These excess funds belong to the firm, and may be transferred out of the segregated accounts.
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Unless savers are literally stuffing their excess funds under a mattress, interest is paid on savings precisely because monies saved are lent to others with near-term demands.
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Over-payment fraud, the victim receives an invalid monetary instrument with instructions to deposit it in a bank account and send excess funds or a percentage of the deposited money back to the sender.
And like Japanese banks, the Chinese ones gather deposits from thrifty households but lend only some of these back out, mainly to companies, parking the vast excess in government bonds and with the central bank (although the Chinese government, unlike Japan's debt-laden government, is a net creditor that invests these excess funds overseas).
First, actively-managed mutual funds cannot earn excess returns over index funds because in aggregate they earn the same as index funds, less the difference in cost.
It is precisely because early VC funds make those excess profits that current VC funds make less than average market profits.
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Second, as we have described in numerous articles, the financial benefits these firms derive from their status as gatekeepers to funds are well in excess of annual fees paid by funds.
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In the breakneck proliferation of hedge funds, excess is turning into absurdity.
Some, with particularly prudent parents, have excess money in their college savings funds with which to spend their post-Ivy summers in Europe, the Far East or, for the idealists among them, Africa.
For example, we have encountered 403(b) participants that are paying investment advisory fees in excess of 3% to invest in mutual funds.
Excess liquidity plus ever more leverage are enabling equity funds to buy out almost any publicly held company.
The trust fund can therefore serve as a place to park excess revenues when taxes exceed expenditures and from which additional funds can be drawn when the reverse occurs.
The Fed should announce that it will let the federal funds interest rate float, at the same time removing some of the excess money it created in 2004--05.
Those higher rates would encourage banks to maintain their excess reserves at the Fed, thereby slowing the increase in velocity associated with a higher Fed Funds rate.
All else being equal, that would push the fed funds rate below the Fed's target, which is why it sterilises those excess reserves by selling some of the Treasuries in its portfolio.
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