Financial Markets and Risk Essay Example | Topics and Well Written Essays - 1000 words

Financial Markets and Risk - Essay Example The long term savings and investment products offered by banks and NBFI’s are mostly life assurance, pensions and other investment products such as fixed deposits with a long term maturity. Fixed deposits are time deposits which give a higher interest rate than the normal demand deposits. Pension products are aimed at meeting the retirement needs of investors wherein a lump sum amount is given to the investor which is accrued over the years. Investing in bonds (government and corporate) is another option where there is more safety even though the returns may be comparatively less. Some banks and many NBFI’s provide platform to invest in mutual funds also. II. Implications for individual savers and investors of a significant increase in the general interest rates. The most visible effect due to the increase in interest rates is on the loans borrowed and deposits made by individuals. An increase in interest rate means increase in the repo rates of banks. This will result in an increase in the mortgage loans’ interest as well as other loans and debts like credit card debt. The increase in interest rate on loans will force the individuals who already borrowed the loans to pay more on the interest and this will lead to fewer savings. Those who had plans to borrow loan will postpone the same in order to be relieved of the extra burden of higher interest repayment. Another aspect is with the timing preference of making deposit. Since the interest rate is high, the return on investment from banks in the form of deposits will also be high which will prompt the individuals to make more investments out of their savings. Exchange rate changes can also be an effect of interest rate change. When the interest rate increases, there will be more inflow of foreign money in the form of FIIs. This will lead to an increase in the value of the domestic currency. The implications are that, the individuals who invested in foreign currency will see their value of i nvestment come down in terms of domestic currency due to the decrease in value of the foreign currency, other factors remaining the same. Also this will make imported goods relatively cheaper to the domestic buyers which in turn force the domestic producers to reduce their products’ price which means more savings for the individual. Rise in interest rates will also affect stock and securities like bonds. When interest rate rises, the price of existing bond falls. This is because investors can get higher rates on newly issued bonds. A rising interest rate may affect the stock market also because 1) investors will turn to buy bonds as they give better yield, 2) investors need to pay more to borrow money and spend them, which will lead to a slump in the growth of many companies which produce consumer goods. III. Risks to commercial banks of a significant rise in general interest rates. All banks face interest rate risks. Changes in interest rate can reduce a bank’s earnin gs and lower its net worth. Interest rate risk is defined as the volatility in earnings or the value of a financial institution owing to unexpected changes in interest rates. â€Å"The chief source of interest rate risk is the mismatched re-pricing of a financial intermediary’s assets and liabilities.†

Marketing communications proposal for P&O Ferries Essay

Marketing communications proposal for P&O Ferries - Essay Example P & O Ferries is a company that focuses its interests on customer comfort. One can rely on this firm for all their travelling and all vacation needs. This is because they understand how significant a holiday is to the customer. It has stable brands that are quite effective that would not fail their customers. Finally, they are capable of providing family holidays valuably. The organisation is also flexible, they use different routes and go to different destinations; their goods and services are worthy trusting in. It is necessary to take a ferry trip for holiday, relaxation, shopping, refreshments and also partying (Hackley 2005). Nowadays there have been many interruptions in air transport, increased insecurity, discomfort, inconveniences and many other problems. This is the reason why ferries have been introduced for convenience and cheap transport to ones destination. The main challenge though is dealing with the negative views people have on ferries. People have the belief that f erries are slow, uncomfortable and are more risky incase breakdowns in the middle of the ocean. P & O Ferries caters for ones travelling, vacations and holiday needs by providing efficient transport facilities that are reliable and customer friendly. As a company, it understands the importance of holiday to its customers, providing its customers with value for their money and it is a stable brand which is reliable (Hackley 2005). The main objectives of the report will be to develop a tourist creative idea aiming at non-ferry users to increase their awareness about P&O Ferries as an effective and credible alternative method of travel which is less costly than the air travel. This will encourage many more people to opt to use ferries when travelling instead of using other costly means. The target audience will include non-ferry customers in Europe taking into account that Europeans travel mostly during spring and summer. To add to that our target will also include customers who want to take their cars with them when travelling. This is because ferries allow one to travel with the car as they are huge enough to accommodate cars and do not charge exorbitantly. Our target audience would also include customers who have become fed up with the inconveniences by air transport and also the restriction of bags and other luggage (Fill 2006). There will be no restriction on the amount of personal luggage one would want to travel with as long as they can afford to pay the fee. The company's other target audience will include people who take holiday travel as being too expensive. A ferry provides a very cost efficient and effective alternative. Finally, the target audience would include customers who seek security, trustworthiness and established ferries. The competition will i nclude other ferries and the cheaply charging flights (Smith & Taylor 2000). About tools, media, recommendations and justification, we are going to use different marketing strategies to sell our idea to our target audiences and esteemed customers. The strategies will include among others, advertising where the organization will go to the media and buy a space for a publication of their products and services; the more the space taken,