Term 2 Progress Test 2 Revision Sheet

Study the terms and concepts for chapter 15 in your textbook.

Revision Sheet Term 2 Progress Test 1

Study chapters 13 and 14 from the Introduction to Business book.

Facebook

Facebook is currently the largest social networking site used by more than 500 million people. It was found in 2004 by a Harvard student Mark Zuckerberg. At first it was only for Harvard students then for all high schools and colleges. And country by country it became one of the most popular sites, however it outflanked many other sites like MySpace.

It is also one of the new titans of internet and it managed to challenge even google. It showed a new vision through personal relationship and recommendations instead of searches. For example the new idea to "Like" something. Zack also introduced new messaging system which is unified and can be used for email, text messaging or online chat. It can be used through mobile and web.

Currently Mark Zuckerberg likes to keep control over his company. It even declined a $1 billion offer from Yahoo in 2006. He even turned down the idea of stock offering. Facebook raised 500 million dollars in january 2011 by investors Goldman sachs and a russian investor, seeking $50 billion value.

Article

Done By: Asdaf Iqbal

Signs of Recovery

http://dealbook.nytimes.com/2011/01/14/jpmorgans-fourth-quarter-profits-rise-47-to-4-8-billion/?ref=business

The article, in short, reveals positive figures for JP Morgan's performance for 2010. It increased its profit that year from 11.4 billion dollars the year before to 17.4 billion, a 47 % increase. This was apparently due to a better consumer lending environment and retail financial services, which include everything from mortgages to credit cards to checking accounts.

The financial report could pave the way for JP Morgan to increase its dividend by as much as a dollar.

The bank however is facing litigation coming from its mortgage business. Along with other several banks, they are going through state and private investigations over questionable foreclosure procedures. Homeowners and state regulators have claimed that banks foreclosed on homes without proving the owned the mortgages. Some banks are even being accused of forging documents in foreclosure procedures.

Speculation over the banking system's ethics is not a new subject. Many have been known to use immoral tactics to make profit. But with so much power it is hard to monitor everything a bank may or may not do. Many of these investigations do not harm the banks.

Since the financial crisis, JP Morgan has a come a long way from when it earned 0.06 dollars a share in the fourth quarter of 2008. “Solid performance in the quarter and for the year reflected good results across most of our businesses, which benefited from strong client relationships and continued investments for growth,” said JP Morgan’s chief executive, Jamie Dimon.

The bank is constantly hinting at increasing its dividend but first, like many other banks, must receive the green light from the Federal Reserve to complete its second round of "stress tests" to determine the capabilities of certain banks. This is an initiative to help prevent banks from striving for too much and ending up losing it all as was one of the main causes of the 2008 financial crisis.

Good news for banks is a bright light for the general recovery of the broader economy. “It’s not like issues from the financial crisis are going away, but we think we’ll see positive overtones as to how the economic recover is taking hold,” said Moshe Orenbuch, an analyst at Credit Suisse.

Rising chinese inflation to show up in U.S economy

http://www.nytimes.com/2011/01/12/business/global/12inflate.html?src=me&ref=business

Inflation has arrived in China. And after Tuesday’s release of crucial financial statistics by China’s central bank, few economists expect Beijing officials to be able to tame rising prices any time soon.

While American importers of Chinese goods will feel the squeeze, the effect on American consumers may be more subtle and the overall impact on United States inflation may be minimal.

In China, consumer prices were 5.1 percent higher in November than a year earlier, according to official government data. And many economists say the official figures actually understate the rate of inflation, which might in reality be twice as high.

“Four percent, China can bear it — beyond 5 percent, people will complain a lot,” said Huo Jianguo, president of the Chinese Academy of International Trade and Economic Cooperation here.

Higher global commodity prices, as well as rising wages in China, play roles in the increasing cost of Chinese goods. But economists say the main reason for the inflation now is China’s foreign exchange reserves, which surged by a record amount in the fourth quarter.

U.S. dollar gains push gold prices down

Wednesday, January 05, 2011

NEW YORK: The U.S. dollar rose Tuesday, pulling the euro from a three-week crest and decreasing gold prices harshly.
Weak consumer stocks on Wall Street and a guess by Morgan Stanley that the standard S&P 500 would lose position in 2011 weighed on opinion a day after the S&P 500 and the Dow increase by two-year highs.
An unexpected boost in U.S. factory orders in November was reported on Tuesday. Orders recorded their biggest profit in eight months.
“No reason that the [U.S.] market is down other than it is up a lot. The news is good, but you could get a 4 to 5 percent correction out of nowhere only because stocks are up a lot,” said Jim Awad, managing director of Zephyr Management in New York.
“But the forward momentum is likely positive, supported by increasingly good news in the economy,” he added.
Spot gold prices tumbled below $1,400 an ounce, losing $28.05, or 1.98 percent, to $1,385.70.
“Pressure [on gold] is expected to return over the next week based on our expectation for a problem in oil prices, gains in the stock market and general stability in the dollar,” MF Global said in a note.
Copper fell from a record high hit Monday, dropping 7.7 cents, or nearly 2% to $4.38 per pound in New York trade. Crude oil prices fell $2.43, or 2.65%, to $89.12 per barrel.

http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=3&article_id=123228#axzz1Arb7bzGh

Is the Iphone bad for the American economy

http://curiouscapitalist.blogs.time.com/2011/01/11/is-the-iphone-bad-for-the-american-economy/?xid=huffpo-direct

This article points out how the iphone, while being a major success, could be considered detrimental to the American economy. As is known, the iphone is an American product, however, what many people might be oblivious to is the fact that it is manufactured in the People's Republic of China. This increases the US trade deficit with China. The authors of the study presented in the paper introduce us to an idea that could cut down on Apple's profist but could be beneficial to the US economy. The idea is relatively simple, start manufacturing iphones in the US. My perspective about this article is incredulous, simply because the US economy is based on Capitalism and companies shouldn't make sacrifices in the sake of the country's well being.

Recession cut air travel demand by a quarter, finds Civil Aviation Authority

Global economic recession resulted in a significant decline in the air travel worldwide. Worst hit were the routes between the UK and European Union followed by those between UK and North America. These were the areas severely affected by the financial crisis.

Recent data shows a build up in the travel business. However, still remaining below what it was in 2008. Icelandic volcanic disruption has also contributed to the decrease in air travel on account of closure of European airspace.

According to CAA, the recession caused movement of short haul business travelers from business class to economy class. Revival of this may or may not happen, as a general acceptance to this has been noticed by many.

Banks lead Wall Street advance

NEW YORK (Reuters) – U.S. stocks rose on Wednesday after a healthy bond sale in Portugal and signs of strength in the U.S. banking sector.

The euro rose 0.5 percent against the U.S. dollar.

JPMorgan Chase & Co (JPM.N) rose 1.6 percent to $44.30 to lead the KBW bank index (.BKX), up 1.6 percent. JPMorgan Chief Executive Jamie Dimon said the bank could pay an annual dividend of 75 cents to a dollar once the Federal Reserve gives its approval.

Adding to the positive sentiment, Wells Fargo raised the U.S. bank sector to an "overweight" rating.

The Dow Jones industrial average (.DJI) gained 51.62 points, or 0.44 percent, to 11,723.50. The Standard & Poor's 500 Index (.SPX) rose 5.67 points, or 0.44 percent, to 1,280.15. The Nasdaq Composite Index (.IXIC) added 6 points, or 0.22 percent, to 2,722.83.

The Fed will release its Beige Book of regional economic conditions at 2 p.m..

Shares of ITT Corp (ITT.N) soared more than 18 percent to $62.32 after the diversified manufacturer said it would separate its businesses into three different publicly traded companies, and shareholders will own shares in all the three corporations.

Link to the Original article

Dell Delivers Tailored Retail Solutions for Small and Midsized Businesses

Dell today extended its Retail Solutions Portfolio with comprehensive offerings that address the unique needs of small and midsized retailers.

Available now in the United States and expanding globally in the coming quarters, Dell has developed end-to-end retail solutions to help growing businesses manage explosive data growth, improve security and serve customers more efficiently.

For the storefront, Dell offers fully integrated point-of-sale (POS), digital signage and surveillance solutions. Back-office offerings make it easier for retailers to manage their growing data needs, stay in control and protect their business by focusing on four distinct infrastructure needs – storage and virtualization, systems management, security, and disaster recovery.

GM Signs With NBC for Olympic Broadcasts

General Motors Co. says it has signed on to be the exclusive U.S. auto advertiser on NBC's broadcast of the 2012 Olympic Games in London. The deal is the latest sign of the increased emphasis that the auto maker is putting on advertising. For the Super Bowl, GM has purchased a big ad package from News Corps Fox and will broadcast at least two Chevrolet ads during the game as well as several in pre-game and post game broadcasts. Thirty-second ads in the game are fetching between $2.8 million and $3 million, according to media buyers.

The Economy in 2011

When people say that the recovery does not feel like a recovery, they are describing reality. The economy is growing, but for many Americans life is not getting better. Unemployment remains high. Home values are depressed. And state budgets are in deep trouble, presaging more layoffs, service cuts and tax increases.

The question for 2011 is whether growth will ever translate into broad prosperity.

For that to happen, the federal government must ensure that the recovery does not falter for lack of adequate stimulus, while fostering job-creating industries and committing itself to long-term deficit reduction.

With corporate profits robust and a one-year payroll tax cut set to start this month, there are reasons to hope for continued growth in 2011. Yet, growth is not expected to be strong enough to make a real dent in unemployment, which at 9.8 percent remains close to the recession’s peak of 10.2 percent in October 2009.

Rising corporate profits should spur hiring, but recent history is not encouraging. Part of the problem is that companies are more apt to spend their cash on stock buy-backs and acquisitions that increase share prices but not hiring. Many companies that are hiring are doing it in fast-growing markets like China and India.

The rift between recovery and prosperity is also painfully evident in housing. Prices are likely to fall another 5 percent in 2011, as unemployment-related defaults and the failure to adequately address the foreclosure crisis add to the inventory of unsold homes. Some two million homes will probably be lost in 2011, on top of 6.8 million homes lost in the bust so far.

Joblessness and the housing bust will continue to batter state and city budgets in 2011. Promises by so many newly elected state officials to balance their budgets without raising any taxes are not only cynical, they are a recipe for more crises to come.

President Obama’s recent tax-cut deal with the Republicans included measures to support growth, notably extended unemployment benefits, and the payroll tax cut. Deep state budget cuts could offset much of that, unless Congress funnels more aid to states. The administration must continue to press banks for more and better mortgage workouts to help borrowers keep their homes.

Such efforts, while vital, are only the start. Competing in a global economy requires spare-no-expense effort to improve education. And Washington needs to do a lot more to help create globally competitive industries with jobs that pay well. We have heard President Obama talk about green jobs and rebuilding the nation’s infrastructure. The country and the economy need a big idea and a big project to move forward.

The federal deficit must be addressed. But cutting too deep, too fast will stall the recovery. There will have to be painful cuts ahead, and everything will have to be on the table, including entitlements and defense. Despite what the Republicans claim, there is no way to tackle the deficit and keep growing without raising taxes.

Link: http://www.nytimes.com/2011/01/02/opinion/02sun1.html?ref=recessionanddepression

China economic dominance is no guarantee

Heavily indebted,overstretched,financially and military are in a struggle with their influence all over the world to have a strong effect or impression to impact the global economy.

after two centuries of the European and the U.S dominance , there was a long run people arguing, does it belong to china or not ??

The future may not be quite as you have been seen before . The west may well be retreating into the shadows of china .. which means that it is possilble that the economic crsis will cause the us to re-boot.

So china was thinking of a new global economic and political power which , that will be one in which the us will remain standing out.

there has been a gradual decline in the position of the economies, as emerging markets become richer, countries like these will become prominent and that will change the way or world works.

China is the world's biggest creditor nation , they lifted thier shares over the past ten years doubling to 7%.

china may be at risk now if the rising of currency ,trade, and protection of the past two years anything to go buy. The political debate in china is about china's need to change in the post-crisis world . Many new ideas came out including the countryside reform, such as: better social security,higher wages,easier labor migration, and investment new industries .

link

Muslims are scared to enter the stock market in foreign countries because of the products or the services provided by the organizations companies firms etc....This was an obstacle to the Muslims because investing money in a forbidden product or a service is against the laws of Islam but recently TASIS has solved this problem. The index, called BSE TASIS Shariah 50, is composed of the 50 largest and most liquid stocks that adhere to Islamic law. The companies were chosen by the Taqwaa Advisory and Shariah Investment Solutions (TASIS), a Mumbai-based Islamic finance firm whose board members include legal experts and Islamic scholars. The stocks will be reviewed monthly for Shariah compliance and any stock changes its regulation and contradict Islamic laws will be excluded, also new stocks are added on quarterly basis. "It will create a market for Indian Muslims," Shariq Nisar, the director of research and operations at TASIS, said in a statement. "We can provide opportunity to domestic investors so that they can invest their money without falling foul of their ethical and religious requirement.

This idea will not only help Muslims to go by islamic laws but it will also help them to invest their money abroad and take advices from experts.

LINk

Recession

http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?scp=3&sq=business%20resesion%20on%202008&st=cse

There is no official definition of recession, and no official body to decree that one has begun or ended. Indeed, a clear picture of the state of the economy usually comes months or even years later. Recessions are commonly described as two or more quarters of a declining gross domestic product.

That definition is not used by the National Bureau of Economic Research, a private, non-partisan group based in Cambridge, Mass., whose findings on swings in the business cycle have come to be generally accepted as the definitive dates for recessions and expansions. Its definition of recession is: "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales."

On Dec. 1, 2008, the bureau announced that the United States economy had entered a recession on Dec. 1, 2007. On Sept. 20, 2010, it announced that the recession had ended in June 2009.

As many economists had expected, this official end date makes the most recent downturn the longest since World War II, at 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months.

The bureau took care to note that the recession, by definition, meant only the period until the economy reached its low point — not a return to its previous vigor.

“In determining that a trough occurred in June 2009, the committee did not conclude that economic conditions since that month have been favorable or that the economy has returned to operating at normal capacity,” the bureau said. “Rather, the committee determined only that the recession ended and a recovery began in that month.”

Consumers boost borrowing in November

American citizens have increased the amount of money they borrow, for buying new cars or paying for college. Consumer credit is at the lowest point in the last four years. "Consumer debt has increased by $1.3 billion, and an estimated of $7 billion in October." - Federal Reserve. This is a small increase in the annual rate which is currently $2.4 Trillion. In September the annual rate was $2.39 Trillion.

Economic growth is being held back due to the less borrowing of households and more saving due to the recession from December 2007. Consumers are accounted for %70 of economic activity. Which means, that %70 of the economic growth is responsible by the consumers.

As unemployment rises, the usage of money is being decreased, Slowing down the economy while people are saving all their money. Ellen Beeson Zentne who is a economist at Bank of Tokyo-Mitsubishi says " Household attitudes toward the use of credit cards soured during the Great Recession and it is going to take time before many people get comfortable with using them again ". Zetne also mentions consumer credit is growing at an annual rate of 4 percent. Which means, it will be a long time ti'll people start using credit because the levels of consumer credit need to normalize.

In the end, the people who are getting credit are for the reasons of buying student loans and credit cards. These two major reasons boost the flow of money in a long scale, due to recession it will take a long time till the people who have borrowed money can payback which in that time the interest rates will increase. A decline has also been showed in consumers buying credit cards.

After all this economic trouble, we can say that the economy is healing itself up and in time banks will be operational full time.

Consumers boost borrowing in November - Washington - Yahoo Business

End of Term Revision List

Grade 12 End of Term Business Revision Sheet

Teacher: A. Malik Holman

Pages: Chapter 18 pages 533 – 553, study chapter notes about credit from the PowerPoint presentation and study notes from the documentary, Capitalism: A Love Story, chapter 17, and 18.

Topics covered:

1. Mutual funds
2. Stocks and bonds
3.  Financial management
4.  Short-term and long-term debt financing
5.  Equity financing
6.  Management information systems
7.  E-business

New Ways to Get a Loan Without Going to the Bank

People have recently adapted to this all-new “online banking” system in which the interest rates are lower than banks, and return rates reach higher than 10%.

The two largest “peer-to-peer” lending firms, LendingClub and Prosper, offer unsecured loans that range from a small amount such as $25 up to $25,000. By doing this they claim that they are bringing back the retroactive methods of lending and borrowing, before banks became involved.

In these firms particularly, the lenders are more interested with helping those in need rather than making a “nice return” which is contrary to those who invest in banks.

The reason behind their ability to offer such satisfactory rates is because they do not have “infrastructure costs” such as expansion or the many costs that banks have to comply with. It’s a cost free business. As long as investors make educated decisions as to whom the money should be lent to, which can be achieved by thoroughly reading loan requests.

In this “peer-to-peer” system, borrowers can attain the money they need from several lenders. And lenders can diversify their risk by dividing their investment through several borrowers. A lender can give out a loan as small as $25 to a single borrower while investing in 100 other borrowers.

LendingClub, which owns the majority of shares to the peer-to-peer market, has been able to make a $188.4 million in profit over the last 3 years (Since 2007). Which is the result of the numerous satisfied costumers who invested in LendingClub.

“Nothing is worse for a business owner who’s attempting to bring an idea to fruition than to be told it’s terrible and won’t work.” says borrower John Good, which is why he joined LendingClub. And within two months his business was up and running. “It was good for me and good for the lenders.” he states.

Indra Singhal, a borrower looking for a good fixed-income investment, invested in LendingClub in 2009 after observing the dissatisfactory rates that banks had to offer.

And so far, he’s lent $80,000 to around 1,015 borrowers with a 14% return rate.

“If you compound our growth rate, we’ll be the size of Citibank in three years.” Claims the CEO of LendingClub, Renaud Leplanch.

Link To Article

Dollar Jumps After Reports Show Stronger Economy

The dollar jumped over the euro, pound, and yen Wednesday, after reports on jobs and the service sector pointed to a strengthening US economy. The euro fell by 1.2%, the British pound by 0.6%, and the Japanese yen by 1.5%, compared to the US dollar.

Payroll processor ADP reported that employers added far more jobs than economists had expected.

A trade group for purchasing executives stated that a measure of the US service sector rose to its highest level in December since May 2006. This service sector includes shipping companies, restaurants, shops, and hotels.

These two reports are signs that the US's economic growth is speeding up.

The US dollar also rose 1.8% over the Swiss franc, but dropped slightly under the Canadian dollar (in cents).

LINK

Apple vs. Android: The view from Google