Financial Intermediaries Essay Example | Topics and Well Written Essays - 1500 words

Financial Intermediaries - Essay Example An understanding of Financial Institution A financial intermediary can be defined as an institution that acts as the middleman between investors and firms raising funds. (Investopedia, 2012) Several types of financial intermediaries such as Banks, Insurance companies, building societies, pension funds, credit unions etc functions in an economy. The function of a financial intermediary is of prime importance in economic growth as it brings in contact two parties i.e. one having a surplus of funds who is looking for a venture to invest in so to earn a return on the money, and the second type which is looking to borrow funds. Since in the real world, it is rare that the demand of lender and borrower reconcile and thus a financial intermediary comes into play. A financial intermediary, such as banks, acquires funds from the lenders and subsequently lends them to the borrowers according to their desire rates. In this particular exercise the financial intermediary takes into consideration various needs of the lender and borrower such as maturity (which means the duration or term for which the lender wants to lend and the borrower wants to acquire) and rate of return/cost of debt (the lender wants to maximize the return, whereas the borrower wants to minimize the cost). ... In addition, the financial intermediary also offers risk aversion which assists the parties involved in spreading out and reducing the risk. Common Functions of Financial Institutions There are three main ways in which capital is transferred between savers and the one who needs it. In the first procedure, the saver directly receives stocks or bonds which a business sells. This transaction is done in the absence of any financial institution. The business in order to get the money it needs, provide savers with its securities. The second way is indirect way, which includes an investment banking house such as Merill Lynch, which underwrites the issue. Underwriter here plays the role of a middleman and guarantees the issuance of securities. The stocks or bonds of the company are sold to the investment bank, which in turn sells these same securities to the savers. In such transaction, the business’s securities and the savers money is only passing through the investment banking house . It should be noted that in this particular transaction that the investment bank buys the securities and held them for a particular period of time. By doing so the investment bank is taking a risk that it may not be able to resale these securities in the future for as much amount as it paid. This transaction is termed as a primary market transaction. The third way is an indirect way in which transfer is made through a financial intermediary such as bank or mutual fund. In this case, by exchanging its own security, the intermediary obtains funds from the saver. After acquiring the funds, the intermediary purchases businesses’ security with the money it obtained from the saver. For example, a bank

Product recognition Research Paper Example | Topics and Well Written Essays - 500 words

Product recognition - Research Paper Example y designed to target the needs of the young generation who cares a lot about bad breath and, use different products to seek â€Å"freshness in breath.† Colgate Max Fresh is high-in-demand in Asian markets as compare to American and European markets. But, the brand can position itself in American and European markets successfully by associating itself with the activities especially for the youth to slowly make its place in the markets. The product is catered to meet the needs of the young generation who seek freshness and use multiple oral products to keep their breath fresh and clean. The product is segmented on the basis of age and gender. Mostly, young males are more conscious about their bad breath due to their smoking habits as compare to girls. Therefore, to reach this specific consumer group, the company has targeted the young males on the basis of â€Å"freshness†. Colgate Max Fresh owns a heavy market in Asia. But, due to high smoking habits of Europeans, the brand can have its potential growth in Europe as well. In America, the brand will enjoy a little attention as the Americans seek whitening of teeth over bad breath. Colgate Max Fresh has been introduced in the market in multiple flavors. The product is designed to target the youth. To penetrate in the market and in the minds of youth, it has associated itself with the brands such as iPods and other sports activities such as Kayaking. This association has helped the brand to develop its image of a brand which is specifically designed for the youth. To target more young consumers, the brand can also sponsor programs that are catered towards the young audience. The constant appearance of Colgate Max Fresh commercial on the TV channel will draw the young audience towards the product, hence, making a psychological effect on their minds. The brand can associate itself with MTV America and Europe to target more young consumers as they listen to music more than any other age group. Colgate Max Fresh has