Which Company's earning would be more volatile?

SM2014 · 1 Which Company's earning would be more volatile? Sun Nov 16, 2014 9:45 pm

SM2014

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As at 30 Sep 2014
Financial Assets CFVF ESL
Financial investments - Held for trading 13,488,199 4,794,599
Financial investments - Loans and receivables 2,646,859 13,387,367
Financial investments - Available for sale 367,375 0
Total 16,502,433 18,181,965

Can you guess which company's earnings will be more volatile in case of Interest rate change?

indi009 · 2 Re: Which Company's earning would be more volatile? Mon Nov 17, 2014 8:35 am

indi009

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Why people haven't commented on this??? People who are working in Finance sector should know.............

Harry82 · 3 Re: Which Company's earning would be more volatile? Mon Nov 17, 2014 8:53 am

Harry82

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CFVF

SM2014 · 4 Re: Which Company's earning would be more volatile? Mon Nov 17, 2014 9:03 am

SM2014

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Harry82 wrote:CFVF

Thanks Dear. Yes. More or less the answer is correct. What about others?

indi009 · 5 Re: Which Company's earning would be more volatile? Mon Nov 17, 2014 9:06 am

indi009

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I don't know............. That's why I didn't comment Rolling Eyes

SM2014 · 6 Re: Which Company's earning would be more volatile? Mon Nov 17, 2014 9:18 am

SM2014

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indi009 wrote:I don't know............. That's why I didn't comment

I am not working in Financial Institution but from accounting perspective Securities held for trading is measured at fair value. That means mark to market. When the market parameters change they create a gain or loss. But for Loans and Receivables ( and Assets held to Maturity) are measured at Amortized Cost. That is normally the original estimation and constant interest rate at which the assets are cumulated to its face value unless there is an impairment. Therefore, it is more volatile the earnings of the companies having trading portfolios rather than Loans & Receivables and Assets held to Maturity.