Archive for the ‘finances’ Category
Friday, October 30th, 2009
Whenever the equity risk premium falls below current spread levels, there is a quasi-arbitrage opportunity between corporate bonds and equities. After a long period with a positive equity credit premium, the picture changed in 1999, signaling the height of the equity bubble. The interpretation of this was that expected returns on corporate bonds versus equities were extremely attractive. While corporate bonds actually outperformed equities by far between 2000 and 2002, those years were characterized by a massive widening of credit spreads. Due to the bursting of the tech bubble and the credit spread tightening since fall 2002, the gap has closed.
Tags: bad debt, business objectives, car loans, compare credit, currency trading, debt consolidation, debt settlement, forex, funds, home equity, investment opportunities, loans guide, portfolio, refinancing
Posted in budget analysis, business goals, finances, financial principles, financial risks, loans, management, merchandise | Comments Off
Thursday, October 29th, 2009
One approach to identify relative value between the above-mentioned asset classes is to compare risk premia. For corporate bonds this is equivalent to the spread over government bonds. The comparison versus equities requires the estimation of the equity risk premium, that is the difference between the expected rate of return on the stock market and a risk-free interest rate, usually long-term government bond yields. While there are differences in the sector structure of the equity and corporate bond markets, for example with respect to technology exposure, the equity credit premium may nevertheless provide valuable insights into the relative valuation of both markets. This is because risk factors such as economic growth, risk aversion and implied equity volatility influence both markets in a similar manner.
Tags: business competition, business objectives, cash reserves, CEO, loans guide, merger, money guide, pricing policy, shareholders, shares
Posted in banking, business patterns, campaigns, credit cards, developers, equity, finances, financial risks | Comments Off
Wednesday, October 28th, 2009
The rapid growth of the European corporate bond market since 1997 has promoted the acceptance of corporate bonds as a separate asset class. Therefore, identifying relative value not only between equities and government bonds, but also relative to corporate bonds, has become a central task of asset allocators. But, of course, this analysis is also relevant from the perspective of a pure fixed income investor. Not only does it help to assess the outlook for credit spreads in general, but also to decide on the beta or, in other words, the aggressiveness of a pure corporate bond portfolio relative to its benchmark. Although it has been common use to compare equities and government bonds, it is far less common to compare equities and corporate bonds.
Tags: credit score, get out of debt, income, international markets, making money, merger, money issues, money tips, personal finances, revenue, shares
Posted in accounting, attitude, banking, equity, expenses, finances, merchandise, money spending, negotiationg | Comments Off
Saturday, October 24th, 2009
Credit spreads historically have been negatively correlated with 3-year rolling equity-market returns, as we would have expected from the Merton model. Indeed, there seems to be a longer term debt–equity cycle. But the chart also reveals a significant decoupling of equity and credit during the 1990s. Since equity-market performance alone is only temporarily able to explain variations of credit spreads, we will now analyze the impact of equity volatility on spreads. However, most of the time equity prices and implied volatility tell the same story. When stock prices are falling, demand for protection increases, and thus volatility, which is simply the price of protection, rises. The result is a strong negative correlation between equity prices and option-implied volatility. Yet the times, when both markets tell different stories, are the most interesting.
Tags: market cycles, money, Partnership, payment, price, Private Annuities, property, purchase real estate, shares, tax
Posted in finances, financial principles, financial risks, funds, global market, innovative marketing, loans | Comments Off
Wednesday, August 5th, 2009
Comfort zone investing does not mean you become a flawless investor or a spiritual giant. For most people, striving for financial maturity is a process of self-discovery and self-acceptance, not a process of self-improvement.
To achieve serenity in investing, once you know how you relate to different investments, you do not have to change who you are; you simply need to change your investments to fit you. Often in marriage or work relationships, you must change yourself if you are to be happy, because your spouse or boss is not about to change. Changing yourself is much more difficult and painful than changing your investments.
Changing investments is not, however, entirely cost free. Switching from stocks to real estate, for example, incurs taxes, commissions, closing fees, research, and assessment hours, as well as other monetary, time, and effort costs. There are social costs as well. You may have to reach outside office norms to find what works for you. If you are a real estate guy and the firm only offers 401(k)s with no REIT option and lots of free company stock, you might have to explain to your colleagues why you put nothing in the plan and spend weekends driving around looking at shopping centers.
Posted in banking, credit cards, finances, global market | Comments Off
Thursday, July 30th, 2009
Most suppliers understand that no company can sell from an empty store. Therefore, most suppliers usually work out financing arrangements that take into account when the company gets paid by its own customers. In other words, most suppliers have come to understand that when their customers are paid, they’ll be paid shortly thereafter. Otherwise, suppliers know they’ll get the unpopular merchandise back anyway when the companies close down—and that’s the last thing suppliers want.
Success can lead to failure if you can’t master cash flow dynamics. If a company can’t keep up with the demand of its customers, it may need to scale down its expectations temporarily and hope to make the most of its growth opportunities later. If a company can’t keep up with payments to its suppliers, it should meet and negotiate, and maybe reduce its purchases in the future. Then it should establish better means of monitoring its cash flow and find ways to operate more efficiently.
Tags: cash crunch, cash dynamics, contingency, productivity
Posted in developers, finances, management, merchandise, negotiationg | Comments Off
Thursday, July 30th, 2009
The size, nature, and complexity of a business may indicate up to one, two, or three years of losses before the business starts turning a profit in new ventures. Managers won’t know for sure until they have some operations time behind them and have begun retool-ing based on what the market is really like, rather than on what they think it’s like. Once managers have an understanding of what customers think of their products and services, they can make more realistic predictions about expenses, income, and profitability to minimize the chances of getting into a cash crunch.
Tags: business, cash crunch, productivity, profit
Posted in customer demand, developers, finances, management | Comments Off
Wednesday, July 29th, 2009
Balance reporting simply refers to checking company accounts via direct online access to the bank’s records using a personal computer. Similar in technique to presentment accounts, automated balance reporting allows direct access to information and gives your accountant the ability to deposit just as much money into the payment account as necessary and no more.
Sweep accounts are perhaps the simplest to understand and yet the most profitable of the three techniques. The bank simply reviews all active company accounts at the end of each business day and sweeps excess funds not used to satisfy payment needs into interest-bearing accounts in an overnight deposit. The next day those funds can be redeposited to satisfy more payments, if need be, or additional funds can be deposited. That night, the bank again sweeps the account and the interest grows.
The key point for you to remember is that A/11 can be a key financial management tool for your company. Understanding how that works and why will help you contribute more effectively to your company’s overall financial growth and prosperity.
Balance reporting simply refers to checking company accounts via direct online access to the bank’s records using a personal computer. Similar in technique to presentment accounts, automated balance reporting allows direct access to information and gives your accountant the ability to deposit just as much money into the payment account as necessary and no more.
Sweep accounts are perhaps the simplest to understand and yet the most profitable of the three techniques. The bank simply reviews all active company accounts at the end of each business day and sweeps excess funds not used to satisfy payment needs into interest-bearing accounts in an overnight deposit. The next day those funds can be redeposited to satisfy more payments, if need be, or additional funds can be deposited. That night, the bank again sweeps the account and the interest grows.
The key point for you to remember is that A/11 can be a key financial management tool for your company. Understanding how that works and why will help you contribute more effectively to your company’s overall financial growth and prosperity.
Posted in finances, global market, online bank, payments | Comments Off
Tuesday, July 21st, 2009
I was watching one of those funniest home video shows a while back. There was an adorable video of a dad digging this big hole in the backyard. Right behind him, just out of his line of sight, was a little kid with a shovel, throwing the dirt right back in the hole.
That’s what it’s like trying to get out of debt sometimes, when you share your finances with another person. In fact, it can be the source of a lot of tension in your relationships.
You may be the most determined person in the world when it comes to getting out of debt. But if someone else refuses to slow down their spending, or even worse, continues to incur new debts, you’re going to get nowhere. If change is going to occur, you’re going to need to sit down and have a serious talk with them about the changes that you think need to take place.
Here are some points to consider when having this less-than-fun discussion with someone you care about:
Don’t place blame. The moment you make someone else the whipping post for your frustrations is the moment he or she will probably stop listening. Even if you know you’re right, you may need to swallow a little pride to get your plan moving.
Take a lot of blame. Heck, take all of it if you can. The more you make this about you, the less defensive and resistant to change someone else will be.
Use “I” statements. As you talk about your money stress, be sure to speak in the first person. Chances are, the other person cares about you a lot, too. When he or she sees the true extent of your stress and anxiety over your finances, the part of him or her that cares for you will want to step up and help!
Posted in credit cards, finances, global market, loans | Comments Off
Tuesday, July 7th, 2009
As you battle to get out of debt and to use debt wisely, it’s of the utmost importance to realize how your credit scores affect your situation. In fact, there is nothing that may affect the money that flows in and out of your household more than your credit score.
I’ll discuss the importance of salvaging your credit score in Chapter 20, but suffice it to say, you’ve got to start guarding that thing like it’s the president! Your credit score is a rating of how “safe” you appear to be to a potential lender (i.e., how likely you are to pay off the money that you borrow). The higher your score, the safer you are. The safer you are, the more friendly your interest rate and repayment terms are going to be.
In fact, two people with different credit scores will be required to pay a noticeably different monthly payment on the same loan. The following table contains six different credit scores along with what the corresponding mortgage ends up costing them. For this example, I’ve used a 30-year fixed-rate mortgage on $250,000. As you can see, the failure to show tender loving care to your credit score results in some major money disappearing from your life. In fact, the difference in total interest paid between the best credit score and worst is over $200,000. This is money that could be used to pay off your other debt and save for your other goals. Heck, that’s enough money to buy a second home!
Posted in finances, global market, loans, real estate | Comments Off