Accounting

The systematic recording, reporting, and analysis of financial transactions of a business. The person in charge of accounting is known as an accountant, and this individual is typically required to follow a set of rules and regulations, such as the Generally Accepted Accounting Principles. Accounting allows a company to analyze the financial performance of the business, and look at statistics such as net profit.

Managerial accounting&Financial accounting

Managerial accounting is concerned with providing information to managers-that is, people inside an organization who direct and control its operation. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside an organization. Managerial accounting provides the essential data with which the organizations are actually run. Managerial accounting is also termed as management accounting or cost accounting. Financial accounting provides the scorecard by which a company's overall past performance is judged by outsiders. Managerial accountants prepare a variety of reports. Some reports focus on how well managers or business units have performedcomparing actual results to plans and to benchmarks. Some reports provide timely, frequent updates on key indicators such as orders received, order backlog, capacity utilization, and sales. Other analytical reports are prepared as needed to investigate specific problems such as a decline in the profitability of a product line. And yet other reports analyze a developing business situation or opportunity. In contrast, financial accounting is oriented toward producing a limited set of specific prescribed annual and quarterly financial statements in accordance with Generally Accepted Accounting Principles (GAAP). Managerial accounting differs from financial accounting in a number of ways that are briefly discussed below. Financial Accounting Reports to those outside organization owners, lenders, authorities and regulators. Emphasis financial activities. is on summaries consequences of Managerial Accounting the Reports to those inside the organization for tax planning, directing and motivating, controlling and performance evaluation. of Emphasis is on decisions affecting the past future.

Objectivity and verifiability of data are Relevance of items relating to decision emphasized. making is emphasized. Precision of information is required. Timeliness of information is required.

Only summarized data for the entire Detailed segment reports about organization is prepared. departments, products, customers, and employees are prepared. Must follow Generally Accepted Need not follow Generally Accepted Accounting Principles (GAAP). Accounting Principles (GAAP). Mandatory for external reports. Not mandatory. Managerial accounting is managers oriented therefore its study must be preceded by some understanding of what managers do, the information managers need, and the general business environment.

Business entities

There are many types of business entity defined in the legal systems of various countries. These include corporations, cooperatives, partnerships, sole traders, limited liability company and other specialized types of organization. Romania: S.A. (Societate pe Aciuni): p.l.c. (UK) A public limited company (legally abbreviated to plc with or without full stops) is a limited liability company that may sell shares to the public in United Kingdom company law, in the Republic of Ireland and other Commonwealth jurisdictions. It can be either an unlisted or listed company on the stock exchanges. In the United Kingdom, a public limited company usually must include the words "public limited company" or its abbreviation "plc" at the end and as part of its legal company name. However, certain public limited companies (mostly nationalised concerns) incorporated under special legislation are exempted from bearing any of the identifying suffixes. S.C.A. (societate n comandit pe aciuni): limited partnership with shares S.C.S. (societate n comandit simpl): limited partnership A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner. The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership. As in a general partnership, the GPs have actual authority as agents of the firm to bind all the other partners in contracts with third parties that are in the ordinary course of the partnership's business. As with a general partnership, "An act of a general partner which is not apparently for carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership only if the act was actually authorized by all the other partners." Like shareholders in a corporation, LPs have limited liability, meaning they are only liable on debts incurred by the firm to the extent of their registered investment and have no management authority. The GPs pay the LPs a return on their investment (similar to a dividend), the nature and extent of which is usually defined in the partnership agreement. General Partners thus carry more liability, and in cases of financial misfortune, the GP becomes "the generous partner". Limited partnerships are distinct from limited liability partnerships, in which all partners have limited liability. S.N.C. (societate n nume colectiv): general partnership In the commercial and legal parlance of most countries, a general partnership or simply a partnership, refers to an association of persons or an unincorporated company with the following major features: Created by agreement, proof of existence and estoppel. Formed by two or more persons The owners are all personally liable for any legal actions and debts the company may face It is a partnership in which partners share equally in both responsibility and liability. Partnerships have certain default characteristics relating to both (a) the relationship between the individual partners and (b) the relationship between the partnership and the outside world. The former can generally be overridden by agreement between the partners, whereas the latter generally cannot be. The assets of the business are owned on behalf of the other partners, and they are each personally liable, jointly and severally, for business debts, taxes or tortious liability. For example, if a partnership defaults on a payment to a creditor, the partners' personal assets are subject to attachment and liquidation to pay the creditor. By default, profits are shared equally amongst the partners. However, a partnership agreement will almost invariably expressly provide for the manner in which profits and losses are to be shared. Each general partner is deemed the agent of the partnership. Therefore, if that partner is apparently carrying on partnership business, all general partners can be held liable for his dealings with third persons. By default a partnership will terminate upon the death, disability, or even withdrawal of any one partner. However, most partnership agreements provide for these types of events, with the share of the departed partner usually being purchased by the remaining partners in the partnership. By default, each general partner has an equal right to participate in the management and control of the business. Disagreements in the ordinary course of partnership business are decided by a majority of the partners, and disagreements of extraordinary matters and amendments to the partnership agreement require

the consent of all partners. However, in a partnership of any size the partnership agreement will provide for certain electees to manage the partnership along the lines of a company board. Unless otherwise provided in the partnership agreement, no one can become a member of the partnership without the consent of all partners, though a partner may assign his share of the profits and losses and right to receive distributions ("transferable interest"). A partner's judgment creditor may obtain an order charging the partner's "transferable interest" to satisfy a judgment. S.R.L. (societate cu rspundere limitat): Ltd. (UK) A private company limited by shares, usually called a private limited company (Ltd) (though this can theoretically also refer to a private company limited by guarantee), is a type of company incorporated under the laws of England and Wales, Scotland, that of certain Commonwealth countries and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company (plc). "Limited by shares" means that the company has shareholders, and that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company. A shareholder's personal assets are thereby protected in the event of the company's insolvency, but money invested in the company will be lost. A limited company may be "private" or "public". A private limited company's disclosure requirements are lighter, but for this reason its shares may not be offered to the general public (and therefore cannot be traded on a public stock exchange). This is the major distinguishing feature between a private limited company and a public limited company. Most companies, particularly small companies, are private. Private companies limited by shares are usually required to have the suffix "Limited" (often written "Ltd" or "Ltd.") or "Incorporated" ("Inc.") as part of their name, though the latter cannot be used in the UK or the Republic of Ireland; companies set up by Act of Parliament may not have Limited in their name. In the Republic of Ireland "Teoranta" ("Teo.") may be used instead, largely by Gaeltacht companies. "Cyfyngedig" ("Cyf.") may be used by Welsh companies in a similar fashion.

Partnership
A partnership is an arrangement where entities and/or individuals agree to cooperate to advance their interests. In the most frequent instance, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits or losses. Partnerships are also frequent regardless of and among sectors. Non-profit organizations, for example, may partner together to increase the likelihood of each achieving their mission. Governments may partner with other governments to achieve their mutual goals, as may religious and political organizations. In education, accrediting agencies increasingly evaluate schools by the level and quality of their partnerships with other schools and across sectors. Partnerships also occur at personal levels, such as when two or more individuals agree to domicile together. Partnerships between governments, interest-based organizations, schools, businesses, and individuals, or some combination thereof, have always been and remain commonplace. Partnerships have widely varying results and can present partners with special challenges. Levels of giveand-take, areas of responsibility, lines of authority, and overarching goals of the partnership must all be negotiated. While partnerships stand to amplify mutual interests and success, some are considered ethically problematic, or at least debatable. When a politician, for example, partners with a corporation to advance the corporation's interest in exchange for some benefit, a conflict of interest may make the partnership problematic from the standpoint of the public good. Developed countries often strongly regulate certain partnerships via anti-trust laws, so as to inhibit monopolistic practices and foster free market competition. Among developed countries, business partnerships are often favored over corporations in taxation policy, since dividend taxes only occur on profits before they are distributed to the partners. However, depending on the partnership structure and the jurisdiction in which it operates, owners of a partnership may be exposed to greater personal liability than they would as shareholders of a corporation.

Public company
A public company or publicly traded company is a company that offers its securities (stock, bonds, etc.) for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets.

Usually, the securities of a publicly traded company are owned by many investors while the shares of a privately held company are owned by relatively few shareholders. A company with many shareholders is not necessarily a publicly traded company. In the United States, in some instances, companies with over 500 shareholders may be required to report under the Securities Exchange Act of 1934; companies that report under the 1934 Act are generally deemed public companies. The first company to issue shares is thought to be the Dutch East India Company in 1601. Advantages It is able to raise funds and capital through the sale of its securities. This is the reason publicly traded corporations are important: prior to their existence, it was very difficult to obtain large amounts of capital for private enterprises. The financial media and city analysts will be able to access additional information about the business. Disadvantages Privately held companies have several advantages over publicly traded companies. A privately held company has no requirement to publicly disclose much, if any financial information; such information could be useful to competitors. For example, publicly traded companies in the United States are required by the SEC to submit an annual Form 10-K containing a comprehensive detail of a company's performance. Privately held companies do not file form 10-Ks; they leak less information to competitors, and they tend to be under less pressure to meet quarterly projections for sales and profits. Publicly traded companies are also required to spend more for certified public accountants and other bureaucratic paperwork required of all publicly traded companies under government regulations. For example, the Sarbanes-Oxley Act in the United States does not apply to privately held companies. The money and income of the owners remains relatively unknown by the public. General Trend The norm is for new companies, which are typically small, to be privately held. After a number of years, if a company has grown significantly and is profitable, or has promising prospects, there is often an initial public offering which converts the privately held company into a publicly traded company or an acquisition of a company by publicly traded company. However, some companies choose to remain privately held for a long period of time after maturity into a profitable company. Investment banking firm Goldman Sachs and shipping services provider United Parcel Service (UPS) are examples of companies which remained privately held for many years after maturing into profitable companies. Privatization Less common, but not unknown, is for a public company to buy out its shareholders and become private. This is typically done through a leveraged buyout and occurs when the buyers believe the securities have been undervalued by investors. Publicly held companies can also become privately held by having all of their shares purchased by an individual or small group of investors, or by another company that is privately held. In addition, one publicly traded company may be purchased by one or more publicly traded company(ies), with the bought-out company either becoming a subsidiary or joint venture of the purchaser(s) or ceasing to exist as a separate entity, its former shareholders receiving either cash, shares in the purchasing company or a combination of both. When the compensation in question is primarily shares then the deal is often considered a merger. Subsidiaries and joint ventures can also be created de novo - this often happens in the financial sector. Subsidiaries and joint ventures of publicly traded companies are not generally considered to be privately held companies (even though they themselves are not publicly traded) and are generally subject to the same reporting requirements as publicly traded companies. Finally, shares in subsidiaries and joint ventures can be (re)-offered to the public at any time - firms that are sold in this manner are called spin-outs. Most industrialized jurisdictions have enacted laws and regulations that detail the steps that prospective owners (public or private) must undertake if they wish to take over a publicly traded corporation. This often entails the would-be buyer(s) making a formal offer for each share of the company to shareholders. Normally some form of supermajority is required for this sort of the offer to be approved, but once it happens then usually all shareholders are compelled to sell at the agreed-upon price and the company either becomes a subsidiary, ceases to exist or becomes privately held. Private companies (vezi Ltd.) A company whose ownership is private. As a result, it does not need to meet the strict Securities and Exchange Commission filing requirements of public companies.

Private companies may issue stock and have shareholders. However, their shares do not trade on public exchanges and are not issued through an initial public offering. In general, the shares of these businesses are less liquid and the values are difficult to determine.

Private company
A privately held company or close corporation is a business company owned either by nongovernmental organizations or by a relatively small number of shareholders or company members which does not offer or trade its company stock (shares) to the general public on the stock market exchanges, but rather the company's stock is offered, owned and traded or exchanged privately. Less ambiguous terms for a privately held company are unquoted company and unlisted company.

The role of an accountant

The accountant evaluates records drawn up by the bookkeeper and shows the results of this investigation as losses and gains, leakages, economies, or changes in value, so as to reveal the progress or failures of the business and also its future limitations and possibilities. Accountants must also be able to draw up a set of financial records and prescribe the system of accounts that will most easily give the desired information; they must be capable of arriving at a comprehensive view of the economic and the legal aspects of a business, envisaging the effect of every sort of transaction on the profit-and-loss statement; and they must recognize and classify all other factors that enter into the determination of the true condition of the business (e.g., statistics or memoranda relating to production; properties and financial records representing investments, expenditures, receipts, fiscal changes, and present standing). Cost accounting shows the actual cost, over a certain period of time, of particular services rendered or of articles produced; by this system unprofitable ventures, services, departments, and methods may be discovered.

Financial statement
A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. In British Englishincluding United Kingdom company lawa financial statement is often referred to as an account, although the term financial statement is also used, particularly by accountants. For a business enterprise, all the relevant financial information, presented in a structured manner and in a form easy to understand, are called the financial statements. They typically include four basic financial statements, accompanied by a management discussion and analysis: 1. Balance sheet: also referred to as statement of financial position or condition, reports on a company's assets, liabilities, and Ownership equity at a given point in time.

Assets
In financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset. Simply stated, assets represent ownership of value that can be converted into cash (although cash itself is also considered an asset). The balance sheet of a firm records the monetary value of the assets owned by the firm. It is money and other valuables belonging to an individual or business. Two major asset classes are tangible assets and intangible assets. Tangible assets contain various subclasses, including current assets and fixed assets. Current assets include inventory, while fixed assets include such items as buildings and equipment. Intangible assets are nonphysical resources and rights that have a value to the firm because they give the firm some kind of advantage in the market place. Examples of intangible assets are goodwill, copyrights, trademarks, patents and computer programs, and financial assets, including such items as accounts receivable, bonds and stocks. Asset characteristics It should be noted that - other than software companies and the like - employees are not considered as assets, like machinery is, even though they are capable of producing value. The probable present benefit involves a capacity, singly or in combination with other assets, in the case of profit oriented enterprises, to contribute directly or indirectly to future net cash flows, and, in the case of not-for-profit organizations, to provide services; The entity can control access to the benefit;

The transaction or event giving rise to the entity's right to, or control of, the benefit has already occurred. In the financial accounting sense of the term, it is not necessary to be able to legally enforce the asset's benefit for qualifying a resource as being an asset, provided the entity can control its use by other means. It is important to understand that in an accounting sense an asset is not the same as ownership. Assets are equal to "equity" plus "liabilities." The accounting equation relates assets, liabilities, and owner's equity: Assets = Liabilities +Stockholder's Equity (Owner's Equity) The accounting equation is the mathematical structure of the balance sheet. Assets are listed on the balance sheet. Similarly, in economics an asset is any form in which wealth can be held. Probably the most accepted accounting definition of asset is the one used by the International Accounting Standards Board. The following is a quotation from the IFRS Framework: "An asset is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise." Assets are formally controlled and managed within larger organizations via the use of asset tracking tools. These monitor the purchasing, upgrading, servicing, licensing, disposal etc., of both physical and nonphysical assets. In a company's balance sheet certain divisions are required by generally accepted accounting principles (GAAP), which vary from country to country. Current assets Current assets are cash and other assets expected to be converted to cash, sold, or consumed either in a year or in the operating cycle (whichever is longer), without disturbing the normal operations of a business. These assets are continually turned over in the course of a business during normal business activity. There are 5 major items included into current assets: 1. Cash and cash equivalents it is the most liquid asset, which includes currency, deposit accounts, and negotiable instruments (e.g., money orders, cheque, bank drafts). 2. Short-term investments include securities bought and held for sale in the near future to generate income on short-term price differences (trading securities). 3. Receivables usually reported as net of allowance for uncollectable accounts. 4. Inventory trading these assets is a normal business of a company. The inventory value reported on the balance sheet is usually the historical cost or fair market value, whichever is lower. This is known as the "lower of cost or market" rule. 5. Prepaid expenses these are expenses paid in cash and recorded as assets before they are used or consumed (a common example is insurance). See also adjusting entries. The phrase net current assets (also called working capital) is often used and refers to the total of current assets less the total of current liabilities. Long-term investments Often referred to simply as "investments". Long-term investments are to be held for many years and are not intended to be disposed of in the near future. This group usually consists of four types of investments: 1. Investments in securities such as bonds, common stock, or long-term notes. 2. Investments in fixed assets not used in operations (e.g., land held for sale). 3. Investments in special funds (e.g. sinking funds or pension funds). Different forms of insurance may also be treated as long term investments. Fixed assets Also referred to as PPE (property, plant, and equipment), these are purchased for continued and long-term use in earning profit in a business. This group includes as an asset land, buildings, machinery, furniture, tools, and certain wasting resources e.g., timberland and minerals. They are written off against profits over their anticipated life by charging depreciation expenses (with exception of land assets). Accumulated depreciation is shown in the face of the balance sheet or in the notes. These are also called capital assets in management accounting. Intangible assets Intangible assets lack physical substance and usually are very hard to evaluate. They include patents, copyrights, franchises, goodwill, trademarks, trade names, etc. These assets are (according to US GAAP) amortized to expense over 5 to 40 years with the exception of goodwill. Websites are treated differently in different countries and may fall under either tangible or intangible assets.

Tangible assets Tangible assets are those that have a physical substance and can be touched, such as currencies, buildings, real estate, vehicles, inventories, equipment, and precious metals. Liability

Legal liability is the legal bound obligation to pay debts.

In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft Act 1978, it is an offense to evade a liability dishonestly. Payment of damages usually resolved the liability. Vicarious liability arises under the common law doctrine of agency respondeat superior the responsibility of the superior for the acts of their subordinate. In commercial law, limited liability is a form of business ownership in which business owners are legally responsible for no more than the amount that they have contributed to a venture. If for example, a business goes bankrupt an owner with limited liability will not lose unrelated assets such as a personal residence (assuming they do not give personal guarantees). This is the standard model for larger businesses, in which a shareholder will only lose the amount invested (in the form of stock value decreasing). For an explanation see business entity. Manufacturer's liability is a legal concept in most countries that reflects the fact that producers have a responsibility not to sell a defective product. See product liability.

Ownership equity
In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If valuations placed on assets do not exceed liabilities, negative equity exists. In an accounting context, Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock. At the start of a business, owners put some funding into the business to finance operations. This creates a liability on the business in the shape of capital as the business is a separate entity from its owners. Businesses can be considered to be, for accounting purposes, sums of liabilities and assets; this is the accounting equation. After liabilities have been accounted for, the positive remainder is deemed the owner's interest in the business. This definition is helpful in understanding the liquidation process in case of bankruptcy. At first, all the secured creditors are paid against proceeds from assets. Afterward, a series of creditors, ranked in priority sequence, have the next claim/right on the residual proceeds. Ownership equity is the last or residual claim against assets, paid only after all other creditors are paid. In such cases where even creditors could not get enough money to pay their bills, nothing is left over to reimburse owners' equity. Thus owners' equity is reduced to zero. Ownership equity is also known as risk capital, liable capital or simply, equity. 2. Income statement: also referred to as Profit and Loss statement (or a "P&L"), reports on a company's income, expenses, and profits over a period of time. Profit & Loss account provide information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state. 3. Statement of retained earnings: explains the changes in a company's retained earnings over the reporting period. 4. Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities. For large corporations, these statements are often complex and may include an extensive set of notes to the financial statements and management discussion and analysis. The notes typically describe each item on the balance sheet, income statement and cash flow statement in further detail. Notes to financial statements are considered an integral part of the financial statements.

Accounts (+vezi curs)

An Account (in bookkeeping) refers to assets, liabilities, income, expenses, and equity, as represented by individual ledger pages, to which changes in value are chronologically recorded with debit and credit entries. These entries, referred to as postings, become part of a book of final entry or ledger.

Examples of common financial accounts are cash, accounts receivable, mortgages, loans, PP&E, common stock, sales, services, wages, and payroll. A chart of accounts provides a listing of all financial accounts used by particular business, organization, or government agency. A bank account is a financial account with a banking institution, recording the financial transactions between the customer and the bank and the resulting financial position of the customer with the bank. Bank accounts may have a positive, or debit balance, where the bank owes money to the customer; or a negative, or credit balance, where the customer owes the bank money. Broadly, accounts opened with the purpose of holding credit balances are referred to as deposit accounts; whilst accounts opened with the purpose of holding debit balances are referred to as loan accounts. Some accounts are defined by their function rather than nature of the balance they hold. Bank accounts designed to process large numbers of transactions may offer credit and debit facilities and therefore do not sit easily with a polarised definition. Deposit account A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited. Major types Checking accounts: A deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts. Savings accounts: Accounts maintained by retail banks that pay interest but can not be used directly as money (for example, by writing a cheque). Although not as convenient to use as checking accounts, these accounts let customers keep liquid assets while still earning a monetary return. Money market account: A deposit account with a relatively high rate of interest, and short notice (or no notice) required for withdrawals. In the United States, it is a style of instant access deposit subject to federal savings account regulations, such as a monthly transaction limit. Time deposit: A money deposit at a banking institution that cannot be withdrawn for a preset fixed 'term' or period of time. When the term is over it can be withdrawn or it can be rolled over for another term. Generally speaking, the longer the term the better the yield on the money. Equity In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If valuations placed on assets do not exceed liabilities, negative equity exists. In an accounting context, Shareholders' equity (or stockholders' equity, shareholders' funds, shareholders' capital or similar terms) represents the remaining interest in assets of a company, spread among individual shareholders of common or preferred stock. At the start of a business, owners put some funding into the business to finance operations. This creates a liability on the business in the shape of capital as the business is a separate entity from its owners. Businesses can be considered to be, for accounting purposes, sums of liabilities and assets; this is the accounting equation. After liabilities have been accounted for, the positive remainder is deemed the owner's interest in the business. This definition is helpful in understanding the liquidation process in case of bankruptcy. At first, all the secured creditors are paid against proceeds from assets. Afterward, a series of creditors, ranked in priority sequence, have the next claim/right on the residual proceeds. Ownership equity is the last or residual claim against assets, paid only after all other creditors are paid. In such cases where even creditors could not get enough money to pay their bills, nothing is left over to reimburse owners' equity. Thus owners' equity is reduced to zero. Ownership equity is also known as risk capital, liable capital or simply, equity.

Equity investments An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises. It may also refer to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup company. When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations. The equities held by private individuals are often held via mutual funds or other forms of collective investment scheme, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms, such as Schroders, Fidelity Investments or The Vanguard Group. Such holdings allow individual investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives. A calculation can be made to assess whether an equity is over or underpriced, compared with a long-term government bond. This is called the Yield Gap or Yield Ratio. It is the ratio of the dividend yield of an equity and that of the long-term bond. Accounting In financial accounting, equity capital is the owners' interest on the assets of the enterprise after deducting all its liabilities. It appears on the balance sheet / statement of financial position,[2] one of the four primary financial statements. Ownership equity includes both tangible and intangible items (such as brand names and reputation / goodwill). Accounts listed under ownership equity include (example): Share capital (common stock) Share capital or issued capital (UK English) or capital stock (US English) refers to the portion of a company's equity that has been obtained (or will be obtained) by trading stock to a shareholder for cash or an equivalent item of capital value. For example, a company can set aside share capital, to exchange for computer servers instead of directly purchasing the servers from existing equity. Share capital usually comprises the nominal values of all shares issued, less those repurchased by the company. It includes both common stock (ordinary shares) and preferred stock (preference shares). If the market value of shares is greater than the their nominal value (value at par), the shares are said to be at a premium (called share premium, additional paid-in capital or paid-in capital in excess of par). The paid-up capital does not speak about the shares. Types of Share Capital: Authorised Share Capital is also referred to, at times, as registered capital. This is the total of the share capital which a limited company is allowed (authorized) to issue to its shareholders. Issued Share Capital is the total of the share capital issued to shareholders. Called up Share Capital is the total amount of issued capital for which the shareholders are required to pay. Paid up Share Capital is the amount of share capital paid by the shareholders. Preferred stock Capital surplus Retained earnings Treasury stock Stock options Reserve Shareholders' equity When the owners are shareholders, the interest can be called shareholders' equity;[3] the accounting remains the same, and it is ownership equity spread out among shareholders. If all shareholders are in one and the same class, they share equally in ownership equity from all perspectives. However, shareholders may allow

different priority ranking among themselves by the use of share classes and options. This complicates both analysis for stock valuation and accounting. The individual investor is interested not only in the total changes to equity, but also in the increase / decrease in the value of his own personal share of the equity. This reconciliation of equity should be done both in total and on a per share basis. Equity (beg. of year) + net income inter net money you gained dividends how much money you gained or lost so far +/ gain/loss from changes to the number of shares outstanding.more or less = Equity (end of year) if you get more money during the year or less or not anything

Financial instruments
A financial instrument is either cash; evidence of an ownership interest in an entity; or a contractual right to receive, or deliver, cash or another financial instrument. Financial instruments can be categorized by form depending on whether they are cash instruments or derivative instruments: Cash instruments are financial instruments whose value is determined directly by markets. They can be divided into securities, which are readily transferable, and other cash instruments such as loans and deposits, where both borrower and lender have to agree on a transfer. Derivative instruments are financial instruments which derive their value from the value and characteristics of one or more underlying assets. They can be divided into exchange-traded derivatives and over-the-counter (OTC) derivatives. Alternatively, financial instruments can be categorized by "asset class" depending on whether they are equity based (reflecting ownership of the issuing entity) or debt based (reflecting a loan the investor has made to the issuing entity). If it is debt, it can be further categorised into short term (less than one year) or long term. Foreign Exchange instruments and transactions are neither debt nor equity based and belong in their own category. Matrix table Combining the above methods for categorization, the main instruments can be organized into a matrix as follows: Instrument Type Asset Class Exchange-traded Securities Other cash OTC derivatives derivatives Debt (Long Term) >1 year Debt (Short Term) <=1 year Equity Bond futures Options on bond futures Interest rate swaps Interest rate caps and floors Interest rate options Exotic instruments Forward rate agreements Stock options Exotic instruments

Bonds

Loans

Bills, e.g. TBills Commercial paper Stock

Deposits Certificates of deposit N/A

Short term interest rate futures Stock options Equity futures

Foreign exchange options Spot foreign Outright forwards Foreign Exchange N/A Currency futures exchange Foreign exchange swaps Currency swaps Some instruments defy categorization into the above matrix, for example repurchase agreements.

Measuring Financial Instrument's Gain or Loss The table below shows how to measure a financial instrument's gain or loss: Instrument Type Assets Assets Categories Loans and receivables Available for sale financial assets Measurement Amortized costs Deposit account Fair value Gains and losses Net income when asset is derecognized or impaired (foreign exchange and impairment recognized in net income immediately) Other comprehensive income (impairment recognized in net income immediately)

Cash payment
A payment is the transfer of wealth from one party (such as a person or company) to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation. In law, the payer is the party making a payment while the payee is the party receiving the payment. A cash payment requires a minimum of three parties (the seller, the purchaser, and the issuer of the currency). A barter payment requires a minimum of two parties (the purchaser and the seller). Cash payments occur at the time of payment. This is the easy case, but payments in other forms can be trickier. Payment also occurs when the taxpayer transfers property or performs services in lieu of making a cash payment.

Foreign Bills Of Exchange

Bill of exchange A bill of exchange or "draft" is a written order by the drawer to the drawee to pay money to the payee. A common type of bill of exchange is the cheque (check in American English), defined as a bill of exchange drawn on a banker and payable on demand. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange. They are not used as often today. A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to order or to bearer. (Sec.126) It is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three partiesthe drawer, the drawee, and the payee. The person who draws the bill is called the drawer. He gives the order to pay money to third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay. He becomes an acceptor when he indicates his willingness to pay the bill. (Sec.62) The party in whose favor the bill is drawn or is payable is called the payee. The parties need not all be distinct persons. Thus, the drawer may draw on himself payable to his own order. (see Sec. 8) A bill of exchange may be endorsed by the payee in favour of a third party, who may in turn endorse it to a fourth, and so on indefinitely. The "holder in due course" may claim the amount of the bill against the drawee and all previous endorsers, regardless of any counterclaims that may have disabled the previous payee or endorser from doing so. This is what is meant by saying that a bill is negotiable. In some cases a bill is marked "not negotiable" see crossing of cheques. In that case it can still be transferred to a third party, but the third party can have no better right than the transferor. Foreign bill of exchange Generally speaking, foreign bills of exchange resemble domestic bills of exchange. Foreign bills, however, have two features which domestic bills do not have. First, there is the necessity of converting one standard of money into terms of another standard - that is, a bill drawn in dollars payable in London, for

example, must have its amount changed to pounds sterling. Second, the length of time required and the expense involved in shipping gold from one country to another are usually greater than would be the case within a country.

Investment (+vezi curs)

Investment services Investment services are very popular nowadays with the growth of investment business. They are used to study and analyze investment market trends and tendencies in order to achieve success while making investments. Numerous investment services online are characterized by easy access, different convenient ways of money transactions, low brokerages rates and very effective research tools that are usually available free of charge. Investment management online monitors clients' investments, observing investment holdings and controlling investment portfolio value during 24 hours a day, 7 days a week. Professional financial planning services are offered by investment services group that suggests the right to receive and use the data on current market conditions. Investment services group provides its clients with qualified help and advice given by capital market experts, leasing brokers and international property management specialists. Every client is provided with full access to capital sources starting from local and spreading to international level. Investment management services involve quality management of securities and assets in order to reach certain financial goals. Such first rate investment services protect clients' interests, setting investment goals, creating suitable investment plan and portfolio strategy, making good selection of assets and giving professional portfolio performance analysis. Investment management software helps to perform market stock trading, predicting possible changes and fluctuations on the market. Beneficial financial decisions can be easily made by means of investment financial services that involve commitment of funds into real estate, equities, securities and other financial instruments. Mutual funds, life insurance, financial management and planning are offered by a great number of investment financial services companies. Financial investment advisor gives proficient recommendations concerning perfect investment management regulation. Investment banking services presuppose financial assets professional management and assistance in funds accumulation as well as expert consulting concerning acquisitions and mergers of public and private firms and companies. Corporate investment banking services clients are large corporate groups, multinational companies etc. Financial achievements can be easily tracked by means of investment banking software. It can turn investment banking process to completely automatic one, being equipped with the best up-to-date financial instruments. Investment fund services support investors on their way of making the investments. Investment fund company brings together funds of the investors. It plays the role of a financial intermediary assisting clients in such difficult tasks as shares selling and then profits investing into new business deals. Investing money into shares and bonds, property and other assets, investors use the help of investment fund management experts that work to make clients' profits large. Capital investment services guide investors in making beneficial capital investments and help to attain the desired financial goal by developing perfect investment strategies and making some thorough planning for the beneficial outcome of the investments. Capital investment financial services involve professional capital investment management that reduces the risk involved with capital and creates possibilities for making good returns on the investments. Commitment of funds to various kinds of immovable property is supervised by property investment services. Many useful options of property investment loans as well as property investment mortgages are offered to clients by companies dealing with property investment services such as banks or credit unions.

Functions of investment banks

An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities. An investment bank may also assist companies involved in mergers and acquisitions, and provides ancillary services such as market making, trading of derivatives, fixed income instruments, foreign exchange, commodities, and equity securities. Unlike commercial banks and retail banks, investment banks do not take deposits. From 1933 (GlassSteagall Act) until 1999 (GrammLeachBliley Act), the United States maintained a separation between

investment banking and commercial banks. Other industrialized countries, including G8 countries, have historically not maintained such a separation. There are two main lines of business in investment banking. Trading securities for cash or for other securities (i.e., facilitating transactions, market-making), or the promotion of securities (i.e., underwriting, research, etc.) is the "sell side", while dealing with pension funds, mutual funds, hedge funds, and the investing public (who consume the products and services of the sell-side in order to maximize their return on investment) constitutes the "buy side". Many firms have buy and sell side components. An investment bank can also be split into private and public functions with a Chinese wall which separates the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas such as stock analysis deal with public information. Main activities An investment bank is split into the so-called front office, middle office, and back office. While large fullservice investment banks offer all of the lines of businesses, both sell side and buy side, smallers sell side investment firms such as boutique investment banks and small broker-dealers focus on investment banking and sales/trading/research, respectively. Investment banks offer services to both corporations issuing securities and investors buying securities. For corporations, investment bankers offer information on when and how to place their to an investment bank's reputation, and hence loss of business. Therefore, investment bankers play a very important role in issuing new security offerings.

Risk management
Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from an adversary. Several risk management standards have been developed including the Project Management Institute, the National Institute of Science and Technology, actuarial societies, and ISO standards. Methods, definitions and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety. The strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk. Certain aspects of many of the risk management standards have come under criticism for having no measurable improvement on risk even though the confidence in estimates and decisions increase. In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. In practice the process can be very difficult, and balancing between risks with a high probability of occurrence but lower loss versus a risk with high loss but lower probability of occurrence can often be mishandled. Intangible risk management identifies a new type of a risk that has a 100% probability of occurring but is ignored by the organization due to a lack of identification ability. For example, when deficient knowledge is applied to a situation, a knowledge risk materializes. Relationship risk appears when ineffective collaboration occurs. Process-engagement risk may be an issue when ineffective operational procedures are applied. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity. Risk management also faces difficulties in allocating resources. This is the idea of opportunity cost. Resources spent on risk management could have been spent on more profitable activities. Again, ideal risk management minimizes spending and minimizes the negative effects of risks. Method For the most part, these methods consist of the following elements, performed, more or less, in the following order. 1. identify, characterize, and assess threats

2. assess the vulnerability of critical assets to specific threats 3. determine the risk (i.e. the expected consequences of specific types of attacks on specific assets) 4. identify ways to reduce those risks 5. prioritize risk reduction measures based on a strategy Principles of risk management The International Organization for Standardization (ISO) identifies the following principles of risk management: Risk management should: create value be an integral part of organizational processes be part of decision making explicitly address uncertainty be systematic and structured be based on the best available information be tailored take into account human factors be transparent and inclusive be dynamic, iterative and responsive to change be capable of continual improvement and enhancement

Financial markets
In economics, a financial market is a mechanism that allows people to buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis. Both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded) exist. Markets work by placing many interested buyers and sellers in one "place", thus making it easier for them to find each other. An economy which relies primarily on interactions between buyers and sellers to allocate resources is known as a market economy in contrast either to a command economy or to a non-market economy such as a gift economy. In finance, financial markets facilitate: The raising of capital (in the capital markets) The transfer of risk (in the derivatives markets) International trade (in the currency markets) and are used to match those who want capital to those who have it. Typically a borrower issues a receipt to the lender promising to pay back the capital. These receipts are securities which may be freely bought or sold. In return for lending money to the borrower, the lender will expect some compensation in the form of interest or dividends. In mathematical finance, the concept of a financial market is defined in terms of a continuous-time Brownian motion stochastic process. In economics, typically, the term market means the aggregate of possible buyers and sellers of a certain good or service and the transactions between them. The term "market" is sometimes used for what are more strictly exchanges, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (like the NYSE) or an electronic system (like NASDAQ). Much trading of stocks takes place on an exchange; still, corporate actions (merger, spinoff) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell stock from the one to the other without using an exchange. Trading of currencies and bonds is largely on a bilateral basis, although some bonds trade on a stock exchange, and people are building electronic systems for these as well, similar to stock exchanges. Financial markets can be domestic or they can be international. Types of financial markets The financial markets can be divided into different subtypes: Capital markets which consist of: o Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.

Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof. Commodity markets, which facilitate the trading of commodities. Money markets, which provide short term debt financing and investment. Derivatives markets, which provide instruments for the management of financial risk. Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market. Insurance markets, which facilitate the redistribution of various risks. Foreign exchange markets, which facilitate the trading of foreign exchange. The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.
o

Foreign exchange markets

The foreign exchange market (forex, FX, or currency market) is a worldwide decentralized overthe-counter financial market for the trading of currencies. Financial centers around the world function as anchors of trading between a wide range of different types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market determines the relative values of different currencies. The primary purpose of the foreign exchange is to assist international trade and investment, by allowing businesses to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business's income is in US dollars. It also supports speculation, and facilitates the carry trade, in which investors borrow low-yielding currencies and lend (invest in) high-yielding currencies, and which (it has been claimed) may lead to loss of competitiveness in some countries. In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market began forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system. The foreign exchange market is unique because of its huge trading volume, leading to high liquidity; its geographical dispersion; its continuous operation: 24 hours a day except weekends, i.e. trading from 20:15 GMT on Sunday until 22:00 GMT Friday; the variety of factors that affect exchange rates; the low margins of relative profit compared with other markets of fixed income; and the use of leverage to enhance profit margins with respect to account size.

Banking operations
Bank is an institution where you can deposit your money and borrow loans. Where by banking is a process by which bank provide different facilities to its customer related to their needs and also advance loans by taking securities in return. Banking operation means how bank operates or simply what facilities bank provides. Banking is a wide term which normally base on two major parts deposits and advancing loan (credit).Deposits are in form of cash and securities, these were received by the individuals, firms and corporations, and are repayable on demand of customer or may be invested in short term loans. Current, fixed and saving accounts are used to deposit money in the bank. Borrow loans means advancing the money in term of loans to individual, groups and organization. Banking operations includes functions of banking, creation of credit, transfer of funds or services, saving, mortgage, private banking, online banking, projects developments, capital markets and treasury, trade finance, issuing bill of exchange, bill of exchange is issue on three basis at par , at discount and at premium. Charging rate of interest on deposits and loans, Operation of commercial banking are of two sided; involve attracting funds from depositors, and employment of funds in viable investments. The bank creates credit by issuing credit cards, ATM cards, visa cards etc. Banknotes and current accounts are used by the bank to issue the money. Claims are negotiable and repayable on demand, while drawing a cheque or creating banknotes claims are effectively transferable. Banks provides the facilities of collection and paying agents for all their customers. It also internally takes part in clearing and settlement department to present, collect and pay payments instruments. For creating more credit and to

increase the transaction banks work as a middle men and borrow and lend loans. Mostly bank lend money to those who deposit securities or bond etc. the security on banknotes and deposits are comparatively low. Bank borrows short term loans from one person and lends long term loans to another person and also charged high rate of interest. For creating stronger credit quality banks have to maintain high reserves to clear the unexpected claims or for economic stability, more investment in marketable securities. Banks used different ways or channels to elaborate banking operations ATM machines are used to withdraw money by using an ATM card, it contains a special code which relates to the same account. Call center and branches are also means of exchange of information which is necessary and important for every customer. Online and mailing banking is also used to access to the customers problems and many transaction and disbursement are used to be done by online banking. Mobile banking is also done by many banks these activity is more advance than other payments of bills and other disbursements are done through mobile phone. Telephone and video banking is also a mean or a channel to communicate with the customers or the persons who need to know abut banking operations more descriptively.

Marketing management
Marketing Management is a business discipline which is focused on the practical application of marketing techniques and the management of a firm's marketing resources and activities. Rapidly emerging forces of globalization have compelled firms to market beyond the borders of their home country making International marketing highly significant and an integral part of a firm's marketing strategy. Marketing managers are often responsible for influencing the level, timing, and composition of customer demand accepted definition of the term. In part, this is because the role of a marketing manager can vary significantly based on a business' size, corporate culture, and industry context. For example, in a large consumer products company, the marketing manager may act as the overall general manager of his or her assigned product. To create an effective, cost-efficient Marketing management strategy, firms must possess a detailed, objective understanding of their own business and the market in which they operate. In analyzing these issues, the discipline of marketing management often overlaps with the related discipline of strategic planning.

Globalization
Globalisation (or globalization) describes the process by which regional economies, societies, and cultures have become integrated through a global network of political ideas through communication, transportation, and trade. The term is most closely associated with the term economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, the spread of technology, and military presence. However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors. The term can also refer to the transnational circulation of ideas, languages, or popular culture through acculturation. An aspect of the world which has gone through the process can be said to be globalised

Trade
Trade is the transfer of ownership of goods and services from one person to another. Trade is sometimes loosely called commerce or financial transaction or barter. A network that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations. Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, or by mail, in small or individual lots for direct consumption by the purchaser.

Wholesale trade is defined as the sale of goods or merchandise to retailers, to industrial, commercial, institutional, or other professional business users, or to other wholesalers and related subordinated services. Trading can also refer to the action performed by traders and other market agents in the financial markets.

Foreign direct investment

Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares

Capital flows In neoclassical economics, capital, capital goods, or real capital are the factor of production, used to
create goods or services, that is not itself significantly consumed (though it may depreciate) in the production process. Capital goods may be acquired with money or financial capital. At any moment in time, total physical capital may be referred to as the capital stock, a usage different from the same term applied to a business entity. In a fundamental sense, capital consists of anything that can enhance a person's power to perform economically useful work - a stone or an arrow is capital for a caveman who can use it as a hunting instrument, and roads are capital for inhabitants of a city. As such, capital is an input in the production function. In classical political economy and Marxian economics, capital is money which is used to buy something only in order to sell it again, and thus capital only exists within the process of economic exchange - it is wealth that grows out of the process of circulation itself and forms the basis of the economic system of capitalism.

Migration
Human migration is physical movement by humans from one area to another, sometimes over long distances or in large groups. The movement of populations in modern times has continued under the form of both voluntary migration within one's region, country, or beyond, and involuntary migration (which includes the slave trade, trafficking in human beings and ethnic cleansing). People who migrate are called migrants or more specifically, emigrants, immigrants, or settlers, depending on historical setting, circumstances and perspective. The pressures of human migrations, whether as outright conquest or by slow cultural infiltration and resettlement, have affected the grand epochs in history and in land (for example, the decline of the Roman Empire); under the form of colonization, migration has transformed the world (such as the prehistoric and historic settlements of Australia and the Americas). Population genetics studied in traditionally settled modern populations have opened a window into the historical patterns of migrations, a technique pioneered by Luigi Luca Cavalli-Sforza. Forced migration has been a means of social control under authoritarian regimes yet free initiative migration is a powerful factor in social adjustment and the growth of urban populations.

Technology
Technology is the usage and knowledge of tools, techniques, crafts, systems or methods of organization in order to solve a problem or create an artistic perspective. Technology has affected society and its surroundings in a number of ways. In many societies, technology has helped develop more advanced economies (including today's global economy) and has allowed the rise of a leisure class. Many technological processes produce unwanted by-products, known as pollution, and deplete natural resources, to the detriment of the Earth and its environment. Various implementations of technology influence the values of a society and new technology often raises new ethical questions. Examples include the rise of the notion of efficiency in terms of human productivity, a term originally applied only to machines, and the challenge of traditional norms. Measurement Economic globalization can be measured in different ways. These center around the four main economic flows that characterize globalization: Goods and services, e.g., exports plus imports as a proportion of national income or per capita of population Labor/people, e.g., net migration rates; inward or outward migration flows, weighted by population

 Capital, e.g., inward or outward direct investment as a proportion of national income or per head of population Technology, e.g., international research & development flows; proportion of populations (and rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances such as the telephone, motorcar, broadband) Effects Globalization has various aspects which affect the world in several different ways: Industrial - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China's trade with Africa rose sevenfold during 2000-07 alone. Financial - emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the Financial crisis of 20072010. Economic - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however, meant that an economic collapse in one area could impact other areas. With globalization, companies can produce goods and services in the lowest cost location. This may cause jobs to be moved to locations that have the lowest wages, least worker protection and lowest health benefits. For Industrial activities this may cause production to move to areas with the least pollution regulations or worker safety regulations. Job Market- competition in a global job market. In the past, the economic fate of workers was tied to the fate of national economies. With the advent of the information age and improvements in communication, this is no longer the case. Because workers compete in a global market, wages are less dependent on the success or failure of individual economies. This has had a major effect on wages and income distribution Health Policy - On the global scale, health becomes a commodity. In developing nations under the demands of Structural Adjustment Programs, health systems are fragmented and privatized. Global health policy makers have shifted during the 1990s from United Nations players to financial institutions. The result of this power transition is an increase in privatization in the health sector. This privatization fragments health policy by crowding it with many players with many private interests. These fragmented policy players emphasize partnerships and specific interventions to combat specific problems (as opposed to comprehensive health strategies). Influenced by global trade and global economy, health policy is directed by technological advances and innovative medical trade. Global priorities, in this situation, are sometimes at odds with national priorities where increased health infrastructure and basic primary care are of more value to the public than privatized care for the wealthy. Political - some use "globalization" to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization.Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of the United States own economy, the People's Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power. Among the political effects some scholars also name the transformation of sovereignty. In their opinion, 'globalization contributes to the change and reduction of nomenclature and scope of state sovereign powers, and besides it is a bilateral process: on the one hand, the factors are strengthening that fairly undermine the countries' sovereignty, on the other most states voluntarily and deliberately limit the scope of their sovereignty'. Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephone and Internet.

 Language - the most popular first language is Mandarin (845 million speakers) followed by Spanish (329 million speakers) and English (328 million speakers). However the most popular second language is undoubtedly English, the "lingua franca" of globalization: About 35% of the world's mail, telexes, and cables are in English. Approximately 40% of the world's radio programs are in English. English is the dominant language on the Internet. Competition - Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skillfully in order to face increased competition Ecological - the advent of global environmental challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution and impact on precious fresh water resources(Hoekstra and Chapagain 2008). On the other hand, economic development historically required a "dirty" industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living. Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see Transformation of culture. Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the export of Hollywood). Some consider such "imported" culture a danger, since it may supplant the local culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote peace and understanding between people. A third position that gained popularity is the notion that multiculturalism to a new form of monoculture in which no distinctions exist and everyone just shift between various lifestyles in terms of music, cloth and other aspects once more firmly attached to a single culture. Thus not mere cultural assimilation as mentioned above but the obliteration of culture as we know it today. In reality, as it happens in countries like the United Kingdom, Canada, Australia or New Zealand, people who always lived in their native countries maintain their cultures without feeling forced by any reason to accept another and are proud of it even when they're acceptive of immigrants, while people who are newly arrived simply keep their own culture or part of it despite some minimum amount of assimilation, although aspects of their culture often become a curiosity and a daily aspect of the lives of the people of the welcoming countries. Greater international travel and tourism. WHO estimates that up to 500,000 people are on planes at any one time. In 2008, there were over 922 million international tourist arrivals, with a growth of 1.9% as compared to 2007. Greater immigration, including illegal immigration. The IOM estimates there are more than 200 million migrants around the world today. Newly available data show that remittance flows to developing countries reached $328 billion in 2008. Spread of local consumer products (e.g., food) to other countries (often adapted to their culture). Worldwide fads and pop culture such as Pokmon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace; accessible only to those who have Internet or Television, leaving out a substantial portion of the Earth's population. Worldwide sporting events such as FIFA World Cup and the Olympic Games. Incorporation of multinational corporations into new media. As the sponsors of the AllBlacks rugby team, Adidas had created a parallel website with a downloadable interactive rugby game for its fans to play and compete. Social - development of the system of non-governmental organisations as main agents of global public policy, including humanitarian aid and developmental efforts. Technical

 Development of a Global Information System, global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones Increase in the number of standards applied globally; e.g., copyright laws, patents and world trade agreements. Legal/Ethical The creation of the international criminal court and international justice movements. Crime importation and raising awareness of global crime-fighting efforts and cooperation. The emergence of Global administrative law. Religious The spread and increased interrelations of various religious groups, ideas, and practices and their ideas of the meanings and values of particular spaces.

Investments abroad
Foreign direct investment (FDI) or foreign investment refers to long term participation by country A into country B. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward foreign direct investment and outward foreign direct investment, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludes investment through purchase of shares. FDI is a measure of foreign ownership of productive assets, such as factories, mines and land. Increasing foreign investment can be used as one measure of growing economic globalization. The figure below shows net inflows of foreign direct investment in the United States. The largest flows of foreign investment occur between the industrialized countries (North America, Western Europe and Japan). But flows to nonindustrialized countries are increasing sharply. Foreign investment can be a significant driver of development in poor nations. It provides an inflow of foreign capital and funds, in addition to an increase in the transfer of skills, technology, and job opportunities. Many of the East Asian tigers such as China, South Korea, Malaysia, and Singapore benefited from investment abroad. The Commitment to Development Index ranks the "developmentfriendliness" of rich country investment policies. Chiles investments abroad amount to 54 billion USD, mostly Latinamerica Chile's investment abroad amounted to about 54.2 billion US dollars between 1990 and June 2010, distributed among more than 70 countries from the Americas, Europe, Asia, Oceania and Europe, according to a report released Monday by the General Directorate of International Economic Relations (DIRECON). Argentina accounted for 29.5% of the investment, Brazil 19.6% and Colombia 12.5%. Colombia received the largest increase of Chilean investment abroad during the first half of 2010, with an increase of 175.6% over the same period last year, according to DIRECON. Brazil was second, with an increase of 89.5%, and Peru in third, with a rise of 81.8%. The retail sector in Columbia, Brazil and Peru accounted for a major portion of the total investment. Parque Arauco and Falabella have investment programs in Colombia, Peru and Argentina. Cencosud plans to expand in Argentina, Colombia, Brazil and Peru. According to the report, more than 900 companies have about 2,000 investment projects abroad. In the first half of 2010, direct investment by Chileans abroad amounted to about US$1.9 billion, a 61.6% increase over the same period last year. DIRECON also reported that countries such as Pakistan, Eritrea, Turkey, Zambia and Bangladesh have become new destinations for Chilean investors. The service sector accounts for the largest portion of Chilean capital abroad, at 39.8%.. The energy sector and industrial sector follow with 28.4% and 23.7%. In the service sector, the main investments were made in Argentina at 28.9%, Peru at 22.2%, the United States at 14%, Brazil at 9.9%, Colombia at 5% and Mexico at 4%. Industry meanwhile captured Argentina at 35.7%, Brazil 28.1%, Peru at 12.2%, Colombia at 4.6%, Venezuela at 3.8%, U.S. at 3.2% and Uruguay at 2.6%. In regional terms, Latin American markets made 84.2% of Chiles global investments.

Tax haven

A tax haven is a country or territory where certain taxes are levied at a low rate or not at all. Individuals and/or corporate entities can find it attractive to move themselves to areas with reduced or nil taxation levels. This creates a situation of tax competition among governments. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies. There are several definitions of tax havens. The Economist has tentatively adopted the description by Geoffrey Colin Powell (former economic adviser to Jersey): "What ... identifies an area as a tax haven is the existence of a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance." The Economist points out that this definition would still exclude a number of jurisdictions traditionally thought of as tax havens. Similarly, others have suggested that any country which modifies its tax laws to attract foreign capital could be considered a tax haven. According to other definitions, the central feature of a haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions. In its December 2008 report on the use of tax havens by American corporations, the U.S. Government Accountability Office was unable to find a satisfactory definition of a tax haven but regarded the following characteristics as indicative of a tax haven: 1. nil or nominal taxes; 2. lack of effective exchange of tax information with foreign tax authorities; 3. lack of transparency in the operation of legislative, legal or administrative provisions; 4. no requirement for a substantive local presence; and 5. self-promotion as an offshore financial center. G20 tax havens blacklist At the London G20 summit on 2 April 2009, G20 countries agreed to define a blacklist for tax havens, to be segmented according to a four-tier system, based on compliance with an "internationally agreed tax standard."[49] The list, drawn up by the OECD, was updated on 2 April 2009 in connection with the G20 meeting in London.[50] Further changes were made to the list on 7 April 2009 to remove countries from the non-cooperative category.[51] The four tiers are: 1. Those that have substantially implemented the standard (includes countries such as Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Czech Republic, France, Germany, Greece, Guernsey, Hungary, Ireland, Italy, Japan, Jersey, Isle of Man, Luxembourg, Mexico, the Netherlands, Poland, Portugal, Russia, Slovakia, South Africa, South Korea, Spain, Sweden, Turkey, United Arab Emirates, United Kingdom, and the United States) 2. Tax havens that have committed to but not yet fully implemented the standard (includes Andorra, the Bahamas, Cayman Islands, Gibraltar, Liechtenstein, and Monaco) 3. Financial centres that have committed to but not yet fully implemented the standard (includes Chile, Costa Rica, Malaysia, the Philippines, Singapore, Switzerland, and Uruguay); three EU countries that had originally figured on this list (Austria, Belgium and Luxembourg), have been recognised by the OECD as having substantially implemented the standard in July 2009 (Belgium and Luxembourg), and September 2009 (Austria) 4. Those that have not committed to the standard (now an empty category) Those countries in the bottom tier were classified as being 'non-cooperative tax havens'. Uruguay was initially classified as being uncooperative. However, upon appeal the OECD stated that it did meet tax transparency rules and thus moved it up. The Philippines is already reported to be taking steps to remove itself from the blacklist and Malaysian Prime Minister Najib Razak has suggested that Malaysia should not be in the bottom tier. On April 7, 2009, the OECD, through its chief Angel Gurria, announced that Costa Rica, Malaysia, the Philippines and Uruguay have been removed from the blacklist after they had made "a full commitment to exchange information to the OECD standards." Despite calls from French President Nicolas Sarkozy for Hong Kong and Macau to be included separately from China on the list, they are as of yet not included independently, although it is expected that they will be added at a later date. Government response to the crackdown has been broadly supportive, although not universal. Luxembourg Prime Minister Jean-Claude Juncker has criticised the list, stating that it has "no credibility", for failing to include various states of the U.S.A. which provide incorporation infrastructure which are indistinguishable from the aspects of pure tax havens to which the G20 object.

Pensing-Romania

The holistic (systemic) approach and the gradualist of reforming the Romanian pensions' system do as in its structure to find two components, respectively the public compulsory regime of pensions and the regime commercially facultative assurances (inclusively the incipient steps made be occupational pensions). The compulsory participation and the organization below the patronage of the state represent main factors for the core of public component, which assures the protection against the poverty for a large number of people found out below the incidence major risk (invalidity, anilities, decease). Commanded of the objective needs of the society existence, the public regime of pensions (i) comprises it as objective ensemble by which the identity of a person as part of the community, to which he/she belongs, is built, (ii) it supposes a summarization of responsibilities, which are divided among employers, assured people and the public authorities and, thence, (iii) it is presented in a tripartite, which combines the representation of three groups of interests, the role of the state, sponsor of solvency of the system and of control of applying the settlements. The features of public component, supported by the intergenerational solidarity, are imprinted with the following appearances: - The existence of varied typologies of the pensions, respectively: the pension for limit of age, the advanced pension, the advanced partial pension, the pension of invalidity, the pension of descendant. The evolution below dimensional appearance typological spectrum permits the of a delineation relevant appearances such as: the reticence to change, demonstrated especially of the persons found out to the ceiling active life, the reduced sizes of labour motivation, the domination of the human side through crediting trustingly the invalid persons and recognize for successor the contribution contributive of assured person the supporter deceased, the failure attempt to improve the conditions of life ale the farmers, etc - The possibility of correct determination of the pensions quantum, without the influence of the inflationary factor, pursuant to automatic index of the pension point, depending on the evolution of average crude salary on economy. Below evolutional one, appearance of two variables registered the following values. - Building the necessary backgrounds for pay of the pensions to the retired generations from activity on the expense of stipendiary contributions of the active generations, which participation is compulsory. Also, a major role in financing the public pensions is assumed for the employers, the contributive quota in report with the one of assured persons to be more than double. - Thence, the charter age pension contributions depend significantly on the economic power of employers, which uses capacity of work. This is a confirmation of the fact that the economic development represents the existential factor for the benefits life post active. - The proportionality of the sizes of the due in report with the size emerged this limit. As it fitted the current settlements, base adding the contribution to social assurances for pensions is limited to five average salaries brutes on economy. - The dependency of the level of the pension of the incomes is insured as far as salaries for the age superannuation. The quantum valour of the pension is obtained through weighing the average annual score (meaning as the report between the sum of annual scores realized of insured and the number of years composing the complete probation of contribution) with the value of the pension point. The annual score results through reporting to 12 the sum of lunar scores (determined as report between the income the monthly insured salary and the average crude monthly salary on economy). - The public regime of pensions is the fact that the mix of factors determining the height resultant pension constitutes the evidence orientation to compatibility with the pension schemes operational in the member states of the European Union, through the line-up of the age of superannuation and default probation of contribution, the tendency of improving the report of dependency, the inclination to the human side through the intervention of the variable conditions of labour, the equity combinations of the value sizes of the pension law with one of generating income, etc. The component of commercially facultative assurance of pensions is a loser in report of forces with the first one, due to vulnerability potential contributive in report with the exigencies of the present time. The complementarities between the non-unified settlement of the shelves of life assurance (and as part as these assurances for pensions) and the subordination of the occupational pensions' oneness of the elementary content has no power to menace the supremacy of the edifice attributed to the public pensions, founded two centuries ago. The generating causes of such a facto state are among other things: descendant tendency of the segment of active population, which decreases the base of potential buyers of policies against risks generated by some social contingences and the limitation of the chances of capaciousness in assure the segment represented of the old population.

Facultative assurances of pensions represent an ascendancy phenomenon, with contributive role to the elimination of the barriers settled through limitation of audiences through the insufficiency of these levels. Some limits of the pensions system Romania made the choice for the consolidation step by step of the pensions' system, respectively the completion the parametric formation (carry presupposes the modifications of parameters of the system inherited the contributive quota, age of superannuation, minimum complete probation of contribution, come insured, the promotion development of voluntary backgrounds, fiscal advantages, etc.) with systemic forming (includes the abandonment of the monopoly of the prisoner pension publish and enter of a compulsory system administered private, based on the capitalization). Inherent, the complexity transformations prompted of the redesign of the system pension carnations as well as many deficiencies' exhibit proved prerequisite for the attempt of this minimization. A prime neuralgic point for the public regime of pensions looks the redistributive nature of the financial funds assuring its functionality, which does not lead to the growth of the volume of the economies, because the current pensions by-path financed from the current contributions, which doesn't require big reserve of backgrounds for pensions, financed beforehand generating an economic depressions pursuant to the increase of the contributions. We point out, also, the fact that the public regime is affected of the incident to risk the operation market of the labour, because in a period of recession the contributions for the formation of what backgrounds support the system are dominating, and the sustainability is fragile. It is evident that big responsibility is placed on the Government's shoulders. This creates the obligation, finances, administers and it assures the public pensions, only that, through the transfer of a control over important parts from active country to executive, the private sector does not approach these backgrounds and thus is inhibited breed economically. Another issue of the pensions' regime is represented by the evolution of the sustaining number and the beneficiaries of public backgrounds of pensions, which drive to fragility of the base of support and install the pessimism opposite the procurement of the reasonable level of pension. The effects substitutive are the following: it decreased the contributive motivation and it affects the financially sustainability on long term of the system pension. There are chances of survival for a pension 's regime in which approximate 0.75 wage earner is due to deliver the contribution source of a the pensioner. The absence of dichotomies of the answer does not leave the explicative place and the contextual background of manifestation of the phenomenon (breed the hope of life, the diminution birth-rate, derogations ascending for superannuation, etc.). It simultaneously accentuates the agony of the system and the eloquence of value whole potential maximum the reformer. The late character and insufficiency of explicit of the information transmitted to assured persons related to the score achieved, respectively about the future laws generate of the pay of the contributions to the public regime of pensions, cannot be omitted. The procedure of establishing the value sizes of the pension is difficult and supposes informational elements wagons not to be found in the certificate concerning the probation of contribution and the annual score achieved, transmitted to assured people. This appearance generates the impossibility verified contribution stages and the way caused by the annual score, as well as the helplessness pointed out its possible omissions' errors. Simultaneously the situation presented disarms on the main financers and points out the minimum level of stood, thus, it encloses the possibility of reorganize the public regime of pensions. The main syncopate of facultative component is represented by the neglect of the educational component in the construction of commercial strategy adopted. Also, the forms of assurance presuppose that this regime of superannuation is found out, with all the international influence strong in a companionships incipient stage in our country. With all that it represents the consequence of the sciences impact upon the progress of the humanity, the ageing of the population aggravates the tensions as part of the pension's system. The estimations of the World Bank referring to the hope of life are not at all comfortable for the future projections. Thus, during 25 years the hope of life shall be of 15.7 years to men and 17.6 years to women. The basic pensions (a minimum salary) represent the middle of the most efficacious of fight against the poverty. How to stop the hiring spiral non wage earner and the agreement opportunist between employee and employer about new wage earner and how to found the role minimum salary, fractionally socialized (subdued the dues) that allowed of an adult in activity to live in acceptable conditions from that of indicatory limit of what survival helps in main to the settlement of the minimum contribution? The previous considerations, whereat we add the very low level of the pensions, placing the big maul parts of the superannuation below the threshold of the poverty, the must of the line-up of Romania to the tendencies and the practices of European Union, new challenges from the cotemporary company, represent solid

arguments for the substitution of responsibility of the company against its own citizens with the individual answered and the consequences for certain share. This appearance supposes each individual to organize the life so that he/she can have a decent living to anilities and to dependent exclusive of received contributions from state.

Universal banking
A universal bank participates in many kinds of banking activities and is both a Commercial bank and an Investment bank. The concept is most relevant in the United Kingdom and the United States, where historically there was a distinction drawn between pure investment banks and commercial banks. In the US, this was a result of the Glass-Steagall Act of 1933. In both countries, however, the regulatory barrier to the combination of investment banks and commercial banks has largely been removed, and a number of universal banks have emerged in both jurisdictions. However, at least up until the global financial crisis of 2008, there remained a number of large, pure investment banks. In other countries, the concept is less relevant as there is not regulatory distinction between investment banks and commercial banks. Thus, banks of a very large size tend to operate as universal banks, while smaller firms specialised as commercial banks or as investment banks. This is especially true of countries with a European Continental banking tradition. Notable examples of such universal banks include Deutsche Bank of Germany, and UBS and Credit Suisse of Switzerland.

Shareholders and stockholders

A shareholder or stockholder is an individual or institution (including a corporation) that legally owns one or more shares of stock in a public or private corporation. Shareholders own the stock, but not the corporation itself (Fama 1980). Stockholders are granted special privileges depending on the class of stock. These rights may include: The right to sell their shares, provided there is a buyer. The right to vote on the directors nominated by the board. The right to nominate directors (although this is very difficult in practice because of minority protections) and propose shareholder resolutions. The right to dividends if they are declared. The right to purchase new shares issued by the company. The right to what assets remain after a liquidation. Stockholders or shareholders are considered by some to be a subset of stakeholders, which may include anyone who has a direct or indirect interest in the business entity. For example, labor, suppliers, customers, the community, etc. are typically considered stakeholders because they contribute value and/or are impacted by the corporation. Shareholders in the primary market who buy IPOs provide capital to corporations; however, the vast majority of shareholders are in the secondary market and provide no capital directly to the corporation. Contrary to popular opinion, shareholders of American public corporations are the (1) owners of the corporation, (2) the claimants of the profit, or (3) investors, as in the contributors of capital.

Money
Money is any object or record, that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally, a standard of deferred payment. Any kind of easily verifiable record serves these functions as well as an object (an "object" that is taken as money actually serves as just a type of secure record), and "digital money" that exists only as secure records in computerized files, is now the most common form of money. Money originated as commodity money, but nearly all contemporary money systems are based on fiat money. Fiat money is without intrinsic use value as a physical commodity, and derives its value by being declared by a government to be legal tender; that is, it must be accepted as a form of payment within the boundaries of the country, for "all debts, public and private".

The money supply of a country consists of currency (banknotes and coins) and demand deposits or 'bank money' (the balance held in checking accounts and savings accounts). These demand deposits usually account for a much larger part of the money supply than currency. As noted, bank money is intangible and exists only in the form of various bank records, but still serves as money. Functions In the past, money was generally considered to have the following four main functions, which are summed up in a rhyme found in older economics textbooks: "Money is a matter of functions four, a medium, a measure, a standard, a store." That is, money functions as a medium of exchange, a unit of account, a standard of deferred payment, and a store of value. However, most modern textbooks now list only three functions, that of medium of exchange, unit of account, and store of value, not considering a standard of deferred payment as a distinguished function, but rather subsuming it in the others. There have been many historical disputes regarding the combination of money's functions, some arguing that they need more separation and that a single unit is insufficient to deal with them all. One of these arguments is that the role of money as a medium of exchange is in conflict with its role as a store of value: its role as a store of value requires holding it without spending, whereas its role as a medium of exchange requires it to circulate. Others argue that storing of value is just deferral of the exchange, but does not diminish the fact that money is a medium of exchange that can be transported both across space and time. The term 'financial capital' is a more general and inclusive term for all liquid instruments, whether or not they are a uniformly recognized tender. Types of money Currently, most modern monetary systems are based on fiat money. However, for most of history, almost all money was commodity money, such as gold and silver coins. As economies developed, commodity money was eventually replaced by representative money, such as the gold standard, as traders found the physical transportation of gold and silver burdensome. Fiat currencies gradually took over in the last hundred years, especially since the breakup of the Bretton Woods system in the early 1970s. Commodity money Many items have been used as commodity money such as naturally scarce precious metals, conch shells, barley, beads etc., as well as many other things that are thought of as having value. Commodity money value comes from the commodity out of which it is made. The commodity itself constitutes the money, and the money is the commodity. Examples of commodities that have been used as mediums of exchange include gold, silver, copper, rice, salt, peppercorns, large stones, decorated belts, shells, alcohol, cigarettes, cannabis, candy, etc. These items were sometimes used in a metric of perceived value in conjunction to one another, in various commodity valuation or Price System economies. Use of commodity money is similar to barter, but a commodity money provides a simple and automatic unit of account for the commodity which is being used as money. Although some gold coins such as the Krugerrand are considered legal tender, there is no record of their face value on either side of the coin. The rationale for this is that emphasis is laid on their direct link to the prevailing value of their fine gold content. American Eagles are imprinted with their gold content and legal tender face value. Representative money In 1875 economist William Stanley Jevons described what he called "representative money," i.e., money that consists of token coins, or other physical tokens such as certificates, that can be reliably exchanged for a fixed quantity of a commodity such as gold or silver. The value of representative money stands in direct and fixed relation to the commodity that backs it, while not itself being composed of that commodity. Fiat money Fiat money or fiat currency is money whose value is not derived from any intrinsic value or guarantee that it can be converted into a valuable commodity (such as gold). Instead, it has value only by government order (fiat). Usually, the government declares the fiat currency (typically notes and coins from a central bank, such as the Federal Reserve System in the U.S.) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts, public and private. Some bullion coins such as the Australian Gold Nugget and American Eagle are legal tender, however, they trade based on the market price of the metal content as a commodity, rather than their legal tender face value (which is usually only a small fraction of their bullion value).

Fiat money, if physically represented in the form of currency (paper or coins) can be accidentally damaged or destroyed. However, fiat money has an advantage over representative or commodity money, in that the same laws that created the money can also define rules for its replacement in case of damage or destruction. For example, the U.S. government will replace mutilated Federal Reserve notes (U.S. fiat money) if at least half of the physical note can be reconstructed, or if it can be otherwise proven to have been destroyed. By contrast, commodity money which has been lost or destroyed cannot be recovered. Commercial bank money Commercial bank money or demand deposits are claims against financial institutions that can be used for the purchase of goods and services. A demand deposit account is an account from which funds can be withdrawn at any time by check or cash withdrawal without giving the bank or financial institution any prior notice. Banks have the legal obligation to return funds held in demand deposits immediately upon demand (or 'at call'). Demand deposit withdrawals can be performed in person, via checks or bank drafts, using automatic teller machines (ATMs), or through online banking. Commercial bank money is created through fractional-reserve banking, the banking practice where banks keep only a fraction of their deposits in reserve (as cash and other highly liquid assets) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand. Commercial bank money differs from commodity and fiat money in two ways, firstly it is non-physical, as its existence is only reflected in the account ledgers of banks and other financial institutions, and secondly, there is some element of risk that the claim will not be fulfilled if the financial institution becomes insolvent. The process of fractional-reserve banking has a cumulative effect of money creation by commercial banks, as it expands money supply (cash and demand deposits) beyond what it would otherwise be. Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's central bank. That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators. The money supply of a country is usually held to be the total amount of currency in circulation plus the total amount of checking and savings deposits in the commercial banks in the country.

Stock exchange
A stock exchange is an entity that provides "trading" facilities for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and dividends. Securities traded on a stock exchange include shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it must be listed there. Usually, there is a central location at least for record keeping, but trade is increasingly less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of increased speed and reduced cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors that, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities. The role of stock exchanges Stock exchanges have multiple roles in the economy. This may include the following: Raising capital for businesses The Stock Exchange provide companies with the facility to raise capital for expansion through selling shares to the investing public. Mobilizing savings for investment When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized and

redirected to promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher productivity levels of firms. Facilitating company growth Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion. Profit sharing Both casual and professional stock investors, through dividends and stock price increases that may result in capital gains, share in the wealth of profitable businesses. Corporate governance By having a wide and varied scope of owners, companies generally tend to improve management standards and efficiency to satisfy the demands of these shareholders, and the more stringent rules for public corporations imposed by public stock exchanges and the government. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than privately held companies (those companies where shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors). Despite this claim, some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies. The dot-com bubble in the late 1990's, and the subprime mortgage crisis in 2007-08, are classical examples of corporate mismanagement. Companies like Pets.com (2000), Enron Corporation (2001), One.Tel (2001), Sunbeam (2001), Webvan (2001), Adelphia (2002), MCI WorldCom (2002), Parmalat (2003), American International Group (2008), Bear Stearns (2008), Lehman Brothers (2008), General Motors (2009) and Satyam Computer Services (2009) were among the most widely scrutinized by the media. However, when poor financial, ethical or managerial records are known by the stock investors, the stock and the company tend to lose value. In the stock exchanges, shareholders of underperforming firms are often penalized by significant share price decline, and they tend as well to dismiss incompetent management teams. Creating investment opportunities for small investors As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. Government capital-raising for development projects Governments at various levels may decide to borrow money to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock Exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate the need, in the short term, to directly tax citizens to finance developmentthough by securing such bonds with the full faith and credit of the government instead of with collateral, the government must eventually tax citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature. Barometer of the economy At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy.

Joint ventures
The JV parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They both exercise control over the enterprise and consequently share revenues, expenses and assets. There are other types of companies such as JV limited by guarantee, joint ventures limited by guarantee with partners holding shares. In European law, the term 'joint-venture' is an elusive legal concept, better defined under the rules of company law. In France, the term 'joint venture' is variously translated as 'association d'entreprises',

'entreprise conjointe', 'co-entreprise' and 'entreprise commune'. But generally, the term societe anonyme loosely covers all foreign collaborations. In Germany,'joint venture' is better represented as a 'combination of companies' (Konzern) On the other hand, when two or more persons come together to form a temporary partnership for the purpose of carrying out a particular project, such partnership can also be called a joint venture where the parties are "co-venturers". The venture can be for one specific project only - when the JV is referred more correctly as a consortium (as the building of the Channel Tunnel) - or a continuing business relationship. The consortium JV (also known as a cooperative agreement) is formed where one party seeks technological expertise or technical service arrangements, franchise and brand use agreements, management contracts, rental agreements, for onetime contracts. The JV is dissolved when that goal is reached. Some major joint ventures include Dow Corning, MillerCoors, Sony Ericsson and Penske Truck Leasing. Concept A JV on a continuing basis is the normal business undertaking. It is similar to a business partnership with two differences: the first, a partnership generally involves an ongoing, long-term business relationship, whereas an equity-based JV comprises a single business activity. Second, all the partners have to agree to dissolve the partnership whereas a finite time has to lapse before it comes to an end (or is closed by the Court due to a dispute). The term JV refers to the purpose of the entity and not to a type of entity. Therefore, a joint venture may be a corporation, a limited liability enterprise, a partnership or other legal structure, depending on a number of considerations such as tax and tort liability. JVs are normally formed both inside one's own country and between firms belonging to different countries. JVs are usually formed in order to combine strengths or to bypass legal restrictions within a country; for example an insurance company cannot market its policies through a banking company. Some JVs are also formed because the law of a country allows dispute settlement, should it occur, in a third country. They are also formed to minimize business,tax and political risks. The JV is an alternative to the parent-subsidiary business partnership in emerging countries, discouraged, on account of (a) ignoring national objectives (b) slow-growth (c) parental control of funds and (d) disallowing competition. JVs can be in the manufacture of goods, services, travel space, banking, insurance, web-hosting business, etc. Today, the term 'JV' applies to more occasions than the choice of JV partners; for example, an individual normally cannot legally carry out business without finding a national partner to form a JV as in many Arab countries where it is mentioned that there are over 500 Indian JVs in Saudi Arabia. Also, the JV may be an easier first-step to franchising, as McDonald's and other fast foods found out in China in the early difficult stage of development. Other reasons for forming a JV are: reducing 'entry' risks by using the local partner's assets inadequate knowledge of local institutional or legal environment access to local borrowing powers perception that the goodwill of the local partner is carried forward in strategic sectors, the county's laws may not permit foreign nationals to operate alone access to local resources through participation of national partner influence of local partners on government officials or 'compulsory' requisite (see China coverage below) access by one partner to foreign technology or expertise, often a key consideration of local parties (or through government incentives for the mechanism) again, through government incentives, job and skill growth through foreign investment, and incoming foreign exchange and investment. Reasons for one partner There may be strategic interests of one partner's alone: adding 'clout' (the influence of the other partner) to the enterprise build on company's strengths economies of (international) scale and advantages of size ('industrial hubs') 'globalize' without size economies of scale (e.g.Indian and Israeli pharmaceutical industries) influencing structural evolution of the industry pre-empting competition

defensive response to blurring industry boundaries speed to market market diversification pathways into R&D outsourcing JVs are formed by the parties entering into an agreement that specifies their mutual responsibilities and goals in an 'adventure. The JV partners can usually form the capital of the company through injections of cash alone or cash together with assets such as 'technology' or land and buildings. Subsequent to its formation the JV can raise debt for additional capital. A written contract is crucial for legal provisions. All JVs also involve certain rights and duties. Each partner to the JV has a fiduciary responsibility, even to act on someones behalf, subordinating one's personal interests to those of the other person or that of the sleeping partner. Upon its incorporation (see later) it becomes a company in most places, or a corporation (in the US). Downsides Some of the downsides of a joint venture may be: differing philosophies governing expectations and objectives of the JV partners an imbalance in the level of investment and expertise brought to the JV by the two parent organizations inadequate identification, support, and compensation of senior leadership and management teams or conflicting corporate cultures and operational styles of the JV partners A JV can terminate at a time specified in the contract, upon the death of an active member (unusual) or if a court so decides in a dispute taken to it. Joint ventures have existed for many years in the US, from their usage in the railroad industry (one party controls the sources of oil and the other party the rights of ferrying it) and even to manufacturing and services. In the financial services industry JVs were widely employed for marketing products or services that one of the parties, which acting alone, would have been legally prohibited from doing so.

Trusts
A trust company is a corporation, especially a commercial bank, organized to perform the fiduciary of trusts and agencies. It is normally owned by one of three types of structures: an independent partnership, a bank, or a law firm, each of which specializes in being a trustee of various kinds of trusts and in managing estates. Trust companies are not required to exercise all of the powers that they are granted. Further, the fact that a trust company in one jurisdiction does not perform all of the duties of a trust company in another jurisdiction is irrelevant and does not have any bearing on whether either company is truly a "trust company". Therefore, it is safe to say that the term "trust company" must not be narrowly construed. The "trust" name refers to the ability of the institution's trust department to act as a trustee someone who administers financial assets on behalf of another. The assets are typically held in the form of a trust, a legal instrument that spells out the beneficiaries and what the money can be spent for. A trustee will manage investments, keep records, manage assets, prepare court accountings, pay bills (depending on the nature of the trust) medical expenses, charitable gifts, inheritances or other distributions of income and principal. A trust department provides investment management, including securities market advice, investment strategy and portfolio management, management of real estate and safekeeping of valuables. A trust involves the administration of assets on behalf of another: an institution or one or more individuals, living or dead. A living trust appoints a trustee to manage assets during the lifetime of the original settlor; this private arrangement allows for distribution of wealth even if the client becomes incapacitated or unable to act personally. Upon death, the trust controls how and when assets are used and distributed; this can be a substitute for appointment of a legal guardian or conservator to handle assets inherited by young children or others unable to act on their own behalf. By bypassing the probate process through which a will is handled by the judicial system, a trust may reduce costs or delays, manage real estate, provide more privacy than a bequest in a will and offer possible tax advantages. A testamentary trust is one created by being written into a will to provide for management of assets to be inherited by beneficiaries.

Revocable trusts A revocable trust is one in which assets are owned by the trustee, but the settlor reserves a power of revocation. Because the settlor can revoke the trust and therefore maintains control over the property, there are normally no tax advantages involved in this arrangement. Irrevocable trusts An irrevocable trust is often used for charitable purposes by organizations or millionaires ("high net worth individuals") as well as for the management of inheritances. As the benefactor relinquishes control of the assets upon creating the trust, any charitable activities incur tax benefits even while the assets are invested to provide a financial endowment for later use by the charitable foundation. This approach has been successfully used by foundations established by well-known and wealthy families such as the Ford (automobile), Carnegie (steel) and Arthur Vining Davis (aluminium) families. A trust may also be an integral part of an institution founded by such an individual or group, created to ensure its long-term financial viability.

Cartels
A cartel is a formal (explicit) agreement among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production. Cartels usually occur in an oligopolistic industry, where there is a small number of sellers and usually involve homogeneous products. Cartel members may agree on such matters as price fixing, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, and the division of profits or combination of these. The aim of such collusion (also called the cartel agreement) is to increase individual members' profits by reducing competition. One can distinguish private cartels from public cartels. In the public cartel a government is involved to enforce the cartel agreement, and the government's sovereignty shields such cartels from legal actions. Contrariwise, private cartels are subject to legal liability under the antitrust laws now found in nearly every nation of the world. Competition laws often forbid private cartels. Identifying and breaking up cartels is an important part of the competition policy in most countries, although proving the existence of a cartel is rarely easy, as firms are usually not so careless as to put agreements to collude on paper. Several economic studies and legal decisions of antitrust authorities have found that the median price increase achieved by cartels in the last 200 years is around 25%. Private international cartels (those with participants from two or more nations) had an average price increase of 28%, whereas domestic cartels averaged 18%. Fewer than 10% of all cartels in the sample failed to raise market prices.

Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its only purpose is owning shares of other companies. Holding companies allow the reduction of risk for the owners and can allow the ownership and control of a number of different companies. In the U.S., 80% or more of stock, in voting and value, must be owned before tax consolidation benefits such as tax-free dividends can be claimed. Sometimes a company intended to be a pure holding company identifies itself as such by adding "Holdings" or "(Holdings)" to its name, as in Sears Holdings.

Offshore bank
An offshore bank is a bank located outside the country of residence of the depositor, typically in a low tax jurisdiction (or tax haven) that provides financial and legal advantages. These advantages typically include: greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking Act) low or no taxation (i.e. tax havens) easy access to deposits (at least in terms of regulation) protection against local political or financial instability While the term originates from the Channel Islands being "offshore" from the United Kingdom, and most offshore banks are located in island nations to this day, the term is used figuratively to refer to such banks

regardless of location, including Swiss banks and those of other landlocked nations such as Luxembourg and Andorra. Offshore banking has often been associated with the underground economy and organized crime, via tax evasion and money laundering; however, legally, offshore banking does not prevent assets from being subject to personal income tax on interest. Except for certain persons who meet fairly complex requirements, the personal income tax of many countries makes no distinction between interest earned in local banks and those earned abroad. Persons subject to US income tax, for example, are required to declare on penalty of perjury, any offshore bank accountswhich may or may not be numbered bank accounts they may have. Although offshore banks may decide not to report income to other tax authorities, and have no legal obligation to do so as they are protected by bank secrecy, this does not make the non-declaration of the income by the tax-payer or the evasion of the tax on that income legal. Following September 11, 2001, there have been many calls for more regulation on international finance, in particular concerning offshore banks, tax havens, and clearing houses such as Clearstream, based in Luxembourg, being possible crossroads for major illegal money flows. Defenders of offshore banking have criticised these attempts at regulation. They claim the process is prompted, not by security and financial concerns, but by the desire of domestic banks and tax agencies to access the money held in offshore accounts. They cite the fact that offshore banking offers a competitive threat to the banking and taxation systems in developed countries, suggesting that Organisation for Economic Co-operation and Development (OECD) countries are trying to stamp out competition. Advantages of offshore banking Offshore banks can sometimes provide access to politically and economically stable jurisdictions. This will be an advantage for residents in areas where there is risk of political turmoil,who fear their assets may be frozen, seized or disappear (see the corralito for example, during the 2001 Argentine economic crisis). However it is often argued that developed countries with regulated banking systems offer the same advantages in terms of stability. Some offshore banks may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention. Advocates of offshore banking often characterise government regulation as a form of tax on domestic banks, reducing interest rates on deposits. Offshore finance is one of the few industries, along with tourism, in which geographically remote island nations can competitively engage. It can help developing countries source investment and create growth in their economies, and can help redistribute world finance from the developed to the developing world. Interest is generally paid by offshore banks without tax being deducted. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income. Some offshore banks offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere. Offshore banking is often linked to other structures, such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals. Many advocates of offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, arguing with Charles Tiebout that tax competition allows people to choose an appropriate balance of services and taxes. Critics of the industry, however, claim this competition as a disadvantage, arguing that it encourages a "race to the bottom" in which governments in developed countries are pressured to deregulate their own banking systems in an attempt to prevent the offshoring of capital. Disadvantages of offshore banking Offshore bank accounts are less financially secure. In a banking crisis which swept the world in 2008 the only savers who lost money were those who had deposited their funds in offshore branches of Icelandic banks such as Kaupthing Singer & Friedlander. Those who had deposited with the same banks onshore received all of their money back. In 2009 The Isle of Man authorities were keen to point out that 90% of the claimants were paid, although this only referred to the number of people who had received money from their depositor compensation scheme and not the amount of money refunded. In reality only 40% of depositor funds had been repaid 24.8% in September 2009 and 15.2% in December 2009. Both offshore and onshore banking centres often have depositor compen-

sation schemes. For example The Isle of Man compensation scheme guarantees 50,000 of net deposits per individual depositor or 20,000 for most other categories of depositor and point out that potential depositors should be aware that any deposits over that amount are at risk. However only offshore centres such as the Isle of Man have refused to compensate depositors 100% of their funds following Bank collapses. Onshore depositors have been refunded in full regardless of what the compensation limit of that country has stated thus banking offshore is historically riskier than banking onshore. Offshore banking has been associated in the past with the underground economy and organized crime, through money laundering. Following September 11, 2001, offshore banks and tax havens, along with clearing houses, have been accused of helping various organized crime gangs, terrorist groups, and other state or non-state actors. However, offshore banking is a legitimate financial exercise undertaken by many expatriate and international workers. Offshore jurisdictions are often remote, and therefore costly to visit, so physical access and access to information can be difficult. Yet in a world with global telecommunications this is rarely a problem for customers. Accounts can be set up online, by phone or by mail. Offshore private banking is usually more accessible to those on higher incomes, because of the costs of establishing and maintaining offshore accounts. However, simple savings accounts can be opened by anyone and maintained with scale fees equivalent to their onshore counterparts. The tax burden in developed countries thus falls disproportionately on middle-income groups. Historically, tax cuts have tended to result in a higher proportion of the tax take being paid by high-income groups, as previously sheltered income is brought back into the mainstream economy. The Laffer curve demonstrates this tendency. Offshore bank accounts are sometimes touted as the solution to every legal, financial and asset protection strategy but this is often much more exaggerated than the reality.

Banking system
Legal background Banking activity in Romania is carried out through the central bank of the Romanian state and through banking companies under the control of the central bank. As central bank of the Romanian state, the National Bank of Romania (here in after referred to as "NBR") is organized and functions in accordance with its statutes, adopted by Law no. 101/1998. The activity of the commercial banks and the relations between the commercial banks and the national bank are regulated by the Banking Law no. 58/1998. The conditions for declaring banking bankruptcy and capitalizing banking assets are stipulated by Law no. 83/1998 regarding the procedure of bankruptcy for credit institutions and by Governmental Decision no. 1217/2001 regarding the organization and functioning of the Authority for the Capitalization of Banking Assets. The aforesaid normative acts represent the legal basis for the convergence of the Romanian banking system with the international regulations in the field of credit institutions. In implementing these, the NBR issued regulations to complete the process of adapting the Romanian banking activity to the world standards (especially to the European ones), and, over the last period, the goal of optimizing the quality of monitoring and banking prudential conduct, as well as the completion of the process of privatization of the state-owned banks, have been pursued. The National Bank of Romania Fundamental objective and duties of the NBR The fundamental objective of the NBR is to ensure the stability of the national currency in order to contribute to the stability of prices. To achieve this objective, the National Bank of Romania issues, applies and handles currency policy, hard currency, credit, payment policy, as well as the authorization and monitoring of prudent banking policies within the framework of the general policy of the state. Its aim is to guarantee the normal functioning of the banking system and the promotion of a financial system that is suited to a free market economy. Operations carried out by the NBR According to its statutes, the NBR carries out four main categories of operations: - operations with banking companies and other credit institutions, consisting especially of: crediting banking companies and financial institutions, regulating and supervising payment systems, and ensuring services of compensation, depositing and payment;

- operations with the state treasury, such as: keeping the current account of the state treasury and granting loans to the central administration to cover temporary deficits between income and expenses; - operations on the currency market, whereby the NBR may discount, acquire, take in pledge or sell claims, titles or other assets of the state, banks or other legal entities and may attract deposits from banks, under the terms deemed necessary in order to achieve the objectives of the currency policy; - operations with gold and external assets, contemplating the preserving of the international reserves on a level that is deemed to be proper for the external transactions of the Romanian state. Commercial banks Legal form and minimum share capital According to Romanian law, commercial banks are legal entities that are authorized to carry out mainly activities to attract deposits and grant credits in personal name and on personal account. The legal form of such banks is a joint stock company, and the minimum share capital required under the law for the establishment of such banks is of ROL 250 billion (approximately USD 7,352,941 as of the date of drafting of the report) until May 30, 2003; ROL 320 billion (approximately USD9,411,765 as of the date of drafting of the report) starting with May 31, 2003; ROL 370 billion (approximately USD 10,882,352 as of the date of drafting of the report) starting with May 31, 2004. The subscribed share capital must be fully paid in at the time of establishment. Banking operations Operations carried out by banks may be classified in two categories: - operations specific to banking activity, carried out directly by the banks, pertaining to the essence of the banking activity (accepting of deposits, crediting, discounting, issuing and administering payment and credit instruments, making payments, transfers and discounts, financial-banking consulting, transactions on personal account or on the account of third parties with negotiable titles, hard currency, etc.); - operations through specialized brokers, carried out through securities companies and companies of financial leasing established for this purpose. RETAIL The year 2002 was the competition year amongst the commercial banks in Romania as regards the retail segment, which has acknowledged a growing demand coming especially from individuals interested in taking credits for dwellings, cars or purchase of other goods, leading to an increase by almost 30%of the nongovernmental credits, in real terms. The housing loans have expanded mostly due to the emergence of regulations regarding mortgaging credits, as represented by the Law no. 190/1999 with amendments, which illuminated the conditions imposed for the set up of mortgaging credits companies, and also due to the emergence of the Law 541/2002 on the savings and crediting in a collective system of the housing domain. Launching various forms of financing, the development of credit cards, the reconsideration by each bank of the branches net, the initiation of Internet- banking and mobile-banking, all favored the expansion and progress of commercial banks in Romania, over the last period. Authorizing of banks Banking companies that are Romanian legal entities may only function on the basis of an authorization issued by the NBR. Romanian legal entities in this case are deemed to be banks with headquarters in Romania, as well as domestic subsidiaries of such banks and of foreign banks. The procedure of authorizing the banks that are Romanian legal entities implies going through three stages: - approving the bank's establishment; - registering the established banking company with the Trade Registry; - authorizing the bank's functioning. Branches of the foreign banks have to follow the above-mentioned procedure by the law for authorizing the foreign legal entities. The quantum of the minimum share capital of such banks is the same as for the minimum share capital of the banks that are Romanian legal entities. Nevertheless, the activities carried out by the branches of the foreign banks may not exceed the object of activity of the mother-company. Representative offices of foreign banks Banks that are foreign legal entities are obliged to notify the NBR with respect to the opening of representative offices in Romania, and the authorization of the functioning thereof is issued by the Ministry of Industry and Resources. Their activity is limited to informing, liaising or representing, and they are not authorized to carry out any banking operations. Supervising the banks' activity

The NBR, in its capacity of authority for prudent banking supervision, may decide upon measures for implementing special supervision and special administration of banks. Special supervision is implemented for a maximum of 120 days, pursuant to a breaching of the law or of the regulations issued by the NBR, discovered while conducting actions of supervision and/or analysis of the banks' reporting, as well as in case of finding a poor financial condition. The special supervision is conducted by a commission composed of NBR specialists, who shall submit periodical reports to the NBR with respect to the situation of the bank subject to supervision. In the event that the bank's activity is further found to present serious deficiencies, the NBR may decide, on a case-per-case basis, to implement measures of special administration of the respective bank. Special administration is carried out by a special administrator appointed by the board of administration of the NBR. The special administrator fully takes over the duties of the board of administration of the bank subject to the special administration regime, and is to further submit a written report to the NBR with respect to the financial condition of the bank and the possibility of recovery of the bank's financial security. Within 15 days following the receipt of the special administrator's report, the board of administration of the NBR shall decide either to extend the activity of the special administrator for a limited period or to withdraw the authorization and notify the competent court for the commencement of the bank's liquidation procedure. Capitalization of the banking assets and privatization of the banks with state capital In view of privatization, the abatement of the state-owned banks from the non-performing banking assets that the same hold is achieved through a specialized institution of the central public administration subordinated to the Government, called the Authority for the Capitalization of Banking Assets (AVAB). AVAB takes over the non-performing banking assets (non-performing claims, movable and immovable goods included in the patrimony of the banks pursuant to the enforcement procedures, as well as the commercial claims associated to the banking assets subject to capitalization) with the payment at the net value of the same and capitalizes them at their market value, resulting from the proportion between demand and offer. Privatization of the state-owned banking companies is achieved in Romania through one of the following three methods: - increase of the share capital by means of a private capital contribution, in cash, on the basis of a public offer or a private placement; - sale of shares administered by the Authority for Privatization and Administration of State Participations (APAPS), only in exchange for cash, with full payment to Romanian and foreign individuals, as well as to Romanian and foreign legal entities with a majority of private capital; - a combination of the methods set forth above. Currently, the most important privatized banks in Romania are: Banc Post taken over by GE Capital, which subsequently assigned part of its shares to two other foreign banks; in November 2002 the last package of shares held by the state, representing 17% of the share capital, was sold to the Hellenic bank Eurobank Ergasias; The Romanian Bank for Development taken over by Societe Generale; and Banca Agricola the majority package was taken over by a consortium formed of Raiffeisenbank and the Romanian-American Investment Fund. The bank privatization process continues, and the privatization of the bank that holds the highest market share the Romanian Commercial Bank is still expected. During the year 2002, the Romanian state organized two unsuccessful tenders for the sale of approximately 70% of the shares held at Romanian Commercial Bank; therefore the privatization strategy is anticipated to suffer a change.

Succesful business-Apple
Apple Inc. (NASDAQ: AAPL; previously Apple Computer, Inc.) is an American multinational corporation that designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad. Apple software includes the Mac OS X operating system; the iTunes media browser; the iLife suite of multimedia and creativity software; the iWork suite of productivity software; Aperture, a professional photography package; Final Cut Studio, a suite of professional audio and film-industry software products; Logic Studio, a suite of music production tools; and iOS, a mobile operating system. As of August 2010, the company operates 301 retail stores in ten countries, and an online store where hardware

and software products are sold. As of May 2010, Apple is one of the largest companies in the world and the most valuable technology company in the world, having surpassed Microsoft. Established on April 1, 1976 in Cupertino, California, and incorporated January 3, 1977, the company was previously named Apple Computer, Inc., for its first 30 years, but removed the word "Computer" on January 9, 2007, to reflect the company's ongoing expansion into the consumer electronics market in addition to its traditional focus on personal computers. As of September 2010, Apple had 46,600 full time employees and 2,800 temporary full time employees worldwide and had worldwide annual sales of $65.23 billion. For reasons as various as its philosophy of comprehensive aesthetic design to its distinctive advertising campaigns, Apple has established a unique reputation in the consumer electronics industry. This includes a customer base that is devoted to the company and its brand, particularly in the United States. Fortune magazine named Apple the most admired company in the United States in 2008, and in the world in 2008, 2009, and 2010. The company has also received widespread criticism for its contractors' labor, environmental, and business practices.

Factoring (+curs)
Factoring is a financial transaction whereby a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. Factoring differs from a bank loan in three main ways. First, the emphasis is on the value of the receivables (essentially a financial asset), not the firms credit worthiness. Secondly, factoring is not a loan it is the purchase of a financial asset (the receivable). Finally, a bank loan involves two parties whereas factoring involves three. It is different from forfaiting in the sense that forfaiting is a transaction-based operation, while factoring is a firm-based operation, meaning that in factoring a firm sells all its receivables, while in forfaiting the firm sells one of its transactions. Factoring is a word often misused synonymously with invoice discounting - factoring is the sale of receivables, whereas invoice discounting is borrowing where the receivable is used as collateral. The three parties directly involved are: the one who sells the receivable, the debtor, and the factor. The receivable is essentially a financial asset associated with the debtors liability to pay money owed to the seller (usually for work performed or goods sold). The seller then sells one or more of its invoices (the receivables) at a discount to the third party, the specialized financial organization (aka the factor), to obtain cash. The sale of the receivables essentially transfers ownership of the receivables to the factor, indicating the factor obtains all of the rights and risks associated with the receivables. Accordingly, the factor obtains the right to receive the payments made by the debtor for the invoice amount and must bear the loss if the debtor does not pay the invoice amount. Usually, the account debtor is notified of the sale of the receivable, and the factor bills the debtor and makes all collections. Critical to the factoring transaction, the seller should never collect the payments made by the account debtor, otherwise the seller could potentially risk further advances from the factor. There are three principal parts to the factoring transaction; a.) the advance, a percentage of the invoice face value that is paid to the seller upon submission, b.) the reserve, the remainder of the total invoice amount held until the payment by the account debtor is made and c.) the fee, the cost associated with the transaction which is deducted from the reserve prior to it being paid back the seller. Sometimes the factor charges the seller a service charge, as well as interest based on how long the factor must wait to receive payments from the debtor. The factor also estimates the amount that may not be collected due to non-payment, and makes accommodation for this when determining the amount that will be given to the seller. The factor's overall profit is the difference between the price it paid for the invoice and the money received from the debtor, less the amount lost due to non-payment. American Accounting considers the receivables sold when the buyer has "no recourse", or when the financial transaction is substantially a transfer of all of the rights associated with the receivables and the seller's monetary liability under any "recourse" provision is well established at the time of the sale. Otherwise, the financial transaction is treated as a loan, with the receivables used as collateral.

Forfaiting (+curs)
In trade finance, forfaiting involves the purchasing of receivables from exporters. The forfaiter takes on all risks involved with the receivables. It is different from the factoring operation in the sense that

forfaiting is a transaction-based operation while factoring is a firm-based operation: In factoring, a firm sells all its receivables while in forfaiting, the firm sells one of its transactions. The characteristics of a forfaiting transaction are: Credit is extended to the exporter for a period ranging between 180 days to seven years. Minimum bill size is normally US$ 250,000, although $500,000 is preferred. The payment is normally receivable in any major convertible currency. A letter of credit or a guarantee is made by a bank, usually in the importer's country. The contract can be for either goods or for services. At its simplest the receivables should be evidenced by a promissory note, a bill of exchange, a deferredpayment letter of credit, or a letter of guarantee. Three elements relate to the pricing of a forfaiting transaction: Discount rate, the interest element, usually quoted as a margin over LIBOR. Days of grace, added to the actual number of days until maturity for the purpose of covering the number of days normally experienced in the transfer of payment, applicable to the country of risk. Commitment fee, applied from the date the forfaiter is committed to undertake the financing, until the date of discounting. The benefits to the exporter from forfaiting include eliminating political, transfer, and commercial risks and improving cash flows. The benefit to the forfaiter is the extra margin on the loan to the exporter.

Credits
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower. Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services. However, in modern societies credit is usually denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account. Movements of financial capital are normally dependent on either credit or equity transfers. Credit is in turn dependent on the reputation or creditworthiness of the entity which takes responsibility for the funds. Credit is also traded in financial markets. The purest form is the credit default swap market, which is essentially a traded market in credit insurance. A credit default swap represents the price at which two parties exchange this risk the protection "seller" takes the risk of default of the credit in return for a payment, commonly denoted in basis points (one basis point is 1/100 of a percent) of the notional amount to be referenced, while the protection "buyer" pays this premium and in the case of default of the underlying (a loan, bond or other receivable), delivers this receivable to the protection seller and receives from the seller the par amount (that is, is made whole). Trade credit The word credit is used in commercial trade in the term "trade credit" to refer to the approval for delayed payments for purchased goods. Credit is sometimes not granted to a person who has financial instability or difficulty. Companies frequently offer credit to their customers as part of the terms of a purchase agreement. Organizations that offer credit to their customers frequently employ a credit manager. Consumer credit Consumer debt can be defined as money, goods or services provided to an individual in lieu of payment. Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), retail loans (retail installment loans) and mortgages. This is a broad definition of consumer credit and corresponds with the Bank of England's definition of "Lending to individuals". Given the size and nature of the mortgage market, many observers classify mortgage lending as a separate category of personal borrowing, and consequently residential mortgages are excluded from some definitions of consumer credit - such as the one adopted by the Federal Reserve in the US. The cost of credit is the additional amount, over and above the amount borrowed, that the borrower has to pay. It includes interest, arrangement fees and any other charges. Some costs are mandatory, required by the lender as an integral part of the credit agreement. Other costs, such as those for credit insurance, may be optional. The borrower chooses whether or not they are included as part of the agreement.

Interest and other charges are presented in a variety of different ways, but under many legislative regimes lenders are required to quote all mandatory charges in the form of an annual percentage rate (APR). The goal of the APR calculation is to promote truth in lending, to give potential borrowers a clear measure of the true cost of borrowing and to allow a comparison to be made between competing products. The APR is derived from the pattern of advances and repayments made during the agreement. Optional charges are not included in the APR calculation. So if there is a tick box on an application form asking if the consumer would like to take out payment insurance, then insurance costs will not be included in the APR calculation (Finlay 2009).

Futures
In finance, a futures contract is a standardized contract between two parties to buy or sell a specified asset (eg.oranges, oil, gold) of standardized quantity and quality at a specified future date at a price agreed today (the futures price). The contracts are traded on a futures exchange. Futures contracts are not "direct" securities like stocks, bonds, rights or warrants. They are still securities, however, though they are a type of derivative contract. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. The price is determined by the instantaneous equilibrium between the forces of supply and demand among competing buy and sell orders on the exchange at the time of the purchase or sale of the contract. In many cases, the underlying asset to a futures contract may not be traditional "commodities" at all that is, for financial futures, the underlying asset or item can be currencies, securities or financial instruments and intangible assets or referenced items such as stock indexes and interest rates. The future date is called the delivery date or final settlement date. The official price of the futures contract at the end of a day's trading session on the exchange is called the settlement price for that day of business on the exchange. A closely related contract is a forward contract; they differ in certain respects. Future contracts are very similar to forward contracts, except they are exchange-traded and defined on standardized assets. Unlike forwards, futures typically have interim partial settlements or "true-ups" in margin requirements. For typical forwards, the net gain or loss accrued over the life of the contract is realized on the delivery date. A futures contract gives the holder the obligation to make or take delivery under the terms of the contract, whereas an option grants the buyer the right, but not the obligation, to establish a position previously held by the seller of the option. In other words, the owner of an options contract may exercise the contract, but both parties of a "futures contract" must fulfill the contract on the settlement date. The seller delivers the underlying asset to the buyer, or, if it is a cash-settled futures contract, then cash is transferred from the futures trader who sustained a loss to the one who made a profit. To exit the commitment prior to the settlement date, the holder of a futures position has to offset his/her position by either selling a long position or buying back (covering) a short position, effectively closing out the futures position and its contract obligations. Futures contracts, or simply futures, (but not future or future contract) are exchange-traded derivatives. The exchange's clearing house acts as counterparty on all contracts, sets margin requirements, and crucially also provides a mechanism for settlement.

Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-french derivation - from franc- meaning free, and is used both as a noun and as a (transitive) verb. For the franchisor, the franchise is an alternative to building 'chain stores' to distribute goods and avoid investment and liability over a chain. The franchisor's success is the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because he or she has a direct stake in the business. A franchise usually lasts for a fixed time period (broken down into shorter periods, which each require renewal), and serves a specific "territory" or area surrounding its location. One franchisee may manage several such locations. Agreements typically last from five to thirty years, with premature cancellations or terminations of most contracts bearing serious consequences for franchisees. A franchise is merely a temporary business investment, involving renting or leasing an opportunity, not buying a business for the purpose of ownership. It is classified as a wasting asset due to the finite term of the license. A franchise can be exclusive, non-exclusive or 'sole and exclusive'.

Although franchisor revenues and profit may be listed in a franchise disclosure document (FDD), no laws require the estimate of franchisee profitability, which depends on how intensively the franchisee 'works' the franchise. Therefore, franchisor fees are always based on 'gross revenue from sales' and not on profits realized. See Remuneration. Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor. Franchise brokers help franchisors find appropriate franchisees. There are also main 'master franchisors' who obtain the rights to sub-franchise in a territory. It should be recognized that franchising is one of the only means available to access venture investment capital without the need to give up control of the operation of the chain and build a distribution system for their services. After the brand and formula are carefully designed,and properly executed, franchisors are able to sell franchises and expand rapidly across countries and continents using the capital and resources of their 'franchisees' while reducing risk. Franchisor rules imposed by the franchising authority are usually very strict and important in the US and most countries need to study them to help the small or start-up franchisee in their countries to protect them. Besides the trademark, there are proprietary service marks which may be copyright - and corresponding regulations.