World Markets can be defined as markets of the world encompassing all the markets of Asia, Europe, Americas, Australia and Africa. It can be stated that world markets have become more integrated as a result of globalization. The world market is common point where all the markets of the world converge. Hence emerges the concept of world supply or world demand or global supply and demand. World supply and demand are heavily influenced by the export and import of the developed vis-à-vis the developing countries. World markets play a key role in the development prospects of many countries of the world as the fluctuations originated there translates into supply and demand conditions in the home country. This can have adverse effects on home producers and consumers of various goods and services. An example would be the world prices of crude oil which wreaked havoc in many developing countries. World markets can also imply the world stock markets such as those present in the countries of the world as also internationally acclaimed stock exchanges such as the NASDAQ.
America Market
America Market is one among the free market system in the world. Find detailed on America Market along with market indicators.
European Market
European Market has become more integrated with the inception of the European Union (EU) in 1992. EU Single Market truly indicates the free movement of people, goods, services and capital across the member countries.
Germany Market
Germany Market is a highly developed market in the world. The market in Germany is generally based upon the doctrine of Social market Economy. Find more on Germany Market.
Japanese Market
In Japanese Market, the best performers are banking, insurance, real estate, retailing, automobiles and telecommunications sector.
Singapore Market
Spain Market
UK Market
Mexican Market
Netherlands Market
Asian Market
Australia Market
Belgium Market
Boston Market
Brazil Market
China Market
Eastern Market
France Market
Global Market
Hong Kong Market
Indian Market
Italian Market
Saturday, January 15, 2011
Unit trust
Unit trust is a special kind of pooled investment, which is formed under a trust deed. Unit trust helps to bring together individuals with same investment objectives in the similar platform of financial transaction.
A unit trust is formed when investors invest their savings to form the trust and it gets dissolved when investors withdraw money from it. By participating in a unit trust, investors accrue greater benefits from their investments than what they would have earned from direct investment in company shares. Investment in unit trust comes with higher financial security and greater economies of scale. Investment schemes like unit trusts encourage investors to participate in equity, derivatives, debt, and money markets. Be it a regular income growth or capital growth, unit trust takes care of all types of investment objectives. Unit trusts are preferred due to their easy affordability, and excellent liquidity.
Features of unit trusts
Unit trusts are characterized by following features:
1. These are open-ended schemes of investment
2. Each unit trust scheme comes with distinct set of investment objective
3. These trusts are designed as per the financial limitations of investors
4. Investors investing in unit trusts have ownership in the trust assets
5. Unit trust is managed by a fund manager, who maintains the trust and tries to improve profit level
Unit trusts can be categorized into two different units as follows:
1. Accumulation units are those that accumulate interest and dividend within the trust and add value to the trusts fund.
2. Distribution or income units on the other hand, distribute dividend or interest among the unit holders on a previously fixed date.
3. Creation and cancellation prices of a unit trust do not match with the offer price and bid price at all times. Profit that is earned from the difference between creation and cancellation prices of unite trusts is termed
A unit trust is formed when investors invest their savings to form the trust and it gets dissolved when investors withdraw money from it. By participating in a unit trust, investors accrue greater benefits from their investments than what they would have earned from direct investment in company shares. Investment in unit trust comes with higher financial security and greater economies of scale. Investment schemes like unit trusts encourage investors to participate in equity, derivatives, debt, and money markets. Be it a regular income growth or capital growth, unit trust takes care of all types of investment objectives. Unit trusts are preferred due to their easy affordability, and excellent liquidity.
Features of unit trusts
Unit trusts are characterized by following features:
1. These are open-ended schemes of investment
2. Each unit trust scheme comes with distinct set of investment objective
3. These trusts are designed as per the financial limitations of investors
4. Investors investing in unit trusts have ownership in the trust assets
5. Unit trust is managed by a fund manager, who maintains the trust and tries to improve profit level
Unit trusts can be categorized into two different units as follows:
1. Accumulation units are those that accumulate interest and dividend within the trust and add value to the trusts fund.
2. Distribution or income units on the other hand, distribute dividend or interest among the unit holders on a previously fixed date.
3. Creation and cancellation prices of a unit trust do not match with the offer price and bid price at all times. Profit that is earned from the difference between creation and cancellation prices of unite trusts is termed
Real Estate Investment, Real Estate Investing
Real estate investment involves the commitment of funds to property with an aim to generate income through rental or lease and to achieve capital appreciation. Real estate refers to immovable property, such as land, and everything else that is permanently attached to it, such as buildings. When a person acquires real estate, s/he also acquires a set of rights, including possession, control and transfer rights.
Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually 'investing' in real estate. There are a number of ways in which an investor can participate in the real estate market.
Real Estate Investment: Rental
One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.
Real Estate Investment Groups
Real estate investment groups are similar to small mutual funds. They are set up for rental properties. While an investor may own one or more units, a professionally managed company acquires, builds, maintains and lets out all the units on the properties in exchange for a percentage of the monthly rent.
Real Estate Trading
Real estate traders hold properties for only a short span of time (less than four months), aiming to sell them at a profit. This process is called flipping properties. Investors aim at purchasing significantly undervalued or very hot properties. Such owners may or may not invest money into improving the property before putting it back on sale. A bear market could result in substantial losses for a real estate trader, since the investment is large.
Resources
Listings of available REO properties are a great starting point to exploring available real estate investment opportunities.
Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a corporation that invests in real estate. REITs trade on major exchanges. A REIT uses investors' money to acquire and operate properties.
The benefits of REITs are:
* REITs provide fairly regular income.
* Investors gain exposure to non-residential investments (like malls and office buildings).
* REITs are highly liquid.
* REITs are required by law to distribute 90% of their taxable income in the form of dividends to shareholders.
Before making a choice regarding the kind of real estate participation, an investor must evaluate his/her investment capacity and risk appetite.
Understanding real estate investment is crucial because it usually involves a substantial investment and a long-term one. Moreover , the real estate market can be unpredictable. This is particularly important when one goes beyond buying a home to actually 'investing' in real estate. There are a number of ways in which an investor can participate in the real estate market.
Real Estate Investment: Rental
One can opt for real estate investment with an aim to rent the property out to a tenant. The owner (landlord) earns a continuous stream of rent from the tenant, but is responsible for paying the mortgage, taxes and any costs associated with maintaining the property. The owner also benefits from capital appreciation (a rise in the value of the property over time). The landlord runs the risk of not finding a tenant and could suffer negative monthly cash flows, with mortgage payments and maintenance expenses still to be borne. As compared to owning stocks and bonds, rental real estate requires a significant amount time and effort to be devoted by the landlord.
Real Estate Investment Groups
Real estate investment groups are similar to small mutual funds. They are set up for rental properties. While an investor may own one or more units, a professionally managed company acquires, builds, maintains and lets out all the units on the properties in exchange for a percentage of the monthly rent.
Real Estate Trading
Real estate traders hold properties for only a short span of time (less than four months), aiming to sell them at a profit. This process is called flipping properties. Investors aim at purchasing significantly undervalued or very hot properties. Such owners may or may not invest money into improving the property before putting it back on sale. A bear market could result in substantial losses for a real estate trader, since the investment is large.
Resources
Listings of available REO properties are a great starting point to exploring available real estate investment opportunities.
Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a corporation that invests in real estate. REITs trade on major exchanges. A REIT uses investors' money to acquire and operate properties.
The benefits of REITs are:
* REITs provide fairly regular income.
* Investors gain exposure to non-residential investments (like malls and office buildings).
* REITs are highly liquid.
* REITs are required by law to distribute 90% of their taxable income in the form of dividends to shareholders.
Before making a choice regarding the kind of real estate participation, an investor must evaluate his/her investment capacity and risk appetite.
Pension, Pensions
A pension is defined as a private or government fund, from which benefits or allowances are paid to a person upon his or her retirement from service or when s/he is unemployed due to disability.
In various public or private employment-based pension plans, the employer regularly contributes a percentage of the employee’s earnings to an individual plan account made in the employee’s name. Employee contributions, if required, are also credited to the pension plan account.
Often, pensions are paid if and only if the employee attains a certain age or if s/he completes a certain length of service.
Pension: Types of pension plans
Pension plans became popular in the US after WW II, when the freeze on wages prohibited an increase in workers’ compensation. Pension plans can be divided into two categories:
· Defined benefit plans: This type of pension plan defines the benefit for an employee upon his or her retirement. The benefits are calculated by taking into account the employee’s pay, years of service, age of retirement, and other factors. In the United States, the average salary over the last five years determines the pension amount. In the UK, pension benefits are indexed for inflation. Pensions can also contain social security contribution, as determined by government regulations.
Defined contribution plans: A defined contribution plan is generally defined as a plan for providing an individual account for each employee, and benefits for which s/he contributes to the account. The contribution may be invested in the stock market, the returns of which are given to the employee upon retirement. Typical examples of such pension plans are the 401K and Individual Retirement Accounts (IRA).
There is also a hybrid plan, which combines the features of both pension plans. This plan is usually used as a pension benefit plan for tax, accounting and regulatory purposes. Hybrid plans are more flexible and portable than traditional pension plans, where the employee’s balance grows by a defined rate of interest and employer contribution.
Pensions are wonderful methods to lead a comfortable and secure life after work. Regular income is guaranteed with benefits, ensuring that you do not need to rely on anyone else for your everyday needs. To achieve maximum returns on a pension account, it is always advisable to seek the expert, unbiased opinion of a registered financial advisor.
In various public or private employment-based pension plans, the employer regularly contributes a percentage of the employee’s earnings to an individual plan account made in the employee’s name. Employee contributions, if required, are also credited to the pension plan account.
Often, pensions are paid if and only if the employee attains a certain age or if s/he completes a certain length of service.
Pension: Types of pension plans
Pension plans became popular in the US after WW II, when the freeze on wages prohibited an increase in workers’ compensation. Pension plans can be divided into two categories:
· Defined benefit plans: This type of pension plan defines the benefit for an employee upon his or her retirement. The benefits are calculated by taking into account the employee’s pay, years of service, age of retirement, and other factors. In the United States, the average salary over the last five years determines the pension amount. In the UK, pension benefits are indexed for inflation. Pensions can also contain social security contribution, as determined by government regulations.
Defined contribution plans: A defined contribution plan is generally defined as a plan for providing an individual account for each employee, and benefits for which s/he contributes to the account. The contribution may be invested in the stock market, the returns of which are given to the employee upon retirement. Typical examples of such pension plans are the 401K and Individual Retirement Accounts (IRA).
There is also a hybrid plan, which combines the features of both pension plans. This plan is usually used as a pension benefit plan for tax, accounting and regulatory purposes. Hybrid plans are more flexible and portable than traditional pension plans, where the employee’s balance grows by a defined rate of interest and employer contribution.
Pensions are wonderful methods to lead a comfortable and secure life after work. Regular income is guaranteed with benefits, ensuring that you do not need to rely on anyone else for your everyday needs. To achieve maximum returns on a pension account, it is always advisable to seek the expert, unbiased opinion of a registered financial advisor.
Options and Futures
Options and futures are the two most common forms of derivatives that are traded at organized exchanges. Derivatives are financial instruments that derive their value from the underlying asset.
Options: Options are those financial instruments that provide its holders the right to trade the underlying asset at a predetermined price. A ‘call’ option gives a trader the right to buy the underlying asset at a given price. A ‘put’ option gives a trader the right to sell the underlying asset at a given price. This given price is known as the ‘strike price.’ The owner of an option has the right, but not the obligation, to buy or sell an asset.
Futures: These refer to contracts to buy or sell an asset on or prior to a specified date in the future at a predeterminedprice. Buying a futures contract would mean that you have agreed to pay a predetermined price for the underlying asset at a futuredate. Similarly, selling a futures contract would mean that you have agreed to transfer the underlying asset to the buyer at a specified price at a future date. Currency, indices and commodities are some popular underlying assets on which the futures contracts are available. The difference between the price of the underlying asset in the spot market (market for immediatedelivery) and the futures market is called 'basis.' The price of the asset in the futures market is typically higher than the spot price on account of factors such as interest cost, insurance and inflation. Hence, the ‘basis’ is usually negative.
How are Options and Futures Traded?
Since options and futures are forms of derivatives, their values change according to changes in the value of the underlying asset. Options and futures are the most common type of exchange traded derivatives. These are traded on organized exchanges and can be bought or sold the way stocks are traded on a stock exchange. In contrast, over the counter (OTC) derivatives, such asforwards and swaps, are not bought or sold through exchanges.
Benefits of Options and Futures
The benefits of options and futures are:
* Hedging: Options and futures are hedging tools, used especially in a bearish market.
* Low transaction costs: They give investors the same exposure with lower transaction cost than other debt instruments.
* Standardized contract: Options and futures are exchange traded. Hence, their pricing and volume transacted are transparent.
* High liquidity: Buyers and sellers of options and futures can be found easily.
Risks of Options and Futures
The risks associated with options and futures are:
* Counterparty risk: This refers to the owner of the contract refusing to buy or sell the asset as agreed.
* Market risk: This refers to the risk of adverse price movements resulting in losses.
Options: Options are those financial instruments that provide its holders the right to trade the underlying asset at a predetermined price. A ‘call’ option gives a trader the right to buy the underlying asset at a given price. A ‘put’ option gives a trader the right to sell the underlying asset at a given price. This given price is known as the ‘strike price.’ The owner of an option has the right, but not the obligation, to buy or sell an asset.
Futures: These refer to contracts to buy or sell an asset on or prior to a specified date in the future at a predeterminedprice. Buying a futures contract would mean that you have agreed to pay a predetermined price for the underlying asset at a futuredate. Similarly, selling a futures contract would mean that you have agreed to transfer the underlying asset to the buyer at a specified price at a future date. Currency, indices and commodities are some popular underlying assets on which the futures contracts are available. The difference between the price of the underlying asset in the spot market (market for immediatedelivery) and the futures market is called 'basis.' The price of the asset in the futures market is typically higher than the spot price on account of factors such as interest cost, insurance and inflation. Hence, the ‘basis’ is usually negative.
How are Options and Futures Traded?
Since options and futures are forms of derivatives, their values change according to changes in the value of the underlying asset. Options and futures are the most common type of exchange traded derivatives. These are traded on organized exchanges and can be bought or sold the way stocks are traded on a stock exchange. In contrast, over the counter (OTC) derivatives, such asforwards and swaps, are not bought or sold through exchanges.
Benefits of Options and Futures
The benefits of options and futures are:
* Hedging: Options and futures are hedging tools, used especially in a bearish market.
* Low transaction costs: They give investors the same exposure with lower transaction cost than other debt instruments.
* Standardized contract: Options and futures are exchange traded. Hence, their pricing and volume transacted are transparent.
* High liquidity: Buyers and sellers of options and futures can be found easily.
Risks of Options and Futures
The risks associated with options and futures are:
* Counterparty risk: This refers to the owner of the contract refusing to buy or sell the asset as agreed.
* Market risk: This refers to the risk of adverse price movements resulting in losses.
Mutual Fund, Mutual Funds
A mutual fund is an investment vehicle that comprises a pool of funds collected from a large number of investors who invest in securities such as stocks, bonds, and short term money market instruments. The portfolio of a mutual fund is structured and maintained by fund managers.
Features of a Mutual Fund
Trading in mutual funds is carried out under strict government regulations. In accordance with the Securities Act of 1933 and the Securities Exchange Act of 1934, all mutual funds must be registered with the US Securities and Exchange Commission (SEC). Disclosure of information about relevant details and the acquired securities are also legally essential.
Specific features of mutual funds include liquidity, transfer of money, purchase of units and high competition. Investment in mutual funds is highly liquid as funds are required to redeem shares daily. It permits transfer of money from one type of fund to another, but the exchange takes place within the same fund family. Units of mutual funds can either be purchased directly or through an investment professional, such as a broker or a financial planner.
Types of Mutual Funds
Mutual funds are classified on the basis of maturity period or investment objective. On the basis of maturity period, mutual funds include open ended funds and close ended funds.
Mutual funds based on investment objectives include growth/equity-oriented funds, income/debt-oriented funds, balanced funds, gilt funds and index funds.
Benefits of a Mutual Fund
* Facilitates easy access of professionally-managed portfolios to small investors. Allows investors to instantly diversify into several sectors and reduce the risk profile of their portfolio.
* The cost of transaction in a mutual fund is divided among all the shareholders, which facilitates cost-effective diversification.
* Enables investors to benefit from professional services like that of a fund manager.
Risks of a Mutual Fund
* Separately managed accounts may perform better than mutual funds.
* High risk and unpredictability of returns.
* Some mutual funds over-diversify or invest within a specific sector or region. This eliminates the benefits of diversification.
Despite these risks, investors are keen to diversify their portfolios and utilize the benefits of mutual funds to earn high returns.
Features of a Mutual Fund
Trading in mutual funds is carried out under strict government regulations. In accordance with the Securities Act of 1933 and the Securities Exchange Act of 1934, all mutual funds must be registered with the US Securities and Exchange Commission (SEC). Disclosure of information about relevant details and the acquired securities are also legally essential.
Specific features of mutual funds include liquidity, transfer of money, purchase of units and high competition. Investment in mutual funds is highly liquid as funds are required to redeem shares daily. It permits transfer of money from one type of fund to another, but the exchange takes place within the same fund family. Units of mutual funds can either be purchased directly or through an investment professional, such as a broker or a financial planner.
Types of Mutual Funds
Mutual funds are classified on the basis of maturity period or investment objective. On the basis of maturity period, mutual funds include open ended funds and close ended funds.
Mutual funds based on investment objectives include growth/equity-oriented funds, income/debt-oriented funds, balanced funds, gilt funds and index funds.
Benefits of a Mutual Fund
* Facilitates easy access of professionally-managed portfolios to small investors. Allows investors to instantly diversify into several sectors and reduce the risk profile of their portfolio.
* The cost of transaction in a mutual fund is divided among all the shareholders, which facilitates cost-effective diversification.
* Enables investors to benefit from professional services like that of a fund manager.
Risks of a Mutual Fund
* Separately managed accounts may perform better than mutual funds.
* High risk and unpredictability of returns.
* Some mutual funds over-diversify or invest within a specific sector or region. This eliminates the benefits of diversification.
Despite these risks, investors are keen to diversify their portfolios and utilize the benefits of mutual funds to earn high returns.
Money
Any generally accepted medium to make a payment for goods and services or paying back debts is called money. Money is the most liquid asset. In the modern world, every country’s currency is the most common form of money in that region.Physical money usually consists of two types, notes or paper money and .
History of Money
The barter system (trade between two individuals each of whom possesses something needed by the other) was in use before money was invented as a medium of exchange more than 100,000 years ago. The various objects used for trade were as diverse as barley, silver, bronze and whale teeth. While the word ‘money’ has its origins in an ancient Roman temple (Juno Moneta) where the Roman mint was located, coins were first used in ancient Greece, China and India in 400 BC. China was the first country to use paper notes as a means of trade in the seventh century, making them the most customer-friendly mode of exchange.
Money: Characteristics
Money has the following characteristics:
# Medium of exchange: facilitating the transferability factor of trade.
# Unit of account: simplifying the divisibility of an exchange.
# Store of value: people can save it and retrieve the value it holds when needed.
Types of Money
Money can be divided into the following categories:
# Commodity money: Any commodity that is used as money itself and exchanged for its worth. For example gold, silver, rice and shells.
# Representative money: Token coins, certificates or digital transactions that can be dependably exchanged for a fixed amount of various commodities.
# Credit money: Any claim against anybody that can be utilized for purchasing commodities in the future. Examples include savings bonds and treasury bonds.
# Fiat money: Money issued legally by the government as a currency in the form of notes and coins.
The central bank of a country has the power to manipulate the supply of money in the national economy. To increase the money supply, the central bank can simply print it or can purchase government fixed-income securities from the market, putting money into public hands. On the other hand, central banks sell government securities to reduce the money supply. The payment made by the buyers of these securities forms the money taken out of supply.
History of Money
The barter system (trade between two individuals each of whom possesses something needed by the other) was in use before money was invented as a medium of exchange more than 100,000 years ago. The various objects used for trade were as diverse as barley, silver, bronze and whale teeth. While the word ‘money’ has its origins in an ancient Roman temple (Juno Moneta) where the Roman mint was located, coins were first used in ancient Greece, China and India in 400 BC. China was the first country to use paper notes as a means of trade in the seventh century, making them the most customer-friendly mode of exchange.
Money: Characteristics
Money has the following characteristics:
# Medium of exchange: facilitating the transferability factor of trade.
# Unit of account: simplifying the divisibility of an exchange.
# Store of value: people can save it and retrieve the value it holds when needed.
Types of Money
Money can be divided into the following categories:
# Commodity money: Any commodity that is used as money itself and exchanged for its worth. For example gold, silver, rice and shells.
# Representative money: Token coins, certificates or digital transactions that can be dependably exchanged for a fixed amount of various commodities.
# Credit money: Any claim against anybody that can be utilized for purchasing commodities in the future. Examples include savings bonds and treasury bonds.
# Fiat money: Money issued legally by the government as a currency in the form of notes and coins.
The central bank of a country has the power to manipulate the supply of money in the national economy. To increase the money supply, the central bank can simply print it or can purchase government fixed-income securities from the market, putting money into public hands. On the other hand, central banks sell government securities to reduce the money supply. The payment made by the buyers of these securities forms the money taken out of supply.
Markets: What is a Market?
A market is an environment that allows buyers and sellers to trade or exchange goods, services, and information. These interactions define demand and supply characteristics and are therefore fundamental to economies.
A market can be defined as a place where any type of trade takes place. Markets are dependent on two major participants – buyers and sellers. Buyers and sellers typically trade goods, services and/ or information. Historically, markets were physical meeting places where buyers and sellers gathered together to trade. Although physical markets are still vital, virtual marketplaces supported by IT networks such as the internet have become the largest and most liquid.
Some markets are very competitive, with a number of vendors selling the same kinds of products or services. Conversely, some markets have low or no competition, particularly if the industry is protected by government legislation.
The number of buyers and sellers involved will have a direct bearing on the price of the good or service to be sold, and has become known as the law of supply and demand. Where there are more sellers than buyers, the availability of supply will push down prices. If there are more buyers than sellers, the increased demand will push up prices.
Markets can appear spontaneously when there are goods or services to be exchanged, or they can be planned and regulated.
Free Markets
Free markets operate under ‘laissez-faire’ conditions, in that the government does not intervene in how the market operates. These markets may be distorted if a seller gains monopoly power by managing the majority of supply (or indeed if a buyer develops monopsony power by managing demand). Governments or trade bodies often step in when such distortions undermine the smooth functioning of free markets.
Currency Markets
The currency markets are the largest continuously traded markets in the world. Twenty four hours a day, seven days a week, governments, banks, investors and consumers are buying and selling every currency, leading to massive money flows constantly changing hands.
Stock Markets
Stock markets have become highly complex markets that allow investors to buy shares in companies or in funds that aggregate companies or industries together. Most stock markets today are primarily electronic networks, although they often maintain a physical location for buyers, sellers and market makers to interact directly.
Types of Consumer Markets
Markets originally started as marketplaces usually in the center of villages and towns, for the sale or barter of farm produce, clothing and tools. These kinds of street markets developed into a whole variety of consumer-oriented markets, such as specialist markets, shopping centers, supermarkets, or even virtual markets such as eBay.
Commodity Markets
With the rising price of oil and food, commodity markets are once again under the spotlight. Commodities underpin economic activity. Commodity markets include: energy (oil, gas, coal and increasingly renewable energy sources such as biodiesel), soft commodities and grains (wheat, oat, corn, rice, soya beans, coffee, cocoa, sugar, cotton, frozen orange juice, etc), meat, and financial commodities such as bonds.
Capital Goods & Industrial Markets
Capital goods markets help businesses to buy durable goods to be used in industrial and manufacturing processes. A number of services can also be associated with these goods. Transactions tend to be wholesale with large quantities of goods being transacted at low prices.
Market Types
Common prevalance of market types over the world are Finance Market, Money market, Capital market etc. Find below various types of markets over the world.
* Farmer’s Market
* Free Market
* Black Market
More..
Money Market
Money market generally deals with short term debt securities that mature in less than a year. Find various instruments used, rates charged and functioning of world money market.
* Money Market Account
* Money Market Instruments
* Money Market Overview
More..
World Markets
World market can be defined as a common point where all the markets of the world converge. Get detailed on various world markets.
* Indian Market
* China Market
* Mexican Market
More..
Share Market
Share market is the market for securities where organized issuance and trading of shares takes place. Find how to invest in the share market and online share trading.
* Fundamentals on Share Market
* Share Prices
* Online Share Dealing
More..
Bond Market
Its a type of financial market where buying and selling of bonds takes place. Bonds are issued by Government or private companies.
* Mortgage Bond Market
* Bond Market High Yield
* Bond Market Interest Ratet
More..
Derivative Market
* Derivatives Market
* Derivative Market Equity
* Derivative Market Credit
More..
Real Estate Market
* Real Estate Market Value
* Real Estate Market Investment
* Real Estate Market Trend
More..
Housing Market
* Housing Market Trends
* World Housing Market
* Hawaii Housing Market
More..
Capital Market
* Capital Market Theory
* Capital Market Report
* China Capital Market
More..
Stock Market
* Stock Market Prices
* Stock Market Report
* Stock Market Trading
More..
Financial Market
* Financial Market Crash
* Financial Market Forecast
* Financial Market Growth
More..
Market Overview
* Market Analysis
* Meaning of Market
* Market Research
More..
* Market Trends, Market Trend
* Financial Market, Financial Markets
* Currency Market, Forex Market
* Stock Market Trading, Trading Market
* Money Markets, Money Market
* Market News
* Market Watch
A market can be defined as a place where any type of trade takes place. Markets are dependent on two major participants – buyers and sellers. Buyers and sellers typically trade goods, services and/ or information. Historically, markets were physical meeting places where buyers and sellers gathered together to trade. Although physical markets are still vital, virtual marketplaces supported by IT networks such as the internet have become the largest and most liquid.
Some markets are very competitive, with a number of vendors selling the same kinds of products or services. Conversely, some markets have low or no competition, particularly if the industry is protected by government legislation.
The number of buyers and sellers involved will have a direct bearing on the price of the good or service to be sold, and has become known as the law of supply and demand. Where there are more sellers than buyers, the availability of supply will push down prices. If there are more buyers than sellers, the increased demand will push up prices.
Markets can appear spontaneously when there are goods or services to be exchanged, or they can be planned and regulated.
Free Markets
Free markets operate under ‘laissez-faire’ conditions, in that the government does not intervene in how the market operates. These markets may be distorted if a seller gains monopoly power by managing the majority of supply (or indeed if a buyer develops monopsony power by managing demand). Governments or trade bodies often step in when such distortions undermine the smooth functioning of free markets.
Currency Markets
The currency markets are the largest continuously traded markets in the world. Twenty four hours a day, seven days a week, governments, banks, investors and consumers are buying and selling every currency, leading to massive money flows constantly changing hands.
Stock Markets
Stock markets have become highly complex markets that allow investors to buy shares in companies or in funds that aggregate companies or industries together. Most stock markets today are primarily electronic networks, although they often maintain a physical location for buyers, sellers and market makers to interact directly.
Types of Consumer Markets
Markets originally started as marketplaces usually in the center of villages and towns, for the sale or barter of farm produce, clothing and tools. These kinds of street markets developed into a whole variety of consumer-oriented markets, such as specialist markets, shopping centers, supermarkets, or even virtual markets such as eBay.
Commodity Markets
With the rising price of oil and food, commodity markets are once again under the spotlight. Commodities underpin economic activity. Commodity markets include: energy (oil, gas, coal and increasingly renewable energy sources such as biodiesel), soft commodities and grains (wheat, oat, corn, rice, soya beans, coffee, cocoa, sugar, cotton, frozen orange juice, etc), meat, and financial commodities such as bonds.
Capital Goods & Industrial Markets
Capital goods markets help businesses to buy durable goods to be used in industrial and manufacturing processes. A number of services can also be associated with these goods. Transactions tend to be wholesale with large quantities of goods being transacted at low prices.
Market Types
Common prevalance of market types over the world are Finance Market, Money market, Capital market etc. Find below various types of markets over the world.
* Farmer’s Market
* Free Market
* Black Market
More..
Money Market
Money market generally deals with short term debt securities that mature in less than a year. Find various instruments used, rates charged and functioning of world money market.
* Money Market Account
* Money Market Instruments
* Money Market Overview
More..
World Markets
World market can be defined as a common point where all the markets of the world converge. Get detailed on various world markets.
* Indian Market
* China Market
* Mexican Market
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Share Market
Share market is the market for securities where organized issuance and trading of shares takes place. Find how to invest in the share market and online share trading.
* Fundamentals on Share Market
* Share Prices
* Online Share Dealing
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Bond Market
Its a type of financial market where buying and selling of bonds takes place. Bonds are issued by Government or private companies.
* Mortgage Bond Market
* Bond Market High Yield
* Bond Market Interest Ratet
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Derivative Market
* Derivatives Market
* Derivative Market Equity
* Derivative Market Credit
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Real Estate Market
* Real Estate Market Value
* Real Estate Market Investment
* Real Estate Market Trend
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Housing Market
* Housing Market Trends
* World Housing Market
* Hawaii Housing Market
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Capital Market
* Capital Market Theory
* Capital Market Report
* China Capital Market
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Stock Market
* Stock Market Prices
* Stock Market Report
* Stock Market Trading
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Financial Market
* Financial Market Crash
* Financial Market Forecast
* Financial Market Growth
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Market Overview
* Market Analysis
* Meaning of Market
* Market Research
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* Market Trends, Market Trend
* Financial Market, Financial Markets
* Currency Market, Forex Market
* Stock Market Trading, Trading Market
* Money Markets, Money Market
* Market News
* Market Watch
Investment, Investing, Types of Investment
Investment, Investing, Types of Investment
Investment refers to the concept of deferred consumption, which involves purchasing an asset, giving a loan or keeping funds in a bank account with the aim of generating future returns. Various investment options are available, offering differing risk-reward trade offs. An understanding of the core concepts and a thorough analysis of the options can help an investor create a portfolio that maximizes returns while minimizing risk exposure.
Types of Investments
The various types of investment are:
* Cash investments: These include savings bank accounts, certificates of deposit (CDs) and treasury bills. These investments pay a low rate of interest and are risky options in periods of inflation.
* Debt securities: This form of investment provides returns in the form of fixed periodic payments and possible capital appreciation at maturity. It is a safer and more 'risk-free' investment tool than equities. However, the returns are also generally lower than other securities.
* Stocks: Buying stocks (also called equities) makes you a part-owner of the business and entitles you to a share of the profits generated by the company. Stocks are more volatile and riskier than bonds.
* Mutual funds: This is a collection of stocks and bonds and involves paying a professional manager to select specific securities for you. The prime advantage of this investment is that you do not have to bother with tracking the investment. There may be bond, stock- or index-based mutual funds.
* Derivatives: These are financial contracts the values of which are derived from the value of the underlying assets, such as equities, commodities and bonds, on which they are based. Derivatives can be in the form of futures, options and swaps. Derivatives are used to minimize the risk of loss resulting from fluctuations in the value of the underlying assets (hedging).
* Commodities: The items that are traded on the commodities market are agricultural and industrial commodities. These items need to be standardized and must be in a basic, raw and unprocessed state. The trading of commodities is associated with high risk and high reward. Trading in commodity futures requires specialized knowledge and in-depth analysis.
* Real estate: This investment involves a long-term commitment of funds and gains that are generated through rental or lease income as well as capital appreciation. This includes investments into residential or commercial properties.
Further Resources
Adhere to trusted wealth management practices from top firms like GoldenTree Asset Management, LP.
Gain Free access to reports previously only available to Governments and select Intelligence agencies. These reports are part of the OilPrice.com Intelligence Newsletter that focuses on: Geopolitics, Economics, Energy Issues, Conflicts, Crude Oil, Gold & Many other topics. Their information is sourced through a wide network of contacts and is not available from traditional news outlets and data providers.
Investment refers to the concept of deferred consumption, which involves purchasing an asset, giving a loan or keeping funds in a bank account with the aim of generating future returns. Various investment options are available, offering differing risk-reward trade offs. An understanding of the core concepts and a thorough analysis of the options can help an investor create a portfolio that maximizes returns while minimizing risk exposure.
Types of Investments
The various types of investment are:
* Cash investments: These include savings bank accounts, certificates of deposit (CDs) and treasury bills. These investments pay a low rate of interest and are risky options in periods of inflation.
* Debt securities: This form of investment provides returns in the form of fixed periodic payments and possible capital appreciation at maturity. It is a safer and more 'risk-free' investment tool than equities. However, the returns are also generally lower than other securities.
* Stocks: Buying stocks (also called equities) makes you a part-owner of the business and entitles you to a share of the profits generated by the company. Stocks are more volatile and riskier than bonds.
* Mutual funds: This is a collection of stocks and bonds and involves paying a professional manager to select specific securities for you. The prime advantage of this investment is that you do not have to bother with tracking the investment. There may be bond, stock- or index-based mutual funds.
* Derivatives: These are financial contracts the values of which are derived from the value of the underlying assets, such as equities, commodities and bonds, on which they are based. Derivatives can be in the form of futures, options and swaps. Derivatives are used to minimize the risk of loss resulting from fluctuations in the value of the underlying assets (hedging).
* Commodities: The items that are traded on the commodities market are agricultural and industrial commodities. These items need to be standardized and must be in a basic, raw and unprocessed state. The trading of commodities is associated with high risk and high reward. Trading in commodity futures requires specialized knowledge and in-depth analysis.
* Real estate: This investment involves a long-term commitment of funds and gains that are generated through rental or lease income as well as capital appreciation. This includes investments into residential or commercial properties.
Further Resources
Adhere to trusted wealth management practices from top firms like GoldenTree Asset Management, LP.
Gain Free access to reports previously only available to Governments and select Intelligence agencies. These reports are part of the OilPrice.com Intelligence Newsletter that focuses on: Geopolitics, Economics, Energy Issues, Conflicts, Crude Oil, Gold & Many other topics. Their information is sourced through a wide network of contacts and is not available from traditional news outlets and data providers.
Investment Banks
Banking Investment:
Banks have relatively higher importance in the field of investment. Though the investment banks play a major role in the field of investment, still in the recent years the commercial banks have raised their importance by concentrating more on the investment segment.
Some of the top investment banks over the world are as follows:
* Anderson & Strudwick
* Bulltick Capital Markets
* Canaccord Adams
* Ferris, Baker Watts, Inc.
* Friedman Billings Ramsey
* Genuity Capital Markets
* Goldman Sachs
* Houlihan Lokey Howard & Zukin
* Jefferies & Co
* Janney Montgomery Scott
* Ladenburg Thalmann
* Lehman Brothers
* Macquarie Bank
* Morgan Stanley
* Newbury Piret
* Noble Bank (UK)
* Northern Securities (Canada)
* Robert W. Baird & Company
* Stephens Inc.
* ThinkEquity Partners, LLC
* William Blair & Company
Banks have relatively higher importance in the field of investment. Though the investment banks play a major role in the field of investment, still in the recent years the commercial banks have raised their importance by concentrating more on the investment segment.
Some of the top investment banks over the world are as follows:
* Anderson & Strudwick
* Bulltick Capital Markets
* Canaccord Adams
* Ferris, Baker Watts, Inc.
* Friedman Billings Ramsey
* Genuity Capital Markets
* Goldman Sachs
* Houlihan Lokey Howard & Zukin
* Jefferies & Co
* Janney Montgomery Scott
* Ladenburg Thalmann
* Lehman Brothers
* Macquarie Bank
* Morgan Stanley
* Newbury Piret
* Noble Bank (UK)
* Northern Securities (Canada)
* Robert W. Baird & Company
* Stephens Inc.
* ThinkEquity Partners, LLC
* William Blair & Company
International Stock Exchanges- A List of the World's Top Stock Exchanges
Everyday, stocks are exchanged and traded in numerous international stock exchanges around the world. The liquidity they bring are a vital component of economic growth.
Stock exchanges are open markets that trade financial assets. Whether associated with a company or acting as an individual, a stock exchange is the place where stocks are bought and sold. There are a number of major stock exchanges around the world and each of these plays a part in determining the overall financial and economic condition of any economy.
Stock exchanges deal with a number of financial instruments such as stocks, bonds and equities. Both corporate and government bonds are traded in stock exchanges. Equities include popular investment options, rights issues, bonus issues, and all other forms of shares and stocks. The actual trading of stocks takes place through mediators such as financial advisors, brokerage houses, and stockbrokers.
Functions of International Stock Exchanges: An Overview
The main function of a stock exchange is to facilitate the transactions associated with both the buying and selling of securities. Buyers and sellers of shares and stocks can track the price changes of securities from the stock markets in which they operate. The ups and downs of stock indexes help the investors to speculate on the return on investment (ROI) of various investment options.
Stock exchanges also serve as a source of capital formation for listed companies. Business entities that are listed in a particular stock exchange can issue shares to the public and sell those shares in that market.
To take part in these transactions, listed companies need to abide by the rules and requirements of that market. The stock exchanges protect the interests of both buyers and sellers by assuring a timely transfer of money. The participants of a stock market are required to operate within the specified transaction limits fixed by the regulatory authority of that stock market.
Speed and transparency are vital for all stock market transactions. The companies listed in a stock exchange need to provide proper guidance regarding business performance and prospects, mergers and acquisitions, stock prices, dividends and other information at all times. Investors make their investment decisions based on the information obtained from these companies, and the comments of analysts who track those companies.
How Stock Exchanges Operate
With the help of stockbrokers, the buyers and sellers participating in a stock market carry out their transactions. The brokers representing selling parties take their orders to the stock exchange floor and then find brokers representing parties willing to invest in similar stocks. If both parties agree to trade at the fixed price, the transaction takes place.
Stock exchanges are open markets that trade financial assets. Whether associated with a company or acting as an individual, a stock exchange is the place where stocks are bought and sold. There are a number of major stock exchanges around the world and each of these plays a part in determining the overall financial and economic condition of any economy.
Stock exchanges deal with a number of financial instruments such as stocks, bonds and equities. Both corporate and government bonds are traded in stock exchanges. Equities include popular investment options, rights issues, bonus issues, and all other forms of shares and stocks. The actual trading of stocks takes place through mediators such as financial advisors, brokerage houses, and stockbrokers.
Functions of International Stock Exchanges: An Overview
The main function of a stock exchange is to facilitate the transactions associated with both the buying and selling of securities. Buyers and sellers of shares and stocks can track the price changes of securities from the stock markets in which they operate. The ups and downs of stock indexes help the investors to speculate on the return on investment (ROI) of various investment options.
Stock exchanges also serve as a source of capital formation for listed companies. Business entities that are listed in a particular stock exchange can issue shares to the public and sell those shares in that market.
To take part in these transactions, listed companies need to abide by the rules and requirements of that market. The stock exchanges protect the interests of both buyers and sellers by assuring a timely transfer of money. The participants of a stock market are required to operate within the specified transaction limits fixed by the regulatory authority of that stock market.
Speed and transparency are vital for all stock market transactions. The companies listed in a stock exchange need to provide proper guidance regarding business performance and prospects, mergers and acquisitions, stock prices, dividends and other information at all times. Investors make their investment decisions based on the information obtained from these companies, and the comments of analysts who track those companies.
How Stock Exchanges Operate
With the help of stockbrokers, the buyers and sellers participating in a stock market carry out their transactions. The brokers representing selling parties take their orders to the stock exchange floor and then find brokers representing parties willing to invest in similar stocks. If both parties agree to trade at the fixed price, the transaction takes place.
Individual Savings Account (ISA)
The Individual Savings Account (ISA) was introduced on 6th April 1999, replacing the Personal Equity Plans (PEPS). The ISA is a form of tax free savings that lets an individual save up to £7200 each year in an ISA scheme. He/she need not pay any tax on the income received from the savings.
Individual Savings Account (ISA): Types
An Individual Savings Account is of two types.
They are:
* Cash ISA – It works like a regular savings account. This component has a limit of £3,600 each year. You can save with only one provider in a tax year. This is beneficial for people who pay high-rate taxes. One can look for better cash ISA accounts and transfer the account to cash ISA that offers higher yield. You can use an ISA comparison service to find the best possible rate.
* Stocks and shares or insurance– You can invest up to £7200 each year in stocks and shares. It is a good long term investment option. Instead of stocks and shares, the same amount can be saved in life insurance.
If you want to invest in both the components, the individual limit is still valid and the total investment should not exceed £7,200. You can have different providers for each component.
Individual Savings Account (ISA): Tax Benefits
Opting for an Individual Savings Account is a great way to take advantage of major tax benefits. They are:
* You need not pay taxes on the income received from the ISA savings and investments.
* You need not pay taxes on capital gains from the investments.
* You can withdraw the cash component any time.
* You need not inform the HMRC regarding the income and capital gains associated with each Individual Savings Account.
Where to get Individual Savings Accounts
You can get an Individual Savings Account (ISA) from ISA managers, who are authorized by the Financial Services Authority. ISA Managers include:
* building societies and banks
* financial advisers
* National Savings and Investments
* some super markets and retailers
The highly competitive environment of the Individual Savings Account industry often announce better deals, particularly cash ISAs that have high interest rates. However, you may be required to buy another product or service with the provider to enjoy the high interest rates.
Individual Savings Account (ISA): Types
An Individual Savings Account is of two types.
They are:
* Cash ISA – It works like a regular savings account. This component has a limit of £3,600 each year. You can save with only one provider in a tax year. This is beneficial for people who pay high-rate taxes. One can look for better cash ISA accounts and transfer the account to cash ISA that offers higher yield. You can use an ISA comparison service to find the best possible rate.
* Stocks and shares or insurance– You can invest up to £7200 each year in stocks and shares. It is a good long term investment option. Instead of stocks and shares, the same amount can be saved in life insurance.
If you want to invest in both the components, the individual limit is still valid and the total investment should not exceed £7,200. You can have different providers for each component.
Individual Savings Account (ISA): Tax Benefits
Opting for an Individual Savings Account is a great way to take advantage of major tax benefits. They are:
* You need not pay taxes on the income received from the ISA savings and investments.
* You need not pay taxes on capital gains from the investments.
* You can withdraw the cash component any time.
* You need not inform the HMRC regarding the income and capital gains associated with each Individual Savings Account.
Where to get Individual Savings Accounts
You can get an Individual Savings Account (ISA) from ISA managers, who are authorized by the Financial Services Authority. ISA Managers include:
* building societies and banks
* financial advisers
* National Savings and Investments
* some super markets and retailers
The highly competitive environment of the Individual Savings Account industry often announce better deals, particularly cash ISAs that have high interest rates. However, you may be required to buy another product or service with the provider to enjoy the high interest rates.
Foreign Exchange Rate
A foreign exchange rate, which is also called a forex rate or currency rate, represents the value of a specific currency compared to that of another country. Currency rates are applicable only on currency pairs. The currency listed on the left is called the reference (or base) currency while the one listed to the right is the quote (or term) currency.
Exchange rates are always written in the form of quotations. A quotation reflects the number of quote currencies that can be bought by using a single unit of reference currency.
Exchange Rate: Determining Base and Term Currencies
When an exchange rate is quoted for a currency pair, the currencies are usually quoted in order of their importance, which is as follows:
* Euro (EUR)
* Great Britain pound (GBP)
* Australian dollar (A$)
* United States dollar (US$)
* Other currencies
In case the conversion is from a Great Britain pound to an Australian dollar, the Great Britain pound would be placed on the left. It will be the base currency.
In certain markets in the United Kingdom and Europe, the order is determined differently. The position of the Great Britain pound and Euro is switched. The pound is treated as the base currency and the Euro is considered as the term currency.
If the currency pair does not comprise any of the currencies listed above, the Forex market considers that currency as the base, whose exchange rate is more than 1.000.
In other countries like Japan, they use the home currency as the base. This method of quoting exchange rates is called direct quotation or price quotation.
Types of Exchange Rate
Spot exchange rate: This is the exchange rate that is currently applicable.
Term forward rate: This is an exchange rate that is currently quoted and used for trading.
Determining Currency Exchange Rates
Fixed rate: This currency exchange rate is determined by a government agency or the central bank. This official exchange rate is regularly monitored by the bank and maintained by using the country’s own foreign exchange reserves.
Floating rate: In this flexible exchange rate regime, the private market determines a currency’s value. However, the value fluctuates according to the demand/supply trends in the foreign exchange rate market.
Exchange rates are always written in the form of quotations. A quotation reflects the number of quote currencies that can be bought by using a single unit of reference currency.
Exchange Rate: Determining Base and Term Currencies
When an exchange rate is quoted for a currency pair, the currencies are usually quoted in order of their importance, which is as follows:
* Euro (EUR)
* Great Britain pound (GBP)
* Australian dollar (A$)
* United States dollar (US$)
* Other currencies
In case the conversion is from a Great Britain pound to an Australian dollar, the Great Britain pound would be placed on the left. It will be the base currency.
In certain markets in the United Kingdom and Europe, the order is determined differently. The position of the Great Britain pound and Euro is switched. The pound is treated as the base currency and the Euro is considered as the term currency.
If the currency pair does not comprise any of the currencies listed above, the Forex market considers that currency as the base, whose exchange rate is more than 1.000.
In other countries like Japan, they use the home currency as the base. This method of quoting exchange rates is called direct quotation or price quotation.
Types of Exchange Rate
Spot exchange rate: This is the exchange rate that is currently applicable.
Term forward rate: This is an exchange rate that is currently quoted and used for trading.
Determining Currency Exchange Rates
Fixed rate: This currency exchange rate is determined by a government agency or the central bank. This official exchange rate is regularly monitored by the bank and maintained by using the country’s own foreign exchange reserves.
Floating rate: In this flexible exchange rate regime, the private market determines a currency’s value. However, the value fluctuates according to the demand/supply trends in the foreign exchange rate market.
Financial Investment, Money Investing
Financial investment is the commitment of funds into financial instruments, such as securities, bonds, real estate and currencies. The term “investment” is closely related to the disciplines of finance and economics and essentially refers to “savings” or “deferred consumption,” which involves purchasing an asset or making a deposit in a bank in the hope of future returns.
The term “investment” is used differently in economics and finance. By the term investment, an economist refers to real investment, such as in a machine or a house. On the other hand, a finance professional would refer to a financial asset as an investment. Such financial assets could be money that is deposited in a bank or invested in the money market.
Types of Financial Investment
Financial investments are of several types, including equities, debt instruments, derivatives, currencies and real estate. These financial assets are acquired with the expectation of future cash flows and may increase or decrease in value resulting in capital gains or losses to investors.
How is Financial Investment Made?
People invest spare money to offset the effect of inflation on idle cash as well as to benefit from an additional source of income and capital appreciation. Financial investments are typically made indirectly via intermediaries such as banks, insurance companies, mutual funds, pension funds, collective investment schemes and investment clubs. An intermediary generally makes investments using the money from many individuals.
Financial Investment and Exchanges
Exchanges are financial markets where financial products are traded. There are various kinds of exchanges, such as stock exchanges, futures exchanges and commodity exchanges. These exchanges formulate their own rules and procedures for smooth transactions and ensuring fairness for all investors.
The exchanges are guided by regulating agencies. For instance, the Securities and Exchange Commission (SEC) is the watchdog of the American stock market, while the Securities and Exchange Board of India (SEBI) regulates the Indian stock market.
The various markets for financial investment are:
Bond Market – The following products trade in this market:
* Fixed income
* Corporate bond
* Government bond
* Municipal bond
* Bond valuation
* High-yield debt
Stock (Equities) Market – The following financial instruments trade in this market:
* Stock
* Preferred stock
* Common stock
* Registered share
* Voting share
Forex Market – The following financial instruments trade in this market:
* Currency
* Currency futures
* Non-deliverable forward
* Forex swap
* Currency swap
* Foreign exchange options
Derivatives Market - The following financial products trade in this market:
* Credit derivative
* Hybrid security
* Options
* Futures
* Forwards
* Swaps
Commodity Market
Money Market
Spot Market
OTC Market
Real Estate Market
The broad range of investment opportunities represents varied levels of risks and rewards. Success in financial investment requires good knowledge of investing. Instead, one could seek the help of financial advisors, who use various technical and fundamental analysis tools to manage portfolios.
The term “investment” is used differently in economics and finance. By the term investment, an economist refers to real investment, such as in a machine or a house. On the other hand, a finance professional would refer to a financial asset as an investment. Such financial assets could be money that is deposited in a bank or invested in the money market.
Types of Financial Investment
Financial investments are of several types, including equities, debt instruments, derivatives, currencies and real estate. These financial assets are acquired with the expectation of future cash flows and may increase or decrease in value resulting in capital gains or losses to investors.
How is Financial Investment Made?
People invest spare money to offset the effect of inflation on idle cash as well as to benefit from an additional source of income and capital appreciation. Financial investments are typically made indirectly via intermediaries such as banks, insurance companies, mutual funds, pension funds, collective investment schemes and investment clubs. An intermediary generally makes investments using the money from many individuals.
Financial Investment and Exchanges
Exchanges are financial markets where financial products are traded. There are various kinds of exchanges, such as stock exchanges, futures exchanges and commodity exchanges. These exchanges formulate their own rules and procedures for smooth transactions and ensuring fairness for all investors.
The exchanges are guided by regulating agencies. For instance, the Securities and Exchange Commission (SEC) is the watchdog of the American stock market, while the Securities and Exchange Board of India (SEBI) regulates the Indian stock market.
The various markets for financial investment are:
Bond Market – The following products trade in this market:
* Fixed income
* Corporate bond
* Government bond
* Municipal bond
* Bond valuation
* High-yield debt
Stock (Equities) Market – The following financial instruments trade in this market:
* Stock
* Preferred stock
* Common stock
* Registered share
* Voting share
Forex Market – The following financial instruments trade in this market:
* Currency
* Currency futures
* Non-deliverable forward
* Forex swap
* Currency swap
* Foreign exchange options
Derivatives Market - The following financial products trade in this market:
* Credit derivative
* Hybrid security
* Options
* Futures
* Forwards
* Swaps
Commodity Market
Money Market
Spot Market
OTC Market
Real Estate Market
The broad range of investment opportunities represents varied levels of risks and rewards. Success in financial investment requires good knowledge of investing. Instead, one could seek the help of financial advisors, who use various technical and fundamental analysis tools to manage portfolios.
Exchange Traded Fund (ETF)
ETF is an acronym for exchange traded fund. ETFs are investment vehicles that comprise of a number of securities or a basket of assets. They are traded just like stocks on a stock exchange. Most ETFs track an index such as the S&P 500 or the Dow Jones Industrial Average.
Features such as tax efficiency, low cost and stock-like characteristics make ETFs a highly attractive investment option. Exchange traded funds have been available in the US financial market since 1993 and in the European market since 1999.
Features of an ETF
The undivided interest that an ETF offers in a pool of securities makes it similar to the traditional mutual funds. However, unlike a mutual fund, shares in an exchange traded funds:
* Can be traded, just like the stocks, through a broker on a securities exchange throughout the day.
* Are not sold or redeemed at their net asset value.
ETF shares are purchased and redeemed directly from the exchange traded fund by financial institutions. This is done only in large blocks, varying from 25,000 to 200,000 shares. These are called 'creation units'. The purchase or redemption of these creation units is generally in kind. Institutional investors contribute or receive a basket of securities of the same type and proportion that is held by the concerned ETF. In some cases, the substitution by cash may be required or permitted for purchase or redemption.
The portfolios of existing ETFs are transparent. This facilitates institutional investors in deciding the portfolio assets they should assemble for purchasing a creation unit.
The Trading of an ETF
A share of an ETF can be obtained or redeemed directly from fund managers only by large institutional investors. Such institutional investors are also called authorized participants. They may either hold the ETF shares or act as market makers in the open market. Other individual investors use a retail brokerage for trading ETF shares in the secondary market created by these authorized participants.
ETFs: Benefits and Risks
An ETF gives the advantage of diversifying an index fund. It also provides the ability to buy on margin, to sell short and purchase as little as a single share. However, many ETFs use unknown and untested indexes. Also, ETFs depend upon the efficiency of the mechanism of the arbitrage.
Since ETFs can be bought and sold just like stocks, their net asset value (NAV) is not calculated once a day by fund managers, but on a continuous basis throughout the day by investors. Thus, unlike mutual funds, ETFs are open to price fluctuations during the entire trading period. Since ETFs are traded on the stock market through brokers, minimal interaction with fund houses is required. Fees associated with ETFs are also lower that the mutual fund fees.
Additionally, ETFs afford greater tax efficiency than mutual funds. While these benefits do exist, the one driving the popularity of ETFs is liquidity.
An ETF is an ideal asset allocation tool that significantly limits the investment risks associated with individual stocks. However, ETFs are not without shortcomings. As ETFs are a basket of funds from the same investment category, investors have high exposure to any downturn in that specific category. Moreover, too much flexibility to move in and out of an ETF could tempt investors to jump often between sectors, resulting in missed opportunities, wrong decisions and reduced potential returns. Additionally, buying and selling of ETFs involve brokerage commissions, which can erode the low-expense advantage of ETFs, particularly when the sum being invested is limited.
A History of Exchange Traded Funds
The bear market in the US in the first couple of years of the twenty-first century propelled investors towards Exchange Traded Funds, thanks to their combination of stability (similar to mutual funds) and ease of trading as stocks.
ETFs have been traded in the US since 1993 and in Europe since 1999. They owe their origin to a product called Index Participation Shares that was traded on the American Stock Exchange and the Philadelphia Stock Exchange in 1989 as an S&P 500 proxy. This product had to be terminated on account of a lawsuit, but was soon followed by a similar product, namely the Toronto Index Participation Shares, trading on the Toronto Stock Exchange. This product, which tracked the TSE 35 and later the TSE 100 stocks, became highly popular. In the US, Standard & Poor's Depositary Receipts (SPDRs), or "Spiders," were the first ETF to hit the market. Since then, ETFs have flourished and form a significant portion of trading activity on US bourses. As of May 2008, there were 680 ETFs in the US, with $610 billion in assets, according to wikipedia.org.
Features such as tax efficiency, low cost and stock-like characteristics make ETFs a highly attractive investment option. Exchange traded funds have been available in the US financial market since 1993 and in the European market since 1999.
Features of an ETF
The undivided interest that an ETF offers in a pool of securities makes it similar to the traditional mutual funds. However, unlike a mutual fund, shares in an exchange traded funds:
* Can be traded, just like the stocks, through a broker on a securities exchange throughout the day.
* Are not sold or redeemed at their net asset value.
ETF shares are purchased and redeemed directly from the exchange traded fund by financial institutions. This is done only in large blocks, varying from 25,000 to 200,000 shares. These are called 'creation units'. The purchase or redemption of these creation units is generally in kind. Institutional investors contribute or receive a basket of securities of the same type and proportion that is held by the concerned ETF. In some cases, the substitution by cash may be required or permitted for purchase or redemption.
The portfolios of existing ETFs are transparent. This facilitates institutional investors in deciding the portfolio assets they should assemble for purchasing a creation unit.
The Trading of an ETF
A share of an ETF can be obtained or redeemed directly from fund managers only by large institutional investors. Such institutional investors are also called authorized participants. They may either hold the ETF shares or act as market makers in the open market. Other individual investors use a retail brokerage for trading ETF shares in the secondary market created by these authorized participants.
ETFs: Benefits and Risks
An ETF gives the advantage of diversifying an index fund. It also provides the ability to buy on margin, to sell short and purchase as little as a single share. However, many ETFs use unknown and untested indexes. Also, ETFs depend upon the efficiency of the mechanism of the arbitrage.
Since ETFs can be bought and sold just like stocks, their net asset value (NAV) is not calculated once a day by fund managers, but on a continuous basis throughout the day by investors. Thus, unlike mutual funds, ETFs are open to price fluctuations during the entire trading period. Since ETFs are traded on the stock market through brokers, minimal interaction with fund houses is required. Fees associated with ETFs are also lower that the mutual fund fees.
Additionally, ETFs afford greater tax efficiency than mutual funds. While these benefits do exist, the one driving the popularity of ETFs is liquidity.
An ETF is an ideal asset allocation tool that significantly limits the investment risks associated with individual stocks. However, ETFs are not without shortcomings. As ETFs are a basket of funds from the same investment category, investors have high exposure to any downturn in that specific category. Moreover, too much flexibility to move in and out of an ETF could tempt investors to jump often between sectors, resulting in missed opportunities, wrong decisions and reduced potential returns. Additionally, buying and selling of ETFs involve brokerage commissions, which can erode the low-expense advantage of ETFs, particularly when the sum being invested is limited.
A History of Exchange Traded Funds
The bear market in the US in the first couple of years of the twenty-first century propelled investors towards Exchange Traded Funds, thanks to their combination of stability (similar to mutual funds) and ease of trading as stocks.
ETFs have been traded in the US since 1993 and in Europe since 1999. They owe their origin to a product called Index Participation Shares that was traded on the American Stock Exchange and the Philadelphia Stock Exchange in 1989 as an S&P 500 proxy. This product had to be terminated on account of a lawsuit, but was soon followed by a similar product, namely the Toronto Index Participation Shares, trading on the Toronto Stock Exchange. This product, which tracked the TSE 35 and later the TSE 100 stocks, became highly popular. In the US, Standard & Poor's Depositary Receipts (SPDRs), or "Spiders," were the first ETF to hit the market. Since then, ETFs have flourished and form a significant portion of trading activity on US bourses. As of May 2008, there were 680 ETFs in the US, with $610 billion in assets, according to wikipedia.org.
Currency
A form of money that serves as a medium of exchange in a country and is meant for public circulation within it is called currency. It also functions as a standard measurement and store of value. Paper notes and coins issued by central banks become the currencies of the respective countries.
The value of a currency in a country is determined on the basis of daily trade. The region in which a particular currency is used as a unit of exchange becomes the currency zone of that currency. Any currency issued by a country located outside this currency zone will be categorized as foreign currency in this region.
Types of Currencies
Based on exchange rate guidelines, currencies fall under two categories:
* Floating currency: This is a currency the value of which is regulated by the currency market. Its value appreciates when the issuing country has a surplus in trade or on the capital account.
* Fixed currency: This is a currency the value of which is set by the monetary authority of the issuing country. Fixed measurement standards, like the value of the country’s currency with respect to a foreign currency, a basket of currencies or gold, are used to calculate the currency’s exchange rate.
* Floating currency: This type of currency is regulated by the currency market. Its value appreciates when the issuing countryhas a surplus in trade or on the capital account.
* Fixed currency: The value of this type of currency is set by the monetary authority of the issuing country. Fixed measurementstandards, like the value of the country’s currency with respect to a foreign currency, a basket of currencies or gold, are used to calculate the currency’s exchange rate.
Regulation of the Exchange Rates of Currencies
In order to facilitate multilateral trade, countries regulate their exchange rates vis-à-vis other currencies. Often, countriesuse the prerogative of producing and circulating their official currency to alter its exchange value. Such decisions are taken by the Ministry of Finance or the central bank of a country.
The member countries of the Economic and Monetary Union of the European Union do not have the authority to produce or distribute currency. These decisions are taken by the European Central Bank (ECB) on behalf of the member nations. The Euro, whichis commonly used by the 16 of the member nations of the European Union, is called a common currency.
Various countries use a common name for their currency, such as the dollars, pounds, pesos and dinars. These will normally havelocal variant names, such as the US Dollar, Canadian Dollar and Australian Dollar.
Online Currency
The term e-currency or online currency refers to currency or scrip that is exchanged electronically. In other words, it is the unit of exchange that is widely used on the Internet. Transactions in online currencies have become increasingly popular owing to their simple and instantaneous nature. E-currencies have created a borderless world, where people can carry out commercial transactions in a matter of a few clicks.
The evolution of the application of currency from punch marked coins to this contemporary stage of e-currency illustrates the need for sophistication of the systems of exchange.
* Currency Trading, Online Currency Trading
* US Dollar Converter, US Dollar Conversion, Dollar Currency Exchange
* Euro Converter, Euro Conversion
* Currency Exchange
* Currency Swap, Currency Swaps
* Currency Pair, Currency Pairs
* Currency Charts, Currency Graphs
* Currency Symbols, Money Symbols
* Cross Currency
* Cross Rate
* Carry Trade
* Money
* Coins
The value of a currency in a country is determined on the basis of daily trade. The region in which a particular currency is used as a unit of exchange becomes the currency zone of that currency. Any currency issued by a country located outside this currency zone will be categorized as foreign currency in this region.
Types of Currencies
Based on exchange rate guidelines, currencies fall under two categories:
* Floating currency: This is a currency the value of which is regulated by the currency market. Its value appreciates when the issuing country has a surplus in trade or on the capital account.
* Fixed currency: This is a currency the value of which is set by the monetary authority of the issuing country. Fixed measurement standards, like the value of the country’s currency with respect to a foreign currency, a basket of currencies or gold, are used to calculate the currency’s exchange rate.
* Floating currency: This type of currency is regulated by the currency market. Its value appreciates when the issuing countryhas a surplus in trade or on the capital account.
* Fixed currency: The value of this type of currency is set by the monetary authority of the issuing country. Fixed measurementstandards, like the value of the country’s currency with respect to a foreign currency, a basket of currencies or gold, are used to calculate the currency’s exchange rate.
Regulation of the Exchange Rates of Currencies
In order to facilitate multilateral trade, countries regulate their exchange rates vis-à-vis other currencies. Often, countriesuse the prerogative of producing and circulating their official currency to alter its exchange value. Such decisions are taken by the Ministry of Finance or the central bank of a country.
The member countries of the Economic and Monetary Union of the European Union do not have the authority to produce or distribute currency. These decisions are taken by the European Central Bank (ECB) on behalf of the member nations. The Euro, whichis commonly used by the 16 of the member nations of the European Union, is called a common currency.
Various countries use a common name for their currency, such as the dollars, pounds, pesos and dinars. These will normally havelocal variant names, such as the US Dollar, Canadian Dollar and Australian Dollar.
Online Currency
The term e-currency or online currency refers to currency or scrip that is exchanged electronically. In other words, it is the unit of exchange that is widely used on the Internet. Transactions in online currencies have become increasingly popular owing to their simple and instantaneous nature. E-currencies have created a borderless world, where people can carry out commercial transactions in a matter of a few clicks.
The evolution of the application of currency from punch marked coins to this contemporary stage of e-currency illustrates the need for sophistication of the systems of exchange.
* Currency Trading, Online Currency Trading
* US Dollar Converter, US Dollar Conversion, Dollar Currency Exchange
* Euro Converter, Euro Conversion
* Currency Exchange
* Currency Swap, Currency Swaps
* Currency Pair, Currency Pairs
* Currency Charts, Currency Graphs
* Currency Symbols, Money Symbols
* Cross Currency
* Cross Rate
* Carry Trade
* Money
* Coins
Companies of the World, Major Companies
There are several prominent lists and indices that cover the largest companies in the world. While they don’t include the largest private companies such as Saudi Aramco, they do reflect a shift in gravity from developed to emerging economies.
Elsewhere in Economy Watch we discuss the types of that exist today, and the effects of The opening up of world economies has allowed businesses to scale on a truly global level. These new multi-national corporations have become immense, and are often bigger than national economies.
A number of indices have been developed to list the largest companies and businesses in the world. These lists tend to be dominated by US companies, with a sizable contingent of European companies. However, in recent years we have seen the beginnings of a trend away from companies in the developed world and towards entities from the emerging markets that are growing at a faster pace.
It is important to note that these indices can only categorize publicly listed companies, and therefore may not be truly reflective of the world pecking order. Many authorities believe that the largest company in the world is actually Saudi Aramco, the company that controls the entire petrochemical industry in Saudi Arabia. However, since it is a private company that does not report its revenues, these claims cannot be verified.
Here are some of the major lists and indices of global companies:
Fortune Global 500
Each year Fortune Magazine calculates the size of the largest companies in the world, and publishes the Global 500 list of the largest, together with their company profiles.
Fortune Global Most Admired Companies
Fortune surveys executives at the top companies of the world, which it classifies as companies with market capitalization of over US $8 billion. It asks respondents to rate their peers on categories such as industry leadership, talent management and innovation, and publishes the results
Forbes 2000 Companies
This is an annual compendium of the biggest publicly-listed companies in the world, compiled by Forbes Magazine. The report was started in 2004, and in 2008 lists companies based in 60 different countries worldwide. Companies are ranked on a mix of metrics including market value, sales, assets and profits. The Forbes 2000 companies account for no less than US $30 trillion of sales and own US $119 trillion of assets worldwide!
S&P Global 1200
The S&P Global 1200 Index is an index of global stocks that are tracked by Standard & Poor’s. The index has components from 31 countries and is estimated to include approximately 70% of worldwide stock market equity. It is composed of six regional or continental indices:
S&P 500 Index (US)
S&P/TSX 60 Index (Canada)
S&P Latin America 40 Index (Brazil, Mexico, Argentina, Chile)
S&P/TOPIX 150 Index (Japan)
S&P Asia 50 Index (Hong Kong, Korea, Singapore, Taiwan)
S&P Europe 350 Index (Europe)
Dow Jones Industrial Average
The Dow Jones Industrial Average consists of 30 of the largest publicly traded companies in the US, who are also among the largest worldwide. It was created by a former Wall Street Journal editor and founder of Dow Jones & Company, Charles Dow. It is also called the DJIA, the Dow 30 or the Dow Jones.
S&P 500
This stock market index contains a selected group of large-cap companies listed on both the New York Stock Exchange and Nasdaq. Most of the companies listed are American. The S&P 500 Index is a subset of the S&P Global 1200 Index
Russell 3000 Index
The Russell 3000 Index consists of the largest 3000 publicly-traded companies in the US, representing 98% of stock market equity in America.
Russell 2000 Index
The Russell 2000 Index is a subset of the Russell 3000 Index, and represents the smallest companies in the US - the top 1000 companies have been removed from the list. The Russell 2000 Index allows investors to track the small-cap market, and represents 10% of the equity value of the Russell 3000 Index.
ET 500 Companies
Dubbed the ‘Changing Face of India inc’, the Economic Times of India publishes the ET 500, the list of the largest companies in India.
Elsewhere in Economy Watch we discuss the types of that exist today, and the effects of The opening up of world economies has allowed businesses to scale on a truly global level. These new multi-national corporations have become immense, and are often bigger than national economies.
A number of indices have been developed to list the largest companies and businesses in the world. These lists tend to be dominated by US companies, with a sizable contingent of European companies. However, in recent years we have seen the beginnings of a trend away from companies in the developed world and towards entities from the emerging markets that are growing at a faster pace.
It is important to note that these indices can only categorize publicly listed companies, and therefore may not be truly reflective of the world pecking order. Many authorities believe that the largest company in the world is actually Saudi Aramco, the company that controls the entire petrochemical industry in Saudi Arabia. However, since it is a private company that does not report its revenues, these claims cannot be verified.
Here are some of the major lists and indices of global companies:
Fortune Global 500
Each year Fortune Magazine calculates the size of the largest companies in the world, and publishes the Global 500 list of the largest, together with their company profiles.
Fortune Global Most Admired Companies
Fortune surveys executives at the top companies of the world, which it classifies as companies with market capitalization of over US $8 billion. It asks respondents to rate their peers on categories such as industry leadership, talent management and innovation, and publishes the results
Forbes 2000 Companies
This is an annual compendium of the biggest publicly-listed companies in the world, compiled by Forbes Magazine. The report was started in 2004, and in 2008 lists companies based in 60 different countries worldwide. Companies are ranked on a mix of metrics including market value, sales, assets and profits. The Forbes 2000 companies account for no less than US $30 trillion of sales and own US $119 trillion of assets worldwide!
S&P Global 1200
The S&P Global 1200 Index is an index of global stocks that are tracked by Standard & Poor’s. The index has components from 31 countries and is estimated to include approximately 70% of worldwide stock market equity. It is composed of six regional or continental indices:
S&P 500 Index (US)
S&P/TSX 60 Index (Canada)
S&P Latin America 40 Index (Brazil, Mexico, Argentina, Chile)
S&P/TOPIX 150 Index (Japan)
S&P Asia 50 Index (Hong Kong, Korea, Singapore, Taiwan)
S&P Europe 350 Index (Europe)
Dow Jones Industrial Average
The Dow Jones Industrial Average consists of 30 of the largest publicly traded companies in the US, who are also among the largest worldwide. It was created by a former Wall Street Journal editor and founder of Dow Jones & Company, Charles Dow. It is also called the DJIA, the Dow 30 or the Dow Jones.
S&P 500
This stock market index contains a selected group of large-cap companies listed on both the New York Stock Exchange and Nasdaq. Most of the companies listed are American. The S&P 500 Index is a subset of the S&P Global 1200 Index
Russell 3000 Index
The Russell 3000 Index consists of the largest 3000 publicly-traded companies in the US, representing 98% of stock market equity in America.
Russell 2000 Index
The Russell 2000 Index is a subset of the Russell 3000 Index, and represents the smallest companies in the US - the top 1000 companies have been removed from the list. The Russell 2000 Index allows investors to track the small-cap market, and represents 10% of the equity value of the Russell 3000 Index.
ET 500 Companies
Dubbed the ‘Changing Face of India inc’, the Economic Times of India publishes the ET 500, the list of the largest companies in India.
Commodity
A commodity is an article of commerce or trade that is in demand and sold by various suppliers without any qualitative differentiation. Generally, commodities are raw materials whose prices are based on market demand and supply. Commodities are of two types, hard and soft. Tea, coffee, sugar, sisal, cocoa, corn soya and pork bellies come under the category of soft commodities. Some examples of hard commodities are metals, such as aluminum and copper.
What is a Commodity Market?
A commodity market is a place where the exchange of primary or raw products happens in regulated commodity exchanges. The buying and selling of these products occurs through standardized contracts.
The commodity markets have their origins in the ancient civilization of Sumer in Southern Iraq. Tokens were used to trade commodities. This included specific timeframes and delivery of commodities, just like contemporary futures contracts. By the 19th century, the crude commodity markets paved the way for modern, regulated and standardized markets in the US, where agricultural products and cattle were traded.
For most people, commodity markets are not a primary area of investment as they are not designed for retail investors. However, investing in commodities can improve the overall rate of return of an investment portfolio with sufficient care and planning.
Which are the Main Commodity Exchanges?
* Kansas City Board of Trade.
* New York Mercantile Exchange.
* Chicago Board of Trade.
* London Metal Exchange.
* Multi Commodity Exchange.
* Kuala Lumpur Futures Exchange.
* Dalian Commodity Exchange.
Who Should Invest in Commodities?
Whoever plans to diversify his/her investment portfolio and earn high returns from price fluctuations should invest in the commodity market. Before investing, it is important to gather as much information as possible and avoid losses. Trends are always unpredictable in the commodity market. Investors are advised to be aware of commodity demand cycles and factors impacting demand.
What Risk Factors are involved in Commodity Trading?
Profits and losses in commodity trading are quite uncertain. This is usually done in the form of futures. Thus, commodity trading also involves similar risk factors like that of future trading in equity markets.
Despite risk factors, commodity trading is preferred by investors who like to take risks so as to earn high returns even when trends are unpredictable.
What is a Commodity Market?
A commodity market is a place where the exchange of primary or raw products happens in regulated commodity exchanges. The buying and selling of these products occurs through standardized contracts.
The commodity markets have their origins in the ancient civilization of Sumer in Southern Iraq. Tokens were used to trade commodities. This included specific timeframes and delivery of commodities, just like contemporary futures contracts. By the 19th century, the crude commodity markets paved the way for modern, regulated and standardized markets in the US, where agricultural products and cattle were traded.
For most people, commodity markets are not a primary area of investment as they are not designed for retail investors. However, investing in commodities can improve the overall rate of return of an investment portfolio with sufficient care and planning.
Which are the Main Commodity Exchanges?
* Kansas City Board of Trade.
* New York Mercantile Exchange.
* Chicago Board of Trade.
* London Metal Exchange.
* Multi Commodity Exchange.
* Kuala Lumpur Futures Exchange.
* Dalian Commodity Exchange.
Who Should Invest in Commodities?
Whoever plans to diversify his/her investment portfolio and earn high returns from price fluctuations should invest in the commodity market. Before investing, it is important to gather as much information as possible and avoid losses. Trends are always unpredictable in the commodity market. Investors are advised to be aware of commodity demand cycles and factors impacting demand.
What Risk Factors are involved in Commodity Trading?
Profits and losses in commodity trading are quite uncertain. This is usually done in the form of futures. Thus, commodity trading also involves similar risk factors like that of future trading in equity markets.
Despite risk factors, commodity trading is preferred by investors who like to take risks so as to earn high returns even when trends are unpredictable.
Commodity Trading
Commodity trading is a kind of financial trading in which primary products, such as food, metals and energy, are bought and sold. Trading in commodities is mostly undertaken on contracts that are based on such commodities.
Some commonly traded commodities include:
Agricultural products such as corn, wheat, soybeans, cocoa and oats
Energy products such as crude oil, ethanol, natural gas and uranium
Precious metals such as gold, platinum and silver
Industrial metals such as copper, lead, zinc and tin
Commodities trading is also called futures trading. When one trades futures, s/he does not actually buy or own anything. The contract is bought to speculate on the future direction of the price of the commodity.
How is Commodity Trading Done?
Commodity is traded at organized commodity exchanges. Most of the trading involves commodity futures. Here, the underlying asset of the futures is a particular commodity, such as gold, corn or wheat.
When such contracts are bought, the buyer of the futures contract gets the right to buy or sell the underlying commodity at a specified price at a specified future date. The buyer of the contract also pays a price to the seller for this right and this is called the premium.
Some famous commodity exchanges are the Chicago Climate Exchange, Hedge Street Exchange, CME Group, Central Japan Commodity Exchange, Dubai Mercantile Exchange, Tokyo Commodity Exchange and London Metal Exchange.
Broadly speaking, there are two different types of markets for commodity trading. Spot markets are where immediate trading takes place. This includes personal purchases (like when you buy jewelry with cash) as well as spot trading on a much larger scale (like trading in oil or large quantities of gold). The other market involves future trading. Here, a contract is traded, rather than the commodity itself.
Benefits of Commodity Trading
* Commodity trading is much cheaper than stock trading, since the margins associated with the former are much lower.
* The brokerage in commodity trading is extremely low.
* Commodity trading is highly useful for speculators.
Risks of Commodity Trading
Commodity trading is highly risky and may result in huge net loss due to unfavorable market conditions. It is advisable for amateurs to first trade in stock futures before venturing into commodity trading.
Some commonly traded commodities include:
Agricultural products such as corn, wheat, soybeans, cocoa and oats
Energy products such as crude oil, ethanol, natural gas and uranium
Precious metals such as gold, platinum and silver
Industrial metals such as copper, lead, zinc and tin
Commodities trading is also called futures trading. When one trades futures, s/he does not actually buy or own anything. The contract is bought to speculate on the future direction of the price of the commodity.
How is Commodity Trading Done?
Commodity is traded at organized commodity exchanges. Most of the trading involves commodity futures. Here, the underlying asset of the futures is a particular commodity, such as gold, corn or wheat.
When such contracts are bought, the buyer of the futures contract gets the right to buy or sell the underlying commodity at a specified price at a specified future date. The buyer of the contract also pays a price to the seller for this right and this is called the premium.
Some famous commodity exchanges are the Chicago Climate Exchange, Hedge Street Exchange, CME Group, Central Japan Commodity Exchange, Dubai Mercantile Exchange, Tokyo Commodity Exchange and London Metal Exchange.
Broadly speaking, there are two different types of markets for commodity trading. Spot markets are where immediate trading takes place. This includes personal purchases (like when you buy jewelry with cash) as well as spot trading on a much larger scale (like trading in oil or large quantities of gold). The other market involves future trading. Here, a contract is traded, rather than the commodity itself.
Benefits of Commodity Trading
* Commodity trading is much cheaper than stock trading, since the margins associated with the former are much lower.
* The brokerage in commodity trading is extremely low.
* Commodity trading is highly useful for speculators.
Risks of Commodity Trading
Commodity trading is highly risky and may result in huge net loss due to unfavorable market conditions. It is advisable for amateurs to first trade in stock futures before venturing into commodity trading.
Capital Accumulation
Capital is wealth that may be in the form of money or property (including real estate, stocks and bonds) owned by an entity (a person or business). In the world of investing, the term capital can be used for assets that are invested in order to gain from a rise in their value. Capital accumulation is the growth in the total value of the capital.
Capital: Related Terms
Here are some terms associated with the concept of capital:
# Capital Asset: Any asset used for wealth creation.
# Capital Gains: The profits made on selling an asset.
# Capital Market: This is the marketplace for securities, such as shares and bonds, where businesses try to raise long term funds.
# Financial Instruments: Contracts of various combinations of capital assets, serving as a store of value, unit of account, medium of exchange or standard of deferred payment.
* Capital Budgeting: Also known as investment appraisal, it is the planning process that determines the profitability of long term investments.
* Cost of Capital: The cost to a borrower when they are loaned money, or the interest rate on a principal amount that has been loaned.
* Capital Appreciation: The rise in the market value of an asset above the original investment in it.
* Capital Risk: The risk of losing the whole or part of the principal amount spent on an investment.
Connotations of Capital Accumulation
The term capital accumulation can have various connotations in different contexts:
* spending less than what one earns (accumulation in the form of savings).
* making investments in physical assets such as plants, equipment, machinery and raw materials.
* investing in contracts of assets on paper.
* training human capital and increasing its skill base.
There is always a possibility that the return on an investment will differ from expectations. The amount of risk that investors are willing to take is directly proportional to the potential returns on their investments. This is because investors have to be rewarded for taking additional risk. For example, US Treasury bonds are one of the safest and lowest yielding investments. The capital appreciation on stocks is much higher, since they are much more risky (a corporation is more likely to declare bankruptcy than the US government).
Capital: Related Terms
Here are some terms associated with the concept of capital:
# Capital Asset: Any asset used for wealth creation.
# Capital Gains: The profits made on selling an asset.
# Capital Market: This is the marketplace for securities, such as shares and bonds, where businesses try to raise long term funds.
# Financial Instruments: Contracts of various combinations of capital assets, serving as a store of value, unit of account, medium of exchange or standard of deferred payment.
* Capital Budgeting: Also known as investment appraisal, it is the planning process that determines the profitability of long term investments.
* Cost of Capital: The cost to a borrower when they are loaned money, or the interest rate on a principal amount that has been loaned.
* Capital Appreciation: The rise in the market value of an asset above the original investment in it.
* Capital Risk: The risk of losing the whole or part of the principal amount spent on an investment.
Connotations of Capital Accumulation
The term capital accumulation can have various connotations in different contexts:
* spending less than what one earns (accumulation in the form of savings).
* making investments in physical assets such as plants, equipment, machinery and raw materials.
* investing in contracts of assets on paper.
* training human capital and increasing its skill base.
There is always a possibility that the return on an investment will differ from expectations. The amount of risk that investors are willing to take is directly proportional to the potential returns on their investments. This is because investors have to be rewarded for taking additional risk. For example, US Treasury bonds are one of the safest and lowest yielding investments. The capital appreciation on stocks is much higher, since they are much more risky (a corporation is more likely to declare bankruptcy than the US government).
Bank of America Investment
Bank of America, the largest financial institution in the USA and one of the largest financial institutions of the world, which provides all kinds of financial services to its clients with effective investment management strategies. It serves individuals, small and medium sized businesses as well as large corporate houses with an array of banking, investing, and asset management and risk management products and services. The bank is said to be the leading Small Business Administration (SBA) loan provider in the USA and has its services spread over 175 countries. It has relationships with 80 percent of the Global Fortune 500 companies and it’s presently listed in the New York Stock Exchange (NYSE).
Bank of America Investment productsare provided by Bank of America Investment Services, Inc. (BAI), which is a registered broker dealer and a member of the NASD (National Association of Securities Dealers) and SIPC (Securities Investor Protector Corporation), however, it is itself a non bank subsidiary of the former organization.
While the BAI in partnership with the Bank of America, N.A., offer investment strategies to individuals and self –directed brokerage customers, the Client Investment Strategies provides one source for working capital investment solutions and comprehensive investment services and is mainly directed towards corporations, non profit organizations and municipalities. Some of the general services offered by the BAI include easy fund transfer between bank and brokerage accounts and sophisticated research and tools to help investors choose the right investments.
BAI in conjunction with the Bank of America is offering $0 for online equity trade for self-directed brokerage customers depending upon their relationship with Bank of America and its affiliates. This offer can be availed by the deposit account holders who have a combined balance of $ 25,000 or above across their accounts and 30 commission- free online equity trades per month are permitted through the BAI-Self-Directed scheme.
This offer was introduced at its inception in the Northeastern states of America. It also provides a Full Service Investing scheme which helps in investment strategies and portfolios.
Bank of America provides the best investment instruments available and works with a well-qualified team of investment professionals. Some of the working capital investment services with the facility of a single point of contact include Automated Sweep Services, Fixed Income Securities, Money Market Funds, Tax Advantaged Investments, Safekeeping Services and Managed Account Solutions. In terms of investment management across a spectrum of different assets and individual and institutional investors, Bank of America has a separate investment management division called the Columbia Management based in Boston, Massachusetts. This and its affiliates comprise the wealth and investment management division of the Bank of America Corporation and the managed assets for the Columbia as a whole stood at $542.9 billion as of December 31, 2006.
Bank of America has its reach in the European nations such as UK, France, Germany and Belgium. Apart from offering Global Investment Banking services, the bank also offers Global Markets Products including Global Debts Products, Equities and Global Liquid Products. The organization has its in forte in Global Treasury Services as well.
Bank of America Investment productsare provided by Bank of America Investment Services, Inc. (BAI), which is a registered broker dealer and a member of the NASD (National Association of Securities Dealers) and SIPC (Securities Investor Protector Corporation), however, it is itself a non bank subsidiary of the former organization.
While the BAI in partnership with the Bank of America, N.A., offer investment strategies to individuals and self –directed brokerage customers, the Client Investment Strategies provides one source for working capital investment solutions and comprehensive investment services and is mainly directed towards corporations, non profit organizations and municipalities. Some of the general services offered by the BAI include easy fund transfer between bank and brokerage accounts and sophisticated research and tools to help investors choose the right investments.
BAI in conjunction with the Bank of America is offering $0 for online equity trade for self-directed brokerage customers depending upon their relationship with Bank of America and its affiliates. This offer can be availed by the deposit account holders who have a combined balance of $ 25,000 or above across their accounts and 30 commission- free online equity trades per month are permitted through the BAI-Self-Directed scheme.
This offer was introduced at its inception in the Northeastern states of America. It also provides a Full Service Investing scheme which helps in investment strategies and portfolios.
Bank of America provides the best investment instruments available and works with a well-qualified team of investment professionals. Some of the working capital investment services with the facility of a single point of contact include Automated Sweep Services, Fixed Income Securities, Money Market Funds, Tax Advantaged Investments, Safekeeping Services and Managed Account Solutions. In terms of investment management across a spectrum of different assets and individual and institutional investors, Bank of America has a separate investment management division called the Columbia Management based in Boston, Massachusetts. This and its affiliates comprise the wealth and investment management division of the Bank of America Corporation and the managed assets for the Columbia as a whole stood at $542.9 billion as of December 31, 2006.
Bank of America has its reach in the European nations such as UK, France, Germany and Belgium. Apart from offering Global Investment Banking services, the bank also offers Global Markets Products including Global Debts Products, Equities and Global Liquid Products. The organization has its in forte in Global Treasury Services as well.
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