Bedrijfsleven, Economie en Financiën ››
- What Are the Different Types of Employee Remuneration?
- What is Market Sentiment?
- What Is a Negative Real Interest Rate?
- What Is an Illiquid Market?
- What is Universal Life Insurance?
- What is the Mortgage Process?
- What are Margin Accounts?
- What Is a Loan Term?
- What Is a Negative Float?
- What is a Timeshare Vacation?
Beknopte antwoorden op Business, Economie en Financiën
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What Are the Different Types of Employee Remuneration?
One of the determining factors that most people consider before accepting a job offer is employee
remuneration, which includes several components. While the paycheck is usually the first detail considered, many people also want to know whether they will get benefits that include health insurance and retirement plans funded by the employer. Another type of employee remuneration that is often expected is
paid time off so missing work occasionally does not mean missing part of a paycheck. In addition, some companies offer free or discounted college tuition, daycare or cell phone plans, to name a few benefits. The most basic type of employee remuneration is monetary compensation. This often comes in the form of a
salary, which usually means employees make the same amount every month, regardless of the hours worked. Those with an hourly wage, however, are compensated for each hour on the job, so their availability and the employer's need for them both directly affect how much they make each pay period. On the other hand, those in sales often get commission, which means the more they sell, the more money they make. Some may get a base salary in addition, while others work on commission alone. Employee remuneration also often includes insurance, particularly health coverage. For many full-time employees, the employer pays a portion of the health
insurance premium so workers only have to pay some of the cost, which is usually taken out of each paycheck. Some employers even pay the entire cost of health coverage, and many also offer dental, vision and
life insurance, all of which most employees find is cheaper to get through their job than on their own. In addition to paying part of the cost of insurance, many employers offer to match employee contributions to a retirement fund.
Stock options also are sometimes offered so employees have a higher interest in the company doing well financially. Employees usually expect some paid days off, at least if they are considered full-time workers. For example, they may get a set number of sick days, personal days and vacation days so they do not lose money each time they miss work. Some employers also allow workers to be compensated at the end of each year for every paid day off that they did not take, which can act as an incentive for employees to avoid missing work. This type of employee remuneration may make an employer more attractive to potential staff members. Many companies also offer a number of minor benefits that can add up for employees. For example, they may offer free or inexpensive daycare for children, reduced or free college tuition for employees, or at least a discount on their own products or services. Some companies also pay for cell phone service or the use of a company car, provided these tools are necessary for the job.
What is Market Sentiment?
Market sentiment refers to the belief that the majority of investors have about the
stock market. Market sentiment can be responsible for large swings in the momentum of the buying and selling of stocks. Sentiment can be influenced by a vast number of factors. In most developed countries,
shares of stock are sold on a
stock exchange. Shares of stock refer to small pieces of ownership in public companies. Stock prices fluctuate up and down as they are sold, depending on what people are willing to sell the stock for — called the ask — and what people are willing to buy the stock for — called the bid. A share of stock in a given company is determined in part by the perceived value of that company itself. For example, if a company has a low
price-to-earnings ratio, that means the price of a single share of stock is relatively low in comparison to the amount of money the company earns. This could make the company an attractive buy for investors and stock prices may be driven higher. The price of stocks as a whole is also driven by market sentiment. If the vast majority of investors believe that the economy is doing well, for example, then the market sentiment will be positive, as these investors will believe that the value of companies is going to continue to rise. If, on the other hand, investors believe that economic trouble is on the horizon, then these investors will likely think that the value of a company may fall. As such, the stock market as a whole may go down as investors think that the price of each individual company is likely to decrease and thus sell off their stocks or make bids at a lower price for a given stock. Market sentiment is described by several different words. For example, a
bull market is a market in which the vast majority of investors believe that stock prices are likely to go up. As a result of this positive sentiment, the shares of individual companies may be driven up and the value of all stocks traded in the stock market may likewise go up. On the other hand, a
bear market is a market in which investors believe that things are likely to go wrong. This type of negative sentiment can drive prices of stocks down and can cause the stock market as a whole to drop.
What Is a Negative Real Interest Rate?
A negative real
interest rate is a condition where inflation is higher than current interest, which means that the
real interest rate is below zero. Real interest rates are calculated by taking the
nominal rate of interest and subtracting inflation. The most significant effect of a negative real interest rate is that low-risk savings options such as bonds, certificates of deposit (CDs), and savings accounts have nearly no return. When there is a negative real interest rate, it typically happens due to a downturn in the economy. Despite the low rate of return on savings, banks usually do not raise interest rates. This is because raising rates adds to the financial load of loan holders, which could further depress the economy and make recovery more difficult. There are several common situations that can arise out of a negative real interest rate. As savings get a low rate of return when this happens, people are often less likely to save. On the other hand, they may save even more in order to compensate for future lost savings income due to the low rate. Many people also borrow more when there is a negative real interest rate in order to take advantage of low loan rates. A low return on savings can lead to an increase in spending overall. As a negative real interest rate can affect the value of a country’s currency, the perception of the currency may change. It may have less value in comparison to currencies in other countries. People may also look to purchase precious metals such as gold and other commodities that maintain their value over time in order to make the most of savings. Others may purchase inflation-protected securities. A real interest rate is determined by subtracting the
inflation rate from the
nominal interest rate. In essence, the nominal interest rate is the rate of interest before inflation has been considered. This information is determined with the calculation of the
Fisher equation, in which one plus the nominal interest rate is equal to one plus the real interest rate multiplied by one plus the expected inflation rate. When the real interest rate has been found, then it can be determined if there is a negative real interest rate, which is indicated by a negative solution to the equation.
What Is an Illiquid Market?
An illiquid market is a market in which the level of trading has decreased considerably, owing to the current expense associated with the assets that are available for trading and the willingness of investors to pay those prices. Lack of interest in the assets available for trade, such as in a collectibles market, may also be the underlying reason for this type of market development. Just about any type of market can experience a period of being illiquid, ranging from the local real estate market to the trading volume found on an exchange. An illiquid market will continue until some set of circumstances prompts investors or buyers to once again become interested in making purchases and the market is stimulated by an upswing in completed purchases. One of the more common examples of an illiquid market is found in a slowdown in sales volume within a real estate market. A number of factors can come together to make this type of market illiquid for a period of time. While there may be homes for sale in the area covered by the market, issues such as a high rate of unemployment or inflation that puts additional stress on household budgets may discourage buyers from actively trying to purchase a home, even if the prices of the homes are very reasonable in comparison to current
market value. When economic factors prohibit buyers from moving forward with seeking financing to buy a new home, there is a good chance that the sales volume in that market will remain low until those economic circumstances change for the better. It is also possible for an illiquid market to develop with stocks and other types of investments. The trading volume within an investment market such as a
stock market or even a
currency market may decrease owing to investor concerns about certain types of investments traded within the marketplace. This means that if investors are concerned with how a change in leadership in a leading company will affect the industry overall, they may adopt a wait and see approach, neither buying nor selling until the outcome of the event becomes evident. In like manner, investors may slow trading owing to changes in government due to political elections, undesirable shifts in the economy, or even a natural disaster that threatens to undermine the ability of some businesses to continue performing at a profit. Like other types of market conditions, an illiquid market will usually continue for a period of time, then begin to shift into a more liquid position as the factors that caused the slowdown in trading to occur are resolved. Depending on the type of market involved, this type of condition may last as little as a few months or remain in place for several months or even years. Typically, governments will attempt to use resources and powers inherent in central and federal banks to stimulate the economy and hopefully in turn motivate additional trading that lifts the market out of the slump and restores it to liquidity.
What is Universal Life Insurance?
Universal
life insurance is a type of permanent life
insurance policy that allows the policy holder to build
cash value on a policy. It differs from
term life insurance in many ways. For one, it can build cash value that the policy holder can borrow, withdraw, or save. Another way it differs from term life insurance is by its length. While term life insurance may last 30years or so, most universal life insurance policies last as long as the policy holder pays the premium. An attractive feature of the universal life insurance policy is the cash value that the policy holder stores up for himself. When the premium is paid, part of it is credited as cash value to the policy holder and when it isn’t, the cost of the insurance is deducted from the cash value. The account may also have fees subtracted from it. With many policies, no matter what happens, the company has to pay a minimum amount of interest that is fixed before hand. The amount of interest is subject to rise and fall according to various factors, but at least the minimum amount must always be paid. Universal life insurance tends to be more expensive than term life insurance. This discrepancy is the result of how the premiums are calculated. As morbid as it sounds, life insurance costs are determined by how likely you are to die over the term of the policy so young person will usually pay a cheaper premium than an older person because young people are less likely to die during the course of the policy. Universal life insurance is usually permanent, and insurance companies take this fact into consideration when calculating the cost. The premiums tend to be higher but should remain the same over the life of the policy; thus, though someone may be paying more for insurance when he is younger, he should be paying less for insurance when he is old. There are several different forms of universal life insurance available.
Indexed life insurance pays interest on the cash value based on a particular financial index and usually offers protection in case the index falls below zero. Universal life insurance allows the policy holder to increase and decrease premiums as well as the amount of insurance.
Variable universal life insurance offers all the benefits of a universal life insurance policy but also allows the insurance company to invest part of the premiums. Lastly, there is last survivor universal insurance policy which only pays money out when the two people covered on the policy have died.
What is the Mortgage Process?
If you're a first time homebuyer, the
mortgage process can seem overwhelming. After all, this is probably the single largest purchase you've ever made. However, if you think of the mortgage process as the total of several smaller steps, moving into your dream house will be much less stressful.
Pre-approval is generally considered the first step in the mortgage process. You can be pre-approved for a mortgage in 10-20 minutes just by answering a few simple questions online or over the phone. This will help you get an idea of which houses are in your price range and give the real estate agent proof that you are serious about buying a home. Once you've found a house you want to purchase, you'll need to actually complete the
mortgage application. At this point in the mortgage process, you can expect to have the
lender request copies of your previous year's
tax return, pay stubs, bank statements, and information from any other current creditors. If you are self-employed, you will likely need to produce two or three years of tax returns as well as information regarding how profitable your business has been in recent months. After you complete the application, the lender will verify the information and determine the risk associated with giving you the loan you requested. If you are approved, you will receive a number of documents to review under the
Truth in Lending Act, which entitles you to an explanation of the total amount of your loan, the total number of payments, the annual percentage rate, all associated finance charges, and a
good faith estimate of settlement costs. Your approval at this point in the mortgage process usually locks in the
interest rate for 30-60 days. If you are denied a mortgage, however, you can request more information about the reasons for the decision under the Equal Credit Opportunity Act of the Fair Credit Reporting Act. When completing the mortgage process, keep in mind that it's ultimately your responsibility to decide how much you can afford to spend on your housing costs each month. The calculations that the lenders use are standardized formulas that don't take into account factors unique to your situation, such as fluctuating income due to self-employment or higher than average medical expenses for a chronically ill family member. Before you sign the loan documents, be sure the payments will fit within your household
budget. In many cases, even one missed payment is sufficient grounds for the lender to begin the mortgage
foreclosure process.
What are Margin Accounts?
Margin accounts are accounts that investors hold with
brokerage firms, through which the brokerage loans money to the investor. The investor may purchase securities with cash he does not have, by using a margin account to do so. The
Federal Reserve limits the amount which may be borrowed on margin to 50% of the value of the purchase. A margin account is necessary when selling stocks short, and is usually used by people who simply want to leverage their investment, rather than people who can’t afford the full purchase price of the securities. A broker who offers margin accounts will charge interest for the right to borrow the money, although the
interest rate is usually very low. The low rate is meant to entice investors into
buying on margin, and the securities and cash the investor has in his account function as
collateral for the
margin loan. Margin accounts are a form of leverage, which means they can be valuable tools for increasing gains. However, they can also increase losses by the same amount, so an investor must exercise caution when buying on margin. To illustrate in a simplified way how margin accounts can be helpful tools, consider an investor who bought a share of stock for $50 US Dollars (USD), whereupon the market price of the stock went up to $75 USD. If he paid cash for it, the return on his investment is 50% -- a very respectable rate of return. However, if he paid $25 USD in cash and $25 USD in funds borrowed on margin, his return is 100%. He still has to pay back the money he borrowed, but by spreading his margin borrowing over several purchases, he will increase his profits, as long as the price of his stock goes up. The disadvantage to using margin funds is that they can have the same effect in reverse. If the $50 USD stock falls in value to $25 USD, and it was paid for with cash, half of the investment is lost. But if it was paid for with 50% margin funds, the entire investment is lost, in addition to the amount still owed to the brokerage. It is situations like these that give margin accounts their risk, and somewhat of a bad reputation. In the stock
market crash of 1929, many investors’ losses were magnified by the fact that they borrowed heavily on margin- up to 90% in some cases. Borrowing at these levels is no longer permitted by law, in order to limit downside risk, or an investor’s potential exposure to loss. It is important to know also, that if the value of your investment drops below a certain level, a broker may issue a
margin call, requiring you to take action by either putting more money or more stock into your account. Some
brokerages will sell your securities without waiting for you, in order to meet the margin call. The best way to avoid this is to be careful and closely watch the value of your account if it consists partly of borrowed funds.
What Is a Loan Term?
A loan term is the span of time over which a loan is taken out and repaid, and it can vary greatly depending on the nature of the loan. All of the loan money is usually paid back in full by the end of the term, but sometimes a new loan can be taken out, the term can be extended, or the loan can be negotiated a second time. A loan term is different from the terms of the loan, which refer to the legal requirements for repayment and other loan conditions. The loan's term can affect many of the loan conditions, including the amount of money issued, the
interest rate, and the schedule of repayments. Both short-term and long-term loans are available to individuals and businesses. Short-term loans usually include lines of credit, credit cards, and
working capital loans, and they usually contain a loan term of one year or less. Small businesses frequently take out short-term loans to finance the costs of general upkeep or tide themselves over through a seasonal dip in revenue. These loans generally tend to have a shorter time frame because the company is secure in its ability to repay the loan in full once business picks up again. Long-term loans are generally used for more expensive financial goals, such as starting a company, purchasing expensive equipment, or buying a house or car. These include mortgages, car loans, and educational loans. A longer loan term means proportionally lower monthly repayments when compared to other loans. Banks tend to profit more from loans with longer terms, but they also take on more risk with these loans. Since these loans have an extended term that can last years or decades, compounding
interest rates increase the total amount due at the end of the loan term. As a result, the total interest paid back tends to be higher with long-term loans. Interest rates tend to be higher with short-term loans, and they are less risky for banks because the total loan amount tends to be lower. Various other loans will have different requirements that relate to the loan term. Balloon loans usually offer low monthly payments at the start of the loan term and have a significantly larger sum due at the very end of the term, a
payment schedule that differs from the traditional monthly repayment scheme. Other adjustable rate loans will have varying interest rates and payment amounts that can increase or decrease over the course of the loan’s term.
What Is a Negative Float?
A negative float is a term that is commonly employed in the banking industry and has to do with the time frame that exists from the moment that a bank customer writes a check and when that check actually clears the bank account. The amount of float involved with a given account is based on the number of transactions that have been initiated by the account holder but have yet to be cleared by the institution. While the term once only had to do with checks written but not yet cleared, the float can also include
debit card transactions that have been accepted by a vendor but have not yet been applied against the balance of the issuing bank account. One of the easiest ways to understand the concept of a negative float is to consider a
checking account that has a current balance of $5,000 US dollars (USD) at the beginning of a calendar month. The account holder issues one check in the amount of $1000 USD to pay rent, another check of $100 USD to pay a utility bill, and then makes a $50 debit card purchase at a local supermarket. The total of the three transactions will not clear the bank account at least until the following business day, meaning that in the interim the account has a negative float of $1150. The amount of float time that is involved with settling a negative float will vary, depending on how quickly the check or debit transaction is presented for payment. In some instances, debit card purchases may not clear the account for two business days, based on when the vendor presents them for payment. The time needed for checks to clear the account will also vary. A check written to a local vendor who also happens to do business with the same bank may be deposited early the next day and clear the account later that same day. By contrast, a check that is mailed to a creditor may take several business days to clear the bank. Monitoring the negative float is important to the process of responsibly managing a checking account. Account holders will use what is known as a check register to track the transactions initiated on the account, making it simple to identify the current balance, less any negative float that may currently exist. Keeping an accurate register that is up to date on all cleared and pending transactions makes it easier to avoid overdrawing the
account balance and incurring penalties or having a check returned for non-sufficient funds.
What is a Timeshare Vacation?
A
timeshare vacation is leisure time spent away from work and in a piece of property that multiple people own or have the right to use. Most
timeshare vacations are spent in
condominium buildings, where a unit is allocated to each timeshare owner for a certain period of time every year. The right to use the unit usually lasts for a week or two, and the unit is generally available to each owner during pre-determined dates.
Timeshare owners ordinarily have the right to use, rent, or sell their shares in the unit. They are also often permitted to let other people, such as friends or relatives, stay in the unit during their allocated time period. The concept of a timeshare vacation first developed during the 1960s. During that period of time, a European ski
resort developer advertised the ability to buy into a resort, rather than merely renting a room. This idea caught on, and other developers quickly marketed similar schemes. Many timeshare vacations are dedicated to resting or relaxing while on holiday. Timeshare resorts tend to be located in exotic or pleasant climates. They are often situated near oceans, beaches, or mountains. Some timeshares, however, are offered for different kinds of vacations, such as taking a cruise or camping. Timeshares for recreational vehicles are also available. When buying a timeshare, a person can choose between a number of different vacation options. A deeded timeshare vacation is typically entered into for a particular unit during a pre-set period of time each year. Individuals who want to have more options when choosing their vacation dates can look for a timeshare agreement that allows for flexible dates. With this arrangement, share owners usually have to make reservations in order to secure the unit for their requested dates. Reservations commonly work on a first come, first serve basis. Timeshare rental vacations work much like renting a hotel for a vacation. Under this set-up, individuals simply lease the property. When the vacation ends, they no longer have any rights to the property. Some timeshare vacation options allow individuals to choose between a number of different vacation spots. These plans typically work by allocating a certain number of points to a timeshare owner each year. The timeshare owner can then apply these points towards a timeshare vacation unit in his or her desired destination. The number of points used for a timeshare vacation can vary, depending upon the unit’s location and the time of year.
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