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Showing posts with the label Financial Management Notes

TYPES OF GOVERNMENT SECURITIES:

TYPES OF GOVERNMENT SECURITIES: ·          Basic two types on the basis of coupon payment Discount securities Pay only contractually fixed amount at maturity (Maturity value or face value) E.g., Treasury bills Coupon securities Pay interest on every six months plus principle at maturity Maturity 2-10 years, e.g., Treasury notes; maturity more than 10 years, e.g., Treasury bonds ·          Bearer and book entry securities Securities for which possession is primary evidence for ownership are bearer securities Book entry securities Only depository institutions are eligible to hold a securities account at Fed Dealers, brokers and their client can access the system indirectly by keeping a securities account at a depository at the Fed Securities Account at a Bank → Bank computer keeps record of ownership of account holder    ↓                                         Account at Fed → Fed’s computer keeps record of Bank’s

Insurance

Insurance A legal contract that protects people from the monetary costs that result from loss of life, lose of property and loss of business etc. Provides security against loss of property through natural causes such as fire, flood, earthquake, war, burglary etc and also provides the financial security against the loss of life due to accidents, decrease etc. Also provides financial security for unemployment and elderliness. It is the risk transfer process where insurance companies are willing to accept the risk associated with individual policyholders in exchange of the premium. The essential feature of the risk transfer process is that, while individuals may not be able to diversify a risk, insurance companies do have that diversification ability. Economics of Insurance Purchaser of insurance pays a fixed premium in exchange for a promise of compensation in the event of some specified economic