Economics, Equity And More!

What Is Economics?

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Economics is a social science concerned with the production, distribution, and consumption of goods and services. 


It studies how individuals, businesses, governments, and nations make choices about how to allocate resources. 


Economics focuses on the actions of human beings, based on assumptions that humans act with rational behavior, seeking the most optimal level of benefit or utility. 


The building blocks of economics are the studies of labor and trade. 


Since there are many possible applications of human labor and many different ways to acquire resources, it is the task of economics to determine which methods yield the best results.


Economics can generally be broken down into macroeconomics, which concentrates on the behavior of the economy as a whole, and microeconomics, which focuses on individual people and businesses.


***What Is an Entrepreneur?

An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. 


The process of setting up a business is known as entrepreneurship. 


The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.


Entrepreneurs play a key role in any economy, using the skills and initiative necessary to anticipate needs and bringing good new ideas to market. 


Entrepreneurship that proves to be successful in taking on the risks of creating a startup is rewarded with profits, fame, and continued growth opportunities. 


Entrepreneurship that fails results in losses and less prevalence in the markets for those involved.


***What Is Equity?

Equity, typically referred to as shareholders' equity (or owners' equity for privately held companies), represents the amount of money that would be returned to a company’s shareholders if all of the assets were liquidated and all of the company's debt was paid off in the case of liquidation. 


In the case of acquisition, it is the value of company sale minus any liabilities owed by the company not transferred with the sale.


In addition, shareholder equity can represent the book value of a company. 


Equity can sometimes be offered as payment-in-kind. It also represents the pro-rata ownership of a company's shares.


Equity can be found on a company's balance sheet and is one of the most common pieces of data employed by analysts to assess the financial health of a company.


***What Is an Ex-Dividend?

Ex-dividend describes a stock that is trading without the value of the next dividend payment. 


The ex-dividend date or "ex-date" is the day the stock starts trading without the value of its next dividend payment.


Typically, the ex-dividend date for a stock is one business day before the record date, meaning that an investor who buys the stock on its ex-dividend date or later will not be eligible to receive the declared dividend. 


Rather, the dividend payment is made to whoever owned the stock the day before the ex-dividend date.


***What Is Goodwill?

Goodwill is an intangible asset that is associated with the purchase of one company by another. 


Specifically, goodwill is the portion of the purchase price that is higher than the sum of the net fair value of all of the assets purchased in the acquisition and the liabilities assumed in the process. 


The value of a company’s brand name, solid customer base, good customer relations, good employee relations, and proprietary technology represent some reasons why goodwill exists.


***What Is a Guarantor?

A guarantor is a financial term describing an individual who promises to pay a borrower's debt in the event that the borrower defaults on their loan obligation. 


Guarantors pledge their own assets as collateral against the loans. 


On rare occasions, individuals act as their own guarantors, by pledging their own assets against the loan. 


The term "guarantor" is often interchanged with the term "surety."


***What Are Hard Skills?

Hard skills are learned abilities acquired and enhanced through practice, repetition, and education. 


Hard skills are important because they increase employee productivity and efficiency and subsequently improve employee satisfaction. 


However, hard skills alone don't translate into business success as employees also need to employ other skills, such as soft skills, that contribute to customer satisfaction.


***What Are Soft Skills?

Soft skills are character traits and interpersonal skills that characterize a person's relationships with other people. 


In the workplace, soft skills are considered to be a complement to hard skills, which refer to a person's knowledge and occupational skills. 


Sociologists may use the term soft skills to describe a person's emotional intelligence quotient (EQ) as opposed to intelligence quotient (IQ).


Soft skills have more to do with who people are, rather than what they know. 


As such, they encompass the character traits that decide how well one interacts with others and usually are a definite part of an individual's personality. 


In a competitive labor market, employees who demonstrate they have a good combination of hard and soft skills often see a greater demand for their services.


***What Is a Hedge?

A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. 


Normally, a hedge consists of taking an offsetting or opposite position in a related security.


***What Is a Hedge Fund?

Hedge funds are alternative investments using pooled funds that employ different strategies to earn active returns, or alpha, for their investors. 


Hedge funds may be aggressively managed or make use of derivatives and leverage in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark).


It is important to note that hedge funds are generally only accessible to accredited investors as they require less SEC regulations than other funds. 


One aspect that has set the hedge fund industry apart is the fact that hedge funds face less regulation than mutual funds and other investment vehicles.


***What Is Inflation?

Inflation is the decline of purchasing power of a given currency over time. 


A quantitative estimate of the rate at which the decline in purchasing power occurs can be reflected in the increase of an average price level of a basket of selected goods and services in an economy over some period of time. 


The rise in the general level of prices, often expressed as a percentage, means that a unit of currency effectively buys less than it did in prior periods.


Inflation can be contrasted with deflation, which occurs when the purchasing power of money increases and prices decline.


***What Is Hyperinflation?

Hyperinflation is a term to describe rapid, excessive, and out-of-control general price increases in an economy. 


While inflation is a measure of the pace of rising prices for goods and services, hyperinflation is rapidly rising inflation, typically measuring more than 50% per month.


Although hyperinflation is a rare event for developed economies, it has occurred many times throughout history in countries such as China, Germany, Russia, Hungary, and Argentina.


***What Is Deflation?

Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. 


During deflation, the purchasing power of currency rises over time.