Financial Risk Management Protecting the Enterprise

Running head: FINANCIAL RISK MANAGEMENT PROTECTING THE ENTERPRISE
Financial risk management protecting the enterprise
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1FINANCIAL RISK MANAGEMENT PROTECTING THE ENTERPRISE
Table of Contents
Answer 1....................................................................................................................................2
Question 2..................................................................................................................................3
Question 3..................................................................................................................................7
Question 4..................................................................................................................................8
Reference..................................................................................................................................10

2FINANCIAL RISK MANAGEMENT PROTECTING THE ENTERPRISE
Answer 1
The major sources of funds in Australia include the following:
 Local deposits- these include deposits and advances from local sources including
local corporations and domestic sources.
 Local wholesale funding- Wholesale funding is a major source of finance employed
by Australian banks. It is an additional source of funding that is employed by banks to
finance operations and enable risk management. Local wholesale funding sources
include federal funds public funds that include state and local municipalities.
 Inter sale wholesale funding- Inter sale wholesale funding includes sources of funds
that represents foreign deposits, federal funds and brokered deposits (Cavusgil et al,
2014).
The major uses of funds include:
 Loans and advances - Loans and advances are the most important applications of
funds in banks.
 Interbank lending - Sometimes banks lend money to other banks in case of meeting
shortage requirements and other emergency requirements.
 Foreign currency and foreign currency assets-foreign currency and foreign currency
assets are important applications of funds as they promote a source of foreign
exchange (Petty et al. 2015).
 Cash and deposits with the RBA-The RBA includes the Reserve Bank of Australia. It
conducts the monetary policy of Australia .The banks are required to keep a certain
percentage of liquid cash of their deposits with the reserve bank of Australia (Tissot
and Gadanecz 2018)

3FINANCIAL RISK MANAGEMENT PROTECTING THE ENTERPRISE
In reference to the question above the bank that can be discussed in the above is the
commonwealth bank. The major sources of funds include proceeds from sale investments to
the amount of $ 49392 million. Another important source of funds includes deposits and
other public borrowings, to the extent of 39821 million dollars. The applications of funds
include to the extents of purchase of investments that include $ 54608 million dollars. It also
includes investments to the net increase in loans, bills discounted and other receivables, to the
amount of $ 38744 million dollars (Commbank.com.au 2018).
Question 2
a. Ranking the banks
 Total asset – based on the amount of total asset commonwealth bank will be ranked 1,
Australia and New Zealand Banking Group Limited (ANZ) will be ranked 2, Westpac
bank will be ranked 3 and National Australia Bank (NAB) will be ranked 4
(Westpac.com.au 2018).
 Total equity - based on the amount of total equity commonwealth bank will be ranked
1, Westpac bank will be ranked 2, ANZ will be ranked 3, and NAB will be ranked 4
(Capital.nab.com.au 2018).
 Market capitalization – based on the amount of market capitalization commonwealth
bank will be ranked 1, ANZ will be ranked 2, NAB will be ranked 3 and Westpac
bank will be ranked 4.