Loans

Gaining Control of Your Business and Personal Finance is Key in Surviving Today’s Financial Crisis by Noobpreneur

noreply@blogger.com (rizki hadifa) — Tue, 17 Mar 2009 22:46:00 -0700

Probably the Term of The Year in today’s business and finance world is “gaining control”.

Today’s tight credit policies and financing woes leave your business and personal financial welfare at stake.

Control your business and personal finance well, you will survive, if not thrive; Lose control of your financials leave you and your business vulnerable.

What’s your decision?

Gaining control: all coming back to the comfort of your home
I believe you and I, if asked such question, will answer “I want to gain control of my personal and business finance.”

Like most things in live, everything is coming back to your ‘home’ - Your knowledge and policy in your personal finance, including your family finance will determine the sustainability of your personal finance facing today’s tough economy.

Not only that, your personal finance policy and knowledge will eventually affect your business.

How to gain control of your finances
I insist that your financial knowledge will command your ability to gain control of your personal and business finances.

What you know will affect your budgeting, spending and investing policies for your home and business.

Financial institutions’ help
Luckily, while you are doing your part, many big financial institutions do offer you a help in managing your finances.

Take mCash Prepaid MasterCard, as an example. From the website, mcashcard.com you can learn that Mastercard offer a solution in your cash management easily. Suppose you want to gain control on your children spending habit, you can ‘enforce’ budgeting through prepaid debit cards for kids.

80/20 rules
The 80/20 rules in Pareto’s Law help you break down what’s necessary and what’s a waste in your personal and business budgeting process.

Simply eliminate the ‘waste’, and minimise the spending on what’s necessary.

What includes as wastes? In your personal finance, they might include eating out, uncontrolled credit card uses, and so on.

In your business finance, they might include logistic issues, such as travel and delivery expenses, and (ahem) entertainment expenses, such as schmoozing clients in lunches.

The idea is break down to the smallest expense posts possible, and start prioritising from there.

Be careful: your investment vehicles
Investment should put money in your pocket.

While it seems obvious, many investment vehicles you choose for your personal and business investment endeavours are actually losing you money!

This might be controversial, but your retirement plan, to me, is an unknown - putting your hard earned cash in stocks means you ‘attach’ your fate to the economy. And the mutual funds. And your savings and certificates of deposit in banks. And other typical vehicles.

There are so many sad stories of people going for personal bankruptcy and lose most, if not all, of their years-worth of saving due to today’s stock market slump.

In my opinion, whether the market is up or down, you should always make money either way - this is the ONLY way to survive economic crisis.

My take on the safest investment vehicles of all time: the precious metal. Period.

Learn finance to gain control
To conclude, I insist you to learn finance, as understanding the basic of it is actually already can do a favour to gain control of your finances.

By learn finance, I’m not suggesting you should go to college for the sake of it. What I suggest you to do is to seek the right information, e.g. from the Internet or publications - tips and tricks from the practicioners and the basic concepts of the world of finance - that will aid you in your personal and business endeavours.

My take on the best source of financial education: Mentors (some of them are bloggers) that insist you NOT to save your money in an account and live below your means.

Good luck on gaining control of your finances.

Student Loan

noreply@blogger.com (rizki hadifa) — Tue, 17 Mar 2009 22:36:00 -0700

The Signature Student Loan is a popular after-Stafford loan. If grants, scholarships, and federal student loans have not covered the total cost of your education, Signature Student loans can help.

Students Loans are available to help you pay day-to-day living costs (Student Loans for Maintenance), and to help you pay any amount of tuition fee that you may be liable for (Student Loan for Fees).

The different types of loans include: Stafford loansthese loans are given out by the federal government. These loans are given to students who have got admission in any certified educational institution. The student starts repaying the loan after the graduation is completed.

A qualified student loan is a loan you took out solely to pay qualified higher education expenses. See the instructions for Form 1040 to determine if your expenses qualify.

In some cases, these lenders work with the federal government to provide subsidized loans - Sallie Mae is a great example. However, most student loan companies offer private loans, which typically have higher interest rates, origination fees and processing fees than do federal loans.

If you are wondering how much you owe in Federal Stafford Loans, please call the US Department of Education at 800-433-3243 or you may look up your student loans on the National Student Loan Database.

The cost to the Federal Government of providing student loan repayment benefits.

Information on current cost estimates for the federal student loan programs, as well as an analysis of the controversy over student loan budget rules and cost estimates is available on the Student Loans Cost Estimates page.

The process of a selecting a lender or student loan company for your private loans is all a matter of comparison.

The Student Loans Company normally pay the Student Loans for Maintenance in three instalments, one each term, direct into your bank account. Follow this link for more information on how payments are made.

You cannot deduct the interest you paid on a student loan to the extent payments were made through your participation in the above programs.

You believe you've made payments that weren't credited to your account. Ask your loan servicer for a statement that shows all payments made on your student loan account. For more information, see our account balance page.

For the 2007-08 school year, the interest rate on a new Stafford Loan is fixed at 6.8%. As of July 2006, all new Federal Stafford Loans will have fixed interest rates. lease note, that interest rates on Federal Stafford Subsidized and Unsubsidized Loans change yearly but will never exceed 8.25%.

Deferment: during repayment, a period of time during which no payments are due. For subsidized student loans, any interest that accrues during a deferment period is paid by the government; for unsubsidized student loans, any unpaid interest that accrues will be added to the principal loan balance for the borrower to repay once repayment resumes.

The Provincial Training Allowance (PTA) provides income support to low-income students enrolled in approved basic education, Workforce Development initiatives or in Quick Skills Training which are not approved for student loan funding.

Loan

noreply@blogger.com (rizki hadifa) — Tue, 17 Mar 2009 22:35:00 -0700

We won’t deny it’s confusing, but we want to make choosing the right home loan as easy as possible. We can also take care of all your banking needs, including credit cards, personal loans, home & content insurance* and high interest deposit accounts. Our rates are really competitive.

Many people will use a subprime loan when they cannot get credit to help repair their credit rating. There could be many reasons why a person would fall behind on their credit payments. An unexpected job loss, an illness or just bad debt management can start a downward spiral of late debt payments.

Bad credit secured loans offers loan amount ranging from ?5000 to ?75,000. Here the repayment term is stretchable that varies from 5 - 25 years. The interest rate comes bit higher than good credit secured loan.
For example, suppose a student has just unsubsidized Stafford Loans originated on or after July 1, 2006. These loans have a fixed interest rate of 6.8%. n they are consolidated by themselves, the consolidation loan will have an interest rate of 6 and 7/8ths of a percent, or 6.875%.

Therefore, bad credit secured loan is easily available in the finance market. In short, when you stick to your repayment term then you find your bad score improving.

In response to questioning at a December hearing, Raines said he was not given a home loan through the program that allegedly extended lower rates to prominent executives and politicians nor did he receive preferential treatment on his mortgage.

Use our Home Selector tool to find the home loan that's right for you.

It is advised that you keep your payments on time towards any loan that you take. This can help you improve your credit score in the long run and help you come out of debt easily.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter ? There are two types of auto loans, direct and indirect.

The PLUS loan interest rate loophole can reduce the interest rate on 8.5% fixed rate PLUS loans by 0.25% through consolidation. 10

Some of the debts that can be consolidated with the help of these loans include:"> personal loans, unsecured loans, medical bills, credit card bills, store card bills etc. There are some debts like mortgage loans, tax payments, car loans etc that do not qualify for these consolidation loans. 11

A home equity loan ? Home equity loans have several benefits over other types of loans, including lower interest rates and payments that are usually tax-deductible (consult a tax advisor for details).

The term grew in usage during the 2008 financial crisis as the sub prime mortgage crisis was blamed on such loans. It works on two levels - as an acronym; and allusion to the fact that ninja loans are often defaulted on, with the borrower disappearing like a ninja.

The bad credit consolidation loan is easily available these days. The lenders look out for two main things: the amount of debt that you are opting to consolidate and your capacity to pay back the bad credit consolidation loan.

Loan forgiveness programs (in which the borrower's loans are paid off in exchange for volunteer work, public service or military service) offer an option for easy repayment.

tools of trade

noreply@blogger.com (rizki hadifa) — Sun, 8 Mar 2009 21:41:00 -0700

The '''tools of trade''' are a term generally used in [[bankruptcy law]] to determine what property a person would commonly use for the purpose of making a living, as items that are tools of trade are separately exempt from attachment with an additional amount above that normally given for a person's property. For example, under bankruptcy law, a person might be allowed $2,000 in household effects, but also allowed an additional $5,000 for tools of the trade. Thus, anything the person can show is used by them for earning a living is carried under a separate exemption. Thus, a man who paints houses for a living would have to include his computer under household effects, but a computer programmer would be able to claim a computer as part of his tools of trade.

Bankruptcy alternatives

noreply@blogger.com (rizki hadifa) — Sun, 8 Mar 2009 21:36:00 -0700

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. In most cases personal bankruptcy is initiated by the bankrupt individual. Bankruptcy is a legal process that discharges most debts, but has the disadvantage of making it more difficult for an individual to borrow in the future. To avoid the negative impacts of personal bankruptcy, individuals in debt have a number of bankruptcy alternatives.

Take No Action

Bankruptcy prevents a person's creditors from obtaining a judgment against them. With a judgment a creditor can attempt to garnish wages or seize certain types of property. However, if a debtor has no wages (because they are unemployed or retired) and has no property, they are "judgment proof", meaning a judgment would have no impact on their financial situation. Creditors typically do not initiate legal action against a debtor with no assets, because it's unlikely they could collect the judgment.

If enough time passes, seven years in most jurisdictions, the debt is removed from the debtor's credit history.

A debtor with no assets or income cannot be garnished by a creditor, and therefore the "Take No Action" approach may be the correct option, particularly if the debtor does not expect to have a steady income or property a creditor could attempt to seize
Self Money Management

Debt is a result of spending more than one's income in a given period. To reduce debt, the most obvious solution is to reduce monthly spending to allow extra cash flow to service debt. This can be done by creating a personal budget and analyzing expenses to find areas to reduce expenses.

Most people, when reviewing a written list of their monthly expenses, can find ways to reduce expenses. Common areas for expense reduction would include reducing food expenses by eating out less often, taking public transportation instead of driving a car, and eliminating enhanced telephone and cable television services.

Negotiate With Creditors

Creditors understand that bankruptcy is an option for debtors with excessive debt, so most creditors are willing to negotiate a settlement so that they receive a portion of their money, instead of risking losing everything in a bankruptcy.

Negotiation is a viable alternative if the debtor has sufficient income, or has assets that can be liquidated so that the proceeds can be applied against the debt.

Negotiation may also buy the debtor some time to rebuild their finances.

Debt Restructuring

Debt restructuring is a process that allows a private or public company - or a sovereign entity - facing cash flow problems and financial distress, to reduce and renegotiate its deliquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its operations.

Out-of court restructurings, also known as workouts, are increasingly becoming a global reality. A debt restructuring is usually less expensive and a preferrable alternative to bankruptcy. The main costs associated with a business debt restructuring are the time and effort to negotiate with bankers, creditors, vendors and tax authorities. Debt restructurings typically involve a reduction of debt and an extension of payment terms.

Debt Consolidation

Debt is a problem if the interest payments are greater than the debtor can afford. Debt consolidation typically involves borrowing from one lender (typically a bank), at a low rate of interest, sufficient funds to repay a number of higher interest rate debts (such as credit cards). By consolidating debts, the debtor replaces many payments to many different creditors with one monthly payment to one creditor, thereby simplifying their monthly budget. In addition, the lower interest rate means that more of the debtor's monthly payment is applied against the principal of the loan, resulting in faster debt repayment. It may be necessary to have a co-signor or other security, such as a car, if the borrow's credit is not sufficient on their own.

Formal Proposal to Creditors

If the debtor cannot deal with their debt problems through personal budgeting, negotiation with creditors, or debt consolidation, the final bankruptcy alternative is a formal proposal or deal with the creditors.

Different countries have different legal procedures for compromising debts. In the United States, a debtor can file a Chapter 13 Wager Earner Plan. The plan will typically last for up to five years, during which time the debtor makes payments that are distributed to their creditors.

In Canada, a Consumer Proposal can be filed with the assistance of a government-licensed proposal administrator. Forty-five days after filing the proposal the creditors vote on the proposal, which is considered accepted if more than half of the creditors, by dollar value, vote to approve the proposal.

Individual Voluntary Arrangement

In the UK the Individual Voluntary Arrangement (IVA) represents the main formal alternative to a debtors bankruptcy petition. The IVA is part of the Insolvency Act 1986 and essentially allows a debtor to reach a formal repayment arrangement with their creditors usually over a 5 year period. In most cases the debtor does not repay their debts in full to their creditors however the IVA proposal essentially allows for any remaining debt to be written off by the creditors at the end of the 5 year repayment period. As with bankruptcy petitions the number of IVA proposals has been increasing rapidly in the UK in recent years.

Creditor's rights

noreply@blogger.com (rizki hadifa) — Sun, 8 Mar 2009 21:31:00 -0700

Creditor's Rights is a legal term used to describe a lawyer's specialized practice area focused on the collection of debts on behalf of creditors. Such attorneys are frequently referred to as collection attorneys or collection lawyers.
Attorneys who practice in the area of "Creditor's Rights" will perform one or all of the following:
Filing lawsuits and using other legal collection techniques to collect consumer debts (i.e. debts owed by individuals).
Filing lawsuits and using other legal collection techniques to collect commercial debts (i.e. debts owed by businesses).
Representing a creditor's interests in a bankruptcy proceeding.
Foreclosure of homes or commercial real estate if the purchaser defaults on payment.
Recovery (or Replevin) of secured goods (e.g. automobiles) if the purchaser defaults on payment.

Financial distress

noreply@blogger.com (rizki hadifa) — Sun, 8 Mar 2009 21:30:00 -0700

Financial distress is a term in Corporate Finance used to indicate a condition when promises to creditors of a company are broken or honored with difficulty. Sometimes financial distress can lead to bankruptcy. Financial distress is usually associated with some costs to the company; these are known as costs of financial distress.

Cost of financial distress

A common example of a cost of financial distress is bankruptcy costs. These direct costs include auditors' fees, legal fees, management fees and other payments. Cost of financial distress can occur even if bankruptcy is avoided (indirect costs):
Financial distress in companies can lead to problems that can reduce the efficiency of management. As maximizing firm value and maximizing shareholder value cease to be equivalent managers who are responsible to shareholders might try to transfer value from creditors to shareholders. The result is a conflict of interest between bondholders (creditors) and shareholders. As a firm's liquidation value slips below its debt, it is the shareholder's interest for the company to invest in risky projects which increase the probability of the firm's value to rise over debt. Risky projects are not in the interest of creditors; however they also increase the probability of the firms value to decrease further, leaving them with even less. Since these projects do not necessarily have a positive net present value, costs may arise from lost profits.
Equally, management might chose to prolong bankruptcy, which has the same effect on probabilities of a change in the firm's value. Management might also distribute high dividends to "save" money from the creditors.
Another source of indirect costs of financial distress are higher costs of capital: Short-term loans by contractors and banks are expensive and difficult to obtain.

Valuation
Companies in financial distress undergo corporate restructuring where valuations are used as negotiating tools. This distinction between negotiation and process is a difference between financial restructuring and corporate finance.
Additional modifications to a valuation approach, whether it is market-, income- or asset-based, may be necessary in some instances. There are other adjustments to the financial statements that have to be made when valuing a distressed company.

Debt restructuring

Debt restructuring is the process that allows a private or public company—or a sovereign entity—facing cash flow problems and financial distress, to reduce and renegotiate its deliquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its operations.

Liquidation

noreply@blogger.com (rizki hadifa) — Sun, 8 Mar 2009 21:25:00 -0700

In law, liquidation refers to the process by which a company (or part of a company) is brought to an end, and the assets and property of the company redistributed. Liquidation can also be referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation. The process of liquidation also arises when customs, an authority or agency in a country responsible for collecting and safeguarding customs duties, determines the final computation or ascertainment of the duties or drawback accruing on an entry.

Liquidation may either be compulsory (sometimes referred to as a creditors' liquidation) or voluntary (sometimes referred to as a shareholders' liquidation, although some voluntary liquidations are controlled by the creditors, see below).

Compulsory liquidation

The parties who are entitled by law to petition for the compulsory liquidation of a company vary from jurisdiction to jurisdiction, but generally, a petition may be lodged with the court for the compulsory liquidation of a company by:
the company itself
any creditor who establishes a prima facie case
contributories
the Secretary of State (or equivalent)
the Official Receiver

Grounds

The grounds upon which one can apply for a compulsory liquidation also vary between jurisdictions, but the normal grounds to enable an application to the court for an order to compulsorily wind-up the company are:
the company has so resolved
the company was incorporated as a public company, and has not been issued with a trading certificate (or equivalent) within 12 months of registration
it is an "old public company" (i.e., one that has not re-registered as a public company or become a private company under more recent companies legislation requiring this)
it has not commenced business within the statutorily prescribed time (normally one year) of its incorporation, or has not carried on business for a statutorily prescribed amount of time
the number of members has fallen below the minimum prescribed by statute
the company is unable to pay its debts as they fall due
it is just and equitable to wind up the company

In practice, the vast majority of compulsory winding-up applications are made under one of the last two grounds.

An order will not generally be made if the real purpose of the application is other than for a winding-up, eg. the application is made just to enforce a debt

A "just and equitable" winding-up enable the ground to subject the strict legal rights of the shareholders to equitable considerations. It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business,[5] or of an implied obligation to participate in management.[6] An order might be made where the majority shareholders deprive the minority of their right to appoint and remove their own director.

The order

Once liquidation commences (which depends upon applicable law, but will generally be when the petition was originally presented, and not when the court makes the order[8]), dispositions of the company's property are generally void,[9] and litigation involving the company is generally restrained.

Upon hearing the application, the court may either dismiss the petition, or make the order for winding-up. The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.

The court may appoint an official receiver, and one or more liquidators, and has general powers to enable rights and liabilities of claimants and contributories to be settled. Separate meetings of creditors and contributories may decide to nominate a person for the appointment of liquidator and possibly of supervisory liquidation committee.

Market liquidity

noreply@blogger.com (rizki hadifa) — Fri, 6 Mar 2009 02:37:00 -0800

Market liquidity refers to the degree to which a financial item such as an asset or security is able to be bought or sold within a market, without significantly affecting the price of the asset or losing much of its value. The term marketability is sometimes used, or often simply liquidity. Market liquidity of a financial item is often characterized by trading activity which is at a high level. Liquid assets is the term for those that are easily bought and sold in such a way without losing value.

There is no one particular formula for market liquidity, although a variety of liquidity ratios are sometimes used for measurement. Liquid assets are considered "safer" to invest in, as an investor may find it easier to take his money out of such an investment. Some items which are generally considered to have high liquidity are assets such as blue chip securities and money market investments.

Certain commodities and items may have a great risk of being illiquid, or difficult to buy or sell. Contracts in the futures market are one example of this, although open interest and trading volume may be an indicator of somewhat better liquidity in such a case. A large amount of a stock is also an example, as its sale would potentially have an affect on the market value of the stock itself.

Market liquidity

noreply@blogger.com (rizki hadifa) — Fri, 6 Mar 2009 02:31:00 -0800

Market liquidity is a business, economics or investment term that refers to an asset's ability to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value. Money, or cash on hand, is the most liquid asset. An act of exchange of a less liquid asset with a more liquid asset is called liquidation. Liquidity also refers both to that quality of a business which enables it to meet its payment obligations, in terms of possessing sufficient liquid assets, and to such assets themselves.

Summary

A liquid asset has some or more of the following features. It can be sold rapidly, with minimal loss of value, anytime within market hours. The essential characteristic of a liquid market is that there are ready and willing buyers and sellers at all times. Another elegant definition of liquidity is the probability that the next trade is executed at a price equal to the last one. A market may be considered deeply liquid if there are ready and willing buyers and sellers in large quantities. This is related to a market depth, where sometimes orders cannot strongly influence prices.

An illiquid asset is an asset which is not readily saleable due to uncertainty about its value or lacking a market in which it is regularly traded.The mortgage related assets which resulted in the subprime mortgage crisis are examples of illiquid assets as their value is not readily determinable despite being secured by real property. Another example is an asset such as large block of stock, the sale of which affects the market value.

The liquidity of a product can be measured as how often it is bought and sold; this is known as volume. Often investments in liquid markets such as the stock exchange or futures markets are considered to be more liquid than investments such as real estate, based on their ability to be converted quickly. Some assets with liquid secondary markets may be more advantageous to own, so buyers are willing to pay a higher price for the asset than for comparable assets without a liquid secondary market. The liquidity discount is the reduced promised yield or expected return for such assets, like the difference between newly issued U.S. Treasury bonds compared to off-the-run treasuries with the same term remaining until maturity. Buyers know that other investors are not willing to buy off-the-run so the newly issued bonds have a lower yield and higher price.[citation needed]

Speculators and market makers are key contributors to the liquidity of a market, or asset. Speculators and market makers are individuals or institutions that seek to profit from anticipated increases or decreases in a particular market price. By doing this, they provide the capital needed to facilitate the liquidity. The risk of illiquidity need not apply only to individual investments: whole portfolios are subject to market risk. Financial institutions and asset managers that oversee portfolios are subject to what is called "structural" and "contingent" liquidity risk. Structural liquidity risk, sometimes called funding liquidity risk, is the risk associated with funding asset portfolios in the normal course of business. Contingent liquidity risk is the risk associated with finding additional funds or replacing maturing liabilities under potential, future stressed market conditions. When a central bank tries to influence the liquidity (supply) of money, this process is known as open market operations.

Futures

In the futures markets, there is no assurance that a liquid market may exist for offsetting a commodity contract at all times. Some futures contracts and specific delivery months tend to have increasingly more trading activity and have higher liquidity than others. The most useful indicators of liquidity for these contracts are the trading volume and open interest.
There is also dark liquidity, referring to transactions that occur off-exchange and are therefore not visible to investors until after the transaction is complete. It does not contribute to public price discovery.

Banking

In banking, liquidity is the ability to meet obligations when they come due without incurring unacceptable losses. Managing liquidity is a daily process requiring bankers to monitor and project cash flows to ensure adequate liquidity is maintained. Maintaining a balance between short-term assets and short-term liabilities is critical. Deposit accounts represent the primary funding (liabilities) in traditional commercial banks, and the loan portfolio represents the primary asset. The investment portfolio represents a smaller portion of assets, and serves as the primary source of liquidity. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. Banks have several additional options for generating liquidity, such as selling loans, borrowing from other banks, borrowing from a central bank, such as the US Federal Reserve bank, and raising additional capital. In a worst case scenario, depositors may demand their funds when the bank is unable to generate adequate cash without incurring substantial financial losses. In severe cases, this may result in a bank run. Most banks are subject to legally-mandated reserve requirements intended to help banks avoid a liquidity crisis.

Banks can generally maintain as much liquidity as desired because bank deposits are insured by governments in most developed countries. A lack of liquidity can be remedied by raising deposit rates and effectively marketing deposit products. However, an important measure of a bank's value and success is the cost of liquidity. A bank can attract significant liquid funds, but at what cost? Lower costs generate stronger profits, more stability, and more confidence among depositors, investors, and regulators.

Business

In business, the term refers to a company's ability to meet its obligation when and in the event they fall due. If a firm is unable to meet its obligation in time, the company is in danger of insolvency. Therefore, heavy weight is put in finance planning by the controlling staff in order to register all potential shortages in funds. If there is a shortage, the Treasury will be informed in order to be prepared to raise capital for the next business period. If a shortage of funds is registered too late and the funds are insufficient, banks may reject lending a company capital, and in consequence bankruptcy might be inescapable.

In business, merchants often have liquidation sales, in which inventories are sold at discount to raise cash or to get rid of inventory more quickly.

Behavioral finance

noreply@blogger.com (rizki hadifa) — Thu, 5 Mar 2009 01:00:00 -0800

Main article: Behavioral finance

Behavioral Finance studies how the psychology of investors or managers affects financial decisions and markets. Behavioral finance has grown over the last few decades to become central to finance.

Behavioral finance includes such topics as:
Empirical studies that demonstrate significant deviations from classical theories.
Models of how psychology affects trading and prices
Forecasting based on these methods.
Studies of experimental asset markets and use of models to forecast experiments.

A strand of behavioral finance has been dubbed Quantitative Behavioral Finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been lead by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran, Huseyin Merdan). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.

Finance

noreply@blogger.com (rizki hadifa) — Thu, 5 Mar 2009 00:45:00 -0800

The field of finance refers to the concepts of time, money and risk and how they are interrelated. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.
The main techniques and sectors of the financial industry
An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary pockets the difference.

A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays the interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity. Banks are thus compensators of money flows in space.

A specific example of corporate finance is the sale of stock by a company to institutional investors like investment banks, who in turn generally sell it to the public. The stock gives whoever owns it part ownership in that company. If you buy one share of XYZ Inc, and they have 100 shares outstanding (held by investors), you are 1/100 owner of that company. Of course, in return for the stock, the company receives cash, which it uses to expand its business; this process is known as "equity financing". Equity financing mixed with the sale of bonds (or any other debt financing) is called the company's capital structure.

Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance), as well as by a wide variety of organizations including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.

Finance is one of the most important aspects of business management. Without proper financial planning a new enterprise is unlikely to be successful. Managing money (a liquid asset) is essential to ensure a secure future, both for the individual and an organization.

Student loans in Canada

noreply@blogger.com (rizki hadifa) — Sat, 28 Feb 2009 07:48:00 -0800

Student loans in Canada

Student loans in Canada help post-secondary students pay for their education in Canada. The federal government funds the Canada Student Loan Program (CSLP) and the provinces may fund their own programs or run in parallel with the CSLP. In addition, Canadian banks offer commercial loans targeted for students in professional programs.

Government loans

Canadian citizens, permanent residents of Canada living in any province for over a year, and protected persons are normally eligible for loans provided by the federal government, through the Canada Student Loans Program (CSLP), in addition to loans provided by their province of residence.

Loans issued to full-time students are interest free while a student is in full-time studies. Students receiving a CSL for the first time on or after August 1, 1995 are eligible for up to 340 weeks (approx 6.5 years) of interest-free assistance. Students in doctoral programs are eligible for an additional 60 weeks, up to 400 weeks (approx 7.5 years). Students with permanent disabilities and students who received their first CSL prior to August 1, 1995 are eligible for up to 520 weeks of assistance (10 years).

As the length of North American graduate degree programs often exceed this 400 week maximum, students considering graduate study are advised to think carefully before taking out student loans. For example, an honours BA from a Canadian University takes four years, assuming satisfactory progress. MA programs in Canada vary in length from 1-3 years, with two years being the average minimum. A PhD, takes on average, 5 years to complete, although many students take significantly longer than this. Assuming a graduate student completes an honours BA (4 years), an MA (2 years), and a PhD (5 years), one can expect to be in university for at least 11 years. This is significantly longer than the 400 weeks maximum allotted to complete a degree by the National student loan program, and graduate students can easily find themselves in a position where they are required to repay their student loans while enrolled as a full-time student.

Funding is available for part-time students through the CSLP (provincial student loans are not available). Part-time students must make interest payments while in study and begin payments of principal and interest when they cease to be a part-time student. Grants may supplement loans to aid students who face particular barriers to accessing post-secondary education, such as students with permanent disabilities or students from low-income families.

Students must apply for the Canadian and provincial loans through their provincial government. The rules for what determines your province of residence vary, but normally it is defined as where you have most recently lived for at least 12 consecutive months, not including any time you spent as a full-time student at a post-secondary institution. In most cases, the province of residence is the province one lived in before becoming a post-secondary student.

Canada Student Loans (CSL) of up to $210 per week of full-time study or 60% of the student's assessed need (the lesser of these) can be issued per loan year (August 1–July 31). Loans issued through provincial programs will normally provide students with enough funding to cover the balance of their assessed need. Part-time loans of up to $4,000 can be made, but a student cannot be more than $4,000 in debt on part-time loans at any one time. All Canadian students may also be eligible for the Canada Millennium Scholarship Foundation Bursary (CMS Grant), and other grants provided by their province of residence.[3]

For example, students in British Columbia may be eligible for a maximum of $14,300 combined loan and grant funding per year.

Tertiary education fees in Australia

noreply@blogger.com (rizki hadifa) — Sat, 28 Feb 2009 07:43:00 -0800

Tertiary education fees in Australia

As a general rule, all students who attend Australian tertiary education institutions are charged higher education fees. However, several measures are in place to relieve the costs of tertiary education in Australia.

Most students are Commonwealth supported. This means that they are only required to pay a part of the cost of tuition, called the "student contribution", while the Commonwealth pays the balance; and students are able to defer payment of their contribution as a HELP loan. Other domestic students are full fee-paying (non-Commonwealth supported) and receive no other direct government contribution to the cost of their education. They can also obtain subsidised HELP loans from the Government up to a lifetime limit of $100,000 for medicine, dentistry and veterinary science programs and $80,000 for all other programs. Australian citizens and (with some limitations) permanent residents[1] are able to obtain interest free loans from the government under the Higher Education Loan Programme which replaced the Higher Education Contribution Scheme (HECS).

HELP is jointly administered by the Department of Education, Science and Training (DEST) and the Australian Taxation Office (ATO).

In addition, qualified students may be entitled to Youth Allowance or Austudy Payment to assist them financially while they are studying. These support payments are means and assets tested. Further assistance is available in the form of scholarships.

Overseas students are charged fees for the full cost of their education and are ineligible for any loans from the Commonwealth, but may apply for international scholarships.

Federal student loan consolidation

noreply@blogger.com (rizki hadifa) — Sat, 28 Feb 2009 07:40:00 -0800

Federal student loan consolidation

Private student loan

In the United States both the Federal Family Education Loan Program (FFELP) and the Federal Direct Student Loan Program (FDLP) include consolidation loans that allow students to consolidate Stafford Loans, PLUS Loans, and Federal Perkins Loans into one single debt. This results in reduced monthly repayments and a longer term for the loan. Unlike the other loans, consolidation loans have a fixed interest rate for the life of the loan.

Interest rates and payments

Consolidation loans have longer terms than other loans. Debtors can choose terms of 10–30 years. Although the monthly repayments are lower, the total amount paid over the term of the loan is higher than would be paid with other loans. The fixed interest rate is calculated as the weighted average of the interest rates of the loans being consolidated, assigning relative weights according to the amounts borrowed, rounded up to the nearest 0.125%, and capped at 8.25%. Some features of the original consolidated loans, such as postgraduation grace periods and special forgiveness circumstances, are not carried over into the consolidation loan, and consolidation loans are not universally suitable for all debtors.

History

The Federal Loan Consolidation Program was created in 1986. In 1998, the United States Congress changed the interest rate to the aforementioned fixed rate weighted mean, effective February 1, 1999. Consolidation loans taken out before that date had a variable interest rate, determined by the individual FDLP loan origination center (e.g., in the case of a university, that university) or FFELP lender (e.g., a third party bank).

In 2005, the Government Accountability Office considered consolidating consolidation loans so that they were exclusively managed through the FDLP. Based on several assumptions about future variations in interest rates, the loan volume, the percentage of defaulters, cost estimates from the United States Department of Education, it concluded that while doing so would incur an additional cost of $46 million, caused by the higher administrative costs of the FDLP compared to the FFELP, this would be offset by a $3,100 million saving comprised in part of avoiding $2,500 million in subsidy costs. In 2008, turmoil in the financial and credit markets has led to the suspension of many loan consolidation programs, including Sallie Mae, Nelnet and Next Student.

Types of loans

noreply@blogger.com (rizki hadifa) — Sat, 28 Feb 2009 07:34:00 -0800

Types of loans

Secured

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.[citation needed]

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on the merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible for a pre-settlement loan.[citation needed] This is considered a secured non-recourse debt due to the fact if the case reaches a verdict in favor of the defendant the loan is forgiven.

LOAN

noreply@blogger.com (rizki hadifa) — Sat, 28 Feb 2009 07:21:00 -0800

LOAN

loan is a type of debt. This article focuses exclusively on monetary loans, although, in practice, any material object might be lent. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower.

It is commonly believed that the borrower initially receives an amount of money from the lender, to be paid back, usually but not always in regular installments, to the lender. In fact, the lender, whether a bank or credit card company, does not provide any cash to the borrower, but simply extends “credit.” The lender does this by making a credit entry into the financial account (e.g. savings or checking) of the borrower; the value of this credit is equal to the amount of the loan. At the same time, the bank, for example, marks the loan as a liability in one part of their accounting system, and an asset in another part. The amount of the asset is equal to the amount of money the borrower promises to pay back, known as the principal.

In this way, the bank or other lending institution creates money, which the borrower is now free to “spend.”

In addition to the principal, the lending institution generally charges the borrower a fee, referred to as interest on the debt, for the privilege of using this newly-created money. Note that the lender acts merely as an intermediary between the borrower and the party providing the goods or services that the borrower obtains with her loan money. The lender is not required to, and typically does not, furnish any tangible assets such as cash money.

In essence, the lending institution creates money out of thin air, by accounting entries, and makes a substantial profit in the process. For example, if the interest on the loan is 6 percent, to be paid off in 30 years (a typical home mortgage contract), the borrower will end up paying more than double the amount of the loan. If the contract is for a loan of $100,000, the borrower at the end of the contract period will have paid back $ 215,838. The lender’s profit is greater than the original loan amount.

A loan is of the annuity type if the amount paid periodically (for paying off and interest together) is fixed.

A borrower may be subject to certain restrictions known as loan covenants under the terms of the loan.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Legally, a loan is a contractual promise between two parties where one party, the creditor, agrees to provide a sum of money to a debtor, who promises to return the money to the creditor either in one lump sum or in parts over a fixed period in time. This agreement may include providing additional payments of rental charges on the funds advanced to the debtor for the time the funds are in the hands of the debtor (interest).