FIN20014 Lecture Notes - Lecture 11: Life Insurance, Capital Market, Working Capital
Document Summary
In australia, financial intermediaries are the dominant sourcesof company finance. The domestic bankshave the largest share of the market. Other key players are superannuation fundsand life insurance companies. Intermediaries receive their income through a interest rate spread. The australian financial sector is regulated by apra, asic, and the rba. Working capital requirements in the day-to-day operations of the business. Industries with seasonal peaks and troughs, and those engaged in international trade, will be heavy users of short-term finance. Main providers are trading banks, merchant banks, and finance companies. Short-term financial decisions typically involve cash inflows and outflows that occur within a year or less. Cash reserves reducing the probability of financial distress vs investments in zero npv securities. Maturity hedging match maturity of asset with maturity of liability. Relative interest rates cheaper to have shortterm borrowing than long-term borrowing. Short-term euro-currency funding: financing in a currency outside the country of issue.
