A-1-b-ii) Financial Multiplier and repetition of issuing,
discounting Bank Guarantee
Consider example of investing initial amount 100´000 and compute
swollen capital. Each "Trade" consists of a cycle of buying
and selling bank instruments to get profit. Capital and Profit are
ensured by bank security instruments and these instrumentes can be
discounted to reenter into following trade cycle of Program, i.e.
Issuing Bank Guarantee, the Discounting it, for 90% for example, to
add capital to amount invested in new trade cycle. The repetition of
cycle of Issuing, Discounting Bank Guarantee will swell the initial
amount invested into Program by technique of Financial Multiplier.
In summary, the swelling of amount of initial investment concerns:
(i) utilization of initial small amount to lease a bigger sum; (ii)
then, utilization of technique of Financial Multiplier and repetition
of Issuing & Discounting Bank Instruments in order to swell the
leased bigger sum. It´s this activating on amount invested that
explains HIGH YIELD in normal conditions of market interest rate.
There is no miracle