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Non-Bank Finance - Coggle Diagram
Non-Bank Finance
Insurance
Types
Term
Premium matched to risk;no savings feature
Whole
Permanent, fixed premium for lfe;Savings features
Regulated by OSFI and Assuris
Receive premiums in exchange for protection; Transforms Premiums into Long-term Assets for investment
Life, Property & Casualty Manage Pensions Funds Sell Annuities
CDS-insurance on Debt Instruments
-seller of CDS pays if default or downgrade on credit
Decrease Asymmetric risks: co-pays & deductibles, disclosures, risk sharing, lower premiums for safety features, investigations, coverage less than asset worth, risk-based premiums,
Pension Plans
Premiums in return for stable income
Invest in Long term Assets, Diversified securities
Defined Contribution (payout based on payments) vs Defined Benefit( set payout)
Private vs Public (OAS, CPP)
Risk limits; Funding requirements, reporting and disclosures
Mutual Funds
open vs closed; ETFs
issue shares, pooled money transformed into diversified portfolio of securities
benefits:lower transaction costs, reduced risk, cater to small investors
Load vs no-load
Hedge Funds
Accredited investor provide capital, min of $1million, < 99 investors
unregulated, less protection
Alternative Investments, longer-term, risky, leverage
Long-term committment, high fees
Private Equity
Invest in LT risky assets,
Limited partners, high net work investors
Buyouts, Venture Capital
non-regulated, risky assets, leverage, no disclosure-no free rider
Brokerage Firms
Investment Banks:Raise funds via IPO
Broker: trading, match Buyer & sellers, low risk, no positions
Dealers: Facilitate trades & take positions;earn spreads-high risk
Finance Companies
Borrow or issue securities to lend
Unregulated, no branches or set capital limits
Sales Finance;Consumer & Business Finance
Government Sponsored Entities
CHMC, BDC,EDC
Private Corps with close tie to government
Buyer of debt, mortgages, liquidity provider, low risk