Range of Financial Institutions Offering Term Deposits in New Zealand

Selecting Financial Institutions for Term Deposits

Sanjay currently earns $95,000 per annum and his total income has exceeded $90,000 for the past two years. He has inherited $50,000 and wants to place the money on term deposit for 12 months. He’s asked you for advice on the range of financial institutions that offer this product.a) To illustrate the range of providers forSanjay:•Select three different types of financial institution currently operating in the New Zealand financial services industry that Sanjay can place his money on term depositwith.•For each financial institution, state their name and type of financial institution, and provide a link to the page promoting termdeposits.•Discuss the similarities and differences between the three financial institutions you selected in termsof:otheirstructure/ownershipohow they’reregulatedothe services theyprovide.(200 words)b) You explain to Sanjay that with some providers, he has the optionof placing his $50,000 on a term deposit or in a PIE Term Deposit Fund for 12 months. Both products currently offer interest at 4% per annum and there are no fees payable for eitheroption.Assume Sanjay invests for the next 12 months, and that his salary remains at $95,000. Also assume his income is derived only from his salary and this investment. Calculate his totalafter-tax income (salary + interest) for each investment option and clearly highlight which option provides him with the higher after-tax income. Show all your workings.

Task 2: The impact of natural disasters and changes in the OCRAroha runs a small business exporting cut flowers and foliage. A year ago,you helped Aroha purchase her first home using a revolving credit facility. The current balance outstanding on this facility is $451,250. She has sum insured home insurance cover with Aotearoa Insurance.Aotearoa Insurance has a reinsurance treaty with Swiss Re. Aroha has seenthe following two newspaper headlines:•Headline 1:‘Inflation is rising and is expected to reach 5–6% inthenext eighteen months’•Headline 2:‘Hurricane Fred in the United States and the earthquake in Japan set to impacthomeowners.She seeks advice from you on how these factors will affect both her business and her personal financial situation.a)Headline 1: Analyse the impact of rising inflation on Aroha.You are required to:•Predict the action the Reserve Bank of New Zealand will take in response to risinginflation.•Analyse how and why the Reserve Bank of New Zealand’s action will impact Aroha’s personal financial situation interms of her homeloan.•Analyse how and why the Reserve Bank of New Zealand’s action will impact Aroha’s business in terms of its export earnings.(100 words)b) Headline 2:Analyse how and why these overseas disasters will impact Swiss Re, Aotearoa Insurance and Aroha, as the insured under a home insurance policy