# How Funds Transfer Pricing (FTP) Is Applied To Measure Bank Profitability - Essay Example

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In this paper, the researcher will make an earnest attempt to use a problem to perform an experiment that involves probability. This research will begin with the statement that probability is the measure of the likelihood of an event happening…

## Extract of sample "How Funds Transfer Pricing (FTP) Is Applied To Measure Bank Profitability"

Download file to see previous pages This paper illustrates the experiment that is the spinning of the spinner. The possible outcomes are landing on white, black, blue, and green. One event of this experiment is landing on white. The probability of landing on white is one fourth. The general formula for determining the probability of an event is P (A) = (Number of ways an event can occur/ Total number of possible outcomes). A conditional statement is a logical statement that has two parts, that is, a hypothesis and a conclusion. Conditional statements take the form of if ‘p’ (hypothesis), then ‘q’ (conclusion). Contrary, converse statements take the form of; if ‘q’ (conclusion), then ‘p’ (hypothesis). Consider the following conditional statement; if it is raining outside, then it must be cloudy. In this case, ‘raining outside’ is the hypothesis while ‘it must be cloudy’ is the conclusion. The converse statement for the above conditional statement would be, if it is cloudy, then it must be raining outside. If a converse and conditional are true, then one can write a biconditional statement. For instance, a conditional statement would be, if two lines intersect to form a right angle, then they are perpendicular. The converse statement would be; if two lines are perpendicular, then they intersect to form a right angle. The bi-conditional statement would be; two lines are perpendicular if and only if they intersect to form a right angle. A syllogism is a form of reasoning that draws conclusions from two premises that share a term with the conclusion and shares other terms that are not in the conclusion. Below is an example of a syllogism. A cause of something is what happens first while the effect is the resulting outcome of the happening. For instance, from the article World War II, the cause of World War II was Germany’s invasion of Poland. The effect was the outbreak of World War II. Normally, there may be many causes for one effect. ...Download file to see next pagesRead More
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## CHECK THESE SAMPLES OF How Funds Transfer Pricing (FTP) Is Applied To Measure Bank Profitability

### Transfer Pricing

...?INTRODUCTION Transfer price mechanism is process that provides opportunity to attach prices of goods and services of two divisions of same company. It is the process where the negotiated price is arrived between two sections of similar divisions (Robertson , 1996, 2). It is usually applied when bodies are separate entities and are individually responsible for their profitability and divisions are accountable for their own profits (Jensen and Meckling, 1976, 315). Since transfer pricing is an agreement between two divisions of same group there is greater chance of conflict of interest as both buying and selling side try to transfer to counter party resulting increased benefit to its division (Chan, Landry, and Jalbert , 2004, 39... ). This...
5 Pages(1250 words)Essay

### Responsibility Accounting and Transfer Pricing

...at that point of time. However, it would mean that an extra cost would be incurred to fulfil with the accounting standards of the government. This would be too complicated to carry out so it is best to not replace the metal press. Problem 5-15 "U.S Pump Systems" US Pumps is a multidivisional firm that manufactures and installs chemical piping and pump systems. Its valve division makes a single standardized valve. The valve division and installation division currently are involved in a transfer-pricing dispute. Last year, half of the valve division's output was sold to the installation division for \$40 and the remaining half was sold to outsiders for \$60. The existing transfer...
4 Pages(1000 words)Math Problem

### Assignment 4: Transfer Pricing

...for sale by USAco to CARco the \$300 gross profit is mainly allocated wholly to CARco, and the total tax on that profit translates to foreign tax of \$135 [\$300 income multiplied by 25% foreign tax rate]. A multinational company (MNC) might utilize transfer pricing strategies for two core purposes: income tax liability reduction or funds repositioning. In the event that the tax rate within the country of the selling affiliate is lower than the tax rate within the buying affiliate country, a high, markup policy on sales is likely to leave minimal taxable income within the buying affiliate country to be taxed at an increased rate (Urquidi, 2008). Even if,...
6 Pages(1500 words)Research Paper

### International Taxation - Transfer Pricing

...of audit plan, the IRS should first select transactions between the subsidiary and the parent company on sample basis (whether through statistical or non-statistical method) and then applies its guidelines of transfer pricing on these transactions. If any misstatement is identified then further investigation should be conducted on account of transfer pricing malpractice. One major indication of transfer pricing malpractice is when the group as a whole starts paying less tax as compared to its previous financial years whereas its profit before tax does not fluctuate. References Ey.com (2013). 2013...
8 Pages(2000 words)Research Paper

### Bank Product Profitability

...to wholesale lending institutions. A broker has established relationships with these companies. Underwriting and funding takes place at the wholesale lender. Many mortgage brokers are also correspondents, which is why many of them also claim to be mortgage bankers. Mortgage brokers deal with lending institutions that have a wholesale loan department. (The Wall Street Journal, p. B3, 2000) Financial Institutions Profitability Measurement In the banking sectors, the profitability measurement is very common from the last years. This is due to the increase in technology and many of the financial institutions now are engaged in making the...
40 Pages(10000 words)Essay

..., the company’s similar quality products are reasonably priced within the same \$50 to \$60 price range. This is the essence of having learning the principles of business communication language principles. Organization Data The organization’s manager sends a business communication to transfer funds from one country to the United States. However, the manager does not specify the currency of the fund transfer. Consequently, there is confusion as to whether the currency of the funds transfer should be in Dirhams or in United States dollars. The finance department finds that there was...
7 Pages(1750 words)Case Study

### Transfer pricing case

...TRANSFER PRICING CASE Introduction PrimeCo is one of the pioneering companies in the cell phone industry that started as provider for cell phone batteries to international players in the cell phone industry. G. Vanford, who was the founder if PrimeCo soon realized that if the company invests in Research & Development, it will have huge potential to reach new level in future. Due to the company’s aggressive investment in R&D and commitment to developing innovative products, it was awarded many patents. The company’s profitability grew with the industry’s growth and this increased revenue allowed the company to raise investments in developing new products. The company’s management decided...
5 Pages(1250 words)Coursework

### Exchange Transfer Funds- BRZU

...Exchange Transfer Funds- BRZU Introduction Direxion Daily Brazil Bull 3X Shares (BRZU) is an exchange transfer fund integrated in the USA. The Fund considers every day investment outcomes before expenses and fees of 300% (3X) of the function of 25-50 Index of the MSCI Brazil. This assignment analyzes BRZU funds against US dollars over the period of 2005 to 2010. Ultra ProShares and Direxion Shares are leveraged ETFs (Exchange-Traded Funds) premeditated to seek daily investment outcomes, prior to fees and expenses, of 3x of the performance or 300% / 3x of the contrary of the operation achievement, in a scenario of a bear...
3 Pages(750 words)Research Paper

### Fund Transfer Pricing

...﻿Application of funds transfer pricing to measure bank profitability Introduction Fund transfer pricing (FTP) is a process used by banks to measure the performance of the different business units in the bank. FTP measures and integrates the performance of the various units such as branches and the various sections and sub sections (Sinha 2008). FTP is a process that incorporates all the aspects related to how banks raise deposits and...
2 Pages(500 words)Essay

### Fund Transfer Pricing

...varying cost of funding (Macdonald & Koch 2006). The main purpose of finance transfer pricing is to measure independently how different sources of funding contribute towards the profitability of banks (Orlando). Illustration Assume a two-year loan financed by a three-month deposit. Assume also that the deposit segment acquires \$1,000,000 worth of funds from the customer at a cost of 4%. These funds are passed to the treasury at a funds transfer-pricing rate. Assuming that the rate is 6%, the bank would...
2 Pages(500 words)Essay