7. Financial Market

Finance is the part of economics concerned with providing fund to individuals, business and government. Finance allows use credit for purchasing goods or investing projects. For example, an individual can borrow money from a bank to buy property. A company may raise money through investors to build new factory, government can issue bonds for particular projects.

Money is always looking for places where it will be most profitable. There are some ways to make money earn the greatest return on investment.

The first for individuals, is to put money on deposit in a bank. You will get interests, your money at the same time is lent out to people, businesses, governments who need it to finance their own projects. The bank will make its profit on the difference between what it pays out in interest on deposits and what it gets in interest from its loans.

The second way is more dangerous. You could buy some bonds and you will get interest payments, later these bonds will eventually be repaid. You can also buy some shares and share in the profitability of your chosen company. The dividends will be more then what you would get from bonds, the shares themselves, in good times, will increase in value, giving a capital gain if you sell them. From this point of view you are investors, companies, you lend out to, are borrowers. But the company you have invested in will pay off interest from bonds and shares until it goes bankrupt or defaults. So there is the trade-off between risk and return.

To invest in start-ups is the way to pay back all the money you lost and much more, but you are to know only 15-20% of start-ups will hit the jackpot. Most investors are not private individuals but institutions like banks, insurance companies, mutual funds and pension funds, which invest in the money and currency market, stock markets, commodities markets and property.

Today most trading is on screen or telephone based: trading takes place by phone and computer between the premises of issuer, brokers and traders.

Central banks are crucial for financial centers, because they set basic interest rates and control money supply.

8. E-commerce

E-commerce is the part of economic which include all financial and trading transactions which work with Nets and some business process. Internet technology opened up a massive consumer market for e-tailors. A big challenge for e-tailors is successful e-commerce site, where customers may browse stock, select items to fill a shopping basket and then go to a virtual checkout to pay for goods.

Other key issues for e-commerce are:

• Physical delivery of goods. Parcel-delivery companies have benefited from companies where goods have to be physically delivered to homes, like Amazon.

• The future of services. Some people think that future in consumer e-commerce is going to be in services like travel and financial products. Already on some airlines two-thirds of bookings are being made on the Internet.

• Business-to-business e-commerce. The biggest impact of the Internet is going to be in business-to-business applications, where suppliers can bid for orders. Competing companies have set up networks where they can get suppliers to do this. Orders are placed and processed, and payment made, over the Internet, with cost reductions through the elimination of processing on paper.

There are some advantages and disadvantages of e-commerce.

Advantages:

For organizations there are: global reach (trading in the different countries), reduced costs (less rent, only warehouse), a quick withdrawal of goods on the market and low cost distribution.

For customers it is large selection of goods and services(education, health care, utilities), more low-cost products and services, operational delivery and easy way to find what they need, don’t need to go somewhere, spend less time.

Disadvantages:

In delivery - when you go shopping you take purchase home immediately but when people buy things by internet they have to wait a delivery. Also sometimes companies haven’t got a courier delivery and customers have to go to outlets.

In Security Issues & Consumer Trust - this is perhaps the biggest worry for customers. Customers worry that their financial details may not be safe and that a business will use them in some illegal way. They also worry that security may be not good and that identity theft is a problem.

Product Description Problems - some customers are worry that description on the e-commerce site may not accurately reflect the real product.

E-commerce does and will play a huge part in purchasing and selling process. And with the growing role of Internet, the role of e-commerce will increase also.