Subsidized vs Unsubsidized Loans

Subsidized Loans are the ones in which the cost or partial cost of the loan is paid by someone other than the user. Some examples of subsidized loans are education loans, agricultural loans, housing loans, business loans, etc. Unsubsidized loans are where the user is himself bearing the cost of the loan

Subsidized loans are generally floated to achieve a specific goal and generally come with a lot of strings attached. Although these may sound to be a good deal, one must thoroughly evaluate all the aspects and clauses very carefully before accepting. For example the student loans are generally subsidized by the government or trusts, foundations, non government organizations, etc. The loans first of all would be given to very deserving individuals and not be available to all. These would generally also require the student to maintain a minimum grade average throughout the course period. They would also specify the family status and maximum income for those who can avail this. Housing loans are generally subsidized to promote settlements in a particular area or in areas hit by natural disasters or war. Subsidized housing loans would normally specify the residential area, maximum property size, maximum construction cost and the time period. Business Loans are generally available for industries that the government would want to develop. Most governments are promoting industries producing equipment related to alternative energy sources like solar energy, windmills, etc. Unsubsidized loans would normally be available to anyone able to show his financial ability to pay back the loan and came with very few strings attached. Students for example do not need to maintain a consistent high average of grades and hence can also take up work along with studies. Unsubsidized property and business loans would virtually be available to anyone with payback capacity.

The other problem that may happen with subsidized loans is the fact that these may not be very flexible. The unsubsidized loans on the other hand are very flexible. They may offer you the option of negotiating interest rates, change the time period, use deferred payment plan and even allow you to prepay the loan if an when the money is available.

Summary

1.In Subsidized Loans the cost of the loans is partially or fully covered by someone else whereas in unsubsidized loans the cost is borne by the user.
2.Subsidized loans are offered to achieve a specific goal whereas unsubsidized loans are available for just about anything.
3.Subsidized loans generally come with a lot of string attached and are not very flexible whereas the unsubsidized loans can be tailored to one’s needs

Fiscal Policy vs Monetary Policy

Fiscal policy and monetary policies are instruments utilized by governments to give impetus to the economy of a nation and sometimes they are used to curb the excess growth. The fiscal policy is the underlying principle through which the government controls the economy with the collection and expenditure of money. This is revealed in the government’s fiscal policy of a particular period.

The government engages in manipulating the available fund within the economy. This is described in the monetary policy of the government. It deals with the issuing of currency and administration of banks for smooth operations. A good flow of money enables customers to have more cash at hand and in turn encourages spending

The fiscal policy relates with the programs and plans of the government and creates an increasing demand for workers resulting in lowering of unemployment position. The automatic fiscal plans correct the sliding down of economy, like the unemployment insurance to give relief to persons who lose jobs. Tax cuts are brought in to give back more money to business and consumers which they can spend in turn to strengthen the economy.

The fiscal policy revolves around the economic position of the nation and the related strategy to impose taxes to make maximum use of fund. This is not a one time affair but goes on changing every year to suit the position of the economy and its needs during the specific period.

The monetary policy differs with the fiscal policy on the ground that it is exclusively for banks and the circulation of money in an efficient way. This is also changed every year on the demand and supply of the money and makes effect on the rate of interest on loans. This monetary policy acts as the key regulator through the key bank of the nation as the Federal Reserve System in US.

Fiscal policy is fundamentally an attempt of the nation to give direction to the economy through manipulation of tax structures. Whereas, the monetary policy is the procedure by which the nation or its key bank influences the supply of fund, rates of interest and so on. The main objectives of both the procedures are attainment of growth of economy and its stability.

In the monetary policy, the central bank attempts to bring in four principles to either increase or reduce money supply to make a change in the structure. The primary principle is to change the cash reserve ratio of commercial banks. This restraint compels banks to maintain a deposit at the central bank. The increase in the ratio means dearth of funds at the hands of commercial banks, which makes loans to consumers difficult. Accordingly interest rates on short-term borrowings are settled. The central banks also employ the process of buying or selling of government bonds to control the supply of money in the market. These are basic differences between fiscal policy and monetary policy of a country.

Summary

1. Fiscal policy gives the direction of economy of a nation. Monetary policy controls the supply of money in the nation.
2. Fiscal policy relates to the economic position of a nation. Monetary policy focuses on the strategy of banks.
3. Fiscal policy administers the taxation structure of the nation. Monetary Policy helps to stabilize the economy of the country.
4. Fiscal policy speaks of the government’s economic program. Monetary policy sets the program of key banks of the nation.

 Fantastic job................................thank you very much

Mortgage Insurance vs Life Insurance

Owning a house is a dream for all of us. But a good house is a costly affair these days. Purchasing a house thus requires a lot of borrowed money. If you are a borrower, you need mortgage insurance if your down payment is less than 20% of appraised market value or purchase value of the property you are purchasing. The mortgage insurance does not protect you. It protects your lender from the risk of your defaulting on the payment to him. Mortgage insurance can be availed of from both the government and the private players, government providing mortgage insurance even at less than 3% down payment.

Life insurance on the other hand is an altogether different proposition. A life insurer insures the ‘life’ of a person for a certain length of his life span or even for whole life  and in the unfortunate event of death of the insured, the insurer pays the insured amount (called ‘sum assured’ in insurance parlance) to the nominee or legal heir of the insured. Life insurance premiums are required to be paid at agreed intervals for whole of the period of life risk coverage.

The difference between mortgage insurance and life insurance are given below to give you a better overview of both type of insurances.

1. Mortgage insurance is normally taken by the borrower to protect the lender against any default in payment by him. So it is a case of ‘I pay for insurance to protect you from me.’ Life insurance on the other hand is taken by the ‘insured’ on his own life to protect his own family in the event of his untimely death.
2. Mortgage insurance premium payment can be stopped by the borrower once the loan to value ratio of the property mortgaged hits the 80% mark in case of private mortgage insurance (in case of government mortgage insurance, the premium payment may have to be continued for life of the loan). Premium payment for life insurance product is to be continued for the entire period of insurance coverage.
3. In mortgage insurance three parties are involved, viz, the borrower, the lender and the insurer whereas the life insurance is essentially a contract between the insurer and the insured.
4. Life insurance policy is taken on the life of the insured. The payment by insurer in case of life insurance is almost always substantially more than the total amount of premium paid to the insurer by the insured. In mortgage insurance there is absolutely no refund of premium when the mortgage insurance is terminated.
5. Mortgage insurance premium may or may not be tax deductible, but life insurance premium is almost always tax deductible.

Summary

1. Mortgage insurance is insurance on property purchased by the borrower whereas life insurance is insurance on life of the insurer.

2. Premium for life insurance is to be paid for entire period of policy term, but the mortgage insurance can be terminated after the loan-to-value ratio of the property hits 80% mark.

Average Tax Rate vs Marginal Tax Rate

It is important to understand the difference between average tax rate and marginal tax rate so you can make an effective tax plan. If you know how to differentiate average tax rate with marginal tax rate, then you will have an easier time in making your payable taxes lower.

First of all, calculating average tax rate is simpler than calculating the marginal tax rate. That is because with average tax rate, you will only get the average between your tax liability and your total taxable income. In simple terms, it is represented as tax liability divided by taxable income. This is a fairly straightforward tax calculation

Meanwhile, calculations for marginal tax rate follow a specific set of tax table. Your tax rate therefore will depend primarily on your current level of income. So the higher you earn, you will also belong to higher income tax bracket. But if your income is lower, your tax rate will be lower also.

Marginal tax rate may change overtime. As your income or consumption increases or decreases, the marginal tax rate will also be adjusted based on your final taxable income. On the other hand, average tax rate represent the actual percentage of your income that goes into taxes.

Obviously, calculations for average tax rate will be lower because it incorporates the amount of taxes you will pay at all levels of income. Marginal tax rate is generally used on progressive taxation. You will get different tax rates based on your current level of income.

It is important to grasp the essentials of average tax rate and marginal tax rate so you can make a good tax plan. With marginal tax rate, you will pay more taxes as your income increases. But you also pay less tax if your income is lower.

The Difference Between a Corporation and a Partnership

A Company that wants to involve other investors in it’s  shares must become incorporated and be owned by more than one individual with the same common goal. In the case of a partnership, the major difference lies in the liabilities of the company. Meaning that both profits and liabilities are shared according to the percentage of ownership agreed  between the partners.

It is the degree of investment that determines the liability protection for each partner. Just as a sole proprietorship does not offer limited liability protection neither does a partnership.

It must be noted that there are two types of partnerships, one being a limited liability partnership and the second a general partnership.

Dealing with a general partnership dictates limited investment chances and no liability protection. The one benefit to a general partnership is the ease in which it can be started and the tax recordings and reporting are simplified. The taxes pertain to each individual partner on one’s own levels. There has to be a business plan where the percentage of ownership is agreed upon and who is going to hold what positions. In most cases, it is wise to have a Corporate lawyer draft (the partnership agreement).

When it comes to Corporations, the tax system is much more complicated. This is just one of the major differences when it comes to a general partnership. With a C-Corporation, the company pays taxes separate from the shareholders. An S-Corporation is simply a C-Corporation that has been given an S Corporation status upon the completion of a 2553 IRS form. It changes the way the Corporation and its shareholders are taxed. In this case, the shareholders can pay taxes like as if they were a member in the partnership as opposed to a standard corporation that is taxed on its basis.

Deciding to be a partnership or Corporation depends on what your expectation of the business is. If you want shareholder involvement then you are going to have to go with the Corporation. If you want no liability protection but favor the ease of starting the business  with a simple tax involvement, partnership would be a better choice

 

Bonds and stocks

Bonds and stocks are both methods of investment. The main difference between bonds and stocks is in what you own.

 

A bond is issued, generally by a government entity such as a federal government or a city government.  The concept of a bond is simply that at the issue of the bond you give the issuer money. In the issuing of a bond there is a time set that the bond will be cashed in. The value is also set at the time of the bond’s issue. It may be that the bond’s original value will earn a specified amount for the duration or a specific amount may be set. With a bond the only thing that you own is the bond and you should ensure that you understand the details of the bond before purchasing it. In some instances the bond may be worthless under certain circumstances, for example if the organization dissolves.

The concept of a stock is that you hold a percentage of ownership in the company while you own the stock. It’s important to understand the details of your ownership before purchasing the stock just as it is with a bond. You may be entitled to a vote in company decisions. You may also have a worthless certificate in the event the company goes bankrupt.  You may also receive dividends while owning a stock.

Stocks and bonds are ways that organizations can attempt to get capital immediately. They are also ways that individuals can participate in shaping the future of something larger

Futures vs Options

Derivatives are created form the underling asset like stocks, bonds and commodities. They are known to be the most complicated instruments in the entire financial market. Some of the investors find them right instruments for risk management, which increases liquidity. However, they are extremely important and have huge effects on financial markets and the economy Derivatives are mainly of two kinds, which are futures and options. There is a marked difference between futures and options.

The meaning of futures is summarized as the contract made by two different parties either to purchase or sell products at a future period where the prices are pre-determined. The meaning of options is the right without the obligation to purchase and sell underlining assets. Call option stands for the right without obligation to only buy the underlining asset and the purchaser may refuse the contract prior to its maturity. Put option means the opposite of call option.

The basic difference of futures and options is evident in the obligation present between buyers and sellers. In the future contract, both the parties are engaged in a contract with obligation to purchase or sell the asset at a particular price on the day of settlement. This is a risky proposition for both the parties. In case of the option contract, the buyer has the right without any obligation to purchase or sell the underlying asset. This is the peculiarity of the term “option” and the price is paid at a premium. With this kind of trading, the purchaser’s risk becomes limited to the payment of premium but the prospective profit is unlimited.

Beside his commissions, the investor is able to engage in future contract without any advance expenditure. In the options case, it requires the payment of a premium to be made. This additional charge is paid to get relief from the obligations to purchase underlying assets in case of negative shift in prices of assets. The only loss would be in the shape of premium when the transaction is made though option and hence the risk remains limited within the payment of premium.

The other fundamental difference between futures and options relates to the size of the stock position. Usually, the position of underlying assets is very huge for the future contracts. Naturally, the obligation to purchase or selling of this huge quantity at a specified price makes the future trading absolutely risky for the fresh investor.

The difference between futures and options as financial instruments depict different profit pictures for parties. The gain in the option trading can be obtained in certain different manners. On the contrary, the gain in the future trading is automatically linked to the daily fluctuations in the market. This is to say that the value of profit positions for investors is dependent upon the market position at the close of the trading everyday. Therefore, every investor should have a prior knowledge of both futures and options before they enter the financial market operations.
 

Summary

1. A future is a contract which is governed by a pre-determined price for selling and buying at a future period. In options, there is the right to sell or purchase of underlying assets without any obligation.

2. A future trading has open risk. The risk in option is limited.

3. The size of the underlying stock is usually huge in future trading. Option trading is of normal size.

4. Futures need no advance payment. Options have the advance payment system of premiums

ETF vs Mutual Fund

ETF (Exchange Traded Fund) is a collective investment scheme that is freely traded in the stock exchanges much like other stocks. Typically in an ETF the value of the shares issued represent the securities value held by the fund. Mutual Funds are professionally managed funds where in the pooled resources of the investors are managed as one portfolio. Each of the investors who form the fund are entitled to a share in the assets of the fund in the ratio of their investments.

A major difference between these two types of funds is that the ETF shares cannot be exchanged for cash from the fund manager. These shares can only be sold as shares to someone who wants to buy them. However, in a Mutual Fund the fund manager would normally account for each investor’s share individually and the option to return the shares for cash to the fund manager typically is always open for the investor.

Typical investors in the ETF are institutional investors who stay invested for a long time. However, the mutual funds attract institutional as well as retail investors and are also in demand by short term investors.

The advantage of the ETF is that they are traded on the market like any other stock, hence, giving the investor all the advantages of stock markets like short selling, margin buying, etc. The user will also have the advantage of reacting to any situation during the trading hours therefore minimizing the losses in case the ETF is going down. The other advantage is that ETFs are relatively immune to the market timings. Buying or selling of ETFs has little effect on the fund value or its underlying asset value. In Mutual Funds the investors can make use of even slight variation in the price and buy or sell the funds causing greater variation in the prices. Secondly, if a user wants to get out he can only do it at the closing price and there is no way to react to any losses during the day.

Summary

1.ETF’s are freely traded like stocks on the stock exchange while Mutual Funds are professionally managed funds.

2.In ETF’s the shares are generally equal in value to the underlying assets whereas in mutual funds are managed as a single portfolio and the investors are entitled to a share in the assets of the fund in the ratio of their investments.
 

3.In ETF the investors enjoy all the benefits of stock market whereas in Mutual Funds this option is not available.

The Difference Between Windows XP and Vista

It would seem that most individuals have become so accustomed and comfortable with using Windows XP that many don’t want to make the transition over to the Windows Vista. Technically, we are creatures of habit so when it comes to making changes it’s not all that easy.

Like most things there are good and bad points about both XP and Vista.

The start menu is more advanced in Vista compared to XP. With Vista, you have a much broader range of search leverage. Another significant change is in the “All Programs” area. XP can be somewhat of a problem to keep the programs organized when you have several whereas with the Vista the programs are scrolled within the start menu making it much less confusing when you want to find a particular program.

Everyone finds the “All Programs List” in XP frustrating. It can be overwhelming with its 3 column wide display. Now in Vista the folders open and close with a single click. In addition to this in Vista, the ability to search is always present. This way to find something  you just type the item and all related items appear quickly.

In Vista there is a power button in the bottom right hand corner. This allows all the pending updates to be installed and then once the update process is completed puts the computer into sleep mode. This is not something that XP has.

In XP when you want to perform the lock function you have to press Ctrl-Alt-Del whereas in Vista there is a simple lock button that will perform the task. In addition to these power functions, you will find other related power functions available to you by way of a pop up menu. In essence, these are all merely time savers and a means of convenience.

According to Microsoft, security of Windows Vista is much improved than XP. As part of this, a new feature called UAC (User Account Control) is included in Vista.

One of the critical differences between both, is the hardware requirements. To achieve the same level of performance as XP, Vista requires more advanced or additional hardware .

Quite often, when one becomes comfortable with a Program such as XP, they really don’t place a lot of emphasis on small time savers .

The iPhone has been the most sought after mobile phone with each release. And now with the 3Gs in the market its time to compare the two. Apple says that the added “S” stands for speed and the 3Gs does seem to sport a lot of speed improvements over the 3G. At first glance, there is almost nothing different about the two. Apple has decided to retain the winning iPhone look while managing to squeeze the improvements in

The 3Gs comes equipped with a 600Mhz ARM processor which is better than the 412Mhz processor of the 3G. This added processing power allows users to run applications without any noticeable lags or freezes. The radio has also been upgraded in the 3Gs. Where the 3G can only achieve 3.6mbps, the 3Gs can reach the maximum of speed offered by the HSDPA technology which is 7.2mbps. These blazing internet speeds mean faster browsing and downloads for 3Gs users who live in areas with HSDPA.

The camera in the 3Gs is also an improvement of the old camera of the 3G. It no has a 3 megapixel sensor instead of a 2.0 megapixel. Apple also added video recording support in the 3Gs, a feature that 3G owners sorely missed since most mobile phones already support video recording at the time of the iPhone

On the software side, Apple added extra features to keep the customers happy. The first is OpenGL ES 2.0 support which is an improvement over the 1.1 version supported by the 3G. This means that the 3Gs can draw images better which give app developers an additional tool to work with. Voice control has also been added to the 3Gs, a feature that lets you control your  Phone with the sound of your voice. There is also a compass application that is supported with phonean embedded magnetic compass. This allows you to use your iPhone just like a compass in case you get lost.

Summary:

1.They are more or less identical when it comes to the aesthetics

2.The 3Gs has a much faster processor than the 3G
 

3.The 3Gs can achieve 7.2mbps on HSDPA while the 3G can only achieve 3.6mbps

4.The 2.0 megapixel camera of the 3G has been replaced with a 3.0 megapixel camera that supports video recording in the 3Gs

5.The 3Gs can now support OpenGl ES 2.0 while the 3G can only support 1.1

6.The 3Gs has voice control and a magnetic compass which are not available in the 3G

 

Read more: Difference Between iPhone 3G and 3Gs | Difference Between | iPhone 3G vs 3Gs https://www.differencebetween.net/object/difference-between-3g-and-3gs/#ixzz0WPr9MMP7
 

The Gre and Gmat

The GRE and the GMAT are both standardized tests that are giving to individuals pursuing postgraduate education. The Graduate Record Examination is a test that is given to potential students prior to their admission into many graduate programs. The GMAT, or Graduate Management Admission Test, is quite similar though this test is specifically tailored for individuals that are entering graduate business studies.

The GRE is designed by Educational Testing Service. They also administer the test for institutions around the globe. The Graduate Record Examination is generally taken through a computer  though paper versions are used sometimes. The emphasis of the GRE is to assess the applied abstract thinking of students in the standard subjects of analytical writing, vocabulary and math. The role of the student’s score in their admittance is completely up to the school that is being applied to. In addition to the general Graduate Record Examination, there are GRE tests designed to focus on specific subjects also. The numbers and subjects in existence have been reduced over the years, but eight still remain. The subjects are Chemistry, Biochemistry, Cell and Molecular Biology, Biology, Physics, Computer Science, Mathematics, Psychology and Literature in English.

The GMAT is a standardized test that is given specifically to individuals planning to enter a graduate business program. The influence of the score is, as in the case of the GRE, completely at the discretion of the institution being applied to. This test is intended to test the education level that an individual has acquired over a long-period. The test focuses on three areas specifically. These include verbal, mathematical and analytical writing skills. The length of the test is 3.5 hours and it is generally administered through a computer similar to the GRE. In some instances temporary computer stations may be setup to allow testing, but there is a paper version that exists, though it is rarely used. The GMAT is intended to predict how well the student may do in the course of graduate studies.

Both of these tests are designed to test long-term education and the individual taker’s application of that education. Both use an adaptive testing format on a computer that changes difficulty or adapts the test to the taker. Both also have very different focuses and each institution has a slightly different application of the data that these tests supply.

Recession and Depression

In economics, recession and depression both means a slowdown in economic activity. Generally recession can be taken as a far less severe form of depression.

A widely accepted indicator of recession is, decline in GDP for two successive quarters . That is if the Gross Domestic Product of an economy declines continuously for six months, the economy is in recession. Although there is no widely-agreed-upon definition for a depression, generally a depression is distinguished from recession when GDP declines by more than 10 percent. Another yardstick for depression is a recession lasting 3 or more years.

Recession occurs more frequently than depression. Deciding whether the economy is in recession or depression is a matter of perspective.

Summary

1. Recession is a less severe form of economic downturn.

2. Recession occurs more frequently than depression.

3. When the GDP declines by more than 10% and lasts longer than 3 years, its called depression.