ARBITRAGE

ARBITRAGE

The simultaneous purchase and sale of an asset in order to profit from a difference in the price. This usually takes place on different exchanges or marketplaces.

Also known as a "riskless profit".

Here's an example of arbitrage: Say a domestic stock also trades on a foreign exchange in another country, where it hasn't adjusted for the constantly changing exchange rate. A trader purchases the stock where it is undervalued and short sells the stock where it is overvalued, thus profiting from the difference. Arbitrage is recommended for experienced investors only.

ACCRETING PRINCIAL

ACCRETING PRINCIPAL
A swap whereby the notional value is increasing over time.

This type of swap is used mainly by companies willing to pay a fixed rate in return for an increasing notional as a result of increasing working capital requirements.

ALL FOREX BUZZWORDS....! ABSOLUTE RATE

ABSOLUTE RATE
The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate.

The absolute rate is a combination of the reference rate and the premium or discounted fixed percentage. For example, if the LIBOR is 3% and the fixed interest portion of the swap is at a 7% premium, the absolute rate is 10%.

It is sometimes also referred to as an absolute swap yield.

WHAT IS FINANCIAL BLOG???

An online journal (or web log) that provides news and information related to the finance industry. Financial blogs not only comment on news and information, but some also provide stock analysis based on both fundamental and technical principles. Most, if not all, financial blogs are provided free of charge to the general public. For the most part the style of these blogs is more casual than articles and often reflect the personal opinion of the respective writers.

The use of financial blogs has become a great tool for investors to share their thoughts on the latest news in the finance industry. Financial blogs are not only provided by major financial websites, but also from individual investors.

Since anyone is capable writing a blog without restrictions on the information used, investors should be wary of what they read. Although reputable websites are reliable with their information, blogs provided by individuals may be more subject to manipulation. Unethical investors can use an investing blog to promote stocks in ways to benefit positions they have taken. Investors who use blogs should be aware these sites exist and ensure that a blog they read has an adequate disclosure policy before they act on anything.

forex spot market

Forex spot market is a security or commodities market where goods, both perishable and non-perishable as well, are been sold for cash and transported at once or within a little period of time. Contracts sold on a spot market are as well successful immediately. The spot market is other known as the “cash market” or also “physical market.” Purchases are settled in cash at the existing prices set by the spot market, as contrasting to the price at the time of delivery. An example of a spot market commodity, which is frequently sold, is crude oil; it is sold at the existing prices, and actually delivered later.

Goods are essential products which is identical with other like type commodities. Some good examples of commodities are grains, beef, oil, gold, silver, and other natural gas. Technology has pierced the industry with commodities like cell phone minutes and as well the bandwidth. Commodities are actually consistent, and should meet exact standards to be sold on the spot market.

The world spot market, or Forex trading (Foreign Currency Exchange), is a giant spot market. It is the instantaneous exchange of one country’s currency for another’s. The way it works is through a trader choosing a currency pair. Great Britain (GBP) and the United State’s (USD) currency is an ordinary pair, which is bought and sold on the globe spot market. If the GBP is ahead strength against the USD, the trader buys. If it is puny, he sells. The advantage of Forex trading is that it is very runny; a trader could enter and egress the market as he chooses.

Another factor, which affects Forex spot market prices, is whether the commodity or goods are perishable or non-perishable. Non-perishable goods like gold or silver would sell at a price that appears in near future price movements. A perishable commodity like grain or fruit would be affected by supply and demand. For instance, oranges bought in April would reveal the existing extra of the commodity and would be less luxurious than in January, when demand for a lesser crop drives costs up. An investor cannot buy oranges for a January delivery at April’s prices, making oranges an ideal example of a spot market commodity.

what is mini forex?

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A mini Forex trading account is extremely helpful for a new trader who is more interested in developing a disciplined, rational trading strategy without focusing entirely on profits and losses.
When you start Forex trading you can begin with a paper trading account with which you can understand how the market moves and you can develop more skills and knowledge about this trading account. Once you are successful with the paper trading account then you can move in for the mini Forex trading account.

In mini Forex trading, you get all the benefits of a full-size Forex accounts. The same software, charts and graphs can be used while handling mini Forex trading. However, it helps you to develop the confidence needed to be successful without the anxiety and distractions that come when large sums are on stake.

Mini Forex trading is done in smaller contract sizes of ten thousand units, which is 1/10th the size of the standard account. For opening a mini Forex account you would require 100-300 dollars. Here one PIP is equivalent to one dollar for EUR/USD and GBP/USD.

With a mini Forex trading account you can learn risk management, which will help you in future while dealing full-size trading account. You can trade by using one mini lot and can then build up on the lot size later.

In a conventional sense, you should use only one mini lot for every thousand dollars that you have in your account. Say if you have five thousand dollars, you can take only five mini lots. But in mini Forex trading the pip value is one dollar and therefore, you can concentrate on building strategies without paying much attention to the profit and loss.

With mini Forex trading, you can invest just $250, but trade 10,000 worth of a currency because of the high leverage. In a mini account, the margin deposit requirement per $10,000 lot traded is only $50. This leads to a leverage of 200 to 1 (10,000/50 = 200). Therefore, with your $250, you can trade a maximum of 5 mini lots, with $500 a maximum of 10, with $1000 a maximum of 20, etc.

So the basic advantages of mini Forex trading are:

1) The account can be opened with as small an amount as $250

2) It has a leverage of 200 – 1

3) It facilitates smaller trade size

The account helps new Forex traders build confidence as they are trying out different strategies

There are other methods like Base 10 Trading for small traders. However, mini Forex trading is most suitable if you want to maintain the account under $10,000. It will provide you the flexibility of implementing strategies and offer more staying power in the Forex market as you can take advantage of multiple trades without over-leveraging your trading account.

what is dove??

An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that inflation and its negative effects will have a minimal impact on society. This term is derived from the docile and placid nature of the bird of the same name, and is the opposite of the term "hawk".

Statements that suggest that inflation will have a minimal impact are called "dovish".

Doves prefer low interest rates as a means of encouraging growth within the economy because this tends to increase demand for consumer borrowing and spur consumer spending. As a result, doves believe the negative effects of low interest rates are negligible in the larger scheme of things. However, if interest rates are kept low for an indefinite period of time, inflation could rise considerably.

what are green investments?

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Green investments are traditional investment vehicles (such as stocks, exchange-traded funds and mutual funds) in which the underlying business(es) are somehow involved in operations aimed at improving the environment. This can range from companies that are developing alternative energy technology to companies that have the best environmental practices.

For the stock savvy, there are many pure-play, leading edge green companies that are traded on the major stock exchanges. These include startups that are developing new methods for creating biofuels or solar panels, and traditional market cap heavyweights that are expanding their product lines to include environmentally friendly products (such as General Electric's development of wind-powered electric generators). (To learn more, read Go Green With Socially Responsible Investing.)

Green investing can also be achieved through exchange-traded funds (ETFs), which mimic the stock indexes made up of green companies. Mutual funds can be another alternative, in which case a professional portfolio manager makes the green asset allocation decisions based on the fund's prospectus.

Unfortunately, because individual beliefs on what constitutes a "green investment" vary, exactly what qualifies as a green investment is a bit of a gray area. Purchasing stock in a business that is an industry leader in terms of employing environmentally conscious businesses practices in a traditionally "ungreen" industry may be considered a green investment for some, but not for others. For example, consider an oil company that has the best record for environmental practices. While it is environmentally sound that the company is making the best precautions in preventing any direct damage to the environment through its day-to-day operations of drilling for oil, some people may object to purchasing its stock as a green investment, because burning fossil fuels is the leading contributor of global warming.

Therefore, prospective green investors should research their investments (by checking out a green fund's prospectus or a stock's annual filings) to see if an investment includes the types of companies that fit their personal definition of "green".

Some may believe that unscrupulous means are sometimes necessary for making gains in a portfolio. However, it is possible to profit while using an ethical investment strategy - and you don't need to join Greenpeace in order to do it. Here we'll take a look at socially responsible investing (SRI) and how you can use socially responsible mutual funds to activate this strategy in your portfolio. (Is it possible to be environmentally friendly and still make money? Read our Green Investing Feature for both sides of the issue.)



What is socially responsible investing?A socially responsible investing strategy is one that views successful investment returns and responsible corporate behavior as going hand in hand. SRI investors believe that by combining certain social criteria with rigorous investment standards, they can identify securities that will earn competitive returns and help build a better world.SRI analysts gather information on industry and company practices and review these in the context of a country's political, economic and social environment.Generally, these seven areas are the focus of socially responsible investors:
Corporate governance and ethics
Workplace practices
Environmental concerns
Product safety and impact
Human rights
Community relations
Indigenous peoples' rights It should be noted that socially responsible investing is essentially interested in promoting the adherence to the positive aspects of these areas with publicly held companies. However, SRI also gets a lot of attention for industries and companies that it opposes as "bad" for society. The latter would include, among others, businesses involved in gambling, tobacco, weapons and alcohol. These so-called "sinful" investment categories are often eliminated through SRI screening. (For related reading, see A Prelude To Sinful Stock.)What are socially responsible mutual funds?Socially responsible mutual funds hold securities in companies that adhere to social, moral, religious or environmental beliefs. To ensure the stocks chosen have values that coincide with the fund's beliefs, companies undergo a careful screening process. A socially responsible mutual fund will only hold securities in companies that adhere to high standards of good corporate citizenship. (To learn more about shareholder rights and responsibilities, see Proxy Voting Gives Fund Shareholders A Say and Knowing Your Rights As A Shareholder.)Because people hold such a wide variety values and beliefs, fund managers have quite a challenge in determining the stocks that reflect the optimal combination of values for attracting investors. The specific criteria used when screening for stocks all depend on the values and goals of the fund. For example, funds with a strong sensitivity toward issues of environmental concern will specifically pick stocks in companies that go beyond fulfilling minimal environmental requirements. (For more insight, read Go Green With Socially Responsible Investing.)Many socially responsible mutual funds will also partition a portion of their portfolios for community investments. A common misconception is that these investments are donations. This is not the case. These investments allow investors to give to a community in need while making a return on their investment. Many community investments are put toward community development banks in developing countries or in lower-income areas in the U. S. for affordable housing and venture capital. Ownership is Taken SeriouslyShareholder activism is one of the most important issues for socially responsible funds. SRI funds use their ownership rights to influence management through policy change suggestions. This advocacy is achieved through attending shareholder meetings, filing proposals, writing letters to management and exercising voting rights. Because it is difficult for fund shareholders to exercise their votes, voting is achieved by proxy; fund shareholders assign management to vote on their behalf. Most socially responsible mutual funds have a strict policy to maintain transparency in their decisions and disclose all proxy voting policies and procedures to their shareholders. Proof that individuals can make a difference is illustrated by the proposal the Securities and Exchange Commission (SEC) passed in January 2003, which states that all mutual fund companies must disclose proxy voting policies and procedures and the actual votes to their shareholders. The SEC's decision was brought about by the thousands of proposal requests sent to them by socially responsible investors. Does good triumph over all?As an investor, you cannot be completely philanthropic and expect nothing in return for your investment other than that pure feeling of having invested in a company that reflects your own values. So how does the performance of socially responsible mutual funds measure up to that of a regular portfolio? On average, its performance has been close to that of regular mutual funds. There are several indexes that track the performance of stocks considered socially responsible investments. According to KLD Indexes, the total returns for the Domini Social 400 Index between 1990 (its inception) and September 2007 was 12%. Over the same period, the S&P 500 returned 11.49%.The Price for Doing Good Socially responsible mutual funds tend to have higher fees than regular funds. These higher fees can be attributed to the additional ethical research that mutual fund managers must undertake. In addition, socially responsible funds tend to be managed by smaller mutual fund companies and the assets under management are relatively small. Under these circumstances, it is difficult for SRI funds to make use of the economies of scale available to their larger rivals. (For related reading, see Stop Paying High Fees.)
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1. Get informed - Learn about socially responsible investing, which funds qualify and where you can buy them. Socialfunds.com is a good place to start your research.2. Know your values - Everybody's values are different. Some may feel strongly about environmental causes while others are more concerned with social programs. Rank your concerns. Once you have established a few top values, you may narrow your fund choices down to a few select funds whose values closely match your own.3. Go beyond your values - Research the fundamentals and fees of the funds in which you are interested. Some items to consider include the level of the management expense ratio, the cost of load fees, the fund manager's track record and how the fund has performed over the last few years. There is no need to sacrifice investment quality when considering an SRI fund. Do your homework as you would for any fund investment. (Visit our Mutual Fund Basics Tutorial for further tips and information on mutual funds.) 4. Diversify - A consequence of investing in SRI funds is that you may be limiting your investment to a few companies who have a lot in common socially, ethically and financially. Think of a sector fund with a portfolio formed mainly from stocks in the internet industry. If you had all of your eggs in this basket during the internet market crash, all your eggs would have been broken. If your investment is placed strategically in different types of investments, the possibility of losing all of your investment is minimal. If you want to be a socially responsible investor, it is still possible to diversify your portfolio with other stocks, bonds or Treasuries without going against your values. Investing in other socially responsible securities whose values differ somewhat from the specific focus of your chosen fund can help. ConclusionSocially responsible investing opportunities suggest that investors need not compromise their values to make money. If you approach socially responsible mutual funds like any other investment, you may be able to put your money into something that both supports your values and lines your pocketbook.For the counterpart to this kind of investing see, Socially (Ir)responsible Mutual Funds

TYPICAL FOREX JARGON!!!!

3-6-3 Rule
Slang used to refer to an "unofficial rule" under which the banking industry once operated, which alludes to it being noncompetitive and simplistic.The 3-6-3 rule describes how bankers would give 3% interest on depositors' accounts, lend the depositors money at 6% interest and then be playing golf at 3pm. This alludes to how a bank's only form of business is lending out money at a higher rate than what it is paying out to its depositors.

Many attribute the problems faced by the banking industry during the events that lead up to the Great Depression as reasons why the government implemented tighter banking regulations. These regulations controlled the rates at which banks can lend and borrow money. Unfortunately, the regulations made it difficult for banks to compete with each other and the banking industry became stagnant. However, with the loosening of banking regulations and the widespread adoption of information technology such as the internet, banks now operate in a much more competitive and complex manner. For example, banks are now providing insurance, brokerage and other forms of financial services.


A Ton Of Money
A slang term used to describe a significant amount of money. The amount implied typically depends on the person, company or situation.

We may all have a different idea of what constitutes a "ton of money", but according to the Bureau of Engraving and Printing, a ton of $1 bills amounts to $908,000 - nearly $1 million!If you're talking about a ton of coins, then it's a different story - a ton of quarters is worth $40,000, and one ton of pennies (363,000 pennies to be exact) is worth $3,630.



Fat Cat
A slang word used to describe executives who earn what many believe to be unreasonably high salaries and bonuses. These top executives also receive generous pensions and retirement packages, consisting of extra compensation not available to other company employees.

This term conjures up the image of cats that consume more than an appropriate amount of food and become grossly overweight. Publicly-traded companies are required to disclose the amount of compensation that their top five executives receive. As a result, companies have been under a lot of scrutiny for excessive executive compensation, especially in the face of floundering revenues.A real-life example of a fat cat would be former Disney CEO, Michael Eisner. For a period of five years in the late 1990s, Eisner received over $737 million in compensation, despite the fact that the company's five-year net income shrank an average of 3.1% each year.




Fool's Gold
A gold-colored mineral that is often mistaken for real gold. Also known as Iron Pyrite.

During historical periods of gold rushes, many less-than-knowledgeable miners would frequently believe that they hit the motherload upon finding a huge cache of fool's gold. Unfortunately, unlike the real stuff, fool's gold is relatively worthless.

tips ....................................................n tricks.. safe investing!!!!!!!! The market is a roller coaster and let no one tell you otherwise. In the short term the market outlook may seem uncertain due to concerns on oil prices and slowdown on foreign institutional investor inflows.
But on the longer horizon Indian markets look very good. The government has been making conscious business friendly policies; the fiscal deficit too is getting under control. India continues to be one of the fastest growing economies in the world. These factors coupled with many others are ensuring India's position as a global investment destination. To grow personal capital from India's growth one has to choose the correct investment avenue. And choosing an investment avenue is like getting into a marriage, so do it wisely.
Choosing between the plentiful available mutual funds and schemes is not easy. A well thought out and well-planned decision is one that will bear fruits in the long run. Thus a structured approach to fund selection with a systematic checklist to achieve it is of utmost importance.
Even though there are many available methods of product comparisons, one doesn't want to be weighed down by all of them. Dwelling into too many numbers, will only lead to further confusion. Therefore only a few areas of comparison are of true importance and will be comprehensive enough to produce a thorough comparison.
PortfolioPortfolio is very important while comparing schemes. Even though some of the underlying stocks in portfolios could be similar, most portfolios have differing mandates and investment philosophies. As a result it is rather important to understand the stance the manager has taken while building his scheme portfolio.
The portfolio will not only determine the future outcome of your investment but will also tell you how risky the product is and hence if it is appropriate for your appetite. For example, an equity scheme, which invests in large cap companies, could be safer than one that invests in mid or small cap companies.
The portfolio for debt instruments is determined on duration of securities. A high duration, high return investment is potentially volatile and risky; while a short duration investment Portfolio is less risky. This is where we come to the next parameter of comparison - Risk.RiskIn today's scenario, investments that generate meaningful post tax; post inflation returns have risks attached to them. These are market risk, credit risk, government policy risk etc. At this point one has to understand how much risk he is willing to take in order to generate higher return. The rule of thumb is that the more risk one is willing to take the better the returns potential.
The measurement for risk to return is known as Sharpe Ratio. The higher the value, the better the risk attached to the scheme is managed. A volatile investment can also be very risky. Thus this aspect must also be quantified. Standard deviation will help us understand the volatility of a scheme vis-�-vis its benchmark. Be aware a riskier investment is not always better and a sure fire way to generate superior returns.Performance comparisons
These are the most favored methods of investors and amongst the easiest. Performance numbers are available in plentiful. But performance is only measured in hindsight, and can never be guaranteed in the future. Also performance can only be compared across similar categories of funds.
For example, performance or return comparison between an equity scheme and a debt scheme should never be done. It must be kept in mind that comparison happens only between similar funds. A large cap fund should be compared with another large cap fund and not a mid cap fund. Thus compare apples to apples only.
Performance and return comparison should be conducted usually when one has decided on the above-mentioned factors like risk and product category.Fund management and institutional backing
Since trusting your hard earned savings to some one can never be easy, it is important to evaluate their money managing capabilities. The markets are a game of understanding numbers and involve immense skill to generate growth from these numbers.
Only a very capable person with a lot of experience can generate capital appreciation in today's confusing market swings while managing risk.Investment horizon
It is very important to determine investments based on one's time horizon viz equity typically being volatile should be considered for investment horizon of 1 to 3 years. While the short term debt schemes should be considered for investment horizons of up to 1 year.It is therefore important to invest with a fund house with a good track record. It is also important to give due weightage to the quality and track record of the spouses of the fund. After evaluating these parameters and choosing a scheme one can be reasonable sure that the investment they are going into is the right one.
At this point I would like to stress, that any of these parameters could only be a guiding star and not a guarantee for the future. Choosing an investment avenue is like getting into a marriage, so do it wisely. Happy Investing!

know more about business incubators!

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Business Incubators
Business incubators are business assistance programs that provide entrepreneurs with an inexpensive start-up environment and a range of administrative, consulting, and networking services. In essence these programs—which may be managed by economic development agencies, local governments, for-profit businesses, or colleges and universities—serve as homes for new companies. "They offer low-cost space, shared equipment, and the comradeship of fellow entrepreneurs," wrote Richard Steffens in Planning. "An incubator usually houses about a dozen tenants, who stay two to three years, then 'graduate' to commercial space. At their best, incubators help new firms create jobs and revive communities." Indeed, statistics indicate that incubator firms have a significantly greater chance of survival than do other start-up businesses. In addition, the world's increasingly technology-driven economy has spawned new wrinkles in the incubator concept in recent years, such as Internet incubators and incubator-like arrangements within existing companies.
Development of Incubators
The growth in the number of incubators across the United States has been traced to a wide variety of factors, including increased entrepreneurship, corporate downsizing, new technologies, increased involvement of educational institutions in technology transfer, and economic globalization. Early incubator programs first appeared in the Northeast in the late 1950s and early 1960s. But programs similar to today's versions did not arrive on the scene until the 1970s and early 1980s. The 1990s saw a surge in incubator creation as statistical and anecdotal evidence of their effectiveness—both for entrepreneurs and the incubators themselves—emerged. The Los Angeles Business Journal, for example, reported in 2000 that companies that launched in incubators remained in business five years later a startling 87 percent of the time, while only 20 percent of all new business startups reached the five-year mark. In the late 1990s, meanwhile, a growing number of for-profit Internet incubators were created in the United States to capitalize on the explosion in e-commerce.
Of those incubators in existence in the late 1990s, about 70 percent were maintained by economic development agencies or local government agencies. These organizations use incubators as a tool to boost regional economic growth or blunt the impact of big lay-offs and other bad economic news in the region. The remainder are operated by universities and colleges or for-profit businesses. These programs exist in a wide variety of demographic regions, from rural areas to urban settings.
Advantages of Incubators
Given the myriad advantages associated with membership in an incubator program, small business consultants often counsel their clients to at least investigate the possibility of securing a spot in one. Strengths of incubators include the following:
SHARED BASIC OPERATING COSTS. Tenants in a business incubator share a wide range of overhead costs, including utilities, office equipment, computer services, conference rooms, laboratories, and receptionist services. In addition, basic rent costs are usually below normal for the region in which the fledgling business is operating, which allows entrepreneurs to realize additional savings. It is worth noting, however, that incubators do not allow tenants to remain in the program forever; most lease agreements at incubator facilities run for three years, with some programs offering one or two one-year renewal options.
CONSULTING AND ADMINISTRATIVE ASSISTANCE.
Incubator managers and staff members can often provide insightful advice and/or information on a broad spectrum of business issues, from marketing to business expansion financing. Small business owners should remember that the people that are responsible for overseeing the incubator program are usually quite knowledgeable about various aspects of the business world. They are a resource that should be fully utilized.
ACCESS TO CAPITAL. Many business incubators can provide entrepreneurs with "access to the kind of early-stage capital that emerging companies desperately need," wrote Entrepreneur's David R. Evanson. "According to a recent survey of [National Business Incubation Association] members, 83 percent of incubator owners and directors provide access to seed capital. Seventy-six percent provide assistance with obtaining federal grants, 74 percent assist with preparing financial proposals, 60 percent can help obtain royalty financing, and 57 percent can lend a hand in obtaining purchase-order financing."
LEGITIMACY IN THE COMMUNITY. Many entrepreneurs have stated that when their start-up businesses are accepted into business incubator programs, the rewards include an aura of legitimacy and credibility among both vendors and customers. "The fact that a business has been accepted into an incubator offers due diligence value to potential investors," Adkins told Entrepreneur. "They have already passed an important litmus test by simply being there."
UNIVERSALITY OF INCUBATOR CONCEPT. One of the key advantages of incubators is that the concept works in all communities of all shapes, sizes, demographic segments, and industries. As Richard Steffens observed in Planning, "a particular strength of an incubator is its ability to aid companies that fulfill specific needs: technology transfer, revitalizing neighborhoods, creating minority jobs, among others." In many cases, the incubator naturally takes on some of the characteristics of the community in which it is located. For example, rural-based incubators may launch companies based on the agriculture present in the area. But whether based in a small town in the Midwest or a large urban area on the West Coast, proponents of incubator programs contend that the small business people in the community would know more about how to start and operate such businesses than major corporations that focus on mass production.
COMRADESHIP OF FELLOW ENTREPRENEURS.
Many small business owners that have launched successful ventures from incubators cite the presence of fellow entrepreneurs as a key element in their success. They note that by gathering entrepreneurs together under one roof, incubators create a dynamic wherein business owners can 1) provide encouragement to one another in their endeavors; 2) share information on business-related subjects; and 3) establish networks of communication that can serve them well for years to come. "Incubators provide psychological support for entrepreneurs, who are far more likely to persist as a result," stated Steffens. "This support is, perhaps, the incubator's unique place in economic development."
Factors to Weigh in Choosing an Incubator
Many incubators have been pivotal in nourishing small businesses to the point where they can make it on their own. But observers note that the programs are not fool-proof. Some small businesses fail despite their membership in such programs, and incubators themselves sometimes fold, crippled by any number of factors. "According to many incubator managers, the most common causes of failure are lack of sustained funding, lack of tenants, and inexperienced management," wrote Steffens. "A poorly run incubator or an underfinanced one will go under, as will any other small business." Entrepreneurs, then, need to recognize that some incubators are better suited to meet their needs than others. Considerations to weigh when choosing an incubator include the following:
Is it a True Incubator?—Some office building owners falsely advertise themselves as incubators in order to lure tenants. Entrepreneurs need to study the details of each offer to determine whether such claims are legitimate.
Length of Operation—"Incubators take time," said Steffens. "To get funding, incubator promoters and managers tend to promise all things to all people. Then, if early results are not promising, the supporters often panic. One manager told me that creation of an incubator typically takes two years from concept to opening, then two more years from opening to full occupancy."
Incubator Leadership—Many analysts contend that entrepreneurs can learn a great deal about the fundamental quality of an incubator program simply by studying the program's leadership. Is the incubator managed by people with backgrounds in business, or by general college or agency administrators? Can the managers provide long-term business plans that show how they intend to guide the incubator to financial independence?
Location—Does the incubator's setting adequately address your fledgling company's needs in terms of target market, transportation, competition, and future growth plans?
Financing—Is the incubator's financial base a reliable one, or is it on shaky ground?
Entrepreneurs interested in exploring the incubator concept can request information from several sources, including the Small Business Administration, area economic development agencies, area educational institutions, or the National Business Incubation Association.
Would-be small business owners should have a complete business plan in hand before applying for entrance into an incubator program. Most incubators maintain a stringent screening process to ensure that their resources are put to the best possible use.
Recent Incubator Innovations
INTERNET INCUBATORS. "Internet incubators—a for-profit variant of the old-time government- or academic-supported not-for-profit entities—are sprouting up like dandelions in summer," wrote Thea Singer in Inc. As with traditional incubators, Internet versions provide dot-com startups with office space, business information and advice, financial assistance (either directly or by connecting them to potential sources of seed money), and management, accounting, and other infrastructure services. According to Internet incubators, these kinds of assistance can provide entrepreneurs with essential tools to accelerate their all-important "speed to market" in the fast-paced Internet economy. "No longer can a great idea or concept for a company take years to develop," confirmed Jerry Brandt in Los Angeles Business Journal. "Trial and error and time to perfect a great idea will leave the entrepeneur in the dust watching another company or individual succeed…. In today's Internet economy [speed to market] is more than a [driving force], it is the difference between success and failure." The price of membership in an Internet incubator can be steep, however. In return for providing their various services and funding, incubators receive a percentage (anywhere from 5 to more than 50 percent) of the dot-com's equity.
Entrepreneurs who are considering membership in an Internet incubator should study the benefits and drawbacks closely before making a final decision. Potential other sources of funding and assistance should be explored, as well as the level of autonomy that is present in the program. In addition, entrepreneurs should examine whether their e-business is prepared to take advantage of the incubator's ability to accelerate the launch process. Analysts note that speed to market is of little benefit if you do not have a complete, focused business plan in place. Finally, entrepreneurs need to objectively weigh whether increased speed to market is worth giving up a piece of the company.
INTERNALIZED BUSINESS INCUBATORS. Another recent wrinkle in incubator creation has emerged in the corporate world in recent years. Weary of mass defections of valuable employees who decide to launch entrepreneurial ventures of their own, some companies have established business incubators within their own corporate structures. In these programs, employees can use the company's resources (including their already established name and reputation) to build and romote their own new business ideas. "The company will provide the management guidance, infrastructure, and financial support to 'incubate' these ventures," explained David Cuthill in Los Angeles Business Journal. "The outcome is a clear win-win. Existing companies stem the hemorrhaging of top talent to Internet start-ups, while profiting from the high multiples investors are willing to pay for a share in Internet ventures…. And entrepreneurial employees get the challenge—and the profits—of creating their own 'companies' with little of the risk they would face on their own."

Foreign exchange reserves
Foreign Exchange


Foreign exchange reserves (also called Forex reserves) in a strict sense are only the foreign currency deposits held by central banks and monetary authorities. However, the term foreign exchange reserves in popular usage commonly includes foreign exchange and gold, SDRs and IMF reserve position as this total figure is more readily available, however it is accurately deemed as official reserves or international reserves. These are assets of the central banks which are held in different reserve currencies such as the dollar, euro and yen, and which are used to back its liabilities, e.g. the local currency issued, and the various bank reserves deposited with the central bank, by the government or financial institutions.


History
Reserves were formerly held only in gold, as official gold reserves. But under the Bretton Woods system, the United States pegged the dollar to gold, and allowed convertibility of dollars to gold. This effectively made dollars appear as good as gold. The U.S. later abandoned the gold standard, but the dollar has remained relatively stable as a fiat currency, and it is still the most significant reserve currency. Central banks now typically hold large amounts of multiple currencies in reserve.

Purpose
In a non fixed exchange rate system, reserves allow a central bank to purchase the issued currency, exchanging its assets to reduce its liability. The purpose of reserves is to allow central banks an additional means to stabilise the issued currency from excessive volatility, and protect the monetary system from shock, such as from currency traders engaged in flipping. Large reserves are often seen as a strength, as it indicates the backing a currency has. Low or falling reserves may be indicative of an imminent bank run on the currency or default, such as in a currency crisis.
Central banks sometimes claim that holding large reserves is a security measure. This is true to the extent that a central bank can prop up its own currency by spending reserves. (This practice is essentially large-scale manipulation of the global currency market. Central banks have sometimes attempted this in the years since the 1971 collapse of the Bretton Woods system. A few times, multiple central banks have cooperated to attempt to manipulate exchange rates. It is unclear just how effective the practice is.) But often, very large reserves are not a hedge against inflation but rather a direct consequence of the opposite policy: the bank has purchased large amounts of foreign currency in order to keep its own currency relatively cheap.

Changes in reserves
The quantity of foreign exchange reserves can change as a central bank implements monetary policy. A central bank that implements a fixed exchange rate policy may face a situation where supply and demand would tend to push the value of the currency lower or higher (an increase in demand for the currency would tend to push its value higher, and a decrease lower). In a fixed exchange rate regime, these operations occur automatically, with the central bank clearing any excess demand or supply by purchasing or selling the foreign currency. Mixed exchange rate regimes ('dirty floats', target bands or similar variations) may require the use of foreign exchange operations (sterilized or unsterilized) to maintain the targeted exchange rate within the prescribed limits.
Foreign exchange operations that are unsterilized will cause an expansion or contraction in the amount of domestic currency in circulation, and hence directly affect monetary policy and inflation: "An exchange rate target cannot be independent of an inflation target. Countries that do not target a specific exchange rate are said to have a floating exchange rate, and allow the market to set the exchange rate; for countries with floating exchange rates, other instruments of monetary policy are generally preferred and they may limit the type and amount of foreign exchange interventions. Even those central banks that stricly limit foreign exchange interventions, however, often recognize that currency markets can be volatile and may intervene to counter disruptive short-term movements.
To maintain the same exchange rate if there is increased demand, the central bank can issue more of the domestic currency and purchase the foreign currency, which will increase the sum of foreign reserves. In this case, the currency's value is being held down; since (if there is no sterilization) the domestic money supply is increasing (money is being 'printed'), this may provoke domestic inflation (the value of the domestic currency falls relative to the value of goods and services).
To maintain the same exchange rate if there is decreased demand, the central bank can purchase the domestic currency using its foreign reserves, effectively removing the domestic currency from circulation; the total foreign exchange reserves will fall. If there is no sterilization, the domestic money supply is also falling, which will tend to restrain domestic inflation (the value of the domestic currency rises relative to the value of goods and services).
Since the amount of foreign reserves available to defend a weak currency (a currency in low demand) is limited, a foreign exchange crisis or devaluation could be the end result. For a currency in very high and rising demand, foreign exchange reserves can theoretically be continuously accumulated, although eventually the increased domestic money supply will result in inflation and reduce the demand for the domestic currency (as its value relative to goods and services falls). In practice, "Some central banks, through open market operations aimed at preventing their currency from appreciating, can at the same time build substantial reserves.
In practice, few central banks or currency regimes operate on such a simplistic level, and numerous other factors (domestic demand, production and productivity, imports and exports, relative prices of goods and services, etc) will affect the eventual outcome. As certain impacts (such as inflation) can take many months or even years to become evident, changes in foreign reserves and currency values in the short term may be quite large as different markets react to imperfect data.

Costs and benefits
On one hand, if a country desires to have a government-influenced exchange rate, then holding bigger reserves gives the country a bigger ability to manipulate the currency market. On the other hand, holding reserves does induce opportunity cost. The "quasi-fiscal costs" of holding reserves are the gap between the low-yield assets that returns managers typically hold, and the average cost of government debt in the country. In addition, many governments have suffered huge losses on the management of the reserves portfolio - all of which is ultimately fiscal. When there is a currency crisis and all reserves vanish, this is ultimately a fiscal cost. Even when there is no currency crisis, there can be a fiscal cost, as is taking place in 2005 and 2006 with China, which holds huge USD assets but the RMB has been continually appreciating.

Excess Reserves
Foreign exchange reserves are important indicators of ability to repay foreign debt and for currency defense, and are used to determine credit ratings of nations, however, other government funds that are counted as liquid assets that can be applied to liabilities in times of crisis include stabilization funds. If those were included, Norway and Persian Gulf States would rank higher on these lists, and UAE's $875 billion Abu Dhabi Investment Authority would be third after Japan and China. Singapore also has significant government funds including Temasek Holdings and GIC. India is also planning to create its own investment firm from its forex reserves.

Levels

Reserves of foreign exchange and gold in 2006
At the end of 2004, 66% of the identified official foreign exchange reserves in the world were held in United States dollars and 25% in euros [1].
Monetary Authorities with the largest foreign reserves in 2007.
Rank
Country/Monetary Authority
billion USD (end of month)

People's Republic of China
$1434 (September) [1]

Japan
$946 (September)
—
Eurozone
$453 (August)

Russia
$434 (October 12)
4
Republic of China (Taiwan)
$263 (September)

South Korea
$257 (September)

India
$251 (October 5)

Brazil
$162 (October 10)

Singapore
$152 (September)

Hong Kong
$141 (September)

Germany
$117 (August)
Note:
^ China updates its information quarterly.
^ Russia updates its information weekly and monthly.
^ India updates its information weekly.
^ Brazil updates its information Daily.
These few holders account for more than 50% of total world foreign currency reserves. The adequacy of the foreign exchange reserves is more often expressed not as an absolute level, but as a percentage of short-term foreign debt, money supply, or average monthly imports.

Balance of trade


The balance of trade encompasses the activity of exports and imports, like the work of this cargo ship going through the Panama Canal.
The balance of trade (or net exports, sometimes symbolized as NX) is the difference between the monetary value of exports and imports in an economy over a certain period of time. A positive balance of trade is known as a trade surplus and consists of exporting more than is imported; a negative balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance; especially in the United Kingdom the terms visible and invisible balance are used.

Definition
The balance of trade forms part of the current account, which also includes other transactions such as income from the international investment position as well as international aid. If the current account is in surplus, the country's net international asset position increases correspondingly. Equally, a deficit decreases the net international asset position.
The trade balance is identical to the difference between a country's output and its domestic demand (the difference between what goods a country produces and how many goods it buys from abroad; this does not include money re-spent on foreign stocks, nor does it factor the concept of importing goods to produce for the domestic market).
Measuring the balance of payments can be problematic because of problems with recording and collecting data. As an illustration of this problem, when official data for all the world's countries are added up, exports exceed imports by a few percent; it appears the world is running a positive balance of trade with itself. This cannot be true, because all transactions involve an equal credit or debit in the account of each nation. The discrepancy is widely believed to be explained by transactions intended to launder money or evade taxes, smuggling and other visibility problems. However, especially for developed countries, accuracy is likely to be good.
Factors that can affect the balance of trade figures include:
Prices of goods manufactured at home (influenced by the responsiveness of supply)
Exchange rates
Trade agreements or barriers
Other tax, tariff and trade measures
Business cycle at home or abroad.
The balance of trade is likely to differ across the business cycle. In export led growth (such as oil and early industrial goods), the balance of trade will improve during an economic expansion. However, with domestic demand led growth (as in the United States and Australia) the trade balance will worsen at the same stage in the business cycle.

Economic impact
Modern economists are split on the economic impact of the trade deficit with some viewing it as a loss in a fixed volume of trade and more radical Neoliberal voices who claim it is a sign of economic strength.
The traditional view opposes long run trade deficits and outsourcing for the sake of labor arbitrage to obtain cheap labor as an example of absolute advantage which does not produce mutual gain, and not an example of comparative advantage which does.
Neoliberal economists claim that trade deficits are beneficial, noting the correlation between increasing trade deficits and increasing GDP and employment . An expanding economy means increased demand for domestic and foreign products. This rising demand promotes domestic investment as both foreign and domestic businesses seek to capitalize on the growth in demand. As the rate of growth accelerates foreign credit sources have greater incentives to invest in a growing nation's capital. The greater net inflows from abroad, the greater the trade deficit. Thus, GDP growth can be correlated with a trade deficit.
Strong GDP growth economies such as the United Kingdom, Australia, Hong Kong and the United States run consistent trade deficits.
GDP growth may be due to excess borrowing to fund consumption and not an expansion of the base of an economy. Developed nations such as Canada, Japan, and Germany typically run trade surpluses. China also has a trade surplus. A higher savings rate generally corresponds with a trade surplus. In 2006, the United States has its lowest savings rate since 1933.Correspondingly, the United States has high trade deficits. The general decline of Great Britain is another example of the deleterious effects of long term trade deficits.
Some contend long term effects of the trade deficits are deleterious. Since the stagflation of the 1970s, the U.S. economy has been characterized by somewhat slower growth. In 1985, the U.S. began its growing trade deficit with China. In 2006, the primary economic concerns have centered around: high national debt ($9 trillion), high corporate debt ($9 trillion), high mortgage debt ($9 trillion), high unfunded Medicare liability ($30 trillion), high unfunded Social Security liability ($12 trillion), high external debt (amount owed to foreign lenders) and a serious deterioration in the United States net international investment position (NIIP) (-24% of GDP),high trade deficits, and a rise in illegal immigration. These issues have raised concerns among economists and unfunded liabilites were mentioned as a serious problem facing the United States in the President's 2006 State of the Union address.
Large imbalances may sometimes be a sign of underlying economic problems or rigidities. An example would be a situation where exchange rates have been fixed or pegged for political reasons at levels impeding a correction of a trade imbalance.
The trade deficit must be "financed" by foreign income or transfers, or by a capital account surplus. This includes inward foreign investment and capital purchases (stocks, bonds ect). An increase in net foreign liabilities tends to lead to an increase in the net outflow of income on international investments.
Those in favor of the trade deficit point to this financing as the source of the benefit. Instead of buying goods back, buyers in the receiving country send the money back in the form of capital. A firm in America sends dollars for Chinese toys, and the Chinese receivers use the money to buy stock in an American firm. Although this is a form of financing, it is not a debt on any party in America.
Such payments to foreigners have intergenerational effects: by shifting consumption over time, some generations may gain at the expense of others . However, a trade deficit may lead to higher consumption in the future if, for example, it is used to finance profitable domestic investment, which generates returns in excess of that paid on the net foreign liabilities (a situation that might arise if a country experiences an unexpected gain in productivity). Similarly, a surplus on the current account implies an increase in the net international investment position and the shifting of consumption to future rather than current generations.
However, trade imbalances are not always indicative of the smooth operation of the market given differences in international productivity and intertemporal consumption preferences. Trade deficits have often been associated with a loss of international competitiveness, or unsustainable 'booms' in domestic demand. Similarly, trade surpluses have been associated with policies that inefficiently bias a country's economic activity towards external demand, resulting in lower living standards. An example of an economy which has had a positive balance of payments was Japan in the 1990s. The positive balance was partly the result of protectionist measures that brought excessive profits to Japanese exporters

market

Market size and liquidity
The foreign exchange market is unique because of:
*its trading volume,
*the extreme liquidity of the market,
*the large number of, and variety of, traders in the market,
*its geographical dispersion,
*its long trading hours - 24 hours a day (except on weekends).
*the variety of factors that affect exchange rates,


Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study Triennial Central Bank Survey 2004
*$600 billion spot
*$1,300 billion in derivatives, ie
*$200 billion in outright forwards
*$1,000 billion in forex swaps
*$100 billion in FX options.


The ten most active traders account for almost 73% of trading volume, according to The Wall Street Journal Europe, (2/9/06 p. 20). These large international banks continually provide the market with both bid (buy) and ask (sell) prices. The bid/ask spread is the difference between the price at which a bank or market maker will sell ("ask", or "offer") and the price at which a market-maker will buy ("bid") from a wholesale customer. This spread is minimal for actively traded pairs of currencies, usually only 1-3 pips. For example, the bid/ask quote of EUR/USD might be 1.2200/1.2203. Minimum trading size for most deals is usually $1,000,000.
These spreads do not apply to retail customers. To individuals, banks will routinely mark up the difference to say 1.2100 / 1.2300 for transfers, or say 1.2000 / 1.2400 for banknotes or travellers' cheques.

forex

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Forex where one currency is traded for another. It is by far the largest market in the world, in terms of cash value traded, and includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Retail traders (speculators) are a smaller part of this market. They may participate directly through brokers or banks if they research the market correctly and or establish relationship with them Many that are not in the know about how the market works have become targets of forex scams.