Discussion Questions Note: Please separate the references and answers from the two Discussions Discussions Q1. “Discuss the implications of Customer

Discussion Questions Note: Please separate the references and answers from the two Discussions

Discussions

Q1. “Discuss the implications of Customer

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Discussion Questions Note: Please separate the references and answers from the two Discussions

Discussions

Q1. “Discuss the implications of Customer relationship Doctrine for fundraising by the lending institutions”.
· Required to reply to one peer responses to this week’s discussion question.

(Due in 10 Hours)

Peer Responses for discussion 1: – (Faisal)

The customer relationship doctrine states that a lending institution’s first priority is to extend loans to customers. Thus, granting loans takes precedence over funds sourcinng. Once loan decisions are made, the lender must ensure that adequate funnding is available to meet the funding commitment. The proposed loan are to top-quality borrowers, from whom the lender expects to earn net positive returns. For that, the rerturns from lending must exceed the costs of borrowing and the borrower must meet the lenders’s minmum quality standards. Moreover, the lender may lose sight of quality standards and make poor quality loans. Such action will force the institution may have to borrow funds at higher costs to meet the lending requirements,

Q2. “Discuss the respective roles of primary and secondary capital markets in the financial system and outline the role of investment banks within them. What potential problems may arise if the investment bank is part of a larger bank that also includes a retail bank?”.

(Due on the 15th of Dec)

· Required to reply to at least two peer responses to this week’s discussion question.

Peer Responses for discussion 2: –

1) Muath:
Roles of primary and secondary capital markets in the financial system COLLAPSE

The main roles of the primary capital markets in the financial system are to facilitate the raising of long-term funds through the issue of shares or debentures. The primary markets mainly deal with origination, which refers to the identification, assessment, and processing of newly issued securities. On the other hand, the secondary markets promote safety and security during transactions. That is because exchanges have an incentive to attract investors without limiting criminal or malicious behavior under their watch (Saunders, Cornett & Erhemjamts, 2012). In this regards, the secondary markets play a crucial role of ensuring that capital markets are allocated efficiently and safely, hence, benefiting the economy as a whole.
Some potential problems may arise in the distribution of investments, especially if the investment bank is part of a larger commercial bank with a retail section. That is because of the contradicting nature of commercial and investment banks in the sense that the former mainly accepts deposits, gives loans, and works with a wide range of clients. On the other hand, an investment bank mainly service large corporations and investors (Saunders, Cornett & Erhemjamts, 2012). Therefore, a potential problem might occur as far as ensuring that both types of clients receive the services they require for stability within the financial system.

2) Khaled:
The roles of primary capital markets in the financial system appear in facilitating the process of raising long-term funds, as it is the place where securities are created, and shares and bonds are issued.
In this market, companies sell new shares and bonds to the public for the first time, as they deal with the origin, where the offering and the first public offering are determined. It refers to the identification, evaluation and treatment of newly issued securities, and trading provides an opportunity for investors to purchase securities from the bank.
Secondary markets or the stock market, which is characterized by the fact that investors can trade among themselves, as stock exchanges have an incentive to attract investors, as secondary markets play a major role in ensuring markets and allocating capital efficiently and safely.
In the secondary market, investors trade previously issued securities without the participation of the issuing companies. There is always an intermediary that we deal with and does not deal with the company directly, and this system benefits the economy as a whole.
The role of investment banks in the capital markets appears in the initial subscription operations. This is an investment banking job, in which an initial offering is made, and the company issues a public subscription by appointing an investment bank.
Or risk management operations, it is a relatively stable process, it is considered a distinct tool to avoid loss in trade.
Or mergers and acquisitions, especially in the field of corporate finance, and management in areas that deal with purchasing or joining other companies, where the investment bank imposes fees on mergers and acquisitions, and a bank rents for these operations.

The potential problems that may arise if the investment bank is part of a larger bank that also includes a retail bank, appears in the process of distributing investments, due to the paradoxical nature of commercial and investment banks, they give loans and accept deposits, they work largely with clients.
You may face the problem of imposing a legal fence between the two parts of the company, which increases costs to consumers. A potential problem may occur about both types of customers getting the stability and services they need within the financial system.

Note: Please separate the references and answers from the two Discussions

Note: Please separate the

references and answers from the

two Discussions

Discussion

s

Q1

.

“Discuss th

e implications of Customer relationship Doctrine for fundraising by the lending

institutions”.

·

R

equired to reply to

one

peer responses to this week’s discussion question

.

(Due in 10 Hours)

Peer Responses

f

or discussion

1

:

(

Faisal

)

The customer relationship doctrine states that a lending institution’s first priority i

s to extend

loans to customers. Thus, granting loans takes precedence over funds sourcinng. Once loan

decisions are made, the lender must ensure that adequate funnding is available to meet the

funding commitment. The proposed loan are to top

quality borrow

ers, from whom the lender

expects to earn net positive returns. For that, the rerturns from lending must exceed the costs of

borrowing and the borrower must meet the lenders’s minmum quality standards. Moreover, the

lender may lose sight of quality standar

ds and make poor quality loans. Such action will force

the institution may have to borrow funds at higher costs to meet the lending requirements

,

Q2.

“Discuss the respective roles of primary and secondary capital markets in the financial

system and outline the role of investment banks within them. What p

otential problems may arise

if the investment bank is part of a larger bank that also includes a retail bank?”.

(Due on the 15

th

of Dec)

·

R

equired to reply to at least two peer responses to this week’s discussion question

.

Peer Responses

f

or discussion

2

:

1)

Mu

ath:

Roles of primary and secondary capital markets in the financial system

COLLAPSE

The main roles of the primary capital markets in the financial system are to facilitate the

raising of long

term

funds through the issue of shares or debentures. The primary markets

mainly deal with origination, which refers to the identification, assessment, and

processing of newly issued securities. On the other hand, the secondary markets promote

safety and secur

ity during transactions. That is because exchanges have an incentive to

attract investors without limiting criminal or malicious behavior under their watch

Note: Please separate the references and answers from the two Discussions
Discussions
Q1. “Discuss the implications of Customer relationship Doctrine for fundraising by the lending
institutions”.
 Required to reply to one peer responses to this week’s discussion question.
(Due in 10 Hours)

Peer Responses for discussion 1: – (Faisal)

The customer relationship doctrine states that a lending institution’s first priority is to extend
loans to customers. Thus, granting loans takes precedence over funds sourcinng. Once loan
decisions are made, the lender must ensure that adequate funnding is available to meet the
funding commitment. The proposed loan are to top-quality borrowers, from whom the lender
expects to earn net positive returns. For that, the rerturns from lending must exceed the costs of
borrowing and the borrower must meet the lenders’s minmum quality standards. Moreover, the
lender may lose sight of quality standards and make poor quality loans. Such action will force
the institution may have to borrow funds at higher costs to meet the lending requirements,

Q2. “Discuss the respective roles of primary and secondary capital markets in the financial
system and outline the role of investment banks within them. What potential problems may arise
if the investment bank is part of a larger bank that also includes a retail bank?”.
(Due on the 15
th
of Dec)
 Required to reply to at least two peer responses to this week’s discussion question.

Peer Responses for discussion 2: –

1) Muath:
Roles of primary and secondary capital markets in the financial system COLLAPSE
The main roles of the primary capital markets in the financial system are to facilitate the
raising of long-term funds through the issue of shares or debentures. The primary markets
mainly deal with origination, which refers to the identification, assessment, and
processing of newly issued securities. On the other hand, the secondary markets promote
safety and security during transactions. That is because exchanges have an incentive to
attract investors without limiting criminal or malicious behavior under their watch

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