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Money, spending, saving and investment

Posted by Economics Corner on 9:02 AM
Learn about money in money land:
http://www.orangekids.com/cedric/money_intro.htm

Learn about spending pattern in spendopolis:
http://www.orangekids.com/cedric/spend_sp_001.htm

Learn about saving:
http://www.orangekids.com/cedric/save_intro.htm

Learn about investment in investment republic:
http://www.orangekids.com/cedric/invest_intro.htm

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CAN YOU BE THE NEXT MARKET GURU?

Posted by Economics Corner on 9:00 AM
In the following activity, you'll start with $100 in Part 1 and $1000 in Part 2 and attempt to accumulate as much wealth as you can by either investing your money in the stock market or setting it aside safely in the bank. When investing in the stock market, your money will be spread among all the stocks in the market rather than placed in any single stock. This is much like investing in a diversified mutual fund. For those who aren't sure what a diversified mutual fund is, it is simply a fund that pools money from many different investors and invests in a basket of stocks. A single individual often does not have enough money to do this on his or her own. Now click below and begin your quest for guru status.

Part 1
Part 2

Professional investment managers have a variety of statistics they examine in an effort to estimate the relative value of the stock market. To help you with your decision-making process, the main ones they use will be given during your trek through time. Read the following summaries of three key statistics to give you an idea of what information they contain. Keep in mind however, if markets are truly efficient, these ratios may be of little help. Perhaps you will find the relationship that others have not.

1. Price/Earnings (P/E) ratio: This ratio describes how much one is paying for every dollar a company earns. For example, if a company's stock price is $15 per share, and it earned $1 per share over the preceding year, its P/E ratio would be 15. To give you some historical perspective, the average P/E ratio over the last 80 years has been 15.7. As of 4/15/2002 the average P/E for the largest 500 stocks was 25. All else equal, the lower the P/E ratio, the less expensive stock prices are.
2. Dividend Yield: Many stocks pay dividends. Dividends are payments to shareholders from the company's earnings. The dividend yield is the dividend divided by the share price. As an example, suppose you buy stock at $10 a share and the company pays $1 per share in dividends. In this case, the dividend yield would be $1/$10 = 10 percent. For historical perspective, consider that the average dividend yield over the last 80 years has been 4.39 percent. At the end of the year 2001, it was 1.5 percent . All else equal, the higher the dividend yield, the more attractive stocks are.
3. Interest Rate: The one-year interest rate tells you how much you can expect to earn on bonds over the next year. Bonds are fixed-income instruments that guarantee a fixed return. Think of them as savings bonds that you may have. The higher the interest rate, the more bonds pay and the less attractive stocks will be. Thus, as interest rates rise, stock prices generally fall as investors move money out of stocks and into bonds. Conversely, as interest rates decline, investors move wealth from bonds and into stocks.

For the P/E ratio and dividend yield, the preceding five-year average will be given. This will give you a historical context in which to judge these two statistics so that you can at least make an educated guess as to whether the statistics are relatively high or low.
The question you have to answer is whether the statistical value will revert back to its average or keep on trending in one particular direction. For example, if the P/E ratio is above its five-year average, common wisdom would suggest stock prices are relatively high. This may portend that stock prices will soon fall. On the other hand, if P/E ratios have moved above their average, this may suggest P/E ratios are trending upwards and thus stock prices will rise. If all this sounds somewhat contradictory and confusing, it is. Forecasting stock prices is often considered more of an art than a science.


Extracted from http://www.econedlink.org

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Posted by Economics Corner on 6:39 AM
Singapore and Brunei launch new $20 notes
extracted from Channel News Asia 27 June 2007
A new $20 polymer note has been launched to celebrate the 40th anniversary of the Currency Interchangeability Agreement between Singapore and Brunei. The commemorative notes were launched by Singapore Prime Minister Lee Hsien Loong and the Brunei Sultan Hassanal Bolkiah at a ceremony in Bandar Seri Begawan on Wednesday. Three million of the Singapore $20 commemorative notes will be introduced into circulation gradually through the banks, starting 16 July.
I hope that this article will interest you. You can find out more from the Singapore Mint website at http://www.singaporemint.com/. Please revise on the following this week as we look into the topic on money:
What is money? What are the functions of money? Why is it used as a medium of exchange? What are the forms (types) of money? Why is money introduced as a medium of exchange over barter trade( cons of barter trade)? What are the differences between the Central Bank and the commercial banks?
Write on the following topics:
1. Are Credit Cards A Form Of Money?
you can refer to this link for a comment on the above topic: http://economics.about.com/cs/money/a/credit_cards.htm
2. What are the differences in the functions of the Central Bank and the commercial Banks in Singapore?
you can refer to this link to learn more about the functions of the Central Bank in Singapore: http://www.mas.gov.sg/resource/eco_research/eco_education/explorer/explorer1.pdf
about commercial banks in Singapore:

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