finchasefly

[finchasefly]

OBJECTIVE OF INVESTMENT : ACHIEVING FINANCIAL FREEDOM

Successful investing has its own characteristics, each characteristic is distinct and that is why investing is different from all others. Income is expected from every investment, in fact investments are organized with this primary objective in mind. Investors always expect more liquidity security of investment with less risk. 

Objective of Investment

There are many alternative ways to invest your savings. Profit is not expected from cash savings so this prospect investment takes place considering the risk. Since risk is closely related to income, one of the objective of  investment  is to increase income and reduce risk. There are different objectives of investment.

Here’s The Objectives of Investment

No productivity earning power and secondly it loses purchasing power as the accumulated money increases in value. Price rise or inflation diminishes the value of money. Investment indifference sets in if investment fails to generate returns commensurate with price appreciation, so the rate of investment is preferable to the rate of inflation. Therefore, the main three objective of investment are given below:

Maximization of Return: Investors always expect a return on their investment due to inflation and depreciation of the currency. This expectation is very reasonable. Knowing about expected returns and actual returns is very important to complete the investment decision making process. An investor invests in any project with the expectation of profit. An investor’s objective in investing is to maximize returns. Investment can serve many goals; one such objective should be growth.

Minimization of Risk: Any time an investor wants to grow their business they have to know how to minimize the risk. So investment decisions must consider returns and risks which cannot be separated from each other. Investors tend to invest more in projects that have less risk.

Hedging against Inflation: Anti-inflation measures should be taken. 

Generally investors expect rights with less risk. Risk can be defined as the chance that actual income falls short of expectations. Debentures and Preference Shares are moderately risky whereas Ordinary Shares are highly risky.

Conclusion

Investors are entitled to higher risk-adjusted returns.  There are various investments available on financial markets. An investor tries to maximize his welfare by choosing the most favorable combination of returns and losses according to his preferences and capabilities.

[finchasefly]

HISTORY ON GRESHAM’S LAWS OF MONEY

Modern financial system All economic activities are carried out by money, although money is used as a standard measure of goods and services, but it has its own value. If a single amount of money is exchanged for more goods and services, it should be understood that the power of money is greater, that is, the value of money is higher in the heart. On the other hand, if a small amount of goods and services can be purchased in exchange for a single currency, then it should be understood that the country’s money power is low and if the price level is high, the quantity of goods can be purchased. That is why currency rules are used to maintain Laws of money.

Definition of Laws of Money

Laws of money is named after Sir Thomas Gresham, adviser to Queen Elizabeth of the United Kingdom. Which another name is Gresham’s Law of money.

In economics, Gresham’s law is a monetary law that says, “bad money drives out good”.(source-Wikipedia).The law was introduced in the year 1860 by the economist Henry Dunning McLeod After Sir Thomas Gresham(1516-1579) one of the most prominent English financiers in the Tudor dynasty. Gresham had been adamant with Queen Elizabeth to reinstate confidence in the devalued English currency.

Gresham’s Laws of Money

When two types of superior and inferior currencies exist side by side in the market as prescribed currencies, the inferior currency drives the superior currency out of the market but the superior currency cannot drive the inferior currency out of the market.

1.Monometallism: When the old depreciated currency and the new other weighted currency are in circulation simultaneously, the superior currency is driven out by the inferior currency. A metal standard system was in place when Queen Elizabeth appealed to Sir Gresham to make the best coins disappear from the market by paying off foreign debts and melting them down.

2.Bimetallism: When silver and gold were in circulation side by side, gold disappeared from the currency market because the overvalued base metal always drove out the undervalued metal.

3.Paper Currency: When paper currency and metal currency coexist, paper currency drives metal currency out of the market, as in the United States during the Civil War and in Britain during World War.

Manner of coming into force of the Rules

How inferior currency drives out superior currency. Three factors can be mentioned for the rule to be effective, for these three factors the inferior currency drives the superior currency out of the market.

1.Reserved: Naturally, the public tries to hoard the superior currency and not the inferior currency

2. Melter: As the new coins contained real weight of metal, people melted them down to make ornaments in anticipation of higher earnings, which would gradually drive the gold coins out of the market and keep the coins in circulation.

3. Foreign debt payout: Usually the currency of one country does not move to another country so in foreign trade foreigners want to accept the better religion instead of the local currency, as a result the better currency is driven out of the market and the inferior currency prevails.

Conclusion

So, it was very important for handling the situation. After taking useful action the problem was solved. 

[finchasefly]

ADVANCES IN FINANCE: UNLOCKING YOUR FINANCIAL POTENTIAL

Every business requires a substantial quantity of money. Which is vital for every company. It is not possible to vacillate a large amount of money, so he or she needs a source of money. So he has to find the appropriate financial institution or bank for the source of money. For the business owner, advance can be the source of finance which is mainly provided by the bank for companies.

Definition of advances in finance

The landing of money by a Lander or a loaned to be a quick one with a set quantity in interest. Formal contract between lender and a bank to offer a set amount of credit for a certain time period, also known as the advances in finance.

Usually the advance can be short term borrow. In this format they have less legal formalities. When the bank gives advances to clients via overdraft or loan account, this is known as credit by bankers.

What is advance rate 

An advance rate is a percentage of the  value Which  is determined by   the bank for the borrower. In different banks, the advance rate is different Which is dependent on borrowed value. The advance rate’s malfunction is the same as the loan value ratio. If a borrower has an advantage rate of 25% and the Present value is $100000 then the maximum advance the borrower can receive $ 25000.

Various types of bank advances

Commercial banks invest their funds in various profitable projects. Commercial bank usually granted which amount of advances is That Given below:

Loan: An advance granted by a bank by opening a loan account for a fixed term by pledging immovable property or debentures as collateral is called a loan. Borrowers can withdraw  through such advance checks at one time or at various times as per requirement. The interest rate on such loans is high and interest starts accruing after transfer as loan. Present day long term and medium term loans are known as loans.

For loans of this kind, there is a charge for interest for the loan. Loans are repaid by current accounts. Interest rates for these loans are very high. Bank cost in providing such loans is relatively low. The interest rate on such days is lower as compared to other loans. People can easily collect such loans.

2. Cash : Commercial banks pledge the goods of traders and grant them advances called credit accounts. Borrowers can withdraw such amounts repeatedly up to a specified period. Banks usually  don’t provide such loans to customers.

Generally only cash loans are given to clients who have integrity and trustworthiness Borrower can withdraw the sanctioned loan amount in lump sum or in part. By providing such loans, the income of the bank increases. Such loans are repaid in instalments or lump sum. By providing such loans, the good relationship of the bank is developed with the honest and trustworthy businessmen. Customer good behavior Play Bank can give loan to the customer up to a long time through the same.

3. Bank overdraft : As a bank depositor, if the bank gives an opportunity to withdraw the extra specified amount of money, then this principle is called a deposit loan against security. Interest has to be paid on it but only the money has to be paid in print. Businessmen prefer overdraft loans. This type of loan is provided against such security. In case of this type of loan, the bank gives the opportunity to withdraw the excess amount deposited in the current account, but the limit of the excess amount is fixed.

Businessmen have to raise short-term financing needs. Loans can be repaid conveniently. loans can be raised in lump sum or in part.

Conclusion

So ,advances in finance are very  important for businessmen to spread their Business. On the other hand , advances in  finance are also significant for banks. Because It is a golden opportunity for them to earn profit.

[finchasefly]

10 PRINCIPLES OF INVESTING FOR MAXIMUM RETURNS

It is important to have principles in any matter. Because policy is based on any course of action and its purpose is established. Any action plan needs policies to implement otherwise it becomes difficult to implement. A program without principles can never bring success. Investment is based on several principles. If these principles are properly applied, desired results can be expected in terms of investment. 

Principles of Investing

Just as certain principles are required for the execution of any action, certain principles are applied for the proper execution of investments. Do you know what are the 10 principles of investing. So, principles of investment are very important for any kind of investment. Here principles of Investment is given below: 

Principles of profit : A major principle of investing is to earn a profit. People invest their savings with the intention of earning profit but such an offer should be by considering the right earned money time price pair. Therefore, the goal of investment is to maximize wealth.

Principles of  risk return trade off : An important investment principle is balancing risk and income. Risks must be borne in order to earn profits, the higher the risk, the higher the return. However, the entire investment may be lost due to loss at times while making maximum income. 

Principles of time value of money : An important investment principle is to consider the past value of money. The value of money is relative to time. As the value of money decreases over time, the value of money is compounded.

Principles of wealth maximization: A fundamental principle of investment and financial management is asset maximization, not profit maximization. While making investment decisions, the projects that will actually maximize the assets of the organization should be taken into consideration. 

Principles of safety : Another important policy in subtraction is the safety policy. This principle states that the security of the investable funds should be ensured so that the fund does not decrease in any way. Investment projects should be taken in a timely manner. 

Principles of portfolio management : Meanwhile, in the field of investment, investment diversification policy is mentioned. An important basic principle in investing is that funds should invest in multiple assets rather than investing in one asset to minimize risk. 

Principles of liquidity: A major principle of investment and financing is to preserve liquidity. But the ability to achieve liquidity gains is contradictory. If the investment is high, the profit will be high but the liquidity will be low and if the investment is low, the profit will be high but the liquidity will be high. This requires coordination between the two. 

Principles of priority : Investors are not able to invest in these investment projects due to lack of financing. Then he had to accept some projects and abandon some projects even though they were profitable. 

Principles of Business : A principle of investment is to follow business principles in the context of business principles which are said to avoid all trades that are not acceptable in the eyes of law. Investments should not be made in businesses and business establishments which are harmful or are involved in businesses that are against the interests of any country. 

Principles of national interest : In the case of investment, the principle of national interest must be followed and the investor must consider the national interest as a whole.

Principles of welfare : Another principle in investment is the welfare principle. Investors should pay particular attention to national interest as well as socio-economic welfare. Necessary measures should be taken for the welfare of the workers as well as for the welfare of the society. 

Principles of risk aversion: Risk aversion policy must be seriously considered when investing. While investing one should see if the risk can be avoided. Risk aversion means risk transfer. 

Conclusion 

Before investing in any project, the principles of investing should be known well. Otherwise the investor will not be able to reach his desired goal. Any investor’s investment objective is to consider risk as well as maximize profit so he must have an understanding of the principles of  investment. So it can be said that knowing the principles of investment is very important for an investor.

[finchasefly]

A COMPREHENSIVE GUIDE TO UNDERSTANDING LIQUIDITY TRAP GRAPH

A universally accepted material as a medium of exchange is called currency. Currently, all economic activities are conducted based on currency. By contributing to production, consumption, exchange, distribution, accounting, exchange, buying and selling etc., currency has been able to gain acceptance worldwide. The total value of all inputs into the economy of a country at a given time is called the money supply. Currency is a thing that has easy universal usage, exchange and acceptance. 

Meaning of Liquidity Trap Graph

Speculative demand for money in which interest rates cannot fall further is called a liquidity trap. There is an inverse relationship between interest rate and speculative demand for money as a decrease in interest rate increases the speculative demand for money and an increase in interest rate decreases the speculative demand for money. But before the interest rate reaches zero, at one of the interest rates, the speculative demand for money demand curve becomes parallel to the horizontal axis, known as liquidity trap.

Liquidity Trap Graph

There is an inverse relationship between interest rate and speculative demand for money as a decrease in interest rate increases the speculative demand for money and an increase in interest rate decreases the speculative demand for money. Expressing this relationship through graphs is a liquidity trap graph. The concept of a liquidity trap graph relates to the speculative demand for money. The minimum interest rate is a liquidity trap graph  if the elasticity of the demand curve for money is infinite. 

[finchasefly]

INTRODUCTION TO MANAGERIAL ACCOUNTING: ACHIEVING PROFESSIONAL SUCCESS

Practically speaking before the introduction to Managerial Accounting , the board of directors raised the above limitation of conventional  financial accounting, why managerial accounting should be introduced or what is wrong with financial accounting. 

                         According to Smith, Keith and Stephens, ”Managerial accounting is the accounting system for providing managers with Quantitative information. They need planning and control”. 

Introduction to Managerial accounting is very important for students and any kind of Businessman.

Characteristics of Management Accounting

Management Accountants totally depend on the accounting information system of the  concern. The characteristics of  Managerial accounting is given below:

Future oriented : Management Accounting is future Orient. The manager’s try to bring Out overall  future betterment. 

Advisory nature:  This refer to the fact that the main purpose of the subject is to provide advice to the advisory board in various matters relating to finance  

Selective: Managerial accounting takes into  accounts only the matters that were expected to affect their decision making.

Analytical :Managerial accounting aims at finding out the cause for different happenings and their remedy does it subject is analytical in nature

Aid to the management :Managerial accounting itself does not take any decisions but rather helps the responsible officer in the management to take various  decisions.

Importance of Management Accounting

Management Accounting  helps in preparation of an effective organization of structure. It helps in identifying various cost centers, budget centers and profit centers and health in stupid job allocation to different personnel. Below are the benefits of management accounting:

Management Accounting aids decision-makers in making key decisions such as pricing or accepting orders, selecting an ideal product mix etc.

Management Accounting is a system which helps for planning budgetary, control capital budgeting and cost  volume  profit analysis.

Management Accounting helps to build a  well knit organization of enterprise.

By suggesting ways and means of better management of inventory ,cash ,receivables and payables it brings in improvement in liquidity position .

Management Accounting helps to optimize efficiency for better performance.

Management Accounting brings in better Coordination Among various departments of the organization through budgeting. 

Conclusion

Management Accounting has least  to a clear shift in emphasis of recording of transaction to their analytical and interpretative aspect as a change of preservatives with regards to the objective of accounting which now help the management to secure better result .In this away , Management Accounting eliminates institution, which is not at all defendable from the field of business management and attempts at broadening the services of accounting to management it has opened up new lines of thought on work measurement and has indicated the advantage is obtained from more Precise forms of control.