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Archive for October 2007

Oct/07

25

Economic Lessons

Risks

Risk is the expresses of the amount by which the return for a certain investment could be higher or lower than its average expected value.
 - or –
Risk is the probability and the extent by which the actual result could be diffrent from the expected result.

Types of investments

Bank accounts
Extreamely liquid
Low Rate of Return
Very low risk

Money market funds
Liquid
Moderate risk
Moderate Rate of Return

Certificates of Deposites
Moderate liquid
Very low risk
Moderate Rate of Return

Diversified portfolio of corporate bonds
Liquid
Moderate Risk
Moderate Rate of Return

Diversified portfolio of corporate blue-chip bonds
Liquid
Low Risk
Low Rate of Return

Diversified portfolio of ricky growth stocks
Liquid
High Risk
High Rate of Return

Real estate
Low Liquid
Medium Rate of Return
Medium Risk

Precious metals
Low Liquid
High Rate of Return
High Risk

Random Walk: Theory of Stock Prices

The price of a stock is determined by the future profit a company earns.

The current stock price incorporates all the information that is available about future profit as a part of the stock price. What makes a stock price move is new information, which is unpredictable.

 

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Today in my economy class I learn Norminal Interest Rate and Real Interest Rate.

The nominal interest rate (unadjusted for inflation) includes compensation for the lender’s lost value due to inflation, whereas the real interest rate excludes inflation. The real interest rate therefore expresses the cost of borrowed funds after the expected erosion of the value of those funds due to the rise in the general price level.

The relationship between real and nominal interest rates can be described in the equation:

(1 + r)(1 + i) = (1 + R) where r is the real interest rate, i is the inflation rate, and R is the nominal interest rate.[1]
A common approximation for the real interest rate is:
real interest rate = nominal interest rate – expected inflation
In this analysis, the nominal rate is the stated rate, and the real interest rate is the interest after the expected losses due to inflation. Since the future inflation rate can only be estimated, the ex ante and ex post (before and after the fact) real interest rates may be different; the premium paid to actual inflation may be higher or lower. In contrast, the nominal interest rate is known in advance.

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Oct/07

21

beat box – nouvelle star

Yo check this out!

 

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Oct/07

21

Financial statement

During the past few days I had been hooked up with Robert Kiyosaki – Choose to be rich, it is a 12 audio CD  that covers pretty much Elementry Level in Financial Education.

The following article are taken from financialfreedomlibrary.com

Robert Kiyosaki stressed the importance of reading Financial Statements. When a person gets proficient at reading Financial Statements, that person is more equipped to be able to evaluate the fiscal health of a business before inves, or buying the company outright. Of equal value is the current business owner who knows how to read his own financial statements.

The keeping of regular Financial Statements enables a business to be able to spot trends in the company’s performance over time. If trends can be localized early enough, the business may begin to evaluate what factors led to the trend. If it’s a downward trend, the comapny might be able to reverse a previously made suboptimal decision, or further capitalize from upward trends.

Basic parts of the financial statement are as follows:

Income/Earnings Statement
Expense Statement
Balance Sheet

The first two are fairly self-explanatory. The balance sheet is a sort of snapshot of where your company is at the time you look at it. The balance sheet shows your company’s net worth, which in it’s basic form is income/assets minus expenses/liabilities.

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Oct/07

4

Business Plan After a Life Plan

This is an article from home-based-business-solutions.com

Now that you have your business plan you are ready to begin your home based business right? Wrong! Conventional business strategies miss the most important aspect of the small business startup. There is one very important and vital part missing if you want an incredibly successful and profitable home based business. That step is the Life Plan.

A home based business is supposed to allow you the money, freedom and flexibility to live the lifestyle you want. Too many people try to create their business plan, find home business ideas or pick a product first, then try to fit their very existence around it. In actuality they have just created another “Job” for themselves.

I know that this is a huge mistake. I made that mistake with the first two home based businesses that I started. It didn’t take me very long to realize that I really needed to smarten up. I created “Jobs” for myself. The true secret of a small business startup is to create the home based business around you.

A Business is supposed to Benefit and Work for the Owner not the other way around.

Build your Life Plan first and then create your business plan around your Life Plan. If you create your home based business around your Life Plan it will fit you like a glove. You will be excited about your new small business startup. Home business ideas will flow and you will be on your way to fulfilling all of your needs. Set some time aside and put together a list of your personal goals.

Read more here [home-based-business-solutions.com]

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