Float

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The Economic Times  Dec 15  Comment 
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Financial Times  Dec 12  Comment 
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Reuters  Dec 5  Comment 
Wealthy Russians facing the prospect of targeted U.S. sanctions next year have floated the idea of a special treasury bond to facilitate favourable terms for bringing their cash home, three sources familiar with the scheme said.
WA Business News  Nov 22  Comment 
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The Economic Times  Nov 16  Comment 
A large number of farmers particularly in Punjab and Haryana are burning the farm stubble/straw, which causes air pollution, in the absence of viable alternatives.
Benzinga  Nov 15  Comment 
Sunshine Heart Inc (NASDAQ: CHFS) shares are trading higher by $14.33, or 380 percent, at $18.10 in Wednesday's session. Until today, it was a thinly-traded stock that had a float of only 530,000 shares and an extremely high short float of 45.4...
The Economic Times  Nov 15  Comment 
Another senior official of the company said the EESL would also have plans for procuring electric buses in the country but the scale of business would depend on demand.
Reuters  Nov 7  Comment 
The owners of Avast Software, one of the world's most used pieces of computer antivirus software, have hired Rothschild to prepare the business for an initial public offering (IPO) which could value the firm at as much as $4 billion, four sources...
BBC News  Nov 4  Comment 
The US president tweets Saudi Arabia, asking it to choose New York for the deal.




 
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The float refers to profits earned by a financial institution on assets that do not belong to that institution, but are held in custody for a client or other purpose. The float is an important source of profitability in a number of industries, such as:

  • Retail banking: In the case of retail banking, customers' checking accounts often earn little or no interest. However, the bank can collectively invest the money its customers have deposited in higher-yielding investments such as mortgages. The bank then earns the difference between the interest paid on the mortgage and the interest paid to customers with deposits in checking accounts.
  • Insurance: The float refers to the time period between when premiums are collected and claims paid out. During this time, insurers invest the premiums and generate returns. Legendary investor Warren Buffett of Berkshire Hathaway (BRK) was originally attracted to the insurance business since he could use low-cost float to earn higher returns on his successful investments.
  • Retail Brokerage: In recent years, stock brokerage firms (particularly E*TRADE Financial (ETFC)) have made money by investing cash left in client trading accounts and earning a float on these assets.

===Ways that financial institutions earn , interest rates rise when loans are longer-term, to compensate the lender for tying up money and making it inaccessible (this difference in interest rates is known as the Yield Curve. For example, a savings account that allows you to withdraw money at any time would pay a small interest rate, but a CD that leaves you unable to access your money for a period of months or years would pay a higher rate. While an individual bank customer might add or withdraw money unpredictably, the bank as a whole can generally count on having stable deposits across all its customers. This allows the bank to pay short-term interest on checking accounts, but then earn higher, long-term interest on these deposits by lending it out for long-term loans (such as mortgages, which typically last 30 years).

  • Assuming risk. By pursuing riskier investments, a financial institution can earn greater returns on assets on deposit.
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