Security trading can be very profitable, either in the form of dividends or interest income or capital gains from the sale of shares to third parties. However, there are also many risks. If these risks are not treated properly, the security negotiations can be very profitable. This study was conducted to obtain information about the finances of the more learned and more micro-economic capital in Cameroon, Douala, COFIN of SA in the investment industry (partnership with Western Union, States United States offer)
Major risks include overdraft credit risk, market risk and interest rate.
The credit risk involved is the probability that the user of the security may not meet its financial obligations. This may take the form of failure to redeem the security or failure to pay interest or dividends, as agreed. In most cases, what the credit risk of a decline in the financial position and results of the company. The credit risk is minimal or no government bond. However, the yields on these securities are also very low.
Market risk is the risk that certain developments could be either in the title in the market or the economy make it difficult for bank security market, because it has become less attractive for investors. For example, unexpected emergency can in a given sector to a sharp decline in demand for securities issued by companies lead in this sector. This is what happens to the shares of banks in microfinance in Cameroon and in the late 1990s due to the perceived distress in the financial sector. In this case, securities are sold at a discount.
Interest rate risk arises due to changes in interest rates. It is likely that the market value of securities may be as a result of rising interest rates decrease. Earlier theories of Keynes showed that the value of financial assets inversely with interest rates. Therefore, the higher the interest rate minus the value of securities held. It is also because while the coupon rate (nominal) debt is fixed, the market interest rate may vary. As such, varies the current yield, which is obtained by dividing the coupon by the market price.
Sun views on the political framework, as the board of directors of banks to formulate policies on its business areas, including the price of the loan, it is also a need to adopt policies to be put in place for investment bank. Such a policy is to support, among other officials in the choice of asset class, maturity, quality and size of the securities to invest are allocated to the account of investment in. The share of funds from the bank is on the method for asset allocation. But the investment policy of the Investment Officer to give further instructions.
Outside agents in the selection of securities in the portfolio of the bank, he helped guide the diversification of investment portfolio. A well-diversified portfolio to reduce risks associated with investments. In this case, we believe that investing in diversified SA COFIN le”etc Cofinix prudentia car, in particular, travelers checks, Western Union.”As such, the issue of diversification in terms of sectors, issuers, maturity, type and geographic location usually included in investment policy.
A bank may decide to engage in aggressive, liberal or conservative investment policy. The type that should be adopted depends on the target bank, income and level of exposure of the bank current and anticipated risks. For example, a bank, the track is already much more exposed to liquidity risks in the form of loans and other assets certainly a conservative investment policy.
Preferably, the investment policy in writing. This will help ensure uniformity and consistency in the application. However, it should be flexible enough to make room for the use of initiatives, and for easy adaptation to changes in the environment.
Finally, to ensure that the investment policy at the end than a simple clerical work, appropriate mechanisms should be put on the motion for its implementation. The authorities must be defined and responsibilities assigned to agents or special services. There should be a provision for the assessment and review of such a policy
