Float

RECENT NEWS
Financial Times  6 hrs ago  Comment 
Property company cites ‘extraordinary market volatility’ for aborted listing
The Australian  Jun 30  Comment 
India Fund has abandoned a planned float, becoming the latest IPO-hopeful casualty as risk aversion grips investors.
Wall Street Journal  Jun 29  Comment 
Trouble in Greece and China is unlikely to do much damage to the U.S., but could still alter the economic and financial landscape.
The Hindu Business Line  Jun 27  Comment 
IndiGo is set to file a prospectus next week for a domestic stock market listing, which is expected to raise as much as $400 million, according to three sources with knowledge of the matter. ...
Reuters  Jun 26  Comment 
India's biggest airline IndiGo is set to file a prospectus next week for a domestic stock market listing, which is expected to raise as much as $400 million, according to three sources with knowledge of the matter.
Financial Times  Jun 25  Comment 
IAC media group to sell up to 20 per cent of Match.com, Tinder and OkCupid
The Australian  Jun 24  Comment 
Costa Group, the fruit and vegetable grower headed by the entrepreneur, Frank Costa, has set a $2.20 to $2.70 price range for its float.
The Australian  Jun 24  Comment 
WiseTech ­Global is poised to fire the starting gun on its initial public offering.
The Australian  Jun 23  Comment 
Mobile phone provider Amaysim’s planned IPO values the company at $317m, well below what some analysts thought it was worth.
The Economic Times  Jun 16  Comment 
Prices of pulses have risen by more than 64 per cent in the last one year as the domestic production fell by nearly two million tonnes.




 
TOP CONTRIBUTORS

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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