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European financial market - Essay Example

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The banks are the best examples of financial intermediation. Banks(Levine, 1999) offer their services to accept deposits from their current and new client depositors. The banks also offer to grant loans (Shetty, 1995) to possible client lenders. The banks will grant loans only if the feasibility study( Thompson, 1999) given by the company applying for the bank loan can show proof that it can pay on time the monthly or quarterly or annual installments(Meigs, 1995)…
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European financial market
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Download file to see previous pages In business parlance, pooling is the grouping credit transactions like bank loans( Brigham, 1985). An example is when loans and other long term liabilities with the same characteristics are pooled successfully into a new stock. Other examples of pooling applying for cash loans(Weston, 1993) with property, plant and equipment are used as collateral loan received is used to invest in several stocks and bonds. The company can also enter into a bond agreement where the bank intermediaries will give a $200,000 loan where the house and lot and another factory equipment will be pooled together to be used as collateral to put buy stocks in the stock exchange.
Funds includes all available money, including cash and checks deposited in banks and cash on hand. Funds also include mutual funds(Gartner,1997) where money is invested in many stocks and bonds and not lumped on one stock or bond alone.
Pension fund is one fund pooling where the employees contribute a small amount of money to a fund so that when such employee retires, he or she will be able to receive a pension benefit upon his or her retirement. Pension fund could be availed of upon retirement either by lump sum method or monthly method. The factors that affect the success(Thompson, 1999) or failure of a pension fund is based on the tables below. The Life expectancy table shows , in 2002, that in the United Kingdom women will generally live until the ripe old age of 80 years old as compared to only 73.7 years old in 1960. The men, meanwhile, will live up to the ripe age of 75.2 which is an increase from the 67.0 years old age in the year 1960. The elderly will increase to 47 percent in the year 2040 in the United Kingdom as compared to only 32 percent in the year 2020. The table below also shows that pension assets divided by Gross Domestic Product is 91 which lower than the amount accorded to Switzerland and Sweden. The pension assets of United Kingdom pension assets will reach US $1,403,000.000. The real returns divided by risk for United kingdom pension fund is 5.9 and its 50-50 bond equity is 4.4 while the pension plan's global portfolio 67.5 and lastly, The real average earnings of United Kingdom is 2.8.
One popular pooling of fund transaction is to exchange cash on and cash in banks and to invest these funds in the stock market. The company then generates income both ways. The first way is to earn dividends that the invested company declares. The second way to gain income is to sell the stocks at a market price that at a much higher than the price when the company bought the stocks.
THREE OTHER FUNCTIONS OF FINANCIAL SYSTEM
Financial System (UK) . This is defined as the information system(Obrien,1992) shows us all MONEY transactions using applications such as word, excel, quickbooks, MYOB accounting software and many others for the gathering of business related data such as official receipts received from suppliers for purchases paid or officials receipts issued for items sold. Electricity, water and telephone bills are also documents evidencing data to be inputted in the ...Download file to see next pagesRead More
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