Tuesday, October 27th, 2009
Remember that corporate bonds can be replicated by the combination of a riskless bond and a short put on the assets of the company. Since lower rated bonds generally are closer to at-the-money than higher rated bonds, it can be expected that the increase of equity-market volatility leads to a widening of the spread differential between issues of different rating classes. This is due to the fact that the sensitivity of the bonds to changes in volatility is different. Options that trade close to at-the-money levels react more strongly given a change in volatility compared with options, which trade far out-of-the-money. The above-described relationships can be witnessed particularly well during crash scenarios in equity markets. In 1990/91, the rise in equity volatility, which was initiated by numerous profit warnings by companies, was a leading indicator of credit spreads.
The subsequent rise in implied equity-market volatility led to a steepening of the yield differential between high and lower rated credits. Baa and Aa rating classes are chosen to illustrate this relationship because for these rating classes the bond universe offers sufficient breadth and liquidity.
Tags: bonds, business, business tips, credit, credit cards, economy, finances, making money, money management, payday loans
Posted in global market, innovative marketing, loans, management, merchandise, money spending, negotiationg | Comments Off
Monday, October 5th, 2009
Many investors try to avoid these troublesome relationships by using online brokers. Online investing is promoted as fun. Chat rooms, IPOs, after-hours trading, 24-hour research: The message is: meet interesting people and make quick, easy money. The results are not any better than using a live-body broker.
Studies show switching to low-commission, online brokers leads to overconfidence. Stocks are bought and sold online in seconds. Online research takes hours if done quickly, days and weeks if done properly. Online investors skip the research and go directly to the trading page. This causes excessive trading, which quickly adds up to excess commissions, large spreads, great unhappiness, and poor results. A few investors become addicted to trading.
Investors using online brokers often turn to chat rooms to get comfort during volatile markets. Chat rooms are full of investors trying to promote their own shares. Their agenda is to get you out of your shares and into theirs at ever-higher prices. Rumors and mass hysteria are treated as fact in chat rooms. Your gullibility will hurt you.
Tags: business plans, company, economy, marketing schedule, payment plans
Posted in business publications, money spending, strategy elements | Comments Off
Monday, August 3rd, 2009
The business plan offers general and specific guidance on reaching company goals. It outlines actions. It also separates the dreamers from the doers. It is often the great equalizer between the enthusiastic idea generators and the serious business people who will accomplish their dreams.
Business plans are usually annual, based on the fiscal year. But there also are multiple-year plans—the most common of which is the five-year plan.
An annual plan is operational and necessary to manage the company’s economic needs for the coming year. A five-year plan is more strategic and designed to chart the firm’s direction. In addition, five-year plans should be rolling plans.
The thinking behind a rolling five-year plan can be applied to other cyclical planning, such as the annual budget process or the marketing schedule. When May ends, for example, the managers can study the forecasts for that month and the results, determine the reasons behind the variances, then use their findings to shape a budget for the following May. Rolling plans allow managers to make the most of their budget analyses, provide greater continuity, and ease the burden of annual planning.
Tags: benchmark, business plans, economy, marketing schedule, sales
Posted in attitude, banking, budget analysis, business goals, business patterns | Comments Off
Monday, August 3rd, 2009
A wiling plan is a perpetual motion engine for your business vehicle. Once you finish the first year in your plan, you add another year to the end of the plan, so the company always is looking five years ahead. Not only does this ensure greater continuity of vision, but it also spares managers the enormous task of creating subsequent five-year plans.
Defining a sound strategy is vital preparation for success. But even the best strategy will fail without a good business plan to put it to work. The strategy is the idea behind the business, but the business plan is the first of many tools by which that idea will turn into actions.
The business plan is the where, when, how, and why of what a company must do to implement its strategy. It’s just that simple—and that difficult.
Tags: benchmark, business plans, economy, sales
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Monday, August 3rd, 2009
That’s good—as a beginning. Now, you need to get into details, by asking a few questions and coining up with solid answers:
Of course, you may want to set ancillary goals in each of these areas. But beware of goals that set department against department, worker against worker. For example, goals for marketing, which are measured in terms of sales, might cause resentment if there are other factors that could affect sales—just as sales goals might not be met because an improvement in efficiency caused a drop in the quality of the products the sales reps are trying to sell.
Tags: benchmark, CEO, economy, sales
Posted in customer demand, employee, expenses, funds, payments, profitability | Comments Off
Sunday, August 2nd, 2009
Except in the movies, nobody has ever made the leap from start-up to success in one jump. The company needs a well-thought out plan built on steps, strategies, and benchmarks to reach its financial goal.
If your financial goal, for example, is a profit of $12 million, you might decide on the following steps:
Tags: benchmark, CEO, company, economy
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Sunday, August 2nd, 2009
It’s possible to plan on the low side, of course, to set a financial goal that your company can reach easily. That may be a good idea for some new companies, allowing them to focus on building a solid foundation rather than stretching to meet a higher goal. But if the economy is generally good, easy goals can promote lax attitudes, keeping your company from becoming truly competitive. Then, if the economy starts to decline…
The bottom line here: Know your company and then set an appropriate financial goal.
Tags: CEO, company, economy, executives
Posted in accounting, attitude, business patterns, business publications, profitability | Comments Off