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Factors Determining Management of an investment portfolio Structure

Trading on Equity- The word “equity” denotes the ownership of the company. Trading on equity means taking advantage of equity share Management of an investment portfolio to borrowed funds on reasonable basis. It refers to additional profits that equity shareholders earn because of issuance of debentures and preference shares. It is based on the thought that if the rate of dividend on preference Management of an investment portfolio and the rate of interest on borrowed Management of an investment portfolio is lower than the general rate of company’s earnings, equity shareholders are at advantage which means a company should go for a judicious blend of preference shares, equity shares as well as debentures. Trading on equity becomes more important when expectations of shareholders are high.

Degree of control- In a company, it is the directors who are so called elected representatives of equity shareholders. These members have got maximum voting rights in a concern as compared to the preference shareholders and debenture holders. Preference shareholders have reasonably less voting rights while debenture holders have no voting rights. If the company’s management policies are such that they want to retain their voting rights in their hands, the Management of an investment portfolio structure consists of debenture holders and loans rather than equity shares.

Flexibility of financial plan- In an enterprise, the Management of an investment portfolio structure should be such that there is both contractions as well as relaxation in plans. Debentures and loans can be refunded back as the time requires. While equity Management of an investment portfolio cannot be refunded at any point which provides rigidity to plans. Therefore, in order to make the Management of an investment portfolio structure possible, the company should go for issue of debentures and other loans.

Choice of investors- The company’s policy generally is to have different categories of investors for securities. Therefore, a Management of an investment portfolio structure should give enough choice to all kind of investors to invest. Bold and adventurous investors generally go for equity shares and loans and debentures are generally raised keeping into mind conscious investors.

Management of an investment portfolio market condition- In the lifetime of the company, the market price of the shares has got an important influence. During the depression period, the company’s Management of an investment portfolio structure generally consists of debentures and loans. While in period of boons and inflation, the company’s Management of an investment portfolio should consist of share Management of an investment portfolio generally equity shares.

Period of financing- When company wants to raise finance for short period, it goes for loans from banks and other institutions; while for long period it goes for issue of shares and debentures.

Cost of financing- In a Management of an investment portfolio structure, the company has to look to the factor of cost when securities are raised. It is seen that debentures at the time of profit earning of company prove to be a cheaper source of finance as compared to equity shares where equity shareholders demand an extra share in profits.

Stability of sales- An established business which has a growing market and high sales turnover, the company is in position to meet fixed commitments. Interest on debentures has to be paid regardless of profit. Therefore, when sales are high, thereby the profits are high and company is in better position to meet such fixed commitments like interest on debentures and dividends on preference shares. If company is having unstable sales, then the company is not in position to meet fixed obligations. So, equity Management of an investment portfolio proves to be safe in such cases.

Sizes of a company- Small size business firms Management of an investment portfolio structure generally consists of loans from banks and retained profits. While on the other hand, big companies having goodwill, stability and an established profit can easily go for issuance of shares and debentures as well as loans and borrowings from financial institutions. The bigger the size, the wider is total Management of an investment portfolioization.


 

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Apendix A

 

Shares of bank groups in selected banking sector indicators(for banks with licences as of 31 December 2013)in %
31 Dec 2004 31 Dec 2010 31 Dec 2011 31 Dec 2012
31 Mar 30 Jun 30 Sep 31 Dec
Assets, total
Banking sector, total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
ofwhich:                
largebanks 61.55 62.88 61.37 61.73 60.08 60.36 59.97 57.53
medium-sizedbanks 8.36 8.73 9.34 10.30 11.02 11.21 11.45 12.24
smallbanks 4.28 4.07 4.29 4.39 4.58 4.73 5.08 5.32
foreignbankbranches 13.82 12.15 12.56 12.38 13.12 13.16 13.03 14.07
buildingsocieties 11.99 12.17 12.45 11.20 11.20 10.54 10.47 10.84
Clientsreceivables, total (gross)
Bankingsector, total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
ofwhich:                
largebanks 60.93 60.11 58.71 56.45 54.65 54.20 53.56 53.69
medium-sizedbanks 14.48 15.60 15.98 17.03 17.84 18.00 18.04 17.99
smallbanks 5.18 5.47 5.63 5.99 6.14 6.25 6.39 6.68
foreignbankbranches 11.15 9.73 10.26 10.70 11.03 11.11 11.39 10.67
buildingsocieties 8.26 9.10 9.41 9.82 10.35 10.43 10.62 10.97
Clientsdeposits, total
Bankingsector, total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
ofwhich:                
largebanks 66.44 64.78 63.43 64.15 63.54 64.05 63.99 60.91
medium-sizedbanks 6.46 6.36 6.57 7.19 7.59 7.93 7.96 8.82
smallbanks 2.29 2.95 3.17 3.33 3.45 3.50 3.78 4.24
foreignbankbranches 7.64 8.25 9.27 9.32 9.62 9.33 9.36 10.22
buildingsocieties 17.18 17.66 17.56 16.01 15.79 15.18 14.91 15.81
Source: JSC «KazkommertsBank»
                         

 

 

Apendix B

 

 

Grossclaimspaid
Gross claims paid (mln. Tenge) Asof 01.07.06. Asof 1.07.07 Asof 01.07.08. Change 2010/2011 %
      Amount share,%  
Total, including: 1 012,6 916,0 1818,6 100,0 98,5
Obligatorybankofshares 286,2 342,6 449,4 24,7 31,2
Voluntary personal bank of shares 190,9 266,3 447,4 24,6 68,0
Voluntary property bank of shares 535,5 307,1 921,7 50,7 200,1
Source: JSC «KazkommertsBank»

 

Apendix C

 

Basic indicators of the bank of shares sector to GDP

    GDP Asof 01.07.07. Asof 01.01.03. Asof 01.07.08.
  3489,3 bln. tenge 3747,2bln. tenge 4100,7bln. tenge
Ratio of bank of shares premiums to GDP, % 0,3 0,6 0,3
Ratio of own equity to GDP, % 0,2 0,2 0,2
Ratio of assets to GDP, % 0,5 0,6 0,6
Source: JSC «KazkommertsBank»

 

 

Apendix D

 

Share Capital The proforma effects of the Proposed Merger on the issued and paid-up share capital of AFB are as follows:
  No. ofAFBShares
Issued and paid-up share capital as at 30 April 2013 3,370,905,834
New BCHB Shares to be issued pursuant to the Proposed Merger 207,096,186
Proforma enlarged issued and paid-up share capital 3,578,002,020
Parvalue (RM) 1.00
Proforma enlarged issued and paid-up share capital (RM) 3,578,002,020
Source: JSC «KazkommertsBank»

 

 

Date: 2015-12-11; view: 989

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