The 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.
Archive for the ‘Levels’ Category
The IMF is…
Tuesday, October 27th, 2009A Receipt is…
Tuesday, October 27th, 2009A receipt is a written or printed record that shows that something has been paid for or goods have been received. When you pay for something in a restaurant, you receive a receipt that typically tells you what you ate and how much it cost.
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.
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.
When you’re pumping gas, what are you really paying for?
Friday, October 23rd, 2009To understand what you pay for at the pump, first you should know where gas comes from. Gasoline is made from crude oil – the black oil that shoots up from the ground. Somebody’s got to collect it all and then refine it into a usable form. From there, it’s shipped all over the world to companies who market and distribute it to stations across their respective countries (think Shell, Texico, Chevron, etc.). Lastly, your local, state, and federal governments add taxes onto the cost of each gallon. From there, gas stations are happy to accept your money in cash, debit, or credit.
While your money goes directly to the gas station, it is really paying for all of these production stages. In total, you pay for the discovery, extraction, and shipment of crude oil; the refinement of oil into gasoline; the shipping, distribution, and marketing of gas by oil companies; the costs of running a gas station; and the taxes levied by the government. Simply put, you’re paying for it all!
Just graduated and they’re already hitting you up for an alumni donation? What’s the point?
Friday, October 23rd, 2009“Hello, my name’s Susan and I’m calling you about your beloved alma mater… How about starting with a small monthly donation of $200?”
Sound familiar? Every graduate receives these calls seemingly moments after that graduation cap tassel crosses from right to left. Alumni donations have a large impact on colleges for several reasons and so they are solicited with what may appear to be overzealous enthusiasm. You may wonder how these people expect a new graduate to be able to donate anything. Don’t you need a job first?
Well, while your school is definitely hoping for a sizable check, that’s actually not the main reason for the unsolicited call. A large part of a school’s ranking is based on the rate of alumni donations – the percentage of graduates who give back to their school. By encouraging you to donate, sometimes even as little as $1, colleges are trying to maintain or even boost a significant factor in ratings determination. They also want to get you in the habit of giving.
While the size of your alumni donation right now might not be close to Warren Buffet’s, it still has a big impact on how your school is ranked and your giving patterns in the future.
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.