Chapter 36 - Capital Management Flashcards

1
Q

Capital management of financial products provide involves

A

Sufficient solvency and capital to meet:
- existing liabilities
- future growth aspitarition
Maximizing reported profits

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Capital needs

Individuals

A

Cushion against unexpected events

Save for future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Capital needs

Company

A
Financial consequences of adverse events
Cushion against fluctuating trading volume
Finance expansion
Finance stock and work in progress
Premises, staff, equipment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Capital needs

Providers of financial products

A
Meet benefits before sufficient premiums
Development expenses
Cushion against unexpected events
Statutory/solvency requirements
Invest more freely
Sell.products woth guarantees
Financial strength to attract business 
Smooth reported profits
Achieve strategic aims
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Capital needs

State

A

Fluctuations in balance of payments and economic cycle

Timing difference between income and outgo

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Meeting capital needs

A

Proprietary - raise capital through share issues

Mutual - raise capital through subordinate debt

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Capital management tools

A
Reinsurance
Financial Reinsurance (FinRe)
Securitisation
Subordinate debt
Banking products
Derivatives
Equity capital
Internal restructuring
How well did you know this?
1
Not at all
2
3
4
5
Perfectly