Pension funds fund set up by an employer to offer

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Pension Funds Fund set up by an employer to offer retirement investments to its employees (continued) Types of FIs
Holdings of Corporate & Foreign Bonds Households (19.2%) Mutual funds, etc. (16.9%) Pension funds (5.0%) Insurance companies (20.1%) Rest of world (20.5%) Banks & savings institutions (6.0%) Other (12.4%) Figure 2.3 Holdings as of 4 th Qtr. 2012
Pension funds (16.3%) Mutual funds, etc. (24.1%) Insurance companies (6.8%) Rest of world (12.1%) Households (39.5%) Other (1.1%) Holdings of Corporate Equities Figure 2.4 Holdings as of 4 th Qtr. 2012
54 Transporting cash across time Risk transfer and diversification Liquidity, maturity, and denomination intermediation Payment mechanism Provide information Commodity Prices, Interest Rates, Company Values Credit Allocation Functions Performed by FIs
The Crisis of 2007 - 2009 The housing market slows in 2005 and crashes in the spring of 2007 in several countries. Two hedge funds at Bear Stearns fail in July 2007. Northern Rock Bank is bailed out by the Bank of England. September 2007 sees several bank runs around the globe. Commodity prices skyrocket in 2008 with crude oil peaking at $147/barrel in July .
The Crisis of 2007 - 2009 US Government places Fannie Mae and Freddie Mac into conservatorship on September 7, 2008. Lehman Brothers fails on September 14, 2008. Equity markets plunge on September 15, 2008. AIG rescued with an $85 billion bailout September 16, 2008. The Greek crisis began to unfold in late 2009 and was protracted until 2012 when it finally defaulted. In mid- 2015 it failed to repay the IMF bailout. It’s sovereign debt was about more than €300bn at the time.
The Crisis of 2007 - 2009 Seeds of the Crisis Change in legislation Easy money Subprime mortgages Mortgage backed securities
Chapter 3 The Balance Sheet The Income Statement The Statement of Cash Flows Accounting Practice & Malpractice Taxes
59 Financial Statements and Reports Financial statements and reports are the most important object of study of the financial manager. The annual (10-K) and quarterly (10-Q) reports filed with the SEC are probably the most important document corporations issue to their stockholders. Get them at: They are comprised of a verbal - qualitative section- and a quantitative section - the financial statements.
60 Financial Statements and Reports How are the statements integrated? In the US, following Generally Accepted Accounting Principles (GAAP) set by the Financial Accounting Standards Board (FASB) and certified by an auditor Abroad, following International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) In 2010, the SEC affirmed its support of a single standard, with IFRS as the preferred method, but it is still unclear as to when IFRS will be adopted.
61 The Letter to Stockholders The primary method of communication from management to shareholders. It outlines results of the past year, as well as plans for the coming year.

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