The main techniques and sectors of the financial industry
An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a or buy notes or bonds in the .The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.
A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.
A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business; this process is known as "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's Finance is used by individuals, by governments by businesses as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.
Finance is one of the most important aspects of Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.
Personal finance
Questions in personal finance revolve around
How much money will be needed by an individual (or by a family), and when?
Where will this money come from, and how?
How can people protect themselves against unforeseen personal events, as well as those in the external economy?
How can family assets best be transferred across generations (bequests and inheritance)?
How does tax policy (tax subsidies or penalties) affect personal financial decisions?
How does credit affect an individual's financial standing?
How can one plan for a secure financial future in an environment of economic instability?
Personal financial decisions may involve paying for education, financing such as and cars, buying e.g. health and property insurance, investing and saving for Personal financial decisions may also involve paying for a loan, or debt obligations.
Corporate finance
is the task of providing the funds for a corporation's activities. For this is referred to as. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.
Long term funds are provided by and long-term often in the form of The balance between these forms the company's Short-term funding or is mostly provided by banks extending a line of credit.
Another business decision concerning finance is investment, or An investment is an acquisition of an in the hope that it will maintain or increase its value. In choosing a – one has to decide what, how much and when to invest. To do this, a company must:
Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;
Identify the appropriate strategy: active v. passive – hedging strategy
Measure the portfolio performance
Financial management is duplicate with the financial function of the However, is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm.
Capital
in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service.
The desirability of budgeting
Budget is a document which documents the plan of the business. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment. Also budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.
Capital budget
This concerns fixed asset requirements for the next five years and how these will be financed.
Cash budget
Working capital requirements of a business should be monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.
The cash budget is basically a detailed plan that shows all expected sources and uses of cash. The cash budget has the following six main sections:
Beginning Cash Balance - contains the last period's closing cash balance.
Cash collections - includes all expected cash receipts (all sources of cash for the period considered, mainly sales)
Cash disbursements - lists all planned cash outflows for the period, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortisation, etc)
Cash excess or deficiency - a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.
Financing - discloses the planned borrowings and repayments, including interest. Ending Cash balance - simply reveals the planned.
Thursday, April 30, 2009
Wednesday, April 29, 2009
Forex in India.
Online Forex Trading
In FOREX trading there are two common types of analysis that most traders utilize, they are fundamental and technical analysis. Fundamental analysis attempts to predict currency movement based off of political and economy indicators. Technical analysis uses historical economic information to predict changes in the FOREX market.
Fundamental Analysis:
Political and economic changes are the basis of fundamental analysis. These can frequently affect currency prices. Traders that take advantage of fundamental analysis will gather their information from a variety of news sources. They are looking for information about unemployment forecasts, political ideologies, economic policies, inflation and growth rates.
Fundamental analysis will provide you with an overview of currency movements and a broad picture of the economic conditions. Most traders then will combine their fundamental analysis with technical analysis to plot actual entrance and exit points as well as confirming the information provided by their fundamental analysis.
Interest Rates – can cause a currency to either strengthen or weaken depending on the direction of movement. In some cases high interest rates will attract foreign money, however high interest rates will frequently cause stock market investors to sell of their portfolios. They do this believing that the higher cost of borrowing money will adversely affect many companies. If enough investors sell of their holdings in can cause a downturn in the market and negatively affect the economy.
Which of these two affects will take place depends on many complex factors, but there is usually an agreement among economic observers as to how the current change in interest rates will affect the general economy and the price of the currency.
International Trade – If there is a trade deficit (more items imported than exported) it is usually considered a negative indicator. When there is a trade deficit it means that more money is leaving the country to buy foreign goods than is entering the country and this can have a devaluing effect on the currency. Usually though trade imbalances are already factored into the market consideration. If a country normally operates with a trade deficit then there should not be an affect on the currency price. The currency price will normally only be effected by trade differences when the deficit is greater than the market expected.
Technical Analysis:
The other common form of analysis is technical analysis. Technical Analysis is based on the following assumptions:
1. Price movements are a result of combined market forces. Political events, economic conditions, seasonal fluctuations, supply and demand are all things that can effect currency prices. Technical analysts do not concern themselves with why the market moves, they are only interested in the movements themselves. 2. Currency prices on the FOREX market follow trends. Predictable consequences have been linked with many recognized market patterns.
3. Historical trends can be used to predict current price movements. Data on the FOREX market has been collected for the last 100 years, over that time certain patterns have become emergent. Human psychology and the way people react to certain circumstances are the basis of these patterns.
Most traders consider technical analysis to be of critical importance even though they may also use fundamental analysis to support and confirm the strategy suggested by technical analysis.
Unlike fundamental analysis technical analysis can be applied to many different currencies and markets at the same time. Since fundamental analysis requires detailed knowledge of the economic and political conditions of a certain country it is nearly impossible for any single trader to perform proper fundamental analysis on more than a few countries.
For the beginning trader the complexities of technical analysis may seem overwhelming and they may even wonder if it is actually necessary. If you wish to be successful at FOREX trading you must have a strategy. Any strategy can work but technical analysis has been proven as a reliable and effective method of predicting market changes. Many forces can affect currency prices though so technical analysis is no guarantee, most successful traders utilize a combination of technical and fundamental analysis.
In FOREX trading there are two common types of analysis that most traders utilize, they are fundamental and technical analysis. Fundamental analysis attempts to predict currency movement based off of political and economy indicators. Technical analysis uses historical economic information to predict changes in the FOREX market.
Fundamental Analysis:
Political and economic changes are the basis of fundamental analysis. These can frequently affect currency prices. Traders that take advantage of fundamental analysis will gather their information from a variety of news sources. They are looking for information about unemployment forecasts, political ideologies, economic policies, inflation and growth rates.
Fundamental analysis will provide you with an overview of currency movements and a broad picture of the economic conditions. Most traders then will combine their fundamental analysis with technical analysis to plot actual entrance and exit points as well as confirming the information provided by their fundamental analysis.
Interest Rates – can cause a currency to either strengthen or weaken depending on the direction of movement. In some cases high interest rates will attract foreign money, however high interest rates will frequently cause stock market investors to sell of their portfolios. They do this believing that the higher cost of borrowing money will adversely affect many companies. If enough investors sell of their holdings in can cause a downturn in the market and negatively affect the economy.
Which of these two affects will take place depends on many complex factors, but there is usually an agreement among economic observers as to how the current change in interest rates will affect the general economy and the price of the currency.
International Trade – If there is a trade deficit (more items imported than exported) it is usually considered a negative indicator. When there is a trade deficit it means that more money is leaving the country to buy foreign goods than is entering the country and this can have a devaluing effect on the currency. Usually though trade imbalances are already factored into the market consideration. If a country normally operates with a trade deficit then there should not be an affect on the currency price. The currency price will normally only be effected by trade differences when the deficit is greater than the market expected.
Technical Analysis:
The other common form of analysis is technical analysis. Technical Analysis is based on the following assumptions:
1. Price movements are a result of combined market forces. Political events, economic conditions, seasonal fluctuations, supply and demand are all things that can effect currency prices. Technical analysts do not concern themselves with why the market moves, they are only interested in the movements themselves. 2. Currency prices on the FOREX market follow trends. Predictable consequences have been linked with many recognized market patterns.
3. Historical trends can be used to predict current price movements. Data on the FOREX market has been collected for the last 100 years, over that time certain patterns have become emergent. Human psychology and the way people react to certain circumstances are the basis of these patterns.
Most traders consider technical analysis to be of critical importance even though they may also use fundamental analysis to support and confirm the strategy suggested by technical analysis.
Unlike fundamental analysis technical analysis can be applied to many different currencies and markets at the same time. Since fundamental analysis requires detailed knowledge of the economic and political conditions of a certain country it is nearly impossible for any single trader to perform proper fundamental analysis on more than a few countries.
For the beginning trader the complexities of technical analysis may seem overwhelming and they may even wonder if it is actually necessary. If you wish to be successful at FOREX trading you must have a strategy. Any strategy can work but technical analysis has been proven as a reliable and effective method of predicting market changes. Many forces can affect currency prices though so technical analysis is no guarantee, most successful traders utilize a combination of technical and fundamental analysis.
Juggle-Bandhi
sick jokes can be healthy Juggle-BandhiAs a humorist I'm often asked by people: What are the limits of humour? When does humour become bad taste? In reply, I quote an old 'sick' joke: "Apart from that, Mrs Lincoln, how did you enjoy the play?" The reference, of course, is to Abraham Lincoln who was assassinated while watching a stage performance. Lincoln was shot in 1865, in the politically surcharged atmosphere following the end of the American Civil War. I heard that joke some 40 years ago, though its provenance is probably much older; the colloquialism 'his name is mud' is believed to be derived from a contemporary reference to a Dr Mudd, a Confederate sympathiser who treated Lincoln's assassin, John Wilkes Booth, who was injured while escaping.'Black' or 'sick' jokes seem to spawn spontaneously at times of trauma. Though P G Wodehouse was pilloried for his humorous broadcasts during World War II when he was held captive by the Germans, his 'sin' was seen to be not his inappropriate recourse to jocularity but his apparent collaboration with the enemy. In fact, blitz-ravaged Britain kept its morale up with laughter in the dark: A bombed-out, roofless establishment would bear the sign, "More open for business than usual".The wars in West Asia, African famines, the death of Princess Diana all fomented a sub-cultural bacillus of gallows humour. Within a few hours of the royal massacre in Kathmandu palace, a 'sick' story was doing the rounds: Prince Charles tells his mother, "OK, so you won't let me marry Camilla; why don't you and the rest of the family come round to my place for dinner Friday night".Sickening as it undoubtedly is, 'sick' humour is like a toxic titration prescribed to cure or alleviate a deeper malaise; it is a psychic alka seltzer taken for a mass emotional hangover. It's based on the homeopathic principle that a judiciously administered dose of the poison that made you ill can make you better.Like ethnic jokes, 'sick' humour is deplored as being 'politically incorrect'. This is to understate the case. 'Sick' jokes are meant to illustrate the incorrectness of the politics that have brought you to the grief from which you now seek deliverance.The more incorrect the politics, the blacker the corrective humour. War is the ultimate in incorrect politics -- 'Violence is the last refuge of the incompetent' -- as Isaac Asimov says -- and the most effective anti-war antidote is not pious bromides but black humour. Joseph Heller's Catch-22 is a classic example. The protagonist, Yosarian, takes off all his clothes and goes around naked on the army base. He hopes that he will convince his superior officers that he is insane so that, by virtue of his insanity, he is discharged from service. However, the army psychiatrist turns down this plea on the grounds that since only madmen would want to fight a war, madness is not a valid argument for dismissal from combat service. That's the Catch-22 underlying the war conducted by other means that we call the human condition.Sex and death are the primal polarities of our lives. Both have long been the subjects of subversive humour. But while The Rationale of the Dirty Joke has been discussed at length in the best-seller of that name, death -- particularly violent or untimely death -- has largely been deemed to be too close-to-the-bone for humour. There have, of course, been dissidents from this conventional view. Osho, for instance, was only one of a long line of Eastern sages to treat death as a juvenile practical joke -- like pulling a chair out from beneath someone about to sit on it -- and greet it with an indulgent chuckle.Graveyard humour has its recognised place in many societies. I remember as a child returning from the burning ghat where we'd gone to consign the mortal remains of an ancient grand-aunt. Some prankster broke the solemn silence by exclaiming "Hey! Haven't we left someone behind?" Initially shocked, I laughed when the adults began to laugh. I learnt early that, like sex, death fills us with shame, from which we seek release in laughter. It's a psychological defence mechanism.Ramakrishna told the story of the itinerant sage who came across a village terrorised by an aggressive poisonous snake. He sought out the snake and forbade it from biting people. Months later, the sage returned to the village. The villagers were well and happy, but the snake was badly battered and dying. "What happened?" asked the sage. "You stopped me from biting, so the villagers lost their fear and attacked me", complained the snake. "You fool", the sage replied, "I told you no biting. Did I say anything about hissing?"Black humour is the hiss of the safety valve on the pressure cooker. You can plug it, but only at your own risk. And that's not said with a forked tongue
A more humbel America
Consumer Confidence in U.S. Jumps More Than Forecast Consumer Confidence in U.S. April 28 (Bloomberg) -- Consumer confidence jumped more than forecast in April as stocks rallied, mortgage rates dropped and Americans thought more jobs will become available, adding to signs the recession may be easing.The Conference Board’s sentiment index climbed to 39.2, the highest level since November, from 26.9 in March, the New York- based research group said today. The gain was the biggest since November 2005.The improvement raises the odds that recent gains in consumer spending, which accounts for 70 percent of the economy, will be sustained. The report indicates efforts by Federal Reserve policy makers, meeting today and tomorrow, to lower borrowing costs and unclog lending may be starting to pay off.“People are tentatively hoping that the worst is over,” said adam york, an economist at Wachovia Corp. in Charlotte, North Carolina, who had forecast a gain. “Hopefully, it means we’ll get some gains in consumption.”Confidence was projected to rise to 29.7, from an originally reported 26 in March, according to the median estimate in a Bloomberg News survey of 62 economists. Forecasts ranged from 26 to 35. The index averaged 57.95 last year.Home PricesA report from S&P/Case-Shiller today showed that the slide in home prices in 20 U.S. cities slowed in February for the first time since January 2007. Prices fell 18.6 percent in February from the same month last year after dropping 19 percent the previous month.Stocks rose after the reports, paring earlier losses, and Treasury securities fell. The Standard & Poor’s 500 index was up 0.4 percent at 861.27 at 10:48 a.m. in New York after dropping as much as 1.2 percent earlier. The yield on the 10-year Treasury note rose to 2.94 percent from 2.91 percent late yesterday.The Conference Board’s measure of present condition rose to 23.7 from 21.9 the prior month. The gauge of expectations for the next six months surged to 49.5, the highest level since the collapse of Lehman Brothers Holdings Inc. in September.The share of consumers who said more jobs will be available in the next six months gained to 13.9, the most since June 2007.The outlook for current employment was more mixed. Fewer Americans said jobs were plentiful, at the same time those that said employment was hard to get also dropped.‘Nearing a Bottom’“Consumers believe the economy is nearing a bottom,” Lynn Franco, director of the Conference Board’s consumer research center, said in a statement. Still, the index “remains well below levels associated with strong economic growth.”The Standard & Poor’s 500 Index has gained 7.5 percent so far this month, leaving it poised for its first two month advance in a year. The benchmark index for American equities is up 27 percent since March 9, helped by unexpected increases in U.S. home sales and durable goods orders and a bigger-than- forecast jump in the University of Michigan’s survey of consumer sentiment.The rally has been led by industries most reliant on economic growth. Shares of banks and brokeraged in the S&P 500 added 70 percent since the March low, while a group of retailers automakers and restaurant chains climbed 41 percent, industrial companies surged 40 percent and raw-materials producers increased 35 percent, according to data compiled by Bloomberg.Lehman ImpactToday’s confidence figures corroborate other reports. The Reuters/University of Michigan preliminary index of consumer sentiment rose for a second month in April, advancing to the highest level since Lehman’s bankruptcy in September pushed the U.S. deeper into a slump.The increase in consumer confidence parallels strong approval ratings for President Barack obama. A CBS News-New York Times poll taken April 22-26 put the president’s approval rating at 68 percent, higher than the 56 percent mark recorded by predecessor, George W. Bush, at his 100-day mark in office.A USA Today-Gallup poll taken April 20-21 found 56 percent of respondents saying Obama was doing an excellent or good job, while 63 percent of those questioned by the Pew Research Center for the People & the Press from April 14-21 approved of his performance in office. All three surveys had margins of error of 3 percentage points.Economists have said the Conference Board’s index tends to be more influenced by attitudes about the labor market.The economy has lost 5.1 million jobs since the recession began in December 2007. Economists surveyed by Bloomberg in early April predicted unemployment will rise to 9.5 percent by the end of the year.Government EffortsAt the same time, recent reports show government efforts to support housing and revive lending may be starting to work. Combined purchases of new and existing houses have hovered around a 5 million annual pace since November, and sales at retailers improved in the first two months of the year.The Libor-OIS premium that indicates banks’ reluctance to lend to each other fell to 0.84 percentage point today, the lowest level since before Lehman collapsed in September, according to data compiled by Bloomberg.Amazon.com Inc., the world’s biggest Internet retailer, posted a jump in first-quarter sales and profit, bolstered by free shipping offers. Restaurant chains Cheesecake Factory Inc. and Yum! Brands Inc. reported quarterly income that fell less than analysts forecast.In a sign the plunge in car sales may be easing, AutoNation Inc, the largest publicly traded U.S. car retailer, this month reported a smaller-than-expected drop in first-quarter earnings.“We saw in the first quarter the first signs of stabilization,” Chief Executive Officer Mike Jackson said in an interview on April 23. Sales improved in the last 10 days of March as banks offered better lending terms, he said.The average rate on auto loans is 2.67 percentage points above one-month Libor. While that is more than the average of 1.84 percentage points over the past decade, it’s down from about 8 percent in December
Financial Industry
The main techniques and sectors of the financial industry.An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business; this process is known as "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure.Finance is used by individuals (personalfinance, by governments public finance, by businesses corporate finance, as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.Personal financeQuestions in personal finance revolve aroundHow much money will be needed by an individual (or by a family), and when?Where will this money come from, and how?How can people protect themselves against unforeseen personal events, as well as those in the external economy?How can family assets best be transferred across generations (bequests and inheritance)?How does tax policy (tax subsidies or penalties) affect personal financial decisions?How does credit affect an individual's financial standing?How can one plan for a secure financial future in an environment of economic instability?Personal financial decisions may involve paying for education, financing durable goods such as real estateand cars, buying insuranc, e.g. health and property insurance, investing and saving for retirement.Personal financial decisions may also involve paying for a loan, or debt obligations.Corporate financeManagerial or corporate finance is the task of providing the funds for a corporation's activities. For small business, this is referred to as SME finance. It generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock.Long term funds are provided by ownership equity and long-term credit, often in the form of bond. The balance between these forms the company's capital structure. Short-term funding or working capital is mostly provided by banks extending a line of credit.Another business decision concerning finance is investment, or fund management. An investment is an acquisition of an asset in the hope that it will maintain or increase its value. In investment management – in choosing a portfolio– one has to decide what, how much and when to invest. To do this, a company must:Identify relevant objectives and constraints: institution or individual goals, time horizon, risk aversion and tax considerations;Identify the appropriate strategy: active v. passive – hedging strategyMeasure the portfolio performanceFinancial management is duplicate with the financial function of the Accounting profession. However, financial accounting is more concerned with the reporting of historical financial information, while the financial decision is directed toward the future of the firm CapitalFinancial capitalCapital, in the financial sense, is the money that gives the business the power to buy goods to be used in the production of other goods or the offering of a service.The desirability of budgetingbudget is a document which documents the plan of the business. This may include the objective of business, targets set, and results in financial terms, e.g., the target set for sale, resulting cost, growth, required investment to achieve the planned sales, and financing source for the investment. Also budget may be long term or short term. Long term budgets have a time horizon of 5–10 years giving a vision to the company; short term is an annual budget which is drawn to control and operate in that particular year.Capital budgetThis concerns fixed asset requirements for the next five years and how these will be financed.Cash budgetWorking capital requirements of a business should be monitored at all times to ensure that there are sufficient funds available to meet short-term expenses.The cash budget is basically a detailed plan that shows all expected sources and uses of cash. The cash budget has the following six main sections:Beginning Cash Balance - contains the last period's closing cash balance.Cash collections - includes all expected cash receipts (all sources of cash for the period considered, mainly sales)Cash disbursements - lists all planned cash outflows for the period, excluding interest payments on short-term loans, which appear in the financing section. All expenses that do not affect cash flow are excluded from this list (e.g. depreciation, amortisation, etc)Cash excess or deficiency - a function of the cash needs and cash available. Cash needs are determined by the total cash disbursements plus the minimum cash balance required by company policy. If total cash available is less than cash needs, a deficiency exists.Financing - discloses the planned borrowings and repayments, including interest.Ending Cash balance - simply reveals the planned ending cash balance.Management of current assetsCredit policyCredit gives the customer the opportunity to buy goods and services, and pay for them at a later date.Advantages of credit tradeUsually results in more customers than cash trade.Can charge more for goods to cover the risk of bad debt.Gain goodwill and loyalty of customers.People can buy goods and pay for them at a later date.Farmers can buy seeds and implements, and pay for them only after the harvest.Stimulates agricultural and industrial production and commerce.Can be used as a promotional tool.Increase the sales.Modest rates to be filled.Disadvantages of credit tradeRisk of bad debt.High administration expenses.People can buy more than they can afford.More working capital needed.Risk of Bankruptcy.Forms of creditSuppliers credit:Credit on ordinary open accountInstallment salesBills of exchangeCredit cardsContractor's creditFactoring of debtorsCash creditFactors which influence credit conditionsNature of the business's activitiesFinancial positionProduct durabilityLength of production processCompetition and competitors' credit conditionsCountry's economic positionConditions at financial institutionsDiscount for early paymentDebtor's type of business and financial positionsCredit collectionOverdue accountsAttach a notice of overdue account to statement.Send a letter asking for settlement of debt.Send a second or third letter if first is ineffectual.Threaten legal action.Effective credit controlIncreases salesReduces bad debtsIncreases profitsBuilds customer loyaltyBuilds confidence of financial industryincrease company capitlisationSources of information on creditworthinessBusiness referencesBank referencescredit agenciesChambers of commerceEmployersCredit application formsDuties of the credit departmentLegal actionTaking necessary steps to ensure settlement of accountKnowing the credit policy and procedures for credit controlSetting credit limitsEnsuring that statements of account are sent outEnsuring that thorough checks are carried out on credit customersKeeping records of all amounts owingEnsuring that debts are settled promptlyTimely reporting to the upper level of management for better management.StockPurpose of stock controlEnsures that enough stock is on hand to satisfy demand.Protects and monitors theft.Safeguards against having to stockpile.Allows for control over selling and cost price.StockpilingMain article: Cornering the marketThis refers to the purchase of stock at the right time, at the right price and in the right quantities.There are several advantages to the stockpiling, the following are some of the examples:Losses due to price fluctuations and stock loss kept to a minimumEnsures that goods reach customers timeously; better serviceSaves space and storage costInvestment of working capital kept to minimumNo loss in production due to delaysThere are several disadvantages to the stockpiling, the following are some of the examples:ObsolescenceDanger of fire and theftInitial working capital investment is very largeLosses due to price fluctuationRate of stock turnoverThis refers to the number of times per year that the average level of stock is sold. It may be worked out by dividing the cost price of goods sold by the cost price of the average stock level.Determining optimum stock levelsMaximum stock level refers to the maximum stock level that may be maintained to ensure cost effectiveness.Minimum stock level refers to the point below which the stock level may not go.Standard order refers to the amount of stock generally ordered.Order level refers to the stock level which calls for an order to be made.CashReasons for keeping cashCash is usually referred to as the "king" in finance, as it is the most liquid asset.The transaction motive refers to the money kept available to pay expenses.The precautionary motive refers to the money kept aside for unforeseen expenses.The speculative motive refers to the money kept aside to take advantage of suddenly arising opportunities.Advantages of sufficient cashCurrent liabilties may be catered for.Cash discounts are given for cash payments.Production is kept movingSurplus cash may be invested on a short-term basis.The business is able to pay its accounts timeously, allowing for easily-obtained credit.LiquidityManagement of fixed assetsDepreciationDepreciation is the decrease in the value of an asset due to wear and tear or obsolescence. It is calculated yearly to enforce the matching principle.InsuranceInsurance is the undertaking of one party to indemnify another, in exchange for a premium, against a certain eventuality.Uninsured risksBad debtChanges in fashionTime lapses between ordering and deliveryNew machinery or technologyDifferent prices at different placesRequirements of an insurance contractInsurable interestThe insured must derive a real financial gain from that which he is insuring, or stand to lose if it is destroyed or lost.The item must belong to the insured.One person may take out insurance on the life of another if the second party owes the first money.Must be some person or item which can, legally, be insured.The insured must have a legal claim to that which he is insuring.Good faithUberrimae fidei refers to absolute honesty and must characterise the dealings of both the insurer and the insured.Shared ServicesThere is currently a move towards converging and consolidating Finance provisions into shared services within an organization. Rather than an organization having a number of separate Finance departments performing the same tasks from different locations a more centralized version can be created.Finance of statesCountry, state, county, city or municipality finance is called public finance. It is concerned withIdentification of required expenditure of a public sector entitySource(s) of that entity's revenueThe budgeting processDebt issuance municipal bonds for public works projectsFinancial economicsFinancial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance.It studies:Valuation - Determination of the fair value of an assetHow risky is the asset? (identification of the asset appropriate discount rate)What cash flows will it produce? (discounting of relevant cash flows)How does the market price compare to similar assets? (relative valuation)Are the cash flows dependent on some other asset or event? (derivatives, contingent claim valuation)Financial markets and instrumentCommodities - topicsStocks - topicsBonds - topicsMoney market instruments- topicsDerivatives - topicsFinancial institutions and regulationFinancial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterise the relationships.f Financial mathematicsFinancial mathematics is a main branch of applied mathematics concerned with the financial markets. Financial mathematics is the study of financial data with the tools of mathematics, mainly statistics. Such data can be movements of securities—stocks and bonds etc.—and their relations. Another large subfield is insurance mathematics.Experimental financeExperimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions, and attempt to discover new principles on which such theory can be extended. Research may proceed by conducting trading simulations or by establishing and studying the behaviour of people in artificial competitive market-like settings.Behavioral financeBehavioral Finance studies how the psychology of investors or managers affects financial decisions and markets. Behavioral finance has grown over the last few decades to become central to finance.Behavioral finance includes such topics as:Empirical studies that demonstrate significant deviations from classical theories.Models of how psychology affects trading and pricesForecasting based on these methods.Studies of experimental asset markets and use of models to forecast experiments.A strand of behavioral finance has been dubbed Quantitative Behavioral Finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been lead by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran, Huseyin Merdan). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.Intangible Asset FinanceIntangible asset finance is the area of finance that deals with intangible assets such as patents, trademarks, goodwill, reputation, etc.Related professional qualificationsThere are several related professional qualifications in finance, that can lead to the field:Accountancy:Qualified accountant: Chartered Accountant (ACA - UK certification / CA - certification in Commonwealth countries), Chartered Certified Accountant (ACCA, UK certification), Certified Public Accountant (CPA, US certification)Non-statutory qualifications: Chartered Cost Accountant CCA Designation from AAFMBusiness qualifications: Master of Business Administration (MBA), Bachelor of Business Management (BBM), Master of Commerce (M.Comm), Master of Science in Management (MSM), Doctor of Business Administration(DBA)Generalist Finance qualifications:Degrees: Masters degree in Finance (MSF), Master of Financial Economics, Master Financial Manager (MFM), Master of Financial Administration (MFA)Certifications: Chartered Financial Analyst (CFA), Certified International Investment Analyst (CIIA), Association of Corporate Treasurers (ACT), Certified Market Analyst (CMA/FAD) Dual Designation, Corporate Finance Qualification (CF)Quantitative Finance qualifications: Master of Science in Financial Engineering (MSFE), Master of Quantitative Finance (MQF), Master of Computational Finance (MCF), Master of Financial Mathematics (MFM)
Tuesday, April 28, 2009
HEALTH INSURANCE
History
Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.
Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case.
Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of organizations.The predecessors of today's(HMOs) originated in 1929, through the 1930s and on during World War II.
Public health care coverage
Public programs provide the primary source of coverage for most seniors and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals; Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families; and, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through and the and benefits provided through the Some states have additional programs for low-income individuals.
Medicare
In the United States, Medicare is a federal social insurance program that provides health insurance to elderly workers and their dependents, individuals who become totally and permanently disabled, and end stage (ESRD) patients. Some health care economists (Uwe Reinhardt of and Stuart Butler among others) assert that the third-party payment feature of this program has had the of distorting the price of medical procedures. As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Recent research has found that the health trends of previously uninsured adults, especially those with chronic health problems, improves once they enter the Medicare program.
Medicare Advantage
expand the health care options for Medicare beneficiaries. The option for Medicare Advantage plans is a result of the with the intent to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices.
Medicare Part D (Prescription Drugs)
provides a private insurance option to allow Medicare beneficiaries to purchase subsidized coverage for the costs of It was enacted as part of to 2003 (MMA) and went into effect on January 1, 2006.
Medicail
Medicaid was instituted for the very poor in 1965. Despite its establishment, the percentage of US residents who lack any form of health insurance has increased since 1994. It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements.Medicaid is a social welfare or program rather than a social insurance program.
State Children's Health Insurance Program (SCHIP)
The State Children’s Health Insurance Program (SCHIP) is a joint state/federal program to provide health insurance to children in families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. The statutory authority for SCHIP is under title XXI o SCHIP programs are run by the individual states according to requirements set by the federal and may be structured as independent programs separate from Medicaid (separate child health programs), as expansions of their Medicaid programs (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.
Military health benefits
Health benefits are provided to active duty service members, retired service members and their dependents by the Department of Defense Military Health System (MHS). The MHS consists of a direct care network of Military Treatment Facilities and a purchased care network known as Additionally, veterans may also be eligible for benefits through the
Indian health service
The (IHS) provides medical assistance to eligible American Indians at IHS facilities, and helps pay the cost of some services provided by non-IHS health care providers.
State risk pools
In 1976, some states began providing guaranteed-issuance risk pools, which enable individuals who are medically uninsurable through private health insurance to purchase a state-sponsored health insurance plan, usually at higher cost. Minnesota was the first to offer such a plan; 34 states now offer them. Plans vary greatly from state to state, both in their costs and benefits to consumers and in their methods of funding and operations. They serve a very small portion of the uninsurable market—about 182,000 people in the US as of 2004.In best cases, they allow people with pre-existing conditions such as cancer, diabetes, heart disease or other chronic illnesses to be able to switch jobs or seek self-employment without fear of being without health care benefits.However, the plans are expensive, with premiums that can be double the average policy, and the pools currently cover only 1 in 25 of the so-called "uninsurable" population.Efforts to pass a national pool have as yet been unsuccessful, but some federal tax money has been awarded to states to innovate and improve their plans.
Private health care coverage
Private health insurance may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. Most Americans with private health insurance receive it through an employer-sponsored program. According to the some 60% of Americans are covered through an employer, while about 9% purchase health insurance directly.
The US has a joint federal/state system for regulating insurance, with the federal government ceding primary responsibility to the states under the States regulate the content of health insurance policies and often require coverage of specific types of medical services or health care provider.State mandates generally do not apply to the health plans offered by large employers, due to the preemption clause
Employer-sponsored
Employer-sponsored health insurance is paid for by businesses on behalf of their employees as part of an package. Most private health coverage in the US is employment based. According to the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees The employer typically makes a substantial contribution towards the cost of coverage. In 2008 the average employee contribution was 16% of the cost of single coverage and 27% of the cost of family coverage. These percentages have been stable since 1999. Health benefits provided by employers are also tax favored. Employee contributions can be made on a pre-tax basis if the employer offers the benefits through a section 125
Costs for employer-paid health insurance are rising rapidly: since 2001, premiums for family coverage have increased 78%, while wages have risen 19% and inflation has risen 17%, according to a 2007 study by Employer costs have risen significantly per hour worked, and vary significantly. In particular, average employer costs for health benefits vary by firm size and occupation. The cost per hour of health benefits is generally higher for workers in higher-wage occupations, but represent a smaller percentage of payroll.The percentage of total compensation devoted to health benefits has been rising since the 1960s.Average premiums, including both the employer and employee portions, were $4,704 for single coverage and $12,680 for family coverage in 2008 However, in a 2007 analysis, the Employee Benefit Research Institute concluded that the availability of employment-based health benefits for active workers in the US is stable. The "take-up rate," or percentage of eligible workers participating in employer-sponsored plans, is falling. The percentage of workers actually covered has fallen somewhat, but not sharply. EBRI interviewed employers for the study, and found that others might follow if a major employer discontinued health benefits. Public policy changes could also result in a reduction in employer support for employment-based health benefits.
Although much more likely to offer retiree health benefits than small firms, the percentage of large firms offering these benefits fell from 66% in 1988 to 34% in 2002.
Accident insurance was first offered in the United States by the Franklin Health Assurance Company of Massachusetts. This firm, founded in 1850, offered insurance against injuries arising from railroad and steamboat accidents. Sixty organizations were offering accident insurance in the US by 1866, but the industry consolidated rapidly soon thereafter. While there were earlier experiments, the origins of sickness coverage in the US effectively date from 1890. The first employer-sponsored group disability policy was issued in 1911.
Before the development of medical expense insurance, patients were expected to pay all other health care costs out of their own pockets, under what is known as the business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance programs. Today, most comprehensive private health insurance programs cover the cost of routine, preventive, and emergency health care procedures, and also most prescription drugs, but this was not always the case.
Hospital and medical expense policies were introduced during the first half of the 20th century. During the 1920s, individual hospitals began offering services to individuals on a pre-paid basis, eventually leading to the development of organizations.The predecessors of today's(HMOs) originated in 1929, through the 1930s and on during World War II.
Public health care coverage
Public programs provide the primary source of coverage for most seniors and for low-income children and families who meet certain eligibility requirements. The primary public programs are Medicare, a federal social insurance program for seniors and certain disabled individuals; Medicaid, funded jointly by the federal government and states but administered at the state level, which covers certain very low income children and their families; and, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage. Other public programs include military health benefits provided through and the and benefits provided through the Some states have additional programs for low-income individuals.
Medicare
In the United States, Medicare is a federal social insurance program that provides health insurance to elderly workers and their dependents, individuals who become totally and permanently disabled, and end stage (ESRD) patients. Some health care economists (Uwe Reinhardt of and Stuart Butler among others) assert that the third-party payment feature of this program has had the of distorting the price of medical procedures. As a result, the Health Care Financing Administration has set up a list of procedures and corresponding prices under the Recent research has found that the health trends of previously uninsured adults, especially those with chronic health problems, improves once they enter the Medicare program.
Medicare Advantage
expand the health care options for Medicare beneficiaries. The option for Medicare Advantage plans is a result of the with the intent to better control the rapid growth in Medicare spending, as well as to provide Medicare beneficiaries more choices.
Medicare Part D (Prescription Drugs)
provides a private insurance option to allow Medicare beneficiaries to purchase subsidized coverage for the costs of It was enacted as part of to 2003 (MMA) and went into effect on January 1, 2006.
Medicail
Medicaid was instituted for the very poor in 1965. Despite its establishment, the percentage of US residents who lack any form of health insurance has increased since 1994. It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to relatively high administrative costs and low reimbursements.Medicaid is a social welfare or program rather than a social insurance program.
State Children's Health Insurance Program (SCHIP)
The State Children’s Health Insurance Program (SCHIP) is a joint state/federal program to provide health insurance to children in families who earn too much money to qualify for Medicaid, yet cannot afford to buy private insurance. The statutory authority for SCHIP is under title XXI o SCHIP programs are run by the individual states according to requirements set by the federal and may be structured as independent programs separate from Medicaid (separate child health programs), as expansions of their Medicaid programs (SCHIP Medicaid expansion programs), or combine these approaches (SCHIP combination programs). States receive enhanced federal funds for their SCHIP programs at a rate above the regular Medicaid match.
Military health benefits
Health benefits are provided to active duty service members, retired service members and their dependents by the Department of Defense Military Health System (MHS). The MHS consists of a direct care network of Military Treatment Facilities and a purchased care network known as Additionally, veterans may also be eligible for benefits through the
Indian health service
The (IHS) provides medical assistance to eligible American Indians at IHS facilities, and helps pay the cost of some services provided by non-IHS health care providers.
State risk pools
In 1976, some states began providing guaranteed-issuance risk pools, which enable individuals who are medically uninsurable through private health insurance to purchase a state-sponsored health insurance plan, usually at higher cost. Minnesota was the first to offer such a plan; 34 states now offer them. Plans vary greatly from state to state, both in their costs and benefits to consumers and in their methods of funding and operations. They serve a very small portion of the uninsurable market—about 182,000 people in the US as of 2004.In best cases, they allow people with pre-existing conditions such as cancer, diabetes, heart disease or other chronic illnesses to be able to switch jobs or seek self-employment without fear of being without health care benefits.However, the plans are expensive, with premiums that can be double the average policy, and the pools currently cover only 1 in 25 of the so-called "uninsurable" population.Efforts to pass a national pool have as yet been unsuccessful, but some federal tax money has been awarded to states to innovate and improve their plans.
Private health care coverage
Private health insurance may be purchased on a group basis (e.g., by a firm to cover its employees) or purchased by individual consumers. Most Americans with private health insurance receive it through an employer-sponsored program. According to the some 60% of Americans are covered through an employer, while about 9% purchase health insurance directly.
The US has a joint federal/state system for regulating insurance, with the federal government ceding primary responsibility to the states under the States regulate the content of health insurance policies and often require coverage of specific types of medical services or health care provider.State mandates generally do not apply to the health plans offered by large employers, due to the preemption clause
Employer-sponsored
Employer-sponsored health insurance is paid for by businesses on behalf of their employees as part of an package. Most private health coverage in the US is employment based. According to the Centers for Medicare and Medicaid Services, nearly 100% of large firms offer health insurance to their employees The employer typically makes a substantial contribution towards the cost of coverage. In 2008 the average employee contribution was 16% of the cost of single coverage and 27% of the cost of family coverage. These percentages have been stable since 1999. Health benefits provided by employers are also tax favored. Employee contributions can be made on a pre-tax basis if the employer offers the benefits through a section 125
Costs for employer-paid health insurance are rising rapidly: since 2001, premiums for family coverage have increased 78%, while wages have risen 19% and inflation has risen 17%, according to a 2007 study by Employer costs have risen significantly per hour worked, and vary significantly. In particular, average employer costs for health benefits vary by firm size and occupation. The cost per hour of health benefits is generally higher for workers in higher-wage occupations, but represent a smaller percentage of payroll.The percentage of total compensation devoted to health benefits has been rising since the 1960s.Average premiums, including both the employer and employee portions, were $4,704 for single coverage and $12,680 for family coverage in 2008 However, in a 2007 analysis, the Employee Benefit Research Institute concluded that the availability of employment-based health benefits for active workers in the US is stable. The "take-up rate," or percentage of eligible workers participating in employer-sponsored plans, is falling. The percentage of workers actually covered has fallen somewhat, but not sharply. EBRI interviewed employers for the study, and found that others might follow if a major employer discontinued health benefits. Public policy changes could also result in a reduction in employer support for employment-based health benefits.
Although much more likely to offer retiree health benefits than small firms, the percentage of large firms offering these benefits fell from 66% in 1988 to 34% in 2002.
PERSONAL COMPUTER
PERSONAL COMPUTER
Personal Computers, microcomputers were made possible by two technical innovations in the field of microelectronics: the integrated circuit, or IC, which was developed in 1959; and the microprocessor, which first appeared in 1971. The IC permitted the miniaturization of computer-memory circuits, and the microprocessor reduced the size of a computer's CPU to the size of a single silicon chip.
The invention of the microprocessor, a machine which combines the equivalent of thousands of transistors on a single, tiny silicon chip, was developed by Ted Hoff at Intel Corporation in the Santa Clara Valley south of San Francisco, California, an area that was destined to become known to the world as Silicon Valley because of the microprocessor and computer industry that grew up there. Because a CPU calculates, performs logical operations, contains operating instructions, and manages data flows, the potential existed for developing a separate system that could function as a complete microcomputer.
The first such desktop-size system specifically designed for personal use appeared in 1974; it was offered by Micro Instrumentation Telemetry Systems (MITS). The owners of the system were then encouraged by the editor of a popular technology magazine to create and sell a mail-order computer kit through the magazine. The computer, which was called Altair, retailed for slightly less than $400.
The demand for the microcomputer kit was immediate, unexpected, and totally overwhelming. Scores of small entrepreneurial companies responded to this demand by producing computers for the new market. The first major electronics firm to manufacture and sell personal computers, Tandy Corporation (Radio Shack), introduced its model in 1977. It quickly dominated the field, because of the combination of two attractive features: a keyboard and a cathode-ray display terminal (CRT). It was also popular because it could be programmed and the user was able to store information by means of cassette tape.
Soon after Tandy's new model was introduced, two engineer-programmers—Stephen Wozniak and Steven Jobs—started a new computer manufacturing company named Apple Computers.
In 1976, in what is now the Silicon Valley, Steve Jobs and Steve Wozniak created a homemade microprocessor computer board called Apple I. Working from Jobs’ parents’ garage, the two men began to manufacture and market the Apple I to local hobbyists and electronics enthusiasts. Early in 1977, Jobs and Wozniak founded Apple Computer, Inc., and in April of that year introduced the Apple II, the world’s first personal computer. Based on a board of their design, the Apple II, complete with keyboard and color graphics capability, retailed for $1290.
Some of the new features they introduced into their own microcomputers were expanded memory, inexpensive disk-drive programs and data storage, and color graphics. Apple Computers went on to become the fastest-growing company in U.S. business history. Its rapid growth inspired a large number of similar microcomputer manufacturers to enter the field. Before the end of the decade, the market for personal computers had become clearly defined.
In 1981, IBM introduced its own microcomputer model, the IBM PC. Although it did not make use of the most recent computer technology, the PC was a milestone in this burgeoning field. It proved that the microcomputer industry was more than a current fad, and that the microcomputer was in fact a necessary tool for the business community. The PC's use of a 16-bit microprocessor initiated the development of faster and more powerful micros, and its use of an operating system that was available to all other computer makers led to a de facto standardization of the industry.
In the mid-1980s, a number of other developments were especially important for the growth of microcomputers. One of these was the introduction of a powerful 32-bit computer capable of running advanced multi-user operating systems at high speeds. This has dulled the distinction between microcomputers and minicomputers, placing enough computing power on an office desktop to serve all small businesses and most medium-size businesses.
Another innovation was the introduction of simpler, "user-friendly" methods for controlling the operations of microcomputers. By substituting a graphical user interface (GUI) for the conventional operating system, computers such as the Apple Macintosh allow the user to select icons—graphic symbols of computer functions—from a display screen instead of requiring typed commands. Douglas Engelbart, invented an "X-Y Position Indicator for a Display System": the prototype of the computer "mouse" whose convenience has revolutionized personal computing. New voice-controlled systems are now available, and users may eventually be able to use the words and syntax of spoken language to operate their microcomputers.
Personal Computers, microcomputers were made possible by two technical innovations in the field of microelectronics: the integrated circuit, or IC, which was developed in 1959; and the microprocessor, which first appeared in 1971. The IC permitted the miniaturization of computer-memory circuits, and the microprocessor reduced the size of a computer's CPU to the size of a single silicon chip.
The invention of the microprocessor, a machine which combines the equivalent of thousands of transistors on a single, tiny silicon chip, was developed by Ted Hoff at Intel Corporation in the Santa Clara Valley south of San Francisco, California, an area that was destined to become known to the world as Silicon Valley because of the microprocessor and computer industry that grew up there. Because a CPU calculates, performs logical operations, contains operating instructions, and manages data flows, the potential existed for developing a separate system that could function as a complete microcomputer.
The first such desktop-size system specifically designed for personal use appeared in 1974; it was offered by Micro Instrumentation Telemetry Systems (MITS). The owners of the system were then encouraged by the editor of a popular technology magazine to create and sell a mail-order computer kit through the magazine. The computer, which was called Altair, retailed for slightly less than $400.
The demand for the microcomputer kit was immediate, unexpected, and totally overwhelming. Scores of small entrepreneurial companies responded to this demand by producing computers for the new market. The first major electronics firm to manufacture and sell personal computers, Tandy Corporation (Radio Shack), introduced its model in 1977. It quickly dominated the field, because of the combination of two attractive features: a keyboard and a cathode-ray display terminal (CRT). It was also popular because it could be programmed and the user was able to store information by means of cassette tape.
Soon after Tandy's new model was introduced, two engineer-programmers—Stephen Wozniak and Steven Jobs—started a new computer manufacturing company named Apple Computers.
In 1976, in what is now the Silicon Valley, Steve Jobs and Steve Wozniak created a homemade microprocessor computer board called Apple I. Working from Jobs’ parents’ garage, the two men began to manufacture and market the Apple I to local hobbyists and electronics enthusiasts. Early in 1977, Jobs and Wozniak founded Apple Computer, Inc., and in April of that year introduced the Apple II, the world’s first personal computer. Based on a board of their design, the Apple II, complete with keyboard and color graphics capability, retailed for $1290.
Some of the new features they introduced into their own microcomputers were expanded memory, inexpensive disk-drive programs and data storage, and color graphics. Apple Computers went on to become the fastest-growing company in U.S. business history. Its rapid growth inspired a large number of similar microcomputer manufacturers to enter the field. Before the end of the decade, the market for personal computers had become clearly defined.
In 1981, IBM introduced its own microcomputer model, the IBM PC. Although it did not make use of the most recent computer technology, the PC was a milestone in this burgeoning field. It proved that the microcomputer industry was more than a current fad, and that the microcomputer was in fact a necessary tool for the business community. The PC's use of a 16-bit microprocessor initiated the development of faster and more powerful micros, and its use of an operating system that was available to all other computer makers led to a de facto standardization of the industry.
In the mid-1980s, a number of other developments were especially important for the growth of microcomputers. One of these was the introduction of a powerful 32-bit computer capable of running advanced multi-user operating systems at high speeds. This has dulled the distinction between microcomputers and minicomputers, placing enough computing power on an office desktop to serve all small businesses and most medium-size businesses.
Another innovation was the introduction of simpler, "user-friendly" methods for controlling the operations of microcomputers. By substituting a graphical user interface (GUI) for the conventional operating system, computers such as the Apple Macintosh allow the user to select icons—graphic symbols of computer functions—from a display screen instead of requiring typed commands. Douglas Engelbart, invented an "X-Y Position Indicator for a Display System": the prototype of the computer "mouse" whose convenience has revolutionized personal computing. New voice-controlled systems are now available, and users may eventually be able to use the words and syntax of spoken language to operate their microcomputers.
FOREX TRADING
Unlike a stock market, where all participants have access to the same prices, the foreign exchange market is divided into levels of access. At the top is the inter-bank market, which is made up of the largest investment banking firms. Within the inter-bank market, spreads, which are the difference between the bid and ask prices, are razor sharp and usually unavailable, and not known to players outside the inner circle. The difference between the bid and ask prices widens (from 0-1 pip to 1-2 pips for some currencies such as the EUR). This is due to volume. If a trader can guarantee large numbers of transactions for large amounts, they can demand a smaller difference between the bid and ask price, which is referred to as a better spread. The levels of access that make up the foreign exchange market are determined by the size of the “line” (the amount of money with which they are trading). The top-tier inter-bank market accounts for 53% of all transactions. After that there are usually smaller investment banks, followed by large multi-national corporations (which need to hedge risk and pay employees in different countries), large hedge funds, and even some of the retail FX-metal market makers. According to Galati and Melvin, “Pension funds, insurance companies, mutual funds, and other institutional investors have played an increasingly important role in financial markets in general, and in FX markets in particular, since the early 2000s.” (2004) In addition, he notes, “Hedge funds have grown markedly over the 2001–2004 period in terms of both number and overall size” Central banks also participate in the foreign exchange market to align currencies to their economic needs.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.
Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most but turnover is noticeably smaller than just a few years ago.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants. Central banks
National central banks play an important role in the foreign exchange markets. They try to control the, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank Several scenarios of this nature were seen in the 1992–9 collapse, and in more recent times in Southeast Asia.
Banks
The interbank market caters for both the majority of commercial turnover and large amounts of speculative trading every day. A large bank may trade billions of dollars daily. Some of this trading is undertaken on behalf of customers, but much is conducted by proprietary desks, trading for the bank's own account.
Until recently, foreign exchange brokers did large amounts of business, facilitating interbank trading and matching anonymous counterparts for small fees. Today, however, much of this business has moved on to more efficient electronic systems. The broker squawk box lets traders listen in on ongoing interbank trading and is heard in most but turnover is noticeably smaller than just a few years ago.
Commercial companies
An important part of this market comes from the financial activities of companies seeking foreign exchange to pay for goods or services. Commercial companies often trade fairly small amounts compared to those of banks or speculators, and their trades often have little short term impact on market rates. Nevertheless, trade flows are an important factor in the long-term direction of a currency's exchange rate. Some multinational companies can have an unpredictable impact when very large positions are covered due to exposures that are not widely known by other market participants. Central banks
National central banks play an important role in the foreign exchange markets. They try to control the, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank Several scenarios of this nature were seen in the 1992–9 collapse, and in more recent times in Southeast Asia.
Subscribe to:
Posts (Atom)
