| United States ECONOMY |
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Sunday, Sept. 14 - Trouble brews
News that Lehman Brothers was on the brink of collapse and scrambling for a buyer first surfaced on
Friday. But by Sunday, there were still no suitors for the 158-year old investment bank, and bankruptcy
seemed inevitable. Indeed, just after midnight, in Monday's early hours, the firm officially announced its
intention to file for Chapter 11.
Equally as staggering, just hours after reports surfaced that Bank of America broke off of talks to buy
Lehman, BoA unleashed the news that it would pay $50 billion to scoop up Merrill Lynch, another iconic
Wall Street name.
As if that weren't enough, American International Group, the nation's largest insurer, said that it planned
to sell some of its troubled assets in order to raise cash and boost investor confidence.
Concerns about the credit crisis grew increasingly dire, even though the government had already
pledged to backstop Fannie Mae and Freddie Mac up to $200 billion just one week ago, and months
earlier engineered JP Morgan's purchase of Bear Stearns with a $29 billion guarantee.
But it looked like that wouldn't be enough, so Sunday afternoon the Federal Reserve, along with 10
banks, announced a $70 billion pool of funds to aid troubled financial firms. The U.S. central bank also
loosened its lending restrictions.
News that Lehman Brothers was on the brink of collapse and scrambling for a buyer first surfaced on
Friday. But by Sunday, there were still no suitors for the 158-year old investment bank, and bankruptcy
seemed inevitable. Indeed, just after midnight, in Monday's early hours, the firm officially announced its
intention to file for Chapter 11.
Equally as staggering, just hours after reports surfaced that Bank of America broke off of talks to buy
Lehman, BoA unleashed the news that it would pay $50 billion to scoop up Merrill Lynch, another iconic
Wall Street name.
As if that weren't enough, American International Group, the nation's largest insurer, said that it planned
to sell some of its troubled assets in order to raise cash and boost investor confidence.
Concerns about the credit crisis grew increasingly dire, even though the government had already
pledged to backstop Fannie Mae and Freddie Mac up to $200 billion just one week ago, and months
earlier engineered JP Morgan's purchase of Bear Stearns with a $29 billion guarantee.
But it looked like that wouldn't be enough, so Sunday afternoon the Federal Reserve, along with 10
banks, announced a $70 billion pool of funds to aid troubled financial firms. The U.S. central bank also
loosened its lending restrictions.
Tuesday, Sept. 16 - The Fed steps in
Stocks saw another sharp drop on Tuesday morning as worries mounted that the financial system was
broken beyond repair. Investors poured money into bonds, and the yield on the benchmark 10-year
Treasury note fell to a 5-year low.
Next, several rock-solid money market funds began to falter, dipping below the $1 per share benchmark.
Meanwhile the Fed was scheduled to meet on Tuesday afternoon. Wall Street analysts, who just a week
ago expected the Fed to hold rates steady, began to anticipate a rate cut. But the central bank chose not
to succumb to panic and unanimously decided to hold rates steady at 2%.
Markets cheered the decision, and the Dow jumped 140 points at the close.
After the bell, British bank Barclays agreed to buy up $2 billion worth of Lehman's brokerage assets and
real estate holdings, and Morgan Stanley reported better-than-expected earnings.
But the big news came later that night when the government announced that it would stage a staggering
$85 billion bailout of AIG, and take an 80% stake in the company.
Stocks saw another sharp drop on Tuesday morning as worries mounted that the financial system was
broken beyond repair. Investors poured money into bonds, and the yield on the benchmark 10-year
Treasury note fell to a 5-year low.
Next, several rock-solid money market funds began to falter, dipping below the $1 per share benchmark.
Meanwhile the Fed was scheduled to meet on Tuesday afternoon. Wall Street analysts, who just a week
ago expected the Fed to hold rates steady, began to anticipate a rate cut. But the central bank chose not
to succumb to panic and unanimously decided to hold rates steady at 2%.
Markets cheered the decision, and the Dow jumped 140 points at the close.
After the bell, British bank Barclays agreed to buy up $2 billion worth of Lehman's brokerage assets and
real estate holdings, and Morgan Stanley reported better-than-expected earnings.
But the big news came later that night when the government announced that it would stage a staggering
$85 billion bailout of AIG, and take an 80% stake in the company.
| Thursday, Sept. 18 - The bailout With a crisis on its hands, the Fed convinced five other central banks around the world to invest a total of $180 billion in global financial markets. Meanwhile, AIG was tossed out of the Dow Jones industrial average and replaced with food giant Kraft. The stock market soared towards the close of the session, with financial stocks rebounding. The Dow added more than 400 points on rumors that an even more extensive federal bailout of the banking industry was in the making. Investors cheered early these reports that the Treasury would create an independent federal agency to take bad loans off bank of balance sheets. Late Thursday night, Treasury Secretary Henry Paulson met with Congressional leaders to hammer out the details of a large-scale bailout. |
Wednesday, Sept. 17 - Another free fall
Investors gave an enormous thumbs-down to the AIG news, sending stocks plummeting, while traders
piled funds into safer havens. Gold rose $70, a new record. Oil rose $6, its second-largest jump ever.
And the yield on the three-month Treasury sank to 0.02%, the lowest level since 1940.
The Dow dropped 450 points by the end of the day, dragged down by bank stocks in a tail-spin. Despite
reporting better-than-expected results, Goldman Sachs shares dipped below $100 a share for the first
time since 2005. Morgan Stanley took a tumble as well, as rumors circulated that it would merge with
troubled bank Wachovia.
Many Wall Street analysts blamed the stock market's collapses on so-called "naked" short sellers, who
short stocks without ever buying the security. Subsequently, the U.S. Securities and Exchange
Commission stepped in and banned naked short selling.
Investors gave an enormous thumbs-down to the AIG news, sending stocks plummeting, while traders
piled funds into safer havens. Gold rose $70, a new record. Oil rose $6, its second-largest jump ever.
And the yield on the three-month Treasury sank to 0.02%, the lowest level since 1940.
The Dow dropped 450 points by the end of the day, dragged down by bank stocks in a tail-spin. Despite
reporting better-than-expected results, Goldman Sachs shares dipped below $100 a share for the first
time since 2005. Morgan Stanley took a tumble as well, as rumors circulated that it would merge with
troubled bank Wachovia.
Many Wall Street analysts blamed the stock market's collapses on so-called "naked" short sellers, who
short stocks without ever buying the security. Subsequently, the U.S. Securities and Exchange
Commission stepped in and banned naked short selling.
Monday, Sept. 15 - The collapse
As traders sold off stocks on the weekend's dour news, rumors began to circulate that AIG was
struggling to raise enough capital to fend off a downgrade. As a result, New York Governor David
Paterson bent intra-corporation lending rules, allowing the company to loan itself $20 billion from a
subsidiary.
In the worst day on Wall Street in seven years, the Dow Jones industrial average tanked more than 500
points after Lehman Brothers' epic collapse of the buyout of Merrill Lynch
By Monday night, AIG was in fact hit with a downgrade, as Fitch bumped the insurance group down a
notch. With $1.1 trillion in assets and 74 million clients in 130 countries, investors feared AIG's collapse
would severely hurt consumers and further tighten already strangled credit.
Also Monday, news cropped up that the nation's largest savings bank, Washington Mutual was in search
of a white knight.
As traders sold off stocks on the weekend's dour news, rumors began to circulate that AIG was
struggling to raise enough capital to fend off a downgrade. As a result, New York Governor David
Paterson bent intra-corporation lending rules, allowing the company to loan itself $20 billion from a
subsidiary.
In the worst day on Wall Street in seven years, the Dow Jones industrial average tanked more than 500
points after Lehman Brothers' epic collapse of the buyout of Merrill Lynch
By Monday night, AIG was in fact hit with a downgrade, as Fitch bumped the insurance group down a
notch. With $1.1 trillion in assets and 74 million clients in 130 countries, investors feared AIG's collapse
would severely hurt consumers and further tighten already strangled credit.
Also Monday, news cropped up that the nation's largest savings bank, Washington Mutual was in search
of a white knight.
| THE 16 DAYS THAT SHOOCK THE US ECONOMY. A shocking series of events that forever changed the financial markets. When banks don't lend to each other and the credit system gets backed up, consumers have a hard time getting a loan to buy a home or car, small businesses can't expand and employees are at risk of losing their jobs. There are major investors, and we mean really big ones: countries, sovereign wealth funds, pension funds, hedge funds and, of course, banks. When credit is flowing smoothly, they send money between each other. They also loan money to corporations.m |
Friday, Sept. 19 - The confidence boost
President Bush, with Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Henry
Paulson and SEC Chairman Christopher Cox, spoke at the Rose Garden Friday.As Wall Street eagerly
awaited the details of Secretary Paulson's plan, the SEC took what it called "emergency action" Friday
morning and temporarily banned investors from short-selling 799 financial companies.
The Treasury also said it would insure up to $50 billion in struggling money market fund investments at
financial companies, guaranteeing that the funds' value will not fall below the standard $1 a share. The
Fed also said it would make unlimited funds available to banks to finance purchases of asset-backed
commercial paper from money market funds.
In a press conference, Treasury Secretary Paulson outlined the government's plan to put up hundreds
of billions of dollars to help stem the crisis, saying "the financial security of all Americans ... depends on
our ability to restore our financial institutions to a sound footing."
Later, President Bush held a separate press conference, flanked by Paulson, SEC Commissioner
Christopher Cox and Fed chief Ben Bernanke, saying it was "essential" that the government step in to
save the economy.
Investors cheered the moves, sending stocks soaring throughout the day.
Although the U.S. government had set various bailouts in motion to the tune of roughly $1 trillion,
investors finished the week with renewed confidence that Wall Street may be broken - but not beyond
repair.
--------------------------------
President Bush, with Federal Reserve Chairman Ben Bernanke, U.S. Treasury Secretary Henry
Paulson and SEC Chairman Christopher Cox, spoke at the Rose Garden Friday.As Wall Street eagerly
awaited the details of Secretary Paulson's plan, the SEC took what it called "emergency action" Friday
morning and temporarily banned investors from short-selling 799 financial companies.
The Treasury also said it would insure up to $50 billion in struggling money market fund investments at
financial companies, guaranteeing that the funds' value will not fall below the standard $1 a share. The
Fed also said it would make unlimited funds available to banks to finance purchases of asset-backed
commercial paper from money market funds.
In a press conference, Treasury Secretary Paulson outlined the government's plan to put up hundreds
of billions of dollars to help stem the crisis, saying "the financial security of all Americans ... depends on
our ability to restore our financial institutions to a sound footing."
Later, President Bush held a separate press conference, flanked by Paulson, SEC Commissioner
Christopher Cox and Fed chief Ben Bernanke, saying it was "essential" that the government step in to
save the economy.
Investors cheered the moves, sending stocks soaring throughout the day.
Although the U.S. government had set various bailouts in motion to the tune of roughly $1 trillion,
investors finished the week with renewed confidence that Wall Street may be broken - but not beyond
repair.
--------------------------------
Saturday, Sept. 20 - The plan
Congress got the proposed legislation in the overnight hours. The bottom line: The administration
was asking for $700 billion to buy troubled mortgage assets and get the financial system flowing
again.
"It is a big package because it's a big problem," President Bush told reporters at a morning news
conference. "The risk of doing nothing far outweighs the risk of the package."
The Democrats who run Congress initially indicated they were receptive to the Treasury proposal.
But as the day wore on, there was a theme sounded by the leadership.
Democrats will seek to "insulate Main Street from Wall Street and keep people in their homes by
reducing mortgage foreclosures," said House Speaker Nancy Pelosi, D-Calif., indicating her party
would seek other actions aimed at benefiting taxpayers. NEXT
Congress got the proposed legislation in the overnight hours. The bottom line: The administration
was asking for $700 billion to buy troubled mortgage assets and get the financial system flowing
again.
"It is a big package because it's a big problem," President Bush told reporters at a morning news
conference. "The risk of doing nothing far outweighs the risk of the package."
The Democrats who run Congress initially indicated they were receptive to the Treasury proposal.
But as the day wore on, there was a theme sounded by the leadership.
Democrats will seek to "insulate Main Street from Wall Street and keep people in their homes by
reducing mortgage foreclosures," said House Speaker Nancy Pelosi, D-Calif., indicating her party
would seek other actions aimed at benefiting taxpayers. NEXT
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| KNOWLEDGEFINANCIALGROUP.COM |
A step by step guide to gaining control of your financial life.
Setting priorities
Here's help for the first -- and often the hardest -- step in achieving your financial goals: deciding which
goals to pursue.
LESSON 2
Making a budget, saving money
How to bring your spending under control, so that you get the most out of every dollar.
LESSON 3
Basics of banking and saving
Here's how to get the best banking services at the best price, either online or off.
LESSON 4
Basics of investing
An introduction to making money in stocks, bonds and mutual funds REIT'S, real estate.
LESSON 5
Investing in stocks
The market can be a great place to turn savings into wealth -- or to lose your shirt. Here are some
fundamentals of investing wisely.
LESSON 6
Investing in mutual funds
It's a mutual-fund jungle out there. Here's how to create a simple portfolio that works.
LESSON 7
Investing in bonds
Bonds can provide a steady and reasonably secure income, while adding ballast to your portfolio--but
only if you really understand what you're buying.
LESSON 8
Buying a home
Owning your home is part of the American Dream, but if you’re not prepared, buying it can be a
nightmare. Here are some fundamentals for buyers and sellers.
LESSON 9
Controlling debt
You've got to know when to hold debt--and when to fold it. This lesson shows you how to accomplish
your financial goals by making debt work for you.
LESSON 10
Home Selling
WAYS TO SELL A PROPERTY FAST AND EASY FOR THE TOP PRICE!
Selling a home is a big decision and requires a lot of work. From getting the house ready to reviewing
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LESSON 11
INSURANCE
Health Insurance, Life Insurance, Home Insurance, Car Insurance
Great things to know about insurance
Buying a car, Auto loans. Great things to know:
Buying a car is like no other shopping experience. The choices seem to be endless. This lesson
helps you sort through your options.
FINANCIAL FREEDOM: A SMARTEST WAY TO PREPARE A BETTER FUTURE. YOUR PATH TO WEALTH STARTS
RIGHT NOW.
It's a fact: today, anyone can become a millionaire
– In the history of the world, there has never been
a better time to create wealth than right here, right
now in real estate.
Setting priorities
Here's help for the first -- and often the hardest -- step in achieving your financial goals: deciding which
goals to pursue.
LESSON 2
Making a budget, saving money
How to bring your spending under control, so that you get the most out of every dollar.
LESSON 3
Basics of banking and saving
Here's how to get the best banking services at the best price, either online or off.
LESSON 4
Basics of investing
An introduction to making money in stocks, bonds and mutual funds REIT'S, real estate.
LESSON 5
Investing in stocks
The market can be a great place to turn savings into wealth -- or to lose your shirt. Here are some
fundamentals of investing wisely.
LESSON 6
Investing in mutual funds
It's a mutual-fund jungle out there. Here's how to create a simple portfolio that works.
LESSON 7
Investing in bonds
Bonds can provide a steady and reasonably secure income, while adding ballast to your portfolio--but
only if you really understand what you're buying.
LESSON 8
Buying a home
Owning your home is part of the American Dream, but if you’re not prepared, buying it can be a
nightmare. Here are some fundamentals for buyers and sellers.
LESSON 9
Controlling debt
You've got to know when to hold debt--and when to fold it. This lesson shows you how to accomplish
your financial goals by making debt work for you.
LESSON 10
Home Selling
WAYS TO SELL A PROPERTY FAST AND EASY FOR THE TOP PRICE!
Selling a home is a big decision and requires a lot of work. From getting the house ready to reviewing
the escrow papers, our helpful guide will walk you through the process of selling your home.
LESSON 11
INSURANCE
Health Insurance, Life Insurance, Home Insurance, Car Insurance
Great things to know about insurance
Buying a car, Auto loans. Great things to know:
Buying a car is like no other shopping experience. The choices seem to be endless. This lesson
helps you sort through your options.
FINANCIAL FREEDOM: A SMARTEST WAY TO PREPARE A BETTER FUTURE. YOUR PATH TO WEALTH STARTS
RIGHT NOW.
It's a fact: today, anyone can become a millionaire
– In the history of the world, there has never been
a better time to create wealth than right here, right
now in real estate.
CLICK HERE TO CONTINUE... THE 16 DAYS THAT SHOOCK THE US
ECONOMY .
A shocking series of events that forever changed the financial markets.
ECONOMY .
A shocking series of events that forever changed the financial markets.
| United States ECONOMY, THE FINANCIAL SYSTEM, THE CREDIT MARKET. ''Economy & Finance Knowledge - Banking & Investing Knowledge - Business & Market Knowledge '' |
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Financial market Information
• A financial market is a market in which people trade financial securities, commodities, and other fungible items
of value at low transaction costs and at prices that reflect supply and demand. Securities include stock…
Financial market
A financial market is a market in which people trade financial securities, commodities, and other fungible items of value at low transaction
costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or
agricultural products.
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions
between them.
The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g.,
a stock exchange or commodity exchange.
Types of financial markets
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finance: for long term
finance, the Capital markets; for short term finance, the Money markets. Another common use of the term is as a catchall for all the markets in
the financial sector, as per examples in the breakdown below.
• Capital markets which to consist of:
• Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent
trading thereof.
• Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
• Commodity markets, which facilitate the trading of commodities.
• Money markets, which provide short term debt financing and investment.
• Derivatives markets, which provide instruments for the management of financial risk.[1]
• Futures markets, which provide standardized forward contracts for trading products at some future date; see also
forward market.
• Foreign exchange markets, which facilitate the trading of foreign exchange.
• Spot market
• Interbanks market
The capital markets may also be divided into primary markets and secondary markets. Newly formed (issued) securities are bought or sold in
primary markets, such as during initial public offerings. Secondary markets allow investors to buy and sell existing securities.
The transactions in primary markets exist between issuers and investors, while secondary market
transactions exist among investors.
Liquidity is a crucial aspect of securities that are traded in secondary markets. Liquidity
refers to the ease with which a security can be sold without a loss of value. Securities with an active secondary market mean that there are
many buyers and sellers at a given point in time. Investors benefit from liquid securities because they can sell their assets whenever they
want; an illiquid security may force the seller to get rid of their asset at a large discount.
Role in the economy
One of the important sustainability requisite for the accelerated development of an economy is the existence of a dynamic financial market. A
financial market helps the economy in the following manner.
•
• A financial market is a market in which people trade financial securities, commodities, and other fungible items
of value at low transaction costs and at prices that reflect supply and demand. Securities include stock…
Financial market
A financial market is a market in which people trade financial securities, commodities, and other fungible items of value at low transaction
costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or
agricultural products.
In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions
between them.
The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g.,
a stock exchange or commodity exchange.
Types of financial markets
Within the financial sector, the term "financial markets" is often used to refer just to the markets that are used to raise finance: for long term
finance, the Capital markets; for short term finance, the Money markets. Another common use of the term is as a catchall for all the markets in
the financial sector, as per examples in the breakdown below.
• Capital markets which to consist of:
• Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent
trading thereof.
• Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
• Commodity markets, which facilitate the trading of commodities.
• Money markets, which provide short term debt financing and investment.
• Derivatives markets, which provide instruments for the management of financial risk.[1]
• Futures markets, which provide standardized forward contracts for trading products at some future date; see also
forward market.
• Foreign exchange markets, which facilitate the trading of foreign exchange.
• Spot market
• Interbanks market
The capital markets may also be divided into primary markets and secondary markets. Newly formed (issued) securities are bought or sold in
primary markets, such as during initial public offerings. Secondary markets allow investors to buy and sell existing securities.
The transactions in primary markets exist between issuers and investors, while secondary market
transactions exist among investors.
Liquidity is a crucial aspect of securities that are traded in secondary markets. Liquidity
refers to the ease with which a security can be sold without a loss of value. Securities with an active secondary market mean that there are
many buyers and sellers at a given point in time. Investors benefit from liquid securities because they can sell their assets whenever they
want; an illiquid security may force the seller to get rid of their asset at a large discount.
Role in the economy
One of the important sustainability requisite for the accelerated development of an economy is the existence of a dynamic financial market. A
financial market helps the economy in the following manner.
•
‘’Investment & Market Knowledge’’
‘’Business Ideas & Opportunities’’
''Financial Literacy & Education''
‘’Wills & Estate Planning’’
‘’Banking & Finance’’ -
‘’Living Will & Living Trust’’ -
''Business Info & Resources''
‘’Saving & Budgeting’’ -
‘’Financial Market & Investing’’ –
''
‘’Retirement & Insurance’’ -
‘’USA & International Stock Indexes’’ -
‘’Stock Brokers – Day Traders & Investors’’ -
''Power Of Knowledge & Education''
''Millionaire Mind Set & Entrepreneurs Strategies''
''Stocks /–/ Bonds – Mutual Fund /–/ Reit – Currency Exchange /–/ Index Funds /–/ Commodities /–/ Self-
Directed IRA & Real Estate /–/
/- Options & Futures = Exchange Traded Fund {ETF’s} /-/ RULE OF 72: Compound interest &
Accounting Basic''
‘’Business Ideas & Opportunities’’
''Financial Literacy & Education''
‘’Wills & Estate Planning’’
‘’Banking & Finance’’ -
‘’Living Will & Living Trust’’ -
''Business Info & Resources''
‘’Saving & Budgeting’’ -
‘’Financial Market & Investing’’ –
''
‘’Retirement & Insurance’’ -
‘’USA & International Stock Indexes’’ -
‘’Stock Brokers – Day Traders & Investors’’ -
''Power Of Knowledge & Education''
''Millionaire Mind Set & Entrepreneurs Strategies''
''Stocks /–/ Bonds – Mutual Fund /–/ Reit – Currency Exchange /–/ Index Funds /–/ Commodities /–/ Self-
Directed IRA & Real Estate /–/
/- Options & Futures = Exchange Traded Fund {ETF’s} /-/ RULE OF 72: Compound interest &
Accounting Basic''
| '' How To Own Investment Homes - Income Producing Properties -. LEARN MORE... ------- '' The south Florida Real Estate Market Update: Buying - Selling - Investing - Renting. LEARN MORE... -------------- '' Real Estate Info About: Single Family Home - Town-home - Co-Op - Condominiums - - Timeshare. LEARN MORE... ------------- '' Real estate Portfolios. How To Find The Best Real Estate Investments? Do You Know That There are About At Least 10 Ten Different Ways To Invest In Real Estate? LEARN MORE.. -------------- Commercial Real Estate: Ways to Evaluate Commercial Property.. How To Get Involve In Commercial Properties? LEARN MORE... ---------------- |
| '' Free Credit Report & Credit Score /-/ Money & Investing /-/ Business & Entrepreneurship /-/ Personal Finance'/-/ '' Assets & Wealth Management /-/ Insurance & Annuity / Banking & Finance /-/ '' Financial Market & Economy /-/ Currency Exchange & American Dollar /-/ Retirement Plans & Estate Planning /-/ '' Real Estate Market & Mortgage Loans /-/ Oil/Gas & Commodities /-/ Tax Liens Certificates & Tax Deeds // |
Financial Tools:
Access our simple and convenient tools that
will help you achieve your personal financial
goals
Access our simple and convenient tools that
will help you achieve your personal financial
goals
Debt to Income Ratio:
Calculating your debt-to-income ratio is another way to assess the state
of your finances. The ratio compares the amount of your monthly debt
(not including your rent or mortgage payment each month) to your total
monthly income. A debt-to-income ratio that is under 20% is considered
to be a good number.
A ratio that is higher than 20% means that you have too much debt
relative to your income and creditors may be unwilling to offer you
attractive terms on any credit you may apply for.
As a result, it will cost you more to use credit and big ticket items like a
home or a car may be beyond your financial reach. If your ratio is 20% or
more, paying down your debt will lower the ratio and make you more
attractive to creditors.
Calculating your debt-to-income ratio is another way to assess the state
of your finances. The ratio compares the amount of your monthly debt
(not including your rent or mortgage payment each month) to your total
monthly income. A debt-to-income ratio that is under 20% is considered
to be a good number.
A ratio that is higher than 20% means that you have too much debt
relative to your income and creditors may be unwilling to offer you
attractive terms on any credit you may apply for.
As a result, it will cost you more to use credit and big ticket items like a
home or a car may be beyond your financial reach. If your ratio is 20% or
more, paying down your debt will lower the ratio and make you more
attractive to creditors.
Calculating your debt-to-income ratio is not difficult. Here's how:
■ Using your budget, add up all sources of your household's monthly income, including income from work, tips and
commissions, any alimony or child support you are receiving, rental income, government benefits, and so on.
If your spouse works outside the home or receives income from other sources, include that income too in order to come up with a
Total Monthly Income figure (When you add in income from work, use your net income figure, which is the amount of money you
actually take home each month.)
■ Referring to your budget to make certain that you do not overlook any of your debts, add up all of your monthly debt payments
based on the minimum payments due for each debt. The total is your Total Monthly Debt figure. (Don't include the amount of your
rent or mortgage)
■ Divide your Total Monthly Debt by your Total Monthly Income. The result will be a
percentage, or your debt-to-income ratio.
■ Using your budget, add up all sources of your household's monthly income, including income from work, tips and
commissions, any alimony or child support you are receiving, rental income, government benefits, and so on.
If your spouse works outside the home or receives income from other sources, include that income too in order to come up with a
Total Monthly Income figure (When you add in income from work, use your net income figure, which is the amount of money you
actually take home each month.)
■ Referring to your budget to make certain that you do not overlook any of your debts, add up all of your monthly debt payments
based on the minimum payments due for each debt. The total is your Total Monthly Debt figure. (Don't include the amount of your
rent or mortgage)
■ Divide your Total Monthly Debt by your Total Monthly Income. The result will be a
percentage, or your debt-to-income ratio.
Advantages to a Low Debt to Income Ratio..
■ Appeals to new creditors.
■ Financial stability.
■ Builds savings.
=====================
Disadvantages to having a High Debt to Income Ratio ..
■ Little money for savings.
■ Increases chances for financial problems.
==============
Your debt to income ratio is over the recommended percentage. If you do not reduce your debts, increase your income, or both,
you are likely to fall deeper into debt or experience financial difficulties. Your goal should be to pay down your debt so you can
become more
-
-attractive to creditors and get the best available interest rates.
■ Appeals to new creditors.
■ Financial stability.
■ Builds savings.
=====================
Disadvantages to having a High Debt to Income Ratio ..
■ Little money for savings.
■ Increases chances for financial problems.
==============
Your debt to income ratio is over the recommended percentage. If you do not reduce your debts, increase your income, or both,
you are likely to fall deeper into debt or experience financial difficulties. Your goal should be to pay down your debt so you can
become more
-
-attractive to creditors and get the best available interest rates.
Saving mobilization: Obtaining funds from the savers or surplus units such as household individuals, business firms,
public sector units, central government, state governments etc. is an important role played by financial markets.
• Investment: Financial markets play a crucial role in arranging to invest funds thus collected in those units which are in need of the
same.
• National Growth: An important role played by financial market is that, they contribute to a nation's growth by
ensuring unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also made possible.
• Entrepreneurship growth: Financial market contribute to the development of the entrepreneurial claw by
making available the necessary financial resources.
• Industrial development: The different components of financial markets help an accelerated growth of
industrial and economic development of a country, thus contributing to raising the standard of living and the society of well-being.
Functions of financial markets
• Intermediary functions: The intermediary functions of financial markets include the following:
• Transfer of resources: Financial markets facilitate the transfer of real economic resources from lenders to ultimate
borrowers.
• Enhancing income: Financial markets allow lenders to earn interest or dividend on their surplus invisible funds, thus
contributing to the enhancement of the individual and the national income.
• Productive usage: Financial markets allow for the productive use of the funds borrowed. The enhancing the income and the gross
national production.
• Capital formation: Financial markets provide a channel through which new savings flow to aid capital formation of a country.
• Price determination: Financial markets allow for the determination of price of the traded financial assets through the
interaction of buyers and sellers. They provide a sign for the allocation of funds in the economy based on the demand and to the supply
through the mechanism called price discovery process.
• Sale mechanism: Financial markets provide a mechanism for selling of a financial asset by an investor so as to offer the
benefit of marketability and liquidity of such assets.
• Information: The activities of the participants in the financial market result in the generation and the consequent dissemination of
information to the various segments of the market. So as to reduce the cost of transaction of financial assets.
• Financial Functions
• Providing the borrower with funds so as to enable them to carry out their investment plans.
• Providing the lenders with earning assets so as to enable them to earn wealth by deploying the assets in production debentures.
• Providing liquidity in the market so as to facilitate trading of funds.
• Providing liquidity to commercial bank
• Facilitating credit creation
• Promoting savings
• Promoting investment
• Facilitating balanced economic growth
• Improving trading floors
Components of financial market
Based on market levels[edit]
• Primary market: Primary market is a market for new issues or new financial claims. Hence it’s also called new issue market. The primary
market deals with those securities which are issued to the public for the first time.
• Secondary market: It’s a market for secondary sale of securities. In other words, securities which have already
passed through the new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides
a continuous and regular market for buying and selling of securities.
Simply put, primary market is the market where the newly started company issued shares to the public for the first time through IPO (initial
public offering). Secondary market is the market where the second hand securities are sold (securitCommodity Marketies).
Based on security types
.
• Money market: Money market is a market for dealing with financial assets and securities which have a maturity period
of up to one year. In other words, it’s a market for purely short term funds.
• Capital market: A capital market is a market for financial assets which have a long or indefinite maturity. Generally it deals
with long term securities which have a maturity period of above one year. Capital market may be further divided into: (a) industrial securities
market (b) Govt. securities market and (c) long term loans market.
• Equity markets: A market where ownership of securities are issued and subscribed is known as equity market. An example
of a secondary equity market for shares is the Bombay stock exchange.
• Debt market: The market where funds are borrowed and lent is known as debt market. Arrangements are made in such a way
that the borrowers agree to pay the lender the original amount of the loan plus some specified amount of interest.
• Derivative markets: A market where financial instruments are derived and traded based on an underlying asset such as
commodities or stocks.
• Financial service market: A market that comprises participants such as commercial banks that provide various financial services like
ATM. Credit cards. Credit rating, stock broking etc. is known as financial service market. Individuals and firms use financial services markets,
to purchase services that enhance the working of debt and equity markets.
• Depository markets: A depository market consists of depository institutions that accept deposit from individuals
and firms and uses these funds to participate in the debt market, by giving loans or purchasing other debt instruments such as treasure bills.
•
Non-depository market: Non-depository market carry out various functions in financial markets ranging from
financial intermediary to selling, insurance etc. The various constituency in non-depositary markets are mutual funds, insurance companies,
pension funds, brokerage firms etc
public sector units, central government, state governments etc. is an important role played by financial markets.
• Investment: Financial markets play a crucial role in arranging to invest funds thus collected in those units which are in need of the
same.
• National Growth: An important role played by financial market is that, they contribute to a nation's growth by
ensuring unfettered flow of surplus funds to deficit units. Flow of funds for productive purposes is also made possible.
• Entrepreneurship growth: Financial market contribute to the development of the entrepreneurial claw by
making available the necessary financial resources.
• Industrial development: The different components of financial markets help an accelerated growth of
industrial and economic development of a country, thus contributing to raising the standard of living and the society of well-being.
Functions of financial markets
• Intermediary functions: The intermediary functions of financial markets include the following:
• Transfer of resources: Financial markets facilitate the transfer of real economic resources from lenders to ultimate
borrowers.
• Enhancing income: Financial markets allow lenders to earn interest or dividend on their surplus invisible funds, thus
contributing to the enhancement of the individual and the national income.
• Productive usage: Financial markets allow for the productive use of the funds borrowed. The enhancing the income and the gross
national production.
• Capital formation: Financial markets provide a channel through which new savings flow to aid capital formation of a country.
• Price determination: Financial markets allow for the determination of price of the traded financial assets through the
interaction of buyers and sellers. They provide a sign for the allocation of funds in the economy based on the demand and to the supply
through the mechanism called price discovery process.
• Sale mechanism: Financial markets provide a mechanism for selling of a financial asset by an investor so as to offer the
benefit of marketability and liquidity of such assets.
• Information: The activities of the participants in the financial market result in the generation and the consequent dissemination of
information to the various segments of the market. So as to reduce the cost of transaction of financial assets.
• Financial Functions
• Providing the borrower with funds so as to enable them to carry out their investment plans.
• Providing the lenders with earning assets so as to enable them to earn wealth by deploying the assets in production debentures.
• Providing liquidity in the market so as to facilitate trading of funds.
• Providing liquidity to commercial bank
• Facilitating credit creation
• Promoting savings
• Promoting investment
• Facilitating balanced economic growth
• Improving trading floors
Components of financial market
Based on market levels[edit]
• Primary market: Primary market is a market for new issues or new financial claims. Hence it’s also called new issue market. The primary
market deals with those securities which are issued to the public for the first time.
• Secondary market: It’s a market for secondary sale of securities. In other words, securities which have already
passed through the new issue market are traded in this market. Generally, such securities are quoted in the stock exchange and it provides
a continuous and regular market for buying and selling of securities.
Simply put, primary market is the market where the newly started company issued shares to the public for the first time through IPO (initial
public offering). Secondary market is the market where the second hand securities are sold (securitCommodity Marketies).
Based on security types
.
• Money market: Money market is a market for dealing with financial assets and securities which have a maturity period
of up to one year. In other words, it’s a market for purely short term funds.
• Capital market: A capital market is a market for financial assets which have a long or indefinite maturity. Generally it deals
with long term securities which have a maturity period of above one year. Capital market may be further divided into: (a) industrial securities
market (b) Govt. securities market and (c) long term loans market.
• Equity markets: A market where ownership of securities are issued and subscribed is known as equity market. An example
of a secondary equity market for shares is the Bombay stock exchange.
• Debt market: The market where funds are borrowed and lent is known as debt market. Arrangements are made in such a way
that the borrowers agree to pay the lender the original amount of the loan plus some specified amount of interest.
• Derivative markets: A market where financial instruments are derived and traded based on an underlying asset such as
commodities or stocks.
• Financial service market: A market that comprises participants such as commercial banks that provide various financial services like
ATM. Credit cards. Credit rating, stock broking etc. is known as financial service market. Individuals and firms use financial services markets,
to purchase services that enhance the working of debt and equity markets.
• Depository markets: A depository market consists of depository institutions that accept deposit from individuals
and firms and uses these funds to participate in the debt market, by giving loans or purchasing other debt instruments such as treasure bills.
•
Non-depository market: Non-depository market carry out various functions in financial markets ranging from
financial intermediary to selling, insurance etc. The various constituency in non-depositary markets are mutual funds, insurance companies,
pension funds, brokerage firms etc
What types of investors are you, or want to be?
What's Your Investing Personality?
Discover your investing weaknesses and how to
manage your money smarter, wiser.
-----------
The stock market always goes up and down. True!
Institutional investors - The big financial firms and the
Insurance companies control such a large portion of the
money in the market, that anything they do efficiently
moves a stock in one direction or the other while any
action smaller investors take makes little impact. True!
What's Your Investing Personality?
Discover your investing weaknesses and how to
manage your money smarter, wiser.
-----------
The stock market always goes up and down. True!
Institutional investors - The big financial firms and the
Insurance companies control such a large portion of the
money in the market, that anything they do efficiently
moves a stock in one direction or the other while any
action smaller investors take makes little impact. True!
The best way to make a lot of money on a stock
involves:
Finding a business that has meaning to you and
that you believe in..
-------------
Researching the business carefully and
reviewing several financial numbers to
determine how it protects itself from
competition in the same space..
----------
Calculating what the business is worth and
buying it well below that price if possible..
involves:
Finding a business that has meaning to you and
that you believe in..
-------------
Researching the business carefully and
reviewing several financial numbers to
determine how it protects itself from
competition in the same space..
----------
Calculating what the business is worth and
buying it well below that price if possible..
Real estate can always outperform the
market and should be a part of
everyone's portfolio.
------------
what matters in a company is that it is
being managed well and that customers
are buying its product or service.
Possible stocks can go up.
------------
Risk and reward in the stock market are
related. If you want a higher return then
you must be willing to take more risks
market and should be a part of
everyone's portfolio.
------------
what matters in a company is that it is
being managed well and that customers
are buying its product or service.
Possible stocks can go up.
------------
Risk and reward in the stock market are
related. If you want a higher return then
you must be willing to take more risks
The best way to offset the risk of investing in the stock
market is to diversify in different sector and asset
classes.
--------------
market is to diversify in different sector and asset
classes.
--------------