Float

RECENT NEWS
Financial Times  Nov 13  Comment 
Offer price for challenger lender at bottom of £1.25bn-£1.45bn range
guardian.co.uk  Nov 10  Comment 
Philip Monks, Aldermores chief executive, claims he is not in any hurry to kick start the shelved stock flotation Specialist lender Aldermore issued an upbeat trading update on Monday but remained silent on when it might kick start its £800m...
newratings.com  Nov 10  Comment 
MOSCOW (dpa-AFX) - Russia's central bank on Monday allowed the ruble to float freely, after it fell heavily in recent weeks, and cut the country's economic growth forecasts on the premise that the Western sanctions would remain until the...
Mondo Visione  Nov 7  Comment 
Deutsche Börse AG has announced an unscheduled adjustment to the free float of Sky Deutschland AG in MDAX®. Due to the takeover of Sky Deutschland AG by British Sky Broadcasting Group PLC, the free float of Sky Deutschland AG changed by more...
The Australian  Nov 7  Comment 
PACIFIC Equity Partners has abandoned plans for a trade sale or initial public offering of its $900m cinema chain Hoyts.
Wall Street Journal  Nov 5  Comment 
Endesa’s parent company Enel plans to float an additional stake of between 17% and 22% in the Spanish power utility on the Madrid stock market.
Reuters  Nov 4  Comment 
British lender Virgin Money said on Tuesday it would go ahead with its postponed stock market listing and expected to be admitted to the London Stock Exchange by the end of...
The Australian  Nov 4  Comment 
DENTAL chain Pacific Smiles will list on the ASX as a $200m company after setting the price for its initial public offering at $1.30 per share.
The Hindu Business Line  Nov 3  Comment 
Dealing a blow to the struggling Congress, its senior leader and former union minister GK Vasan today quit the party and announced his decision to float a new outfit in Tamil Nadu. Blamin...




 
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.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki