8.- HOW CAN WE GET PROFITABILITY?
Bank financial instruments, such as medium-terms obligations ( Medium Term Notes -MTN-) or Letters of Credit, are bouth and inmediately sold on the secondary market repeatedly getting this way the corresponding capital gain.
These sucessive operations of purchase/sale are executed daily for a period of 40 weeks.
The Trader or the Trading Group provides a one-year contract with a bank which sells, for example, MTN of first issuance and other separated contract with another Bank which buy it at an fixed price during a year. The difference between the buying price and the selling price represents the gain, which is shared between the applicant/investor and the authorised Trader.
Therefore, as a simplified example, if the difference generated by the operation shall be X% and the bank instrument shall have a nominal value of 100 million USD dollars, the result would be:
100 mill USD& x X% x 5 transactions per week x 40 weeks year = X00 %
The X% which is multiplied many times for the period of the contract, is only the first step of the potential profitability we can get.
The investement made by the applicant/ investor must be carried out in cash deposits, so that increases the basis of liablities of the Bank for its entry into the operation and support the yields in its way, according to their position in the operation.
Beside this, there are several ways to obtain significan yields but always under the assumption of no risk to capital invested.
Programs according to the acts of the Fed corresponding to its issuance have diferent lenght. The most usual corresponding to the typical investment of XXX millions of US Dollars mentioned above, is 40 weeks.
In every case, within the contract between applicant/investor and the authorized Trader by the Fed and the Banking Institution concerned, the power to interrupt the program execution by the applicant/investor, through the corresponding pre-notice is always include.