Category Archives: Business / Investing

Economics

The Economic Status of the World

A country is defined not only in its culture but economy as well. In the study of economics, a business defines it status by how well it is able to supply the demands of people, and sell a demand at a price that is both by consumer and seller. The growth of our world’s economy has largely changed over the past few decades. The constant modernization has made each country required to be tightly competitive and so each country has defined it power through their economic status. Every year, economists thoroughly research on a country’s economic status. Here are the top 10 earners of the world as sourced by the CIA World Factbook:

  1. United States – Uncle Sam has been consistent in the top ranking. Its population count as of 2011 is more than 300 million but their purchasing power is about 14 trillion, despite unemployment rate of 9.6%
  2. China – The ranging population of China does not stop them from being one of the world’s most powerful economical countries. Their unemployment rate only is 4.3%, as of 2009 and the purchasing power totals to 10.09 trillion.
  3. Japan – Their population is not that huge as compared to the first two countries but they are contributing more than 70% in the services sector as of the year 2010. This makes their purchasing power more than 4 trillion.
  4. India – This country ranks the fourth even if unemployment rate went up to 10% in the year 2010. Despite this, they can still purchase goods at 4.06 trillion, and contribute largely to industrial, agricultural and services sector; respectively 26%, 18% and 55%.
  5. Germany – Their economic standing roots from contributing largely in services as they come in second to Japan of bringing 71%. With that, they are able to have a GDP of close to 3 trillion.
  6. Russia – Their buying power is about 2 trillion and their population is not as large as everyone else, considering that their country’s geographical size is huge. With that, they are able to use their available resources to provide more than 36% in the industrial sector.
  7. United Kingdom – The United Kingdom’s limited population still has an unemployment rate of 7% but their GDP defines how largely they can purchase due to their contribution in the services sector, which is close to 80%.
  8. Brazil – It is ranked the 8th country to have a strong economic status since their GDP is 2 trillion with a 200-million population as of 2011. Like the top countries, their GDP largely contributes to the service sector, which is about 67%.
  9. France – Also a country that is largely based on the services sector, it has a purchase power parity of 2 trillion, where population is small and unemployment rate is 9%.
  10. Italy – Due to its small population and purchasing power, Italy is on the top 10 list. Their purchasing power parity is about 2 trillion where it contributes 72.8% in services sector.

Business Investing

Business Investing

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Business Investing – Where to Begin?

Many of us would like to venture into the world of business but are just hesitant due to lack of knowledge on things like finance and investment. Whether it is a small-time or a big-time business, these two play equally important roles. So for those of us who would like to start up a business but just don’t know where exactly to begin, may you find this article a helpful guide toward the world of risky and tricky self-employment. Yes, being our own boss is not all about enjoying its perks. That is why we have to equip ourselves with a powerful game plan before we plunge, head-on.

Top 3 Startup Ideas for Business
• Own a restaurant – this business idea will work out smoothly for those of us who love cooking and food. We have the option to either start up our own name or franchise an established business in the industry. Although the food industry has been feared to be capricious and flicker, a lot of people still find number of reasons to invest in it. And one of these reasons, as noted by the renowned website Entrepreneur.com, is the high volume of job seekers who wish to enter this kind of business. This serves as an assurance that we will never go short of help in this industry, especially if the economy continues to recover.
• Own a retail shop or boutique of your dreams – one of the easiest and most popular ways to start a business in the retail industry is to open up our own boutique. Experts say that the great thing about going this way is that we are all given a chance to indulge in what we like. We can sell clothes, homemade peanut butters, hardware supplies, car accessories, etc. It gives us a chance to showcase our personalities and get involved in something that we really want.
• Own a consultation nook – this is the most ideal business idea for those of us who want to help out people. If we are an expert in a certain field or industry, then we may offer our consultation services to the people who need guidance and tips. The Association of Professional Consultants in Irvine, California notes that this kind of business is booming nowadays. We just have to establish a strong foundation and create the right connections and we’ll surely succeed in this industry.
How to Keep on Track
For us to fully enjoy the rewards and opportunities that self-employment has to offer, we must corroborate a good plan first. Also, we need to ensure that we will get the proper business funding and financial support if we should need it. Businesses are always risky and there is no assurance that we will all succeed in it. However, if we work hard enough and educate ourselves of everything that we should know then it is not impossible. Budding entrepreneurs like us have to keep in mind that it is also very important to make a lasting first impression to our customers. Excellent customer service should also be on top of our priority list as it will make our investment all worth it.

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Defining Derivatives

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Derivative

Derivative

A layman will only understand the term ‘derivative’ as something that is not from an original source. For economically adept people, derivative is understood as an option to invest on stocks, or buy shares at a specific value. Whatever definition a derivative has, there is only one understanding – it is of something that is acquired from something else.

There are different kinds of derivatives as far as economics is concerned. This will help any beginners to learn stocks and investment as each type can be used for a certain advantage. In a financial industry, a derivative may be forward-based, optional, or contracts for differences.

Forward Derivatives Explained

Forward derivative involves investing on a future business at a given time. This derivative is based on obligation so you can be bound to a contract as you are required to transact at a given time. This can be agreed upon by both seller and investor so the contract can also be cancelled. Since this involves long term investment, there is more flexibility in terms of time so you are able to analyze a business if it is worth investing for. There is no outright investment. Examples of forward investments are stock markets, insurance and many others. This type of derivative also can be traded to other type of transaction. This can be bases on the economic status of a business, exchange rated and many others.

 

Defining Optional Derivatives

In optional-based derivatives, an investor may engage into a certain transaction but it does not require any commitment. To simply define it, it is merely an option to invest and nothing else. An optional derivative can be used at a certain advantage since you can only invest on a transaction that you want. A good example of this is a call option. In this kind of investment, buying stocks can be acquired at a given value, on a specific time. This limitation can also be a disadvantage since it should be decided at the quickest time, wherein time can be limited in analyzing if it is a wise and profitable move.

 

Contract for Differences Basics

This type of derivative does not differ entirely from the forward-based one. It also involves future investments at a certain amount but no specific time. In short, this type of investment has no expiration. Usually, contract for difference can be bought and sold to your advantage. There are also certain obligations that you need to follow as per your investment, trade or selling options. The most common transaction of this derivative is cash-settled, which you need not to own physical properties. This can be a commodity, currencies and many others.

 

These are the three basic types of derivatives. Their own kinds differ in transaction and any beginner should learn all these three before planning to invest in any kind of business. In this modern world where everyone should be at par with the latest trends in business, it is good to go back to basics and refresh pertinent knowledge to gain more insights in investment and other business transactions.

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