What are Forward Contracts?
In this article, I will introduce a financial derivative called Forward Contracts. What are forward contracts? Forward contracts are used by companies to take advantage of a speculation.
A forward contract is an agreement between two parties to buy or sell a specific asset at a certain future time for a certain price agreed today. It costs nothing to enter a forward contract. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell
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What is Variable Life Insurance?
First of all, why are you buying life insurance? The basic rationale for life insurance is to replace your income in the event that you die unexpectedly. Your insurance policy then is supposed to “buy” your dependents’ time to replace the income they had depended on you.
Strictly speaking, life insurance is primarily for protection, not an investment or a savings plan. However, today’s insurance companies offer products with savings plans and investment features. These
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How FED Controls Money Supply
The Federal Reserve of the US, or simply FED, is the most powerful banking institution in the world. It controls the banking and economic system of the most powerful country in the world - United States of America.
In 1913, the US Congress established the FED. The Fed, although the central bank of the United States, is not really one bank. It consists of twelve regional banks, so that no one region of the country can unfairly gain an economic advantage. The Fed is run by a seven-member team
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Financial Ratios You Need to Know When Buying a Business
If you want to become educated on business matters, then one of the things that you should know is the financial statement of companies. You need to know how to read numbers because numbers don’t lie.
Financial statements are the health check up of businesses. Just like humans, businesses can be subject of certain “diseases” that you should know before it’s too late. Here are some of the financial ratios that you should know to examine the health of a business. This
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What Caused the Great Depression?
Filed under: Finance Concepts, On the Spotlight, Personal Finance
We’ve talked about the current recession before and we know that the main thing that triggered it is the subprime mortgage crisis which originated from several investment banks. But what about a more severe economic downturn called depression?
According to Wikipedia:
In economics, depression involves sustained, long-term downturn economic activity. While recession is seen as a part of a normal business cycle, depression is a sustained recession. It is characterized by abnormal increase
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How to Fight Inflation
Inflation is one of the reasons why do you need to invest your money. In economics, we have known inflation as the general increase in prices of commodities. The higher the inflation, the lesser the value of our money. Inflation degrades the value of our money. Your money last year cannot buy the same amount of goods now.
WHAT CAUSES INFLATION TO INCREASE?
Increase in oil prices. Oil is a very important commodity in the world because it is one of the raw materials of every company used to
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Good Debt vs. Bad Debt
Debt has always been considered as a liability. Yes, in most cases, debt is a liability because it is money owed to someone else. One classic example of a liability is a credit card debt. When you use a credit card, you’re taking a loan from the bank or company that issued the card.
With that loan come interest payments. You generally do not pay interest for the first credit card cycle (usually a month), but any amount not completely paid off after that first cycle is subject to interest.
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Preparing Your Personal Financial Statement
In order for you to know where you want to go, you must first know where you are currently. To reach your financial goal, the first thing you must do is figure out where you are. For if you don’t know where you are, you can’t expect to get where you want to go. Knowing where you are means taking an honest inventory of your financial situation—filling out a financial statement—and taking a good hard look at the results. This may sound difficult, and maybe even a bit scary, but it’s a
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