Monday, 24 October 2016

Want to Double Your Money? The “Rule of 72” Tells You How

Bill Veeck once bought the Chicago White Sox baseball
team franchise for $10 million and then sold it 5 years
later for $20 million. In short, he doubled his money in
5 years. What compound rate of return did Veeck earn
on his investment?
A quick way to handle compound interest problems
involving doubling your money makes use of the “Rule
of 72.” This rule states that if the number of years, n, for
which an investment will be held is divided into the value
72, we will get the approximate interest rate, i, required
for the investment to double in value. In Veeck’s case,
the rule gives
72/n = i
72/5 = 14.4%
Alternatively, if Veeck had taken his initial investment
and placed it in a savings account earning 6 percent com-
pound interest, he would have had to wait approximately
12 years for his money to have doubled:
72/i = n
72/6 = 12 years
Indeed, for most interest rates we encounter, the
“Rule of 72” gives a good approximation of the interest
rate – or the number of years – required to double your
money. But the answer is not exact. For example, money
doubling in 5 years would have to earn at a 14.87 percent
compound annual rate [(1 + 0.1487)5 = 2]; the “Rule of
72” says 14.4 percent. Also, money invested at 6 percent
interest would actually require only 11.9 years to double
[(1 + 0.06)11.9 = 2]; the “Rule of 72” suggests 12.
However, for ballpark-close money-doubling approxima-
tions that can be done in your head, the “Rule of 72”
comes in pretty handy.

Agency Theory

Agency Problems
It has long been recognized that the separation of ownership and control in the modern
corporation results in potential conflicts between owners and managers. In particular, the
objectives of management may differ from those of the firm’s shareholders. In a large cor-
poration, stock may be so widely held that shareholders cannot even make known their
objectives, much less control or influence management. Thus this separation of ownership
from management creates a situation in which management may act in its own best interests
rather than those of the shareholders.
We may think of management as the agents of the owners. Shareholders, hoping that the
agents will act in the shareholders’ best interests, delegate decision-making authority to them.
Jensen and Meckling were the first to develop a comprehensive theory of the firm under
agency arrangements.1 They showed that the principals, in our case the shareholders, can
assure themselves that the agents (management) will make optimal decisions only if appro-
priate incentives are given and only if the agents are monitored. Incentives include stock
options, bonuses, and perquisites (“perks,” such as company automobiles and expensive
offices), and these must be directly related to how close management decisions come to
the interests of the shareholders. Monitoring is done by bonding the agent, systematically
reviewing management perquisites, auditing financial statements, and limiting management
decisions. These monitoring activities necessarily involve costs, an inevitable result of the
separation of ownership and control of a corporation. The less the ownership percentage
of the managers, the less the likelihood that they will behave in a manner consistent with
maximizing shareholder wealth and the greater the need for outside shareholders to monitor
their activities.
Some people suggest that the primary monitoring of managers comes not from the
owners but from the managerial labor market. They argue that efficient capital markets
provide signals about the value of a company’s securities, and thus about the performance
of its managers. Managers with good performance records should have an easier time finding
other employment (if they need to) than managers with poor performance records. Thus, if
the managerial labor market is competitive both within and outside the firm, it will tend to
discipline managers. In that situation, the signals given by changes in the total market value
of the firm’s securities become very important.

Wednesday, 15 January 2014

Small Businesess :

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Small Business :

there are four familiar types of small businesses.
1. Manufacturing 2. Wholesale 3. Retail 4. Service 
Familiar large businesses were once very small . Small businesses serve as a tool for the large businesses.

Importance of small businesses:

1. Risk taking 
2. Self inspired 
3. Initiative towards stay ahead 
4. Failure does not matter 
5. Achievements leads 

Benefits of Small businesses : 

  • Relations are personal 
  • Responsive towards problems 
  • Innovative and Inventiveness 
  • Low Overheads  

Monday, 13 January 2014

Careers in Business Adminstration :

Careers in Business Administration : 

1. Company Manager:
Business Administration leads to a wide variety of manager's jobs in organisations .
2. Entrepreneur :
As a entrepreneur anyone can start his own business .
3. Investment Banker :
"Earn return on Investment" . There programs will teach about the market and resources such as financial derivatives, fixed-income investment , foreign exchange , commodities , stocks and sale of securities.
4. Private Equity Manager : 
"managing investments in unlisted companies "
5. Strategic Consultant : 
"guidance and advice to other organisations"
6. Specialist in Finance, operations, HR, or Information systems.
Managing the different functions of organisations.

Sunday, 12 January 2014

what is Success?

Success is the achievements of the goals for whom someone is looking for .It may be refer as the the satisfaction , a satisfaction who take you away from others ,,,,,,,,,,,,,,,,

Success demand forwhat?

Everyone is waiting for a better tomorrow , but why people are not struggling for a better today?