Treasury 1

Invest in the portfolio of various

assetswith the objectives of the risk mitig-

ation.

Answer explanation

Principle of Portfolio

“Do not put allyour eggs in one

basket. ” —Warren Bufet

Answer explanation

Principle of Diversification

Investment made by banks should

provide maximum returns possible.

Answer explanation

Principle of Profitability

Maintain adequate level of liqu-

idity tomeet borrower and depositor ’s

demand

Answer explanation

Principle of Liquidity

Principle of Security

Banks should invest the inevitable

funds in safe or secure areas in which def-

aultrisk will be minimum.

➢ The treasury department grants credit

to the customer to manage the cash.

Answer explanation

Credit Granting

➢ It maintains excellent relation with the

investment community for fundraising

purposes that isimportant

Answer explanation

Fund Raising

➢ The treasurers meets with thereprese-

ntatives of bank that thecompany uses,

to: discuss thecompany ’s financial

condition, thebank’s fee structure, any

debt grantedto the company by the

bank, andforeign exchange

transaction, hedges,

wire transfers, cash pooling, and soon.

Answer explanation

Bank Relations

➢ Treasury staffs monitors the market

conditions and provide the necessary

advice to the company.

Answer explanation

Management Advice

➢ The treasury staff shows the quickres-

ponds to information requests from

credit agency ’s review team.

Answer explanation

Credit rating agency relations