Monthly Archives: December 2017

How to Get a Finance Job With No Experience

Finance is one such industry which is difficult to get into, especially for undergraduates and people switching from some other industry to finance. This happens because such candidates lack experience, which is considered as a key factor by finance companies for hiring new employees. Several resumes reach the interviewer’s desk, but only the candidates who either display reasonable work experience or have something exclusive, are called for the interview. It is during the interview, when a candidate without any work experience can create an impression on the interviewer, to get into the industry. Experts often get several questions from candidates who are interested in making a career in finance. Here is what they recommend.
Tips to Get a Finance Job Without any Experience
Build a Strong Resume

A candidate’s resume is responsible for creating the first impression on the interviewer. Hence, a strong resume with no typos, proper formatting, and accurate information must be built. Candidates who are unable to build a good resume must not hesitate from taking the help of professional resume builders. With a perfect resume, the candidate’s chances of being shortlisted for the interview are highly increased.

Take up Internships

Candidates lacking full-time experience in finance face difficulty in obtaining jobs. Generally, only entry-level positions are open to such candidates. As most of the entry-level positions do not require experience, the number of candidates with no knowledge of the work involved will be substantially high. To stand apart from the group, candidates can gain some work-related knowledge by taking up internships in finance companies. Internship will help the candidate understand how the industry works, what are the various departments involved, and how the work flows through these departments to finally meet customer demands. When interviewers come to know that a particular candidate is well aware of the functioning of the industry, his chances of getting selected are more as compared to others.
Work for Different Internship Programs

Diversifying areas of internship helps the candidate in gaining perspective of different functions in the finance industry. For example, equity trading, bonds, portfolio management, commodity trading etc., are all individual areas of the finance industry, and each of them has a different kind of work involved. Working in different areas during internship can give a clear picture to the candidate and make the choice of a field easy in the huge finance industry. This will also be a plus point for being selected in the interview, as it will reflect the candidate’s knowledge in various areas and his dedication towards the industry.

The Prime Causes of Crowding Out Effect in Economics

Great Recession
During the great recession of 2007, government deficits had increased a lot, since the government had to incur huge public spending for the masses. However, the ultimate result was that it did impact the business sector, and they ended up being crowded out. Thus, government spending does have a negative side too, though it has been overlooked.
The dictionary meaning of the term ‘crowding out’ is thrusting out, or forcing out of a small place. However, in economics, the crowding out effect is an interesting phenomenon that deals with the government spending. Government deficit is a situation when the government ends up spending more than the borrowing. What does the government do when it is short of money? Simply mint money? Of course, not! Money circulation is not so easy, and the government cannot start printing money simply as per its wishes and whims. Too much circulation of money will not lead to an increase in the value of the goods or services, but will certainly increase the inflation rate in the economy.
Why does ‘Crowding Out’ occur?

To reduce the deficits, the government again borrows from the market. Since the fiscal policies of the government impact the economy on a much larger scale, it does affect the private sector of the market. Due to the increase in government borrowing, the demand for investments in the market increases. Automatically, the price of funds increases. It implies that this increases the rate of interest in the market.

Hence, increased interest rates in the market again have an impact on the private sector. The private entrepreneurs cannot borrow much, once the interest rate of loan funds increases. In this case, they may stop or curb their growth or expansion plans. Thus, the government sucks up or absorbs the money circulation in the market, thereby creating a crowding out effect in the market.

Interest rates and borrowings have an inverse relationship. Once the interest rates increase, the borrowings decrease and vice versa. The government can create a crowding out effect in many ways.
Issuing government bonds in the market

The government borrows from the market, by issuing bonds and securities. Other than that, there are compulsory savings in the form of pension funds and other security benefits. When such bonds are circulated in the market, people tend to invest in them due to their high credit rating as compared to the private sector. Thus, much also depends on the mentality of the investors. If they prefer to have risk-less investments, most of them will divert their savings to the government.

Lower Interest Rate on a Credit Card

There are some solutions that can be used to lower the rate of interest on a credit card. ‘Interest’ or the cost of credit that is incurred, as a result of borrowing, can be calculated before the credit card is taken. It can also be managed after the credit card has been issued. ‘Interest’ rate on a credit card, basically includes all the credit card processing costs, APRs (Annual percentage rate), late fees, membership fees, and service charges.
In theory, the best way to get a lower interest rate is to have a good credit report. If one has a good credit report, it acts as an advantage, and credit card companies issue cards with lower interest rates. However, apart from a good credit report, a low-interest credit card is given to a select class of working people, such as military servicemen or people with disabilities. Different companies offer special concessions to frequent fliers, or those who have low-interest business credit cards. There are also several other ways to reduce credit card debt that you might incur. For example, checking the facilities of differential APRs. When a credit card holder spends on items of necessity such as food and clothing, the APR that is charged is small and negligible. You can also avail bankruptcy credit cards or student credit cards, as the APR and fees of such cards is less and the credit limit is more. Thus, the interest rate on a credit card also depends on the purpose. When you have a good credit report, you also have the advantage of negotiating the interest rates with the company. Another option is to have a secured credit card. The plus point is that, this card has a better credit limit and lesser APRs on some purchases.
In order to hunt for ways to cut credit card debt, you will have to review the credit card agreement. This agreement has different clauses, such as introductory APR, which is by default 0% for first 6 months in most cases. Then you will have an APR that is applicable for purchases; this amount is usually variable. Credit card companies state the upper and lower limits of the APR, for example, 9.22% to 16.50%. Apart from the APR, a discount is assured that can go as high as 10% to 15%, if you purchase from specified brand stores. Moreover, you will have an APR for balance transfers, one APR for cash advances, and another one for overdraft facilities. The key is to read the agreement and all possible details about the card on the company’s website.

Giffen’s Goods With Appropriate Examples

Before we begin with discussing Giffen’s paradox and proceed to look at what goods and items come under the purview of this paradox, let us first have a brief refresher of the law of demand. According to the law of demand, with everything else remaining constant, the demand for a particular good increases with a decrease in its price and decreases with an increase in its price. As such, there is an inverse relationship between the price of a product and the quantity demanded.

Demand for a product is, therefore, a function of its price and this relation can be mathematically depicted as:

Qx = f(Px)

Where, x is the product, Qx is the quantity demanded of the product and Px is the price of the product. Giffen’s paradox constitute of those phenomena or demand scenarios that violate the law of demand and various examples of Giffen goods act as exceptions to the law of demand.

What are Giffen Goods?
A Giffen good, as stated above, is that product or good that defies the law of demand in terms of the relationship between its price and quantity of demand. This particular economic paradox was propounded by Scottish economist, Sir Robert Giffen (after whom it’s named). According to this paradox, which Sir Robert Giffen arrived at after observing the purchasing tendency of the poor Victorian subjects, the demand for a particular good tends to increase even when its price increases. Sir Robert Giffen had observed that when the price of necessary staple goods
such as bread, food grain, vegetables, etc., rose, the poorer sections of the Victorian society, who relied heavily on these basic staple items, gave up on purchasing other goods and concentrated all their purchasing power on procuring the necessary staples. This kept the demand for these good high despite an increase in their price.

Conversely, when the prices of these staples go down, the consumer would, out of the consumer’s surplus (the price he has always paid and is ready to pay for the good minus the decreased price) difference that has occurred due to the price plunge, prefer to buy less of the staples and more of superior substitutes for consumption.
There are some pre-conditions so as to explain the Giffen’s paradox:

The goods taken should be inferior goods.
There should be no close substitute.
The goods should cover substantial percentage of the income of the buyer, but not so much that the buyer can’t buy any other normal good.