A credit rating agency is a company that researches and evaluates companies, countries or any other entity for their creditworthiness. They give companies scores, or credit ratings, that can tell investors whether or not they are safe investments. The SEC regulates rating agencies such as Moody’s and Standard and Poor’s.
Archive for the ‘Grow Page’ Category
The IMF is…
Tuesday, October 27th, 2009The IMF is the International Monetary Fund, an organization established to encourage international trade and financial cooperation, stabilize exchange rates, and combat poverty. Countries that are members of the IMF contribute to the fund in gold and in their own currency, and they can then withdraw from the fund in order to pay off debts to other nations during times of deficit.
A Lender is…
Tuesday, October 27th, 2009A lender is any person or business that makes loans. A lender gives a borrower money because the lender expects to be paid back not only the initial amount he or she lent – the principal – but also interest.
CD or Savings?
Tuesday, October 27th, 2009In short, it all depends. Certificates of Deposit (CDs) and savings accounts are similar ways of storing your money, but they offer different benefits. A quick look at each will help you figure it all out.
Both savings accounts and CDs pay you interest on your money and are insured by the government as long as they live at an FDIC bank (almost every bank is). In essence, they are both virtually risk-free investments – a pretty good deal. The only difference is their given interest rates and how often you can take your money out.
CDs typically pay higher interest rates than savings accounts, but you can’t withdraw your money whenever you want. CDs have set maturation time periods like three months, one year, five years, etc. where you cannot access your money (if you’re desperate then you can access your money by paying a hefty fine). The CDs with the longest maturation periods typically have higher interest rates, while those with shorter maturation periods have lower rates. Because of this, CDs are a great way to store money that you won’t use in the short-term while savings accounts are more for money you’ll want to spend sometime soon. Either way you go, you’re still getting paid to store your money, which is a pretty good thing.
The World Bank is…
Tuesday, October 27th, 2009The World Bank is an organization whose job it is to help poor countries achieve economic development through loans and advice. It gives out about $30 billion every year to 100 countries.
NYSE Executive Lawrence Leibowitz Talks Wall Street
Tuesday, October 27th, 2009
Lawrence Leibowitz has one of the longest job titles you’ll hear. He’s the NYSE Euronext Group Executive Vice President & Head of U.S. Execution and Global Technology. Sound like a big job? It is. Larry kindly answered a few of TILE’s questions about what life is like on Wall Street.
TILE: So what do you do at the New York Stock Exchange?
Larry: I am responsible for running the New York Stock Exchange on a daily basis. That includes making sure our trading day runs smoothly, our technology is the best it can be, and helping the companies that list on NYSE reach investors around the world.
TILE: How has Wall Street changed since you started in the business?
Larry: In the 25 years I have been on Wall Street, the biggest change is the fact that technology has reinvented the business from top to bottom, from executing trades in less than an eyeblink, to running financial models to value complex derivatives. It has changed the business, and it has changed the way we think about the world.
The second biggest change is probably the democratization of Wall Street – in 1980 retail trading customers got most of their information from brokers, placed orders by phone, and read the newspaper to see how their portfolios were performing. Now, people get information from the web and 24 hour news coverage of the markets, place trades directly, and manage their money online.
Finally, Wall Street has gone global. As technology, information, and capital flows have interconnected our world, Wall Street firms and investors have turned their attention from the narrow U.S.-centric view to one which spans countries and continents.
TILE: What do you see in the future of the NYSE?
Larry: NYSE is now part of a larger company, NYSE Euronext, which owns exchanges around the world, including Amsterdam, Brussels, Lisbon, Paris, and the London Futures Exchange. We trade stocks, bonds, and derivatives all around the world, connecting traders, investors, and companies trying to raise capital to grow their businesses. NYSE Euronext will continue to grow and innovate in this globalized economy, never losing its reputation for the integrity and high standards that our listed companies and clients have come to expect.
>> TILE brings you exclusive opinions, explanations, and interviews from experts in every industry. To read more, click on Ask the Experts in the TILE Library.
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Pay Slashed at Firms That Received TARP Funds…Sort of
Monday, October 26th, 2009The Obama administration appears to be punishing some executives at the financial institutions it helped bail out… except for those firms that have already repayed their TARP loans.
- Despite the fact that pay for the top executives will be cut by roughly 50% of total compensation this year, in some cases salaries could still be multi-million dollar packages.
- The “Pay Czar” – Kenneth Feinberg of the Treasury Department – created this compensation plan for the 7 companies that borrowed the most TARP funds.
- The companies that have paid back their TARP funds, including JPMorgan Chase, Goldman Sachs and Morgan Stanley will not face restrictions on pay.
Facts and Figures
- Executive perks that are worth more than $25,000 will require government approval.
- The 7 companies where pay is restricted are: Bank of America, Citigroup, American International Group, General Motors, Chrysler and the two financing arms of GM and Chrysler.
- The departing CEO of Bank of America won’t receiving a salary or bonus this year (his pension is still more than $50 million).
Exchange Rates are…
Friday, October 23rd, 2009Exchange rates are the value of one currency in relation to or expressed in another currency. For example, the exchange rate of the U.S. Dollar to the Euro might be $1.43. That means that every one Euro equals 1.43 U.S. Dollars.
Why can it be good to borrow money?
Friday, October 23rd, 2009It’s a good question: loans come with interest, so you always have to pay back more than you borrowed. How is borrowing possibly a good idea?
Say you want to buy a house. Houses aren’t cheap, but they’re generally necessary (unless you want to live in your car). Especially if you’re fairly young and just starting out, chances are you probably can’t afford to just drop the full value of that house, in cash, up front, into the seller’s lap. But if you take out a mortgage to pay for the house, you can pay it back a little at a time. True, you’ll end up paying back more over time than if you’d just paid up front, but presumably you’ll be making more money as your life progresses, and then mortgage payments will count for less of your budget.
How does a hedge fund manager actually make money?
Friday, October 23rd, 2009The term “hedge fund” can actually be somewhat misleading – not many hedge funds actually hedge their investments. Hedging is a strategy that reduces the risk of a business transaction. Hedge funds use many different investment strategies, but they often engage in high-risk trading because their goal is to make as much money as possible as quickly as possible, which is different from, say, an index mutual fund that just tries to outperform an index (for example the S&P500). What really distinguishes hedge funds is how hedge fund managers get paid: management fee plus a performance fee.