certain specified events occur. 2. and specializing in small consumer loans.

variable life insurance invests fixed premium paymentsin mutual funds of stocks. Despite the enormous variety of contractual forms. Variable life. unlike traditional policies that promise to pay the insurance the fixed or face amount of policy. Credit Life Sold to protect lenders against a borrower’s death prior to the repayment of a debt contract such as a mortgage or car loan. Ordinary Life Ordinary life insurance involves policies marketed on an individual basis. there are essentially five basic contractual types:     Term life. Whole life. with no savings element attached. Group Life Covers a large number of insured persons under a single policy. allows both the premium amounts and the maturity of the life contract to be changed by the insured. on which policyholder make periodic premium payment. 2. Life Insurance Life insurance allows individuals and their beneficiaries to protect against losses in income through premature death or retirement. Usually issued to corporate employers. Property-Casualty Insurance .insurance company invest in financial securities such as corporate bonds and stocks. By pooling risk. life insurance transfers income-related uncertainties from insured to a group. an endowment life policy combines a pure (term) insurance element with a saving element. c. bonds. b. Industrial Life Currently represents a very small area of coverage.  Universal life and variable universal life. and money market instruments. unlike traditional policies that maintain premium at a given level over a fixed contract period. a term life policy is the closest to pure life insurance. d. a whole life policy protects the individual over an entire lifetime. The four basic classes or lines of life insurance are distinguished by the manner in which they are sold or marketd or purchased. Insurance services are classified into two major group: 1. Endowment life. These classes are: a.

3.Property insurance involves insurance coverages related to the loss of real and personal property. 4. Investing Investing involves managing not only pools of assets such as closed and open end mutual funds but also pension funds in competition with life insurance companies. Market making Involves creating secondary market in asset by a securities firm or investment bank. and distributing issues of new securities (the commercial side of business) are called investment banks. Trading Closely related to the market-making activities. while other firms specialize in originating. underwriting. There are four type of trading activities: a. Position trading b. . Cash Management Money market mutual funds sold by investment banks. Casualty insurance concerns protection against legal liability exposure. Program trading 5. Securities firms and investment banks engage in as many as seven key activity areas: 1. Hometowners multiple-peril insurance c. Fire insurance and allied lines b. Investment Banking Refers to activities related to underwriting and distributing new issues of debt and equity. where a trader takes an active net position in an underlying instrument or asset. Types of property-casualty insurance: a. Automobile liability and physical damage insurance e. Risk arbitrage d. most cash management account offer check writing previleges. 2. salem and brokerage of existing securities (the retail side of the business) are called securities firm. Commercial multiple insurance d. Pure arbitrage c. Liability insurance (other than auto) Chapter 4 Financial Services: Securities Brokerage and Investment Banking Some firms in the industry specialize in the purchase.

Hedge funds are similar to mutual funds in that they are pooled investment vehicles that accept investors’ money and generally invest it on collective basis. clearance and sttlement services.g. Short-term fund include taxable money market mutual funds and tax-exempt money market mutual funds.6. Mutual fund are also able to generate greater economies of scale by incuring lower transaction costs and commisions. Hedge funds are type of investment pool that solicit fund from (wealthy) individuals and other investors (e. . 7. Mergers and Acquisitions Frequently involved in providing advice or assisting in mergers and acquisitions. An open-ended mutual fund (the major type of mutual fund) continously stands ready to sell new share to investors and to redeem outstanding share on demand at their fair market value. are restricted to more wealthy clients. Thus. Investment in hegde funds. commercial banks) and invest these funds on their behalf. and research and other advisory services. Hedge funds can be devided into three clasifications: 1. Back-Office and Other Service Functions These functions include custody and escrow services. these funds provide opportunities for small investors to invest in financial securities and diversify risk. These funds seek high returns using leverage.. More risky Market directional. Chapter 5 Financial Services: Mutual Fund and Hedge Fund Mutual funds and hegde funds are financial institutions that pool the financial resources of individuals and companies and invest in diversified portofolio of assets. however. Long-term funds include:    bond funds (comprised of fixed-income securities with a maturity of over one year) equity funds (comprised of common and preferred stock securities) hybrid funds (comprised of both bond and stock securities). typically investing based on anticipated events. The mutual fund industry is usually divided into two sectors: short-term funds and long-term funds.

consistent returns with low risk. Some of their loans are similar to commercial bank loans. This difference can lead to losses and even failure if the high risk does not pay off. These funds strive for moderate. business lending. 2. Risk avoidance Market neutral. Chapter 6 Financial Services: Finance Companies The primary function of finance companies is to make loans to both individuals and corporations. but otther are more specialized. such as consumer and auto loans. and mortgage financing. . 3. 3. Personal credit institutions Institutions that specialize in making installment and other loans to consumers. Additionally. Sales finance institutions Institutions that specialize in making loans to the customers of a particular retailer or manufacturer. The three major type of finance companies are: 1. typically favoring a longer-term investment strategy. finance companies often lend to customers commercial bank find to risky.2. Moderate risky Market neutral or value orientation. The services provided by finance companies include consumer lending. Business credit institutions Institutions that specialize in making business loans. Finance companies differ from banks in that they do not accept deposits but instead rely on short and long-term debt as source of funds. These funds have moderate exposure to market risk.

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