Financial tipster

Kamal Nath

admin — Mon, 01 Aug 2011 12:57:13 +0000

Kamal Nath is an Indian politician who was first elected to Lok Sabha (Indian parliament) in 1980. He was an MP for several terms until he was appointed to the cabinet. From 1991 to 1995 he served as Union Minister of State for the Environment and Forests.

Subsequently, he held the position of the Union Minister of State for Textiles (1995- 1996). From 1998 to 1999 he was elected to the 12th Lok Sabha. Kamal Nath was the General Secretary of the INC from 2001 to 2004. He was re-elected to the 14th Lok Sabha in 2004. Shortly afterwards, he became Union Cabinet Minister of Commerce & Industry, which was the position he had held from 2004 to 2009.

In May, 2009 he was elected to the 15th Lok Sabha. He reentered the Cabinet, serving as Union Minster for Road Transport and Highways. After government reshuffle he moved to the Urban Development ministry. Commerce Minister Kamal Nath, the position he is currently holding, is a member of the Indian National Congress.

Tax Attorney

admin — Mon, 28 Mar 2011 21:55:41 +0000

Professional tax attorneys represent the taxpayer in cases that involve tax law and taxation. They help in making their clients understand the importance of various aspects of tax liabilities. Tax attorneys handle the following problems:

Federal and State Tax Collection issues (negotiation with IRS, development of payment plans, wage garnishments, and etc.),
Representation in the field of IRS,
IRS Criminal Investigations
Representation in purchasing or selling business,
Organization of transactions,
Assist in making the most of tax and non-tax benefits,
Preparation of documents,
Contract matters,
and many more.

If you would like to learn more about how you may be able to resolve your IRS back taxes, please contact tax attorney Roni Deutch, who is the Founder, Owner and President of the Professional Tax Corporation.

Certificate of deposit

admin — Mon, 07 Mar 2011 11:44:10 +0000

Certificate of deposit , often called a CD, is a document issued by financial institutions to investors that certifies that the investor has lent them money for a predetermined length of time. In exchange the investor is paid an interest on that loan.

Maturities on Certificate of deposit can range from several weeks to years. The interest rate earned increases in proportion to the time the investor’s capital is tied up in the investment. The investor can easily calculate their earnings at the very beginning of the term.

In case of longer maturities, the investors earn a higher interest rate, but their capital is locked for the entire period, which, in turn, may result in forgoing better or more profitable uses of the capital.

Payday loans

admin — Mon, 28 Feb 2011 08:33:07 +0000

The current economic crisis causes a lot of people to seek financial assistance in places other than banks. Why? The loan application process at traditional lenders, such as banks, can be extremely tedious and time consuming. Banks require a pile of documents, standing in line, or answering thousands of questions asked by not always friendly personnel. You often have to drive from one to another , searching for an institution that can finally help you.

Payday loans

A good solution for people who value their time or don’t want to go through a traditional application process is a special type of loan called a payday or paycheck loan, which is available online. You don’t have to leave your home to get approved within minutes. You can get more information (Payday Loan Facts Iowa) on payday loans in the state of Iowa and see if payday loans are right form you.

Establishing an Emergency Savings Fund

admin — Sat, 22 May 2010 19:03:46 +0000

Emergency savings accounts are crucial to a successful personal finance plan. Before you ever pay off your debt or look to invest, you should have a sizeable savings account dedicated to be used at a moment’s notice for an emergency. You never know when you will need to put a down payment on a new car, fix an old one or have an accident and need to pay hospital bills.

Emergency Fund Rules

Find the best savings rates you can and start building your emergency savings month over month. You should start contributing to it steadily and consider the money to be gone in a sense. This will help you stay disciplined if you’re ever tempted to tap into these funds. Always make sure that you keep your money in a high yield savings account. You’ll need the funds to be liquid so you can access it whenever you need.
Save up until you have about 6-8 months worth of expenses in your emergency savings. If you can get up to a year’s worth of expenses, that would be ideal. This means that you could basically survive for a year without working or needing to tap into other assets or funds. Most people are able to find a job within that time so it makes sense not to build a fund that’s more extensive than that.

Emergency Needs

There are a number of situations you can find yourself in where you wish you would have had an emergency fund. If you are involved in a serious accident or develop a health issue, an emergency fund could cover the costs along with your health insurance. Did you know that about 60 percent of new bankruptcy cases are due to high medical bills that people cannot pay? Don’t get caught in this situation.
If you drive an older car, that’s another reason you would want an emergency fund. You could also create one for your car specifically. Most people do not take the time to consider the cost of repairing a transmission or a new set of tires for their car.
Emergency savings accounts are a great idea for everyone because it makes sense to plan ahead for future costs that will come unexpectedly. When building up your fund, treat it like the most important thing you can do with your finances and sacrifice all other discretionary expenses until you reach your objective. You will feel much better knowing you have a safety net in case you need it.

Correlation

admin — Sun, 28 Mar 2010 16:07:59 +0000

Correlation can be loosely defined as the mutual relation between two or more variables. This is captured in a quantitative way in statistics by a measure defined as the correlation coefficient, usually represented by the letter “r ”. The linear correlation coefficient is used to examine whether there is any evidence of a linear relationship between two variables and defines two qualities:

Nature of relationship. A positive correlation coefficient means that the two variables tend to move in the same direction. If it is negative it implies that the relationship is inverse and that when the value of one variable rises the value of the other tends to fall. Strength of relationship. The value of correlation coefficient provides a measure of the strength of the relationship, if any exists. The correlation coefficient cannot be greater than +1 or less than –1:
Perfect linear relationship. A correlation coefficient of +1 means that there is a perfect linear relationship. If one variable rises then so does the other and the ratio of the rise or fall remains constant. If, for example, the price of one bond increases then the price of the other bond always rises. If the increase in price of the first bond for a given fall in yields is 1% and the price of the second rises by 2% then if the first bond falls in value by 3% the value of the second bond will fall by 6%. Perfect inverse linear relationship. A correlation coefficient of –1 means there is a perfect inverse linear relationship. In the above example a 1% rise in the value of the first bond would be associated with a 2% fall in the value of the second bond. If the first bond falls by 3% the value of the second bond increases by 6%. Independent variables. A correlation coefficient of zero suggests that no linear relationship exists and that the variables move independently of one another.
Note that these are expressed in absolute terms. A “trend line” has been added to the scatter graph. This is defined as the line of best fit and is the line about which the variation of values is minimized. Credit spreads and long-term risk-free rates appear to have an inverse relationship. When long-term risk-free rates rise credit spreads tend to narrow and when yields fall tend to widen.
The variation around the line of best fit is far greater than it is for the plot of change in credit spreads versus changes in long-term yields. There is a weak positive correlation.
In more technical terms the square of the correlation coefficient r2 defines the “goodness of fit” of the trend line. It measures the proportion of the values that can be explained by the inferred linear relationship. Methods exist to assess whether the results are statistically significant, whether it is likely that a linear relationship does in fact exist or whether the results can be explained by chance alone.
A widely used rule of thumb is that if the value for r2 is less than 0.4 (r = 0.63) the evidence for any linear relationship is very thin. A large value for r is not in itself proof that a relationship exists and a useful simple check is to calculate r over a range of time frames to determine whether its value remains stable.

Private property

admin — Wed, 22 Jul 2009 14:20:42 +0000

Private owners have an incentive to lower the chance that their property will cause damage to the property of others. Private ownership links responsibility with the right of control. Private owners can be held accountable for damage done to others through the misuse of their property. A car owner has a right to drive his car, but will be held accountable if the brakes aren’t maintained and the car damages someone else’s property. Similarly, a chemical company has control over its products, but, exactly for that reason, it is legally liable for damages if it mishandles the chemicals. Courts of law recognize and enforce the authority granted by ownership, but they also enforce the responsibility that goes with that authority. Because private-property owners can be held accountable for damages they cause, they have an incentive to use their property responsibly and take steps to reduce the likelihood of harm to others. A property owner, for example, has an incentive to cut down a dying tree before it falls into a neighbor’s house and to leash or restrain his or her dog if it’s likely to bite others.

Private owners

admin — Wed, 22 Jul 2009 14:19:52 +0000

Private owners have an incentive to conserve for the future-particularly if the property is expected to increase in value. People have a much stronger incentive to conserve privately owned property than they do commonly owned property. For example, when Steven was in college, the general rule among his roommates was that any food or drink in the house was common property-open game for the hungry or thirsty mouth of anyone who stumbled across it. There was never a reason for Steven to conserve food or drinks in the house because it would be quickly consumed by a roommate coming in later that night. When Steven first started living alone, he noticed a dramatic change in his behavior. When he ordered a pizza, he would save some for the next day’s lunch rather than eating it all that night. Steven began counting his drinks before he had one to make sure there were enough left for the next day. When Steven was the sole owner, he began delaying his current consumption to conserve for the future because he was the one, not his roommates, who reaped the benefit from his conservation.
Similarly, when more than one individual has the right to drill oil from an underground pool of oil, each has an incentive to extract as much as possible, as quickly as possible. Any oil conserved for the future will probably be taken by someone else. In contrast, when only one owner has the right to drill, the oil will be extracted more slowly. The same applies to the common-property problems involved in overfishing of the sea compared with fisheries that use privately owned ponds. ’’
Someone who owns land, a house, or a factory, has a strong incentive to bear costs now, if necessary, to preserve the asset’s value for the future. The owner’s wealth is tied up in the value of the property, which reflects nothing more than the net benefits that will be available to a future owner. Thus, the wealth of private owners is dependent on their willingness and ability to look ahead, maintain, and conserve those things that will be more highly valued in the future. This is why private ownership is particularly important for the optimal conservation of natural resources.

Tradable and Non-Tradable Goods

admin — Fri, 26 Jun 2009 21:21:40 +0000

There is a further point, which is that clear differentiation has to be made between tradable and non-tradable goods. PPP may not hold for non-tradable goods such as services. The dry world of economics is frequently best explained through example and anecdote. Thus, a haircut might be cheaper in New York than London (most things are and this is not one of the exceptions), but few people would be prepared to ﬂy to New York from London just to get that cheaper haircut. This is not just because to do so you would have to pay for a London–New York return ﬂight, which would negate any haircut-related gains you would make. Even supposing the air ticket was free would you really ﬂy 8 hours for a cheaper haircut? The PPP concept assumes there are no barriers to the arbitraging of price differentials, yet with non-tradable goods this may not be the case. Granted, there may always be some wayward individuals who would actually take that ﬂight!
PPP or the law of one price holds better of necessity for homogeneous commodities that are traded internationally, with arbitrage opportunities being quickly eliminated. However, even here, care is needed. While PPP may hold generally, prices even of homogeneous commodities may vary widely between countries depending on local supply/demand dynamics. Indeed, the very fact that the price of a McDonalds Big Mac, which is a homogeneous commodity, can vary between countries for even a short period of time proves this point.

Reasons for “Misalignments”

admin — Fri, 26 Jun 2009 18:20:41 +0000

Exchange rates which do not reﬂect the PPP value are said to be “misaligned” and it is assumed therefore that they have to revert towards PPP. Such misalignments are seen as being caused by temporary distortions, either to the price of the good or the exchange rate, which should quickly be eliminated by a rational, proﬁt-seeking market. In reality, such “misalignments” can last for months or even years. In other words, traders, investors or corporations who base short-term ﬁnancial decisions on the PPP model of exchange rate value do so at their own risk. The track record of the PPP model over the short term leaves a lot to be desired, to the extent it is known in the market as the “Pretty Poor Predictor”. How can such misalignments occur in a free market economy where the price adjustment mechanism should be immediate? If there is free trade between nations, a price differential in a good (or basket of goods) should create an arbitrage opportunity — you buy the good in the cheaper country. Such buying should push up the currency in the cheaper country relative to the more expensive one. Yet still, this is not necessarily what happens over the short term. Why?
We do not have perfectly free trade — Such a concept would imply zero import tariffs, zero export subsidies and perfect competition across all business sectors. Needless to say, this is not the case. Whatever progress we have made, we are not there yet. As a result, there remain signiﬁcant trade-related price (and therefore exchange rate) distortions.
The adjustment mechanism is not necessarily immediate — During periods of market volatility, corporations may delay setting prices and budget exchange rates until they have a better idea of where the appropriate levels should be to retain competitiveness and margin.
The price of goods may not be the most important exchange rate determinant — A basic PPP assumption is that the relative pricing of goods is the main driver of exchange rates. However, since the liberalization of capital markets, this may no longer be the case.
The good or basket of goods may not be exactly the same in different countries — The consistency of the good should not be taken for granted as the same good may vary between countries in terms of quality, cost and speed to market.
Base-year effects — There is also the question of when to start the PPP analysis. Logic might suggest starting from the end of the Bretton Woods exchange rate system in the 1971–1973 period, yet this took place at a time of very high inﬂation, thus signiﬁcantly distorting the results.