Citigroup sold auction rate securities to retail investors on the representation that these securities are "cash alternatives". It implies that they are liquid and can be converted to cash at any time. During the credit crisis, there is no liquidity for these securities.
The District Attorney office of New York took up a case on behalf of the retail investors. It negotiated a settlement that require Citigroup to buy back the securities from the retail investors and compensate those who have suffered a loss. Citigroup had to buy back USD $8 billion of these securities.
I wish that our similar action is taken in Singapore on behalf of retail investors that were misled into investing in structured financial products and life insurance products that offer poor value to the investors.
Thursday, August 7, 2008
Benefit illustration
Hi Mr. Tan,
I am 20 this year. I had just graduated from diploma and had just starting my first career. Being the breadwinner of the house, I think having a insurance/policy will be safer. I am currently thinking which type of policy should I take. However I am kind of confused. After reading through your website and blog, I get exposed to more information which I neglect previously. However there are still several question which i will like to clarify with you.
Is cash value equivalent to surrender value Where can I fine the cash value in my benefit illustration ? What is gross yield and net yield? Where can I find the gross yield and net yield in my benefit illustration ?
REPLY
Cash value is the same as surrender value. The gross yield is the yield that the insurance company expects to earn by investing your premium. This yield is not guaranteed. The net yield is the yield that you can earn (not guaranteed) after the charges have been deducted by the insurance company.
You should ask the insurance agent to show you these figures in the benefit illustration.
Due to the high charges, a life insurance policy gives a poor yield. It is better to buy a Term insurance and invest the difference in a low cost fund. This is explained in this FAQ:
http://www.tankinlian.com/faq/fptips.html
I am 20 this year. I had just graduated from diploma and had just starting my first career. Being the breadwinner of the house, I think having a insurance/policy will be safer. I am currently thinking which type of policy should I take. However I am kind of confused. After reading through your website and blog, I get exposed to more information which I neglect previously. However there are still several question which i will like to clarify with you.
Is cash value equivalent to surrender value Where can I fine the cash value in my benefit illustration ? What is gross yield and net yield? Where can I find the gross yield and net yield in my benefit illustration ?
REPLY
Cash value is the same as surrender value. The gross yield is the yield that the insurance company expects to earn by investing your premium. This yield is not guaranteed. The net yield is the yield that you can earn (not guaranteed) after the charges have been deducted by the insurance company.
You should ask the insurance agent to show you these figures in the benefit illustration.
Due to the high charges, a life insurance policy gives a poor yield. It is better to buy a Term insurance and invest the difference in a low cost fund. This is explained in this FAQ:
http://www.tankinlian.com/faq/fptips.html
Insurance for a child
Dear Mr. Tan
I would appreciate if you could advise me on what insurance package/company should I take up for my new born son. I'm overwhelmed by the different insurance packages and companies in the market.
REPLY
Read this FAQ
http://www.tankinlian.com/faq/childlife.html
I would appreciate if you could advise me on what insurance package/company should I take up for my new born son. I'm overwhelmed by the different insurance packages and companies in the market.
REPLY
Read this FAQ
http://www.tankinlian.com/faq/childlife.html
Wednesday, August 6, 2008
Joke: The wife wanted to tell it herself
The posh dinner party has been a great success until, over coffee, one of the guest decided to tell a detailed blue joke.
The host was appalled, "This is an outrageious joke. How do you tell this story before my wife!"
The guest replied, "I's sorry. I did not know that you wife wanted to tell this joke herself.
The host was appalled, "This is an outrageious joke. How do you tell this story before my wife!"
The guest replied, "I's sorry. I did not know that you wife wanted to tell this joke herself.
Business ethics
I write about honesty and business ethics in this article:
http://theonlinecitizen.com/2008/08/business-ethics-%e2%80%93-honesty-while-making-profits/#comment-16764
posted in
www.theonline.citizen.com
http://theonlinecitizen.com/2008/08/business-ethics-%e2%80%93-honesty-while-making-profits/#comment-16764
posted in
www.theonline.citizen.com
Profiteering
Source: Wikipedia
Profiteering is a pejorative term for the act of making a profit by methods considered unethical. Business owners may be accused of profiteering when they raise prices during an emergency (especially a war). The term is also applied to businesses that play on political corruption to obtain government contracts.
Some types of profiteering are illegal, such as price fixing syndicates and other anti-competitive behaviour, for example on fuel subsidies (see British Airways price-fixing allegations), or restricted by industry codes of conduct such as aggressive marketing of products in the third world such as baby milk (see Nestlé boycott).
Profiteering is a pejorative term for the act of making a profit by methods considered unethical. Business owners may be accused of profiteering when they raise prices during an emergency (especially a war). The term is also applied to businesses that play on political corruption to obtain government contracts.
Some types of profiteering are illegal, such as price fixing syndicates and other anti-competitive behaviour, for example on fuel subsidies (see British Airways price-fixing allegations), or restricted by industry codes of conduct such as aggressive marketing of products in the third world such as baby milk (see Nestlé boycott).
Overcharging
Source: Wikipedia
Overcharge is an economic term that refers to the difference between an observed market price and a price that would have been observed in the absence of collusion. The latter is often called a "but-for price" or a competitive "benchmark price".
When collusion is not in use, such as by privately-owned businesses, overcharge is considered as a markup of the observed market price for the sole profit of the business and in some states is considered illegal, similar to profiteering and price gouging.
An overcharge may be expressed as a mark-up on the benchmark price, or it may be divided by the observed market price. When the benchmark price is equal to the marginal cost of production, as it is in perfect competition, then ratio of the overcharge to market price is the Lerner Index of market power.
When the overcharge is multiplied by the quantity purchased, it becomes the monetary injury or damages incurred by a buyer of goods sold by a cartel.
Overcharge is an economic term that refers to the difference between an observed market price and a price that would have been observed in the absence of collusion. The latter is often called a "but-for price" or a competitive "benchmark price".
When collusion is not in use, such as by privately-owned businesses, overcharge is considered as a markup of the observed market price for the sole profit of the business and in some states is considered illegal, similar to profiteering and price gouging.
An overcharge may be expressed as a mark-up on the benchmark price, or it may be divided by the observed market price. When the benchmark price is equal to the marginal cost of production, as it is in perfect competition, then ratio of the overcharge to market price is the Lerner Index of market power.
When the overcharge is multiplied by the quantity purchased, it becomes the monetary injury or damages incurred by a buyer of goods sold by a cartel.
Subscribe to:
Posts (Atom)