problem1. Treasury Management defines the objective of treasury management as “the management of an organisation’s cash flow, its borrowings and its investments, in such a way as to control and handle the associated risks and to accomplish a high level of performance or return, consistent with those risks”.

Required:

i. Describe how the Treasury Manager’s attitude to risk will differ in public service environment from that which might be found in private sector.

ii. Identify and describe the types of risk that must be considered when making investment decisions.

iii. Outline the steps which can be taken to compute and control the risks.

problem2. You work in Treasury Management section of local authority. One of your duties is to compile a report to the finance committee reporting on performance of the external investment managers employed to invest the authority’s pension fund. You get a message that a newly elected member of the committee would like an explanation of the some of the terms in your report. The councillor has asked to see you before the committee meeting this evening.

Required:

Prepare a set of notes that will help you describe the following terms to the councillor:

i. Asset allocation

ii. Pooled vehicles

iii. Active management

iv. Passive management

v. Balanced portfolio

vi. Performance measurement and benchmarking.